10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                          to                         

Commission file number: 001-37542

CRH MEDICAL CORPORATION

(Exact name of registrant as specified in its charter)

British Columbia, Canada	Not Applicable
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

Suite 578 – 999 Canada Place, World Trade Center

Vancouver, BC V6C 3E1

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (604) 633-1440

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Shares, no par value	NYSE American

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐
Accelerated filer	☒
Non-accelerated filer	☐
Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes  ☐    No  ☒

The aggregate market value of the voting and non-voting common shares held by non-affiliates of the registrant, based on the closing sale price of the registrant’s common shares on the last business day of its most recently completed second fiscal quarter, as reported on the NYSE American was approximately $215.8 million.

The number of outstanding common shares of the registrant, no par value, as of March 12, 2019 was 71,712,288.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required by Part III of this Annual Report on Form 10-K is incorporated by reference to the registrant’s definitive proxy statement related to its 2019 Annual General Meeting of Shareholders, to be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

CRH MEDICAL CORPORATION

FORM 10-K

For the Fiscal Year Ended December 31, 2018

Table of Contents

PART I		5
Item 1.	Business	5
Item 1A.	Risk Factors	22
Item 1B.	Unresolved Staff Comments	43
Item 2.	Properties	43
Item 3.	Legal Proceedings	43
Item 4.	Mine Safety Disclosures	43
PART II		44
Item 5.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	44
Item 6.	Selected Financial Data	49
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	50
Item 7A.	Quantitative and Qualitative Disclosure About Market Risk	69
Item 8.	Financial Statements and Supplementary Data	69
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	104
Item 9A.	Controls and Procedures	104
Item 9B.	Other Information	105
Item 10.	Directors, Executive Officers and Corporate Governance	105
Item 11.	Executive Compensation	105
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	105
Item 13.	Certain Relationships and Related Transactions and Director Independence	105
Item 14.	Principal Accounting Fees and Services	105
PART IV		106
Item 15.	Exhibits, Financial Statement Schedules	106
EXHIBITS INDEX		106
Item 16.	Form 10-K Summary	107
SIGNATURES		108

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K includes “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of Canadian securities laws, or collectively, forward-looking statements. Forward-looking statements include statements that may relate to our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs and other information that is not historical information. Many of these statements appear, in particular, under the headings “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements can often be identified by the use of terminology such as “subject to”, “believe,” “anticipate,” “plan,” “expect,” “intend,” “estimate,” “project,” “predict,” “potential,” “may,” “will,” “should,” “would,” “could,” “can,” “continue,” the negatives thereof, variations thereon and similar expressions, or by discussions of strategy. In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking. In particular, these forward-looking statements include, but are not limited to:

• the size of our addressable markets and our profitability;

• the achievement of our growth strategies and strategic plans and trends in our industry;

• the perceived merit of our products and services;

• our plans and expectations relating to the CRH O’Regan System and our anesthesiology operations;

• our future financing plans and anticipated needs for working capital; and

• our ability to predict developments in government regulation and manage our operations accordingly.

All forward-looking statements, including, without limitation, our examination of historical operating trends, are based upon our current expectations and various assumptions. Certain assumptions made in preparing the forward-looking statements include:

• the absence of material adverse changes in our industry or the global economy;

• trends in our industry and markets;

• our ability to maintain good business relationships with our anesthesiologists, other independent contractors or any business partners;

• our ability to comply with current and future regulatory standards;

• our ability to protect our intellectual property rights;

• our continued compliance with third-party intellectual property rights;

• our ability to identify, manage and integrate acquisitions;

• our ability to recruit and retain key personnel; and

• our ability to raise sufficient debt or equity financing to support our continued growth.

We believe there is a reasonable basis for our expectations and beliefs, but forward-looking statements are inherently uncertain. We may not realize our expectations, and our beliefs may not prove correct. Actual results could differ

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materially from those described or implied by such forward-looking statements. The following uncertainties and factors, among others (including those set forth under “Risk Factors”), could affect future performance and cause actual results to differ materially from those matters expressed in or implied by forward-looking statements:

• our ability to successfully identify and complete corporate transactions and achieve anticipated synergies relating to any acquisitions or alliances;

• our ability to manage our growth effectively and achieve our expansion strategy;

• our ability to retain senior management personnel who have been key to our growth;

• changes to payment rates or methods of third-party payors and changes to U.S. laws that regulate payments for medical services;

• our exposure to potential decreases in revenue and profit margin under our fee for service contracts and arrangements;

• the risk that Ambulatory Surgical Centers (“ASCs”) or other customers may terminate or choose not to renew their agreements with us;

• our ability to enforce the non-competition and other restrictive covenants in our agreements;

• our potential need and ability to raise additional capital to fund future operations;

• risks arising from the various restrictive covenants and events of default we are subject to under our credit facilities;

• our ability to incur substantially more debt, which could exacerbate risks associated with increased leverage;

• significant price and volume fluctuations in our common shares;

• the risk that we may write-off intangible assets;

• our ability to maintain or increase anesthesia procedure volumes at our existing ASCs;

• our ability to successfully recruit and retain qualified anesthesiologists or other independent contractors;

• potential adverse events related to our product or our services and related risks associated with product liability, medical malpractice or other legal claims, insurance claims, product recalls and other liabilities;•         our inability to predict the impact of health reform initiatives;

• our ability to manage third-party service providers and maintain the quality of service that we provide;

• risks relating to income tax audits or changes in our effective income tax rate;

• our dependence on suppliers;

• risks relating to unfavorable economic conditions;

• the risk that we may be subject to a variety of regulatory investigations, claims, lawsuits, and other proceedings;

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• the risk of damages resulting from claims that that we, or our employees, have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors;

• our ability to adequately protect or enforce our intellectual property;

• the risk that patent protection for our products may expire;

• our ability to successfully market our products and services;

• the risk that our employees and third-party contractors may not appropriately record or document services that they provide;

• our ability to timely or accurately bill for services;

• the level of competition in our industry;

• changes in federal or state laws, rules, regulations, or in interpretations of such laws, rules or regulations, which may require us to redeem our physician partners’ ownership interests in anesthesia companies under the savings clause in our joint venture operating agreements;

• our ability to comply with U.S. federal and state fraud and abuse laws;

• the risk that our employees and business partners may not appropriately secure and protect confidential information in their possession;

• our ability to protect our information technology infrastructure against cyber-based attacks, network security breaches, service interruptions or data corruption;

• the risk that we may be subject to criminal or civil sanctions if we fail to comply with privacy regulations regarding the protection, use and disclosure of patient information;

• our legal responsibility to the minority owners of the entities through which we own our anesthesia services business, which may conflict with, and prevent us from acting in, our own best interests;

• the risk that a significant number of our affiliated physicians could leave our affiliated ASCs;

• changes in regulations or regulatory interpretations, which may obligate us to re-negotiate agreements with our anesthesiologists or other contractors;

• our dependence on maintaining strong relationships with physicians in order to continue the development of our products and provision of our services;

• the extensive level of federal, state, and local regulation, and changes in law and regulatory interpretations relating to our industry;

• the risk that unfavorable changes or conditions could occur in the states where our operations are concentrated;

• the risk that government authorities or other parties may assert that our business practices violate antitrust laws;

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• the potential that our significant shareholders could influence our business operations and sales of our shares by such significant shareholders could influence our share price;

• anti-takeover provisions in our constating documents that could discourage a third party from making a takeover offer that could be beneficial to our shareholders;

• changes in the medical industry and the economy that may affect the Company’s business;

• the existence in our industry of numerous governmental investigations into marketing and other business practices which could result in fines, penalties, administrative remedies or divert the attention of our management;

• the evolving regulation of corporate governance and public disclosure, which may result in additional expenses and continuing uncertainty;

• our exposure to adverse movements in foreign currency exchange rates;

• our ability and the ability of our suppliers to comply with the U.S. Food and Drug Administration’s (“FDA”) Quality System Regulation and other applicable requirements;

• our intention not to pay dividends on our common shares and the consequence that any return on a shareholder’s investment in our common shares will depend on appreciation, if any, in the price of our common shares;

• the risk that as an “emerging growth company” and “smaller reporting company,” our common shares may be less attractive to investors;

• our ability to maintain an effective system of internal control over financial reporting; and

• the risk that our share price and trading volume could decline if securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business.

Consequently, forward-looking statements should be regarded solely as our current plans, estimates and beliefs. You should not place undue reliance on forward-looking statements. We cannot guarantee future results, events, levels of activity, performance or achievements. We do not undertake and specifically decline any obligation to update, republish or revise forward-looking statements to reflect future events or circumstances or to reflect the occurrences of unanticipated events, except as required by law.

We own or have rights to trademarks, service marks or trade names that we use in connection with the operation of our business. In addition, our names, logos and website names and addresses are our service marks or trademarks. CRH and the CRH O’Regan System are registered trademarks. The other trademarks, trade names and service marks appearing in this Annual Report on Form 10-K are the property of their respective owners. Solely for convenience, the trademarks, service marks, tradenames and copyrights referred to in this Annual Report on Form 10-K are listed without the ^©, ^® and TM symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and tradenames.

We express all amounts in this Annual Report on Form 10-K in U.S. dollars, except where otherwise indicated. References to “$” and “US$” are to U.S. dollars and references to “C$” are to Canadian dollars.

Except as otherwise indicated, references in this Annual Report on Form 10-K to “CRH ,” the “Company,” “we,” “us” and “our” refer to CRH Medical Corporation and its consolidated subsidiaries.

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PART I

Item 1. Business

Overview

CRH is a North American company focused on providing physicians throughout the United States with innovative products and services for the treatment of gastrointestinal (“GI”) diseases. The CRH O’Regan System is a single-use, disposable, hemorrhoid banding technology that is safe and highly effective in treating all grades of hemorrhoids. CRH distributes the CRH O’Regan System, treatment protocols, operational and marketing expertise as a complete, turnkey package directly to gastroenterology practices, creating meaningful relationships with the gastroenterologists (“GIs”) it serves. The CRH O’Regan System is currently used in all 48 lower U.S. states.

In 2014, CRH acquired Gastroenterology Anesthesia Associates, LLC (“GAA”), a full-service gastroenterology anesthesia company that provides anesthesia services for patients undergoing endoscopic procedures. Performing these procedures under anesthetic provides more comfort for patients and increases the operating efficiency of ASC’s. CRH has continued to leverage the capabilities it acquired through GAA to consolidate the highly fragmented gastroenterology anesthesia provider business. The Company’s goal is to establish itself as the premier provider of innovative products and essential services to GIs throughout the United States. Each of the Company’s two primary lines of business, the sale of medical products and the provision of anesthesia services, is discussed below. As of December 31, 2018, CRH has a majority ownership interest in 20 GI anesthesia practices in 10 U.S. states and services approximately 305,000 patient cases annually.

In 2018, the Company completed five acquisitions. All acquisitions completed during 2018 have been included in the anesthesia segment of the Company. In March 2018, a subsidiary of the Company entered into an asset purchase agreement to acquire 100% of certain assets of Shreveport Sedation Associates, LLC, an anesthesia services provider in Louisiana. In May 2018, a subsidiary of the Company entered into an asset contribution and exchange agreement to acquire 51% of the ownership interest in Western Ohio Sedation Associates, LLC, an anesthesia services provider in Ohio. In July 2018, a subsidiary of the Company entered into a membership interest purchase agreement to acquire a 51% interest in Lake Washington Anesthesia Associates, LLC, a gastroenterology anesthesia services provider in Washington State. In September, a subsidiary of the Company entered into an asset purchase agreement to acquire 100% of the ownership interest in Lake Erie Sedation Associates, LLC, an anesthesia services provider in Ohio. In December, a subsidiary of the Company entered into an asset contribution and exchange agreement to acquire 51% of the ownership interest in Tennessee Valley Anesthesia Associates, an anesthesia services provider in Tennessee. The total aggregate consideration paid for these businesses was $27,509,811 in cash and acquisition costs incurred.

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The CRH O’Regan System

Invented in 1997 by laparoscopic surgeon Dr. Patrick J. O’Regan, and cleared by the FDA in 2000, the CRH O’Regan System represents a significant advancement in rubber band ligation treatment of hemorrhoids. The technology was improved in 2016, incorporating a number of features bringing the CRH O’Regan System to a new level of functionality for the practitioner and a new level of comfort and safety for the patient. The CRH O’Regan System is an entirely disposable, single-use device for hemorrhoid treatment. Previous metal instruments were introduced in the 1950s and 1960s, before the advent of virulent, blood borne pathogens such as HIV and Hepatitis B and C. Today they pose reprocessing challenges and concerns about cross-patient infection.

The ligator is a plastic plunger suction device resembling a syringe, with a built-in obturator to ease insertion, which is applied to each hemorrhoid in turn, two centimeters above the dentate line. Manual suction is induced to cause a portion of the hemorrhoid cushion to enter the nozzle, and the band is then released to strangulate the tissue. Only one band is used to facilitate the later adjustment and to reduce the risk of complications. This procedure can be performed under direct visualization with a specially designed anoscope or using a “blind” technique where the device is inserted to a mark through the anus and directed to one of the hemorrhoid cushions, which is then banded.

What are Hemorrhoids?

Hemorrhoids are normal cushions of tissue and blood vessels in the lower rectum which normally play a role in maintaining continence. In a large number of people, these hemorrhoidal cushions undergo changes which typically lead to any number of perianal symptoms. It is at this point when patients typically seek treatment for their hemorrhoidal “disease.” Hemorrhoids are classified as either external or internal:

External – swollen vascular and soft tissue that is present below the “Dentate Line,” which can often be seen and felt under the skin outside the anal canal. They often appear as a small bulge and are the same color as the skin. These can become irritated, inflamed or thrombosed, are generally treated by over the counter remedies or in some cases, a surgical procedure. External hemorrhoids are often mistakenly “blamed” for patients’ symptoms that are actually caused by their internal hemorrhoids, explaining why so many patients with “external” symptoms respond to treating their internal hemorrhoids.

Internal – swollen and prolapsing vascular tissue that are inside of the anal opening, and form above the “Dentate Line.” When internal hemorrhoids become abnormal, they may protrude out through the anus while straining or during defecation. A reference to “hemorrhoids” in a clinical setting is generally a reference to internal hemorrhoids.

Internal hemorrhoids fall into one of four “grades” depending on the degree of severity. Grade I hemorrhoids do not prolapse, and so very infrequently cause symptoms. These patients are usually treated with over the counter remedies and diet, and if any symptoms are present they are typically self-limited. Grades II through IV are typically in need of treatment and rubber band ligation is the most frequent type of treatment utilized on these patients, although most Grade IV patients require surgical intervention, which is quite costly and painful. Successful treatment of lesser grades of hemorrhoids may well prevent the development of Grade IV disease.

There are many presumed factors that may increase the likelihood of developing hemorrhoidal symptoms. These factors include: aging, chronic constipation or diarrhea, pregnancy, hereditary issues, chronic straining during bowel movements and faulty bowel function due to overuse of laxatives or enemas. Hemorrhoid symptoms include: itching, bleeding, swelling, prolapse, leakage, and in patients with associated external hemorrhoids, lumps and pain.

According to the National Institute of Health, the prevalence rate of hemorrhoids in the United States is at least 4.4% of the population, and approximately 50% of the U.S. population will develop symptomatic hemorrhoids by age 50.

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According to the American Society of Colon and Rectal Surgeons, hemorrhoids are one of the most common ailments, with the onset typically occurring usually after age 30. The peak prevalence occurs between 45 and 65 years of age. Most patients with milder cases appear to suffer in silence, or may seek over-the-counter remedies, rather than turning to a medical professional.

Hemorrhoid Treatment Procedures

Rubber Band Ligation

A small rubber band is placed around the base of the hemorrhoid inside the rectum. The band cuts off circulation, the banded tissue sloughs within a few days, and scar tissue forms, preventing the tissue from prolapsing or causing symptoms. Rubber band ligation may be utilized for the vast majority of hemorrhoid patients.

The banding technique is the most widely accepted form of treatment as it requires no anesthesia, is simple to perform, can be done in a doctor’s office, and is relatively inexpensive and effective. The CRH O’Regan System is an example of this treatment technique.

Coagulation by use of infrared light (“IRC”)

Coagulation by use of infrared light causes the treated hemorrhoid tissue to coagulate, creating scar tissue that is intended to stop the prolapse, lessening the hemorrhoidal symptoms. It is mostly used for grade 1 or small grade II hemorrhoids. IRC has been shown to be less effective than rubber band ligation, as it typically requires more treatments with a higher recurrence rate.

Injection sclerotherapy with chemicals

With injection sclerotherapy, a doctor injects a chemical solution under the surface of the hemorrhoid. The solution causes inflammation and scarring of the tissue in an attempt to keep the hemorrhoidal tissue from causing symptoms. This technique is not widely used, and complications can occur if the solution is not injected precisely where it is needed.

Surgery

A hemorrhoidectomy is performed by a surgeon with local anesthetic plus sedation, or more typically a spinal anesthetic or a general anesthetic. It is sometimes performed on an outpatient basis, but an overnight or inpatient hospital stay can be required. It is a more expensive procedure than the other options as it is required to be performed in a hospital or ambulatory surgery center. Surgery is accompanied by greater cost, as well as post procedural pain and disability.

Stapling

A “PPH” or a “stapled hemorrhoidectomy” utilizes a specialized device which can cut and then staple together a portion of the rectal lining, causing scar tissue that typically keeps the hemorrhoid tissue in place, minimizing the patient’s symptoms. This procedure gained favor because it caused less pain and disability than the conventional surgical hemorrhoidectomy, but more recent experience has shown that this procedure is not without the potential for significant complications.

Transanal Hemorrhoidal Dearterialization

A more recent development, this surgical procedure utilizes a specialized scope to help identify the arteries which supply blood to the hemorrhoidal tissues. This localization allows for the surgeon to suture those vessels, reducing blood flow to the hemorrhoids as well as to cause scarring which helps to minimize hemorrhoidal

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symptoms. This technique demonstrates promise, but it is still a surgical procedure, causing significantly more pain and disability than the non-surgical approaches outlined above. This technique has demonstrated as high as a 25% short term failure rate.

Evidence of Use for the CRH O’Regan System

A large 2005 study of the CRH O’Regan System reported the lowest hemorrhoid treatment complication rate ever published at 16 out of 5,424 procedures, or 0.3%. Post-band bleed occurred in eight patients (0.4%), post-band pain in three patients (0.2%) and post-band thrombosis in five patients (0.3%). No other complications were observed. Compared to conventional rubber band ligation, these figures demonstrate a ten-fold reduction in complications. The results also showed the CRH O’Regan System to have lower recurrence (4.8%) at two years than previous banding techniques (12%) or even hemorrhoidectomy (5-8%). However, patient compliance with dietary changes and recommended bowel habits may have marked influence on recurrence rates and long-term studies to confirm whether this distinction exists at late follow-up have not been conducted.

A 2006 study was conducted to evaluate the effectiveness and complications associated with rubber band ligation using the CRH O’Regan System. The study included treatment for 60 patients and no major complications were noted. The study concluded that the CRH O’Regan System is associated with a good response and low complication rate. Minor early and late bleeding was reported in 10% and 6.7% of patients, respectively, but none was severe. Pain occurred in 6.7% of patients, but was not severe. In all cases clinical and endoscopic improvement was observed and patients of all ages, including the elderly, were found to be tolerant to the procedure. The study concluded the technique is a safe and reliable treatment option.

A 2008 study involving 113 patients and a total of 257 banding events concluded that the outpatient treatment of hemorrhoids by GIs using the CRH O’Regan System is safe and effective. Initial symptoms were resolved in 94% of patients, and rectal bleeding resolved in 90% of patients after at least one banding event. These results were sustained at three months. There were no cases of pelvic sepsis. Patient satisfaction with the CRH O’Regan System was high. Overall, 81% of patients were highly satisfied with their treatment and 75% of patients said they would choose this therapy again over a surgical option and/or recommend it to a friend. Patients do not require time off from work after the procedure.

A 2010 study titled The Long Term Results of Hemorrhoid Banding Using the O’Regan Disposable Suction Ligator, involved 20,286 ligations with the CRH O’Regan System on 6,690 patients. The results indicated an 8% recurrence of all three hemorrhoids over an average of 42 months and a 5% partial recurrence (one or two hemorrhoids). Complications were 0.2% per band or 0.6% per course of treatment. In light of the low recurrence and partial recurrence rates, the study concluded that the use of the CRH O’Regan System was a significant improvement on Barron’s original rubber band ligation device and that the CRH O’Regan System has performed well since its introduction.

In order to improve ease of use and patient comfort, the Company began distributing its upgraded ligator in 2016. The improved CRH O’Regan System incorporated a built-in obturator which eases insertion as well as limits the trauma that can be inflicted by utilizing an alternative device with an “open jaw.” The “anti-pinch” feature further adds to patient comfort, and a feature which helps to prevent misfires makes the device more reliable when treating patients. These upgrades have improved the safety profile of the device, and have further reduced patient pain and post-banding complaints.

Commercialization Strategies

In 2008, as a strategy to achieve rapid adoption of the CRH O’Regan System by a broader segment of the medical community, the Company began developing the capability to bring our CRH O’Regan System directly to physicians. We believe this strategy, called the “Direct-to-Physician Program,” positions the Company to increase the number of physicians who use utilize its products and capture more market share while building brand awareness and value.

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Approximately 15 million colonoscopies are performed annually in the United States by approximately 14,000 GIs. Studies have shown as many as 40% of colonoscopies demonstrate significant hemorrhoidal changes. Given that gastroenterologists perform the majority of colonoscopies in the United States, CRH’s Direct-to-Physician Program specifically targets these providers because they are regularly diagnosing hemorrhoids and are able to adequately screen patients prior to the procedure. The CRH O’Regan System provides GIs with an effective modality to treat hemorrhoidal disease and increase their practice revenue.

CRH is actively expanding the Direct-to-Physician Program by targeting the distribution of the CRH O’Regan System directly to the over 14,000 GIs practicing in the United States. CRH utilizes many methods to create awareness and demand for the CRH O’Regan System. Awareness is created through a number of channels and tactics, including key opinion leader endorsement and GI word-of-mouth; articles and advertisements in professional journals and publications; “Grand Rounds”-type presentations at academic institutions and Gastroenterology Fellowship Training Programs; exhibits and product demonstrations at GI conferences; and targeted email and direct mail campaigns. The information on the CRH O’Regan System website, including procedure videos and published research, also serves as an educational tool and an important source of awareness to the GI community. To date, CRH has provided training relating to the use of the CRH O’Regan System to approximately 3,000 GI’s at over 1,100 practices.

The Company is introducing the CRH O’Regan System into the curriculum of the approximately 190 academic and hospital-based Gastroenterology Fellowship Programs throughout the United States as perianal care is not traditionally a topic covered during training. The treatment of hemorrhoids is a natural extension of the GI practice. Hemorrhoid treatment with the CRH O’Regan System expands the continuum of care and provides a fast and painless solution to patients. Since many hemorrhoid patients also require colonoscopy and other endoscopic services, adoption of the CRH O’Regan System creates additional patient and procedural revenue for the GIs’ traditional practice.

In addition, the integration of the CRH O’Regan System into a GI practice may increase practice revenues. For example, the treatment of patients using the CRH O’Regan System generates an hourly procedural reimbursement approximately equal to or greater than that of colonoscopy procedures. Offering these treatments also brings new patients into the practice, many of whom require additional diagnostic procedures. Moreover, the reimbursement is typically generated without the need for any additional staff, capital expenditures or facility requirements.

In contrast to other treatment modalities, the CRH O’Regan System procedure takes less than a minute to perform, does not require anesthesia or bowel preparation, is well tolerated by patients, and can be performed in an office setting as well as in ASCs. The CRH O’Regan System is totally disposable and does not require any capital investment.

CRH provides a comprehensive support program for GI practices, including providing clinical training, operational training and marketing programs and materials.

CRH provides physician-to-physician training for GIs at their own practice setting with patients they identify and recruit for treatment. This enables the GI to see a variety of pathologies and learn the procedure by treating patients in a “hands-on” manner, ultimately leading to a greater comfort level with the technology and the associated necessary treatment protocols. These initial patients are also then scheduled for subsequent bandings, contributing to the start-up and growth of hemorrhoid procedures within the practice.

CRH also provides operational training and support to ensure that GI office staff are comfortable describing the procedure and are able to address the questions most frequently asked by hemorrhoid sufferers seeking our treatment. The training includes hemorrhoid education, technology facts, phone scripts, frequently-asked questions, optimal patient flow processes and scheduling methodologies, and a billing and coding overview. In addition, CRH provides hemorrhoid content that may be added to the GI practice website. The goal is to ensure

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that the GI practice can effectively convert treatment inquiries into patient appointments and bring new patients in.

CRH provides a comprehensive marketing support program to assist GIs with integrating the CRH O’Regan System into their practice. Marketing programs and materials are available at no charge and are designed to quickly and effectively educate new and existing patients about the procedure.

CRH also provides web-based marketing resources to GI practices by adding their practice profile to the CRH website. The CRH consumer website (www.crhsystem.com) directs hemorrhoid sufferers to trained physicians near them who offer our procedure. The creation of a direct link between the practice website and the CRH website has been one of the most beneficial tools for driving new patients to our GI partner practices. Information contained on, or accessible through, our website is not a part of this Annual Report, and the inclusion of our website address in this Annual Report is an inactive textual reference.

Specialized Skill & Knowledge

The Company’s management, medical and support teams have developed specific skills and knowledge in the U.S. healthcare market from the Company’s prior operation of Centers for Colorectal Health and many years managing and developing its Direct-to-Physician Program. We believe that the extent and breadth of the Company’s experience delivering healthcare services, developed through years of operating across multiple U.S. states, have provided it with a national scope of knowledge that is not easily acquired or replicated. On a national scale, there is a significant amount of fragmentation of legal requirements, divergence in medical service reimbursement levels, and local healthcare contracting that the Company must evaluate prior to penetrating any particular market. Over the course of its operating history, we believe the Company has acquired the knowledge necessary to gather and process the critical information required to measure quantifiable decisions to enter prospective markets. The Company continues to develop this knowledge and expertise by expanding the know-how of its existing management and acquiring new personnel with the requisite skill sets.

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Competition

The majority of rubber band ligation procedures are performed using metal re-usable ligators and retractors. In the same way that disposable syringes have replaced re-usable syringes in most medical applications, disposable ligators have replaced re-usable ligators. The table below compares the CRH O’Regan Ligator to the traditional ligation device and other hemorrhoid treatment devices.

	CRH O’Regan System	McGiveny Ligator	Other Diposable Ligators	EZ Band	IRC	HET	Endoscopic Banding
Assistance required	No	Often	Often	No	Often	Often	Yes
Length of procedure	Approximately 1 minute	Approximately 5 - 15 minutes	Approximately 5 - 10 minutes	Approximately 1 minute	Approximately 5 - 10 minutes	Approximately 5 - 10 minutes	Approximately 10 - 30 minutes
Patient comfort	No Anoscope required, greater patient comfort. Obturator and anti-pinch aids insertion and minimizes discomfort Least painful of available techniques	Anoscope and technique increase patient discomfort	Technique and multiple site banding increases patient discomfort	No Anoscope required No obturator Open-cylinder device which can lead to excess anal tissue capture or painful insertion and may entirely preclude insertion in some patients with anal spasm/fissure	Anoscope and technique increases patient discomfort	Most patients receive anesthesia because of risk of discomfort	Requires bowel preparation and sedation Highest incidence of post-banding pain
Ease of Use by Physician	Easy to learn one handed technique	2 handed techniques required, instrumentation is more difficult to utilize	2 handed technique required	One handed technique	2 handed technique required	Requires specialized anoscope and grasping devices	Requires endoscope and multiple assistance
Cleaning	Disposable	Sterilization and maintenance required.	Disposable, significantly more waste with suction tubing canisters	Disposable	Disposable	Disposable	Sterilization and maintenance required.
Additional Equipment/Capital Investment required	None	Up front instrument purchase Cleaning and sterilizing expense	Wall suction	Not required	Console unit to produce infrared	Current generator some instrumentation	Endoscopic facility and associated equipment
Training	On-site physician training	None	Non physician onsite and video	Webinar	Video	Non-physician onsite and video	Training included in fellowship
Other Support	Marketing and operational	None	Very limited	Limited marketing materials	Patient education at additional cost	None	None
Cost	$70	Initial cost + cost of cleaning and maintenance	$30 – 75 (includes tubing and canisters)	$35	Initial investment plus cost per treatment of ~$60	Initial investment plus a per treatment cost >$600/procedure	$250 + cost of endoscopy, ASC, etc.

Foreign Operations

While the Company’s headquarters are in Vancouver, British Columbia, substantially all of the Company’s revenues from sales of the CRH O’Regan System are generated in the United States.

The Company is actively working to begin distributing the CRH O’Regan System in China. The device has received CFDA approval and is currently undergoing a clinical trial at the Beijing Anorectal Hospital.

Regulatory Approval

The FDA, Health Canada, and comparable agencies in other foreign countries impose requirements upon the design, development, manufacturing, marketing and distribution of medical devices. The applicable regulations

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require clearance or approval before the devices can be sold. After the applicable approvals are granted the regulatory agencies require companies to comply with quality system requirements and maintain annual registrations.

The Company has FDA 510(k) clearance (K963166 and K020702) for the United States and Medical Device License #65043) for Health Canada. These registrations are legal prerequisites for the Company to market and sell the CRH O’Regan Ligator, Anoscope and CRH O’Regan System in the United States and Canada, and many countries worldwide that accept these registrations. The Company sub-contracts the design and manufacture of its O’Regan products to a Canadian manufacturer that holds certification for CRH products to ISO13485:2016 MDSAP.

For a more fulsome description of the regulations applicable to the Company’s products and services, see the section below titled “Government Regulation.”

Operations and Manufacturing

The Company manages sub-contracted activities and Quality Management System activities to ensure compliance with the requirements of ISO 13485:2016 MDSAP and Current Good Manufacturing Practices and is committed to continuously improve the quality of our products and services to better satisfy the needs and expectations of our customers.

All subcontractors are monitored and evaluated on a regular basis to ensure the highest quality product. We manage the activities of our supply chain on a continuous basis. While the Company has outsourced design and manufacturing activities, we maintain direct control over customer service activities to ensure that we provide our best service to our customers. Through an established system of customer feedback we are able to monitor for signs of quality problems and customer issues.

Customer, Professional and Technical Services

The Company has established a feedback system to provide early warning of quality problems and to determine whether it has met the customer’s requirements. Customer complaints, expressions of satisfaction and other unsolicited customer feedback are collected and processed by Customer Service. As discussed above, our licensed physician medical directors provide professional and consultative support to our Customers.

Cycles and Economic Dependence

The provision of healthcare services in the United States has changed as a result of the shifts within the healthcare insurance market. Some of these shifts include a decline in overall Health Maintenance Organization market-share due to patients demand to see “out of network” physicians. Other shifts are high deductible plans and health savings plans that are shifting the burden of healthcare expenditures directly to patients. These shifts have an effect on the frequency and the types of treatment that patients will seek and thus have an effect on treatments that may be considered elective. Although the treatment of hemorrhoids with ligation is a covered procedure by most insurance plans, some patients may still consider the treatment as elective due to the above factors.

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The Company is economically dependent on one critical supplier for the CRH O’Regan System. The supplier, a clean room injection molding manufacturing company based in Ontario, Canada, performs contract manufacturing and assembly for the Company. Currently, the Company has one set of manufacturing molds for each product produced, which is used for the injection molding and these molds are inventoried at the supplier’s facility. See the risk factor titled “Our dependence on suppliers could have a material adverse effect on our business, financial condition and results of operations” in Item 1A.

Revenue from the sale of the CRH O’Regan System was $10,959,215 and $11,501,005 for the years ended December 31, 2018 and 2017, respectively. Many healthcare plans in the United States have deductibles and other patient related costs for the treatment of hemorrhoids. As a result of these plans, and other factors, the Company may experience fluctuations in quarterly revenue.

Gastroenterology Anesthesia Services

In 2014, CRH became a full-service gastroenterology anesthesia company with the platform purchase of Gastroenterology Anesthesia Associates, LLC (“GAA”). In all, CRH has completed 21 anesthesia acquisitions to date. The Company provides anesthesia services for patients undergoing endoscopic procedures performed by GIs in Ambulatory Surgery Centers (“ASC’s”) in the United States. Most commonly this is propofol sedation for upper endoscopy and lower endoscopy procedures performed in ASCs. As part of each acquisition, the Company enters into a service agreement with each ASC to become the exclusive provider of anesthesia services at that location. In return, CRH undertakes to staff the facility with the appropriately trained and experienced anesthetists and board-certified anesthesiologists. The Company receives and records revenue through fee for service arrangements with commercial and government insurance providers. The serviced GI group or ASC is not responsible for payment for the procedure.

The Company currently provides anesthesia services in 47 GI-focused ASCs, to more than 320,000 patients per year, using a team of more than 400 Certified Registered Nurse Anesthetists and Physician Anesthesiologists.

Evidence of Use

Based upon Medicare claims data, more than 50% of the approximately 25 million GI endoscopy procedures are performed with monitored anesthesia care. The remaining procedures use moderate sedation, typically by combining an opioid and benzodiazepine (e.g. the fentanyl-Versed regimen), which does not require the involvement of an anesthetist.

The use of anesthesia for GI endoscopic procedures has shown a significant increase in use over the last decade. A Medicare cohort study showed an anesthesia utilization rate of 11% in 2000, rising to 23.4% in 2006, while a published survey of commercial payor data showed anesthesia was used in 13.6% of cases in 2003, increasing to 35.5% in 2009, and was forecasted to increase to 53.7% during 2015. We believe anesthesia for GI endoscopy is the standard of care and that adoption will continue to increase.

The Centers for Disease Control and Prevention (“CDC”) launched the Screen for Life: National Colorectal Cancer Action Campaign in 1999 with the goal of raising awareness about the importance of colorectal cancer screening. As of 2016, the program found that only 67.3% of U.S. adults were up to date with their colorectal screening. The campaign’s current goal is to have 80% of the population between the ages of 50 and 75 up to date on their screening by 2018.

The United States Census Bureau projects that the number of Americans between the ages of 50 to 75, the group targeted for screening, will grow from 91 million in 2014 to 99 million in 2020. Assuming 80% of that population gets screened, as targeted by the CDC, an additional 6.4 million colonoscopies would have to be performed in that period.

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Physician and Patient Preference

GIs prefer Propofol sedation due to its pharmacologic properties that include rapid onset, rapid recovery and fewer recovery-associated symptoms compared to moderate sedation. This is associated with increased patient compliance during the procedure and less utilization of resources during recovery, which can improve costs, procedure throughput and scheduling efficiency.

Patients also strongly prefer the use of anesthesia, which allows for a more comfortable procedure and a reduced recovery time that is free from nausea, memory loss and drowsiness associated with the moderate sedation regimen.

Commercialization Strategies

The Company’s anesthesia business strategy has been to establish itself as a high quality, reliable provider of anesthesia services to ASCs performing GI endoscopies. There are approximately 1,000 single-specialty-GI Medicare certified ASCs in the United States, of which the Company currently serves 46. The Company expects to further penetrate the market through its acquisition strategy, with the goal of increasing the number of facilities in which it serves.

Similar to GAA and the Company’s other 19 acquisitions, the Company seeks to acquire established GI-focused anesthesia groups. GI anesthesia acquisitions consist of either a 100% acquisition or a joint venture acquisition structure where the Company acquires a controlling interest. The joint venture model allows the physician group to monetize a portion of their anesthesia business while retaining an ongoing revenue stream and reducing risk from an operational, regulatory, and reimbursement standpoint. The acquired anesthesia group provides anesthesia services to the partner ASC under a professional services agreement.

We believe there are several GI groups that lack the knowledge and resources to launch and maintain their own anesthesia group. To address this, the Company has created a Monitored Anesthesia Care (“MAC”) Development Program as an option for groups wishing to provide anesthesia services to their patients. This arrangement provides greater control over the anesthesia services through a co-management arrangement with the Company while also providing additional revenue for the physicians. These business arrangements include the initial development and ongoing management of the anesthesia group. Additionally, CRH may be provided a contractual right of first refusal on the purchase of the anesthesia group and/or a future option to purchase a controlling interest in the anesthesia group. In each case, the Company integrates the acquired professional service agreements into its established billing and staffing processes to maximize quality assurance and efficiencies.

Overall, these acquisitions generally experience annual volume growth, primarily driven by patient case growth of the referring GI group.

CRH provides an anesthesia services solution that integrates quickly with the GI group practice with little or no disruption. While the GIs are actively involved with CRH in establishing the anesthesia group, CRH’s involvement allows GIs to focus on their core business of endoscopic procedures to achieve greater results for their patients. In addition to the daily assistance in the management of the anesthesia group through billing, collections, staff recruitment, credentialing, and scheduling, those partnering with CRH take advantage of our quality assurance and quality improvement program, data collection and reporting, and patient questionnaires. All of these processes can be a burden for many GI practices, but we believe they are critical to measuring quality and treatment outcomes.

CRH has established itself as a long-standing, trusted partner in the GI community through the CRH O’Regan System due to its focus on the patient and by providing a level of service to both the GI and practice staff that we believe is unparalleled in the industry. CRH Anesthesia Services continues to achieve this same high level of quality and service, while leveraging the relationships that have been established with approximately 3,000 GIs throughout the country to date.

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As a result, we believe the Company has established its reputation as a high-quality provider of, and partner in, anesthesia services, thereby fostering maintenance and adoption of its services. This may lead to other non-GI anesthesia opportunities in the future.

Specialized Skill and Knowledge

The Company maintains national medical directors responsible for reviewing, implementing and supporting evidence based clinical practices. The Company’s clinical and operational thought leaders serve on the Quality Management Committee, chartered to help drive the clinical quality of the Company and to ensure that all patients receive the highest quality of care. Committee members review specific cases, research, survey readiness practices and various other data with the intent to continuously enhance their understanding of anesthesia care and to disseminate learnings and best practices Company-wide. Often these learnings are transferred through on-site provider education sessions and in-services.

To support the independent needs of providers, the Company offers both W2 employment as well as 1099 contractor status. The Company has insourced recruitment to ensure alignment and focuses efforts on experienced providers, typically maintaining three or more years of clinical experience. A defined provider on-boarding process orients each provider to their respective facilities and clinical policies and procedures of the Company. Once onboarded, the ability to retain these providers resides in the Company’s competitive compensation and benefits, strong clinical support and expansive clinical opportunities across the broad portfolio of sites nationally.

The Company focuses diligently on the overall patient experience delivered across the communities served. Patient experience is measured through a survey system, offering real-time patient and caregiver insights. Feedback from the surveys is consistently monitored at the local level as well as by the centralized Quality Management Committee in order to drive change.

Additional areas of expertise include payer and provider credentialing, payer contracting and revenue cycle management and optimization, which is provided through an exclusive relationship with an outsourced provider. These key practices ensure continual alignment with regulatory requirements as well as the efficient and optimal collection of revenue.

The Company has streamlined and standardized their ability to deliver these specialized skills to businesses through their dedicated integration resources. The integration team ensures a seamless transition and onboarding experience for GI physicians and anesthesia providers alike. As part of the integration process, clinical and regulatory compliance policies and practices promote ethical and compliant practices, while also providing internal controls to proactively address any identified potential concerns. Fundamentals include provider education and access to compliance leadership to report and address potential concerns or non-compliant behaviors.

Competition

The majority of GI ASCs are currently utilizing anesthesia services for its endoscopic procedures through groups affiliated with their GI practice. It is these groups the Company targets for acquisition. The remainder utilize 3^rd party management or staffing companies. These 3^rd parties are generally small, fragmented, and not well-capitalized, offering no opportunity for acquisition.

Those GI ASCs not currently utilizing anesthesia for its endoscopic procedures are targets for the Company’s MAC Development Program. Local 3^rd party management and staffing companies compete for these programs, however they do not offer the same breadth of services, nor the potential for a future acquisition.

Additionally, the Company competes with large GI practices, led by private equity groups that are active in acquiring and consolidating physician practices, including related ancillary services, such as GI anesthesia.

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The Company plans to continue to primarily focus on the GI market and leverage its reputation for high-quality value-added service, established through its CRH O’Regan System business, to consolidate the market and further establish itself as a trusted anesthesia provider.

Intangible Properties

The Company’s intangible properties pertaining to the anesthesia business include its exclusive professional service agreements with each of the serviced facilities. The majority of our agreements are multi-year and contain auto-renewal features.

Foreign Operations

While the Company’s headquarters are in Vancouver, British Columbia, all of the Company’s revenues for anesthesia services are generated in the United States.

Economic Dependence

Though highly recommended, GI endoscopies such as colorectal screenings, are primarily elective procedures and are therefore susceptible to the dynamics of the general economy, which can influence the proportion of the population covered by private insurance and the number of patients willing to pay relevant copays and deductibles, thereby influencing overall procedure volumes.

The Company’s anesthesia services are dependent upon the continuous recruitment and retention of qualified Anesthetists and Anesthesiologists. As the demand for Anesthetists and Anesthesiologists in hospitals and non GI ASC’s increases, there is a potential for cost increases for these resources. See the risk factor titled “Our ability to successfully recruit and retain qualified anesthesiologists or other independent contractors” in Item 1A.

The Company’s anesthesia services rely upon the ample and continual supply of Propofol or potential sedation alternative. When necessary, CRH currently sources Propofol through supply agreements with narcotics manufacturers and its physicians and medical practitioners. See the risk factor titled “Our dependence on suppliers could have a material adverse effect on our business, financial condition and results of operations” in Item 1A.

We depend primarily on U.S. government, third party commercial and private and governmental third-party sources of payment for the services provided to patients. The amount we receive for our services may be adversely affected by market and cost factors, as well as other factors over which we have no control, including changes to the Medicare and Medicaid payment systems. For a description of the risks relating to changes in U.S. government health care programs, see the risk factors titled “Changes to payment rates or methods of third-party payors, including United States government healthcare programs, changes to the United States laws and regulations that regulate payments for medical services, the failure of payment rates to increase as our costs increase, or changes to our payor mix, could adversely affect our operating margins and revenues” and “We are unable to predict the impact of health reform initiatives, including reform initiatives relating to the PPACA” in Item 1A.

Though the co-pay and deductible for anesthesia during screening colonoscopies was eliminated in 2015 as a part of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “PPACA”), many private healthcare plans in the United States have deductibles and other patient-related costs. As a result of these plans, payor mix, and other factors, the Company may experience fluctuations in quarterly revenue.

Revenue from anesthesia services was $101,790,165 and $83,505,140 for the years ended December 31, 2018 and 2017, respectively. In 2018, the Company’s revenue from anesthesia services for the acquisitions completed

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through December 31, 2017 were negatively impacted by the November 2, 2017 Centers for Medicare and Medicaid Services (“CMS”) final rule which came into effect on January 1, 2018 and by changes in the per unit reimbursements received from our commercial payors. The CMS final rule impacted our revenue per case by an estimated 9% and the changes from our commercial payors impacted our revenue per case by an additional 4%. These negative impacts to anesthesia revenue were partially offset by organic growth in patient cases and deployment of available capital for acquisitions, and we expect similar offsets in the future.

Intellectual Property

A vital part of the Company’s business strategy is to protect its products and technologies through the use of patents, proprietary technologies and trademarks, to the extent available. Success will depend, in part, upon the ability to obtain and enforce strong patents, to maintain trade secret protection and to operate without infringing the proprietary rights of others. Current CRH policy is to seek patent protection for proprietary technology whenever and wherever commercially practical. CRH has acquired or received patents for marketing in the United States, Canada, Europe and in some parts of Asia. See the risk factor titled “If we are unable to adequately protect or enforce our intellectual property, our competitive position could be impaired” in Item 1A.

As of December 31, 2018, our patent portfolio consists of 11 issued U.S. and foreign patents and 4 pending U.S. and foreign patent applications. Of these, our issued patents expire between approximately 2021 and 2034. Pursuant to an agreement dated May 8, 2001 as amended, the Company acquired the patent and all other rights to the CRH O’Regan Ligator from Dr. Patrick J. O’Regan, a former director of the Company, in exchange for common shares of the Company. The patent regarding the CRH O’Regan Ligator was registered in the name of the Company in the patent office on August 27, 2002. The CRH O’Regan System consists of the CRH O’Regan Ligator and the slotted Anoscope. The CRH O’Regan Ligator is a disposable, minimally invasive hemorrhoid banding device. The CRH O’Regan Ligator was patented in the United States by Dr. Patrick O’Regan.

In addition, we also have 3 U.S. and foreign trademark registrations.

We routinely monitor the status of existing and emerging intellectual property disclosed by third parties that may impact our business, and to the extent we identify any such disclosures, evaluate them and take appropriate courses of action. We also protect our proprietary information by ensuring that our employees, consultants, contractors and other advisors execute agreements requiring non-disclosure and assignment of inventions prior to their engagement.

Research and Development

The Company is not engaged in any research and development activities.

Government Regulation

Healthcare Reform

The United States and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our future products profitably. Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality or expanding access. In the United States, changes in healthcare policy could increase our costs and subject us to additional regulatory requirements that may impact sales of the CRH O’Regan System. By way of example, the PPACA substantially changed the way healthcare is financed by both governmental and private insurers, and significantly impacted the medical device industry. PPACA, among other things, imposed a 2.3% excise tax on any entity that manufactures or imports medical devices offered for sale in the U.S., with limited exceptions. While the implementation of the medical device tax has further been suspended until

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December 31, 2019, the status of the tax for sales after December 31, 2019 is not clear. The medical device tax may continue to be suspended, or may be reinstated at the same or at a different level effective January 1, 2020. Since its enactment, there have been judicial and Congressional challenges to certain aspects of the PPACA. For example, the Tax Cuts and Jobs Acts, enacted December 22, 2017 in the United States, made changes to the tax treatment of health care expenses and repealed the “individual mandate” to purchase private insurance. Additional legislation may result in changes to government programs such as Medicare, Medicaid and federal sunshine laws. In addition, the current U.S. Administration is considering a number of administrative policy changes that could result in additional changes to insurance coverage, financing of insurance coverage and benefits offered through private insurance in both the employer-sponsored and individual markets. As a result, there is still uncertainty whether the PPACA will undergo additional revisions, and we cannot predict the impact of any future modifications, and it is uncertain how any such proposals, if approved, would affect these provisions.

In addition to PPACA, there will continue to be proposals by legislators at both the federal and state levels, regulators and third party payors to reduce costs while expanding individual healthcare benefits. For example, in December 2016, the 21st Century Cures Act (the “Cures Act”), was signed into law. The Cures Act, among other things, is intended to modernize the regulation of medical devices and spur innovation, but its ultimate implementation is unclear. We expect that the PPACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and lower reimbursement, and in additional downward pressure on the price that we receive for our products. Any reduction in reimbursement from Medicare or other government-funded programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to maintain profitability.

Other Healthcare Laws and Compliance Requirements

We are subject to a number of laws and regulations that may restrict our business practices, including, without limitation, anti-kickback, false claims, physician payment transparency and data privacy and security laws. The government has interpreted these laws broadly to apply to the marketing and sales activities of manufacturers like us.

The federal Anti-Kickback Statute prohibits, among other things, persons or entities from knowingly and willfully soliciting, receiving, offering or providing remuneration, directly or indirectly, in cash or in kind, in exchange for or to induce either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service for which payment may be made, in whole or in part, under federal healthcare programs such as Medicare and Medicaid. In addition, a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. Violations can result in significant penalties, imprisonment and exclusion from Medicare, Medicaid and other federal healthcare programs.

The federal civil False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval to the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government. A claim includes “any request or demand” for money or property presented to the U.S. government. The civil False Claims Act also applies to false submissions that cause the government to be paid less than the amount to which it is entitled. When an entity is determined to have violated the federal civil False Claims Act, the government may impose significant civil fines and penalties for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs. Private suits filed under the civil False Claims Act, known as qui tam actions, can be brought by individuals on behalf of the government. These individuals may share in any amounts paid by the entity to the government in fines or settlement.

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The federal Civil Monetary Penalties Law prohibits, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies.

The federal Physician Sunshine Act, which requires certain manufacturers of drugs, biologicals, and medical devices or supplies that require premarket approval by or notification to the FDA, and for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, to report annually to the CMS information related to (i) payments and other transfers of value to physicians and teaching hospitals, and (ii) ownership and investment interests held by physicians and their immediate family members. Applicable manufacturers are required to submit annual reports to CMS. Failure to submit required information may result in civil monetary penalties for all payments, transfers of value or ownership or investment interests that are not timely, accurately, and completely reported in an annual submission, and may result in liability under other federal laws or regulations. Certain states also mandate implementation of commercial compliance programs, impose restrictions on device manufacturer marketing practices and/or require the tracking and reporting of gifts, compensation and other remuneration to healthcare professionals and entities.

In addition, we may be subject to, or our marketing activities may be limited by, data privacy and security regulation by both the federal government and the states in which we conduct our business. For example, the Health Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”), and its implementing regulations established uniform federal standards for certain “covered entities” (healthcare providers, health plans and healthcare clearinghouses) governing the conduct of certain electronic healthcare transactions and protecting the security and privacy of protected health information. The American Recovery and Reinvestment Act of 2009, commonly referred to as the economic stimulus package, included expansion of HIPAA’s privacy and security standards called the Health Information Technology for Economic Clinical Health Act (“HITECH”). Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable to “business associates”— independent contractors or agents of covered entities that create, receive, maintain, or transmit protected health information in connection with providing a service for or on behalf of a covered entity. HITECH also increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons.

Also, many U.S. states and countries outside the U.S. have similar fraud and abuse statutes or regulations that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under government programs.

Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, it is possible that some of our business activities could be subject to challenge under one or more of such laws. If our operations are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including criminal and significant civil monetary penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government healthcare programs, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, private qui tam actions brought by individual whistleblowers in the name of the government or refusal to allow us to enter into supply contracts, including government contracts, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. We may also be subject to additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement with a governmental entity to resolve allegations that we have violated these laws. To the extent that any of our products are sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post-approval requirements, including safety surveillance, anti-fraud and abuse laws, and implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare professionals.

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As stated above, in addition to regulatory requirements in the United States, Health Canada, and comparable agencies in other foreign countries impose requirements upon the design, development, manufacturing, marketing and distribution of medical devices. The applicable regulations require clearance or approval before the devices can be sold, and after the applicable approvals are granted, the regulatory agencies generally require companies to comply with quality system requirements and maintain annual registrations. In addition, the regulations governing medical devices vary from country to country and continue to evolve.

Employees

As of December 31, 2018, we had 25 employees supporting our CRH O’Regan business, CRH Anesthesia Management LLC and corporate operations. In addition, we have 112 employed anesthesia providers, including 87 full-time, 25 part-time, and relationships with 234 independent contractors and other third party providers in connection with the Company’s anesthesia services business. None of our employees are represented by a labor organization or covered by a collective bargaining arrangement. We consider our relationship with our employees and independent contractors to be excellent.

Corporate Structure

CRH was incorporated under the name Medsurge Medical Products Corp. on April 12, 2001 by registration of a Memorandum and Articles pursuant to the Company Act (British Columbia). The Company transitioned under the Business Corporations Act (British Columbia) on March 15, 2005 and changed its name to CRH Medical Corporation on April 28, 2006.

The registered and records offices of the Company are located at Suite 2600, 595 Burrard Street, Three Bentall Center, Vancouver, British Columbia, V7X 1L3, and its head office and principal place of business is located at Suite 578 – 999 Canada Place, World Trade Center, Vancouver, British Columbia, V6C 3E1, telephone (604) 633-1440, facsimile (604) 633-1443.

The Company has the following wholly-owned subsidiaries:

Subsidiary	Interest	Date of Incorporation	Jurisdiction of Incorporation
CRH Medical Corporation	100%	May 20, 2005	Delaware, U.S.
CRH Anesthesia Management LLC	100%	November 12, 2014	Delaware, U.S.
Gastroenterology Anesthesia Associates LLC (“GAA”) (1)	—	June 12, 2012	Georgia, U.S.
NC GAA, PC (“NC GAA”) (1)	—	March 18, 2015	North Carolina, U.S.
CRH GAA PLLC (“CRH GAA”) (1)	—	April 11, 2016	Texas, U.S.
CRH Anesthesia of Gainesville LLC	100%	October 31, 2014(2)	Florida, U.S.
CRH Anesthesia of Florida LLC	100%	April 7, 2014(2)	Florida, U.S.
CRH Anesthesia of Cape Coral LLC	100%	Jul 20, 2015	Florida, U.S.
CRH Anesthesia of Knoxville LLC	100%	August 14, 2015	Tennessee, U.S.
CRH Anesthesia of Colorado, LLC	100%	March 9, 2016(3)	Delaware, U.S.
Alamo Sedation Associates LLC	100%	August 17, 2017	Texas, U.S.
Shreveport Sedation Associates, LLC	100%	March 19, 2018	Louisiana, U.S.
CRH Anesthesia of Ohio, LLC	100%	March 23, 2018	Delaware, U.S.
CRH GAA of Washington, PLLC (“CRH GAAW”) (1)	—	July 3, 2018	Washington, U.S.
Lake Erie Sedation Associates, LLC	100%	September 4, 2018	Ohio, U.S.

(1) The shares of GAA, NC GAA, CRH GAA, and CRH GAAW are owned by individual medical practitioners. The operations and corporate structure of these subsidiaries are governed by certain agreements, including loans by CRH Medical Corporation (Delaware) to the individual medical practitioners. These agreements, including the affirmative and negative covenants therein in favour of CRH, effectively provide CRH control of GAA, NC GAA CRH GAA, and CRH GAAW.

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(2) On February 23, 2015, IPS of Gainesville, LLC changed its name to CRH Anesthesia of Gainesville LLC. On February 12, 2015, Coastal Anesthesia Providers, LLC changed its name to CRH Anesthesia of Sarasota LLC. Subsequently, its name was changed to CRH Anesthesia of Florida LLC.

(3) On June 23, 2017, CRH Anesthesia of Arapahoe LLC changed its name to CRH Anesthesia of Colorado, LLC

The Company also holds ownership interests in the following subsidiaries:

Subsidiary	Interest  (1)	Date of Incorporation	Jurisdiction of Incorporation
Macon Gastroenterology Anesthesia Associates LLC (“MGAA”)	65%	November 30, 2015	Georgia, U.S.
Knoxville Gastroenterology Anesthesia Associates LLC (“KGAA”)	51%	July 29, 2015	Tennessee, U.S.
Austin Gastroenterology Anesthesia Associates PLLC (“AGAA”)	51%	April 11, 2016	Texas, U.S.
Greater Boston Anesthesia Associates, PLLC (“GBAA”) (2)	65%	October 4, 2017	Massachusetts, U.S.
Arapahoe Gastroenterology Anesthesia LLC (“AGA”)	51%	March 8, 2016	Delaware, U.S.
Osceola Gastroenterology Anesthesia Associates LLC (“OGAA”)	60%	January 12, 2017	Florida, U.S.
DDAB LLC (“DDAB”)	51%	November 4, 2015	Georgia, U.S.
West Florida Anesthesia Associates LLC (“WFAA”)	55%	June 14, 2017	Florida, U.S.
Central Colorado Anesthesia Associates LLC (“CCAA”)	51%	June 16, 2017	Colorado, U.S.
Raleigh Sedation Associates LLC (“RSA”)	51%	August 29, 2017	North Carolina, U.S.
Western Ohio Sedation Associates, LLC (“WOSA”)	51%	March 19, 2018	Ohio, U.S.
Lake Washington Anesthesia Associates, PLLC (“LWA”)	51%	March 8, 2017	Washington , U.S.
Tennessee Valley Anesthesia Associates, LLC (“TVAA”)	51%	November 2, 2018	Tennessee, U.S.
Triad Sedation Associates, LLC (“TSA”)	15%	September 26, 2018	North Carolina, U.S.

(1) As a result of the operating agreements for the above entities, the Company controls MGAA, KGAA, AGAA, GBAA, AGA, OGAA, DDAB, WFAA, CCAA, RSA, WOSA, LWA, and TVAA. The Company does not control TSA.

(2) On January 1, 2018, we filed a Certificate of Amendment with the Secretary of the Commonwealth of Massachusetts to change the name of Community Anesthesia, PLLC to Greater Boston Anesthesia Associates, PLLC. It remains the same legal entity for purposes of CRH’s agreements with the endoscopy centers serviced by Community Anesthesia, PLLC.

Available Information

This Annual Report on Form 10-K and our future quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to these reports are filed, or will be filed, as appropriate, with the U.S. Securities and Exchange Commission (“SEC”) and the Canadian Securities Administrators (“CSA”). These reports are available free of charge on our website, www.crhmedcorp.com, as soon as reasonably practicable after we electronically file such reports with or furnish such reports to the SEC and the CSA. Information contained on, or accessible through, our website is not a part of this Annual Report on Form 10-K, and the inclusion of our website address in this document is an inactive textual reference.

Additionally, our filings with the SEC may be accessed through the SEC’s website at www.sec.gov and our filings with the CSA may be accessed through the CSA’s System for Electronic Document Analysis and

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Retrieval (“SEDAR”) at www.sedar.com. Our reports can also be read and copied by the public at the SEC’s Public Reference Room at 100 F Street, NE., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

Item 1A. Risk Factors

You should consider carefully the following risk factors, as well as the other information in this Annual Report on Form 10-K, including our consolidated financial statements and notes thereto. If any of the following risks actually occur, our business, financial conditions, results of operations and prospects could be materially adversely affected. This Annual Report on Form 10-K also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described below. See “Cautionary Note Regarding Forward-Looking Statements.” The risks below are not the only risks facing our company. Risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, results of operations, and / or prospects.

Risks Related to Our Company

We may or may not successfully identify and complete corporate transactions on favorable terms or achieve anticipated synergies relating to any acquisitions or alliances, and such acquisitions could result in unforeseen operating difficulties and expenditures, or require significant management resources and significant charges.

As a part of our growth strategy, we regularly explore potential acquisitions of complementary businesses, technologies, services or products as well as potential strategic alliances. We may be unable to find suitable acquisition candidates or appropriate partners with which to form alliances. Even if we identify appropriate acquisition or alliance candidates, we may be unable to complete the acquisitions or alliances on favorable terms, if at all, as a result of changes in tax laws, healthcare regulations, financial market, or other economic or market conditions. Acquisition activities can be thwarted by overtures from competitors for the targeted candidates, government regulation and replacement product developments in our industry. Competition may intensify due to the ongoing consolidation in the healthcare industry, which may increase our acquisition costs. In addition, the process of integrating an acquired business, technology, service or product into our existing operations could result in unforeseen difficulties and expenditures. Integrating completed acquisitions into our existing operations involves numerous short-term and long-term risks, including diversion of our management’s attention, failure to retain key personnel, long-term value of acquired intangible assets and acquisition expenses. In addition, we may be required to comply with laws, rules and regulations that may differ from those of the states in which our operations are currently conducted. Moreover, we may not realize the anticipated financial or other benefits of an acquisition or alliance.

Future acquisitions could also involve the issuance of equity securities, the incurrence of debt, contingent liabilities or amortization of expenses related to other intangible assets, any of which could adversely impact our financial condition or results of operations. The issuance of shares for an acquisition may result in dilution to our existing shareholders and, depending on the number of shares that we issue, the resale of such shares could affect the trading price of our common shares. In addition, equity or debt financing required for such acquisitions may not be available.

Any corporate transaction will be accompanied by certain risks including but not limited to:

• exposure to unknown liabilities of acquired companies and the unknown issues with any associated technologies or research. Such liabilities may include liabilities for failure to comply with applicable laws, or liabilities relating to medical malpractice claims. Generally, we obtain indemnification agreements from the sellers of businesses acquired with respect to pre-closing acts, omissions and other

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similar risks. It is possible that we may seek to enforce indemnification provisions in the future against sellers who may no longer have the financial wherewithal to satisfy their obligations to us. Accordingly, we may incur material liabilities for past activities of acquired businesses;

• certain acquired businesses may derive a greater portion of their revenue from government health programs than what we recognize on a consolidated basis, or may have business models with lower operating margins than ours, which could affect our overall payor mix or operating results in future periods;

• higher than anticipated acquisition costs and expenses;

• the difficulty and expense of integrating operations, systems, and personnel of acquired companies;

• disruption of our ongoing business;

• uncertainty that an acquired business will continue to maintain its pre-acquisition revenue and growth rates, or be profitable;

• inability to retain key customers, vendors, and other business partners of the acquired company;

• diversion of management’s time and attention;

• the realization of financial and operating risks not fully anticipated; and

• potential challenges under antitrust laws, either before or after an acquisition is consummated, which could involve substantial legal costs and result in the Company having to abandon the transaction or make a divestiture.

We may not be able to successfully overcome these risks and other problems associated with acquisitions and this may adversely affect our business, financial condition or results of operations.

If we are unable to manage growth, we may be unable to achieve our expansion strategy.

The success of our business strategy depends in part on our ability to expand our operations in the future. Our growth has placed, and will continue to place, increased demands on our management, operational and financial information systems, and other resources. Further expansion of our operations may require substantial financial resources and management attention.

To accommodate our past and anticipated future growth, and to compete effectively, we will need to continue to improve our management, to implement our operational and financial information systems, and to expand, train, manage, and motivate our workforce. Our personnel, systems, procedures, or controls may not be adequate to support our operations in the future. Further, focusing our financial resources and diverting management’s attention to the expansion of our operations may negatively impact our financial results. Any failure to improve our management, to implement our operational and financial information systems, or to expand, train, manage, or motivate our workforce may reduce or prevent our growth.

Our senior management has been key to our growth, and we may be adversely affected if we lose any member of our senior management.

The Company is dependent on its senior management. Consequently, our ability to retain these individuals and attract other qualified individuals is critical to our success. In addition, because of a relative scarcity of individuals with the high degree of education and business experience required for our business, competition

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among companies for qualified employees is intense and, as a result, we may not be able to attract and retain such individuals on acceptable terms, or at all. The loss of key management personnel or our inability to attract, retain, and motivate sufficient numbers of qualified management personnel could have a material adverse effect on the Company.

Incentive provisions for our key executives include the granting of equity-based compensation that vest over time or are based on performance and are designed to encourage such individuals to stay with us. However, a low share price, whether as a result of disappointing growth, revenues, income, or as a result of market conditions generally, could render such agreements of little value to our key executives. In such event, our key executives could be susceptible to being hired away by our competitors or other businesses who could offer a better compensation package. If we are unable to attract and retain key personnel, our business, financial condition, and results of operations may be adversely affected.

Changes to payment rates or methods of third-party payors, including United States government healthcare programs, changes to the United States laws and regulations that regulate payments for medical services, the failure of payment rates to increase as our costs increase, or changes to our payor mix, could adversely affect our operating margins and revenues.

We provide anesthesia services primarily through fee for service payor arrangements. Under these arrangements, we collect fees directly through the entities at which anesthesia services are provided. We assume financial risks related to changes in third-party reimbursement rates and changes in payor mix. Our revenue decreases if our volume or reimbursement decreases, but our expenses may not decrease proportionately.

We depend primarily on U.S. government, third party commercial and private and governmental third-party sources of payment for the services provided to patients. The amount we receive for our services may be adversely affected by market and cost factors, as well as other factors over which we have no control, including changes to the Medicare and Medicaid payment systems. U.S. health reform efforts at the federal and state levels may increase the likelihood of significant changes affecting U.S. government healthcare programs and private insurance coverage. U.S. Government healthcare programs are subject to, among other things, statutory and regulatory changes, administrative rulings, interpretations and determinations concerning patient eligibility requirements, funding levels and the method of calculating payments or reimbursements, all of which could materially increase or decrease payments we receive from these government programs. Further, Medicare reimbursement rates are increasingly used by private payors as benchmarks to establish commercial reimbursement rates and any adjustment in Medicare reimbursement rates or formulas may impact our reimbursement rates from such private payors as well.

As the Medicare program transitions away from fee for service payment models and toward value-based payment methodologies, we may be required to make additional investments to receive maximum Medicare reimbursement. For example, the Medicare Physician Quality Reporting System provides additional Medicare compensation to physicians who implement and report certain quality measures. Further, the Medicare Access and CHIP Reauthorization Act of 2015 requires the establishment of the Merit-Based Incentive Payment System under which, beginning in 2019, providers receive payment incentives or reductions based on their performance with respect to clinical quality, resource use, clinical improvement activities, and meaningful use of electronic health records.

There are significant private and public sector pressures to reign in healthcare costs and to lower reimbursement rates for medical services, and we believe that such pressures will continue. Major payors of healthcare, including U.S. federal and state governments and private insurers, have taken steps in recent years to monitor and control costs, eligibility for, and use and delivery of healthcare services, and to revise payment methodologies. Further, the ability of commercial payors to control healthcare costs may be enhanced by the increasing consolidation of insurance and managed care companies, and the incursion of other private companies into the healthcare industry, all of which may reduce our ability to negotiate favorable contracts with such payors.

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We expect efforts to impose greater discounts and more stringent cost controls by government and other payors to continue, thereby reducing the payments we receive for our services. The effect of cost containment trends will depend, in part, on our payor mix. We may not be able to offset reduced operating margins through cost reductions, increased volumes, the introduction of additional procedures or otherwise. In addition, future changes to reimbursement rates by government healthcare programs, cost containment measures by private third-party payors or other factors affecting payments for healthcare services may adversely affect our future revenues, operating margins, and profitability.

We are subject to decreases in our revenue and profit margin under our fee for service contracts and arrangements, where we bear the risk of changes in volume, payor mix, radiology, anesthesiology, and pathology benefits, and third-party reimbursement rates.

In our fee for service arrangements, which represent substantially all of our revenues, we collect the fees for services. Under these arrangements, we assume financial risks related to changes in the mix of patients covered by government-sponsored healthcare programs and third-party reimbursement rates. A substantial decrease in patient volumes, or an increase in the number of patients covered by government healthcare programs, as opposed to commercial plans that have higher reimbursement levels, or any potential shift in reimbursement mix could reduce our profitability and adversely impact future revenue growth. In some cases, our revenue decreases if our volume or reimbursement decreases, but our expenses may not decrease proportionately.

We operate a large number of anesthesia entities in many different markets. Each entity has a different mix of contracted and non-contracted relationships with commercial payors. In cases where our providers are not contracted, most payors have radiology, anesthesiology, and pathology provisions that limits the amount payable by patients when a non-contracted provider is utilized. In most cases, reimbursements we receive for anesthesia services are greater when we are non-contracted than they would be if we were contracted. As our anesthesia entities mature, we may choose or be required to enter into contracts with a majority of existing commercial payors which may result in decreased revenue, but our expenses may not decrease proportionately. Payors may also change the amount reimbursed for non-contracted providers which may also result in decreased revenue, but our expenses may not decrease proportionately

ASCs or other customers may terminate or choose not to renew their agreements with us.

Our professional service agreements with our partner ASCs currently range in duration from one year to 15 years and can be renewed if agreed upon by both parties and contain auto-renewal features. To date, with the exception of a contract in Sarasota, Florida, which was terminated as a result of an ASC closing and NC GAA contracts that the Company chose not to renew, all other professional service agreements have been renewed as required. Our contract with GAA-affiliated ASCs, currently our largest customer contributing 20% of our total revenue in 2018 and 27% of our total revenue in 2017, requires renewal by November 2021.

Our customers may cancel or choose not to renew their contracts with us. Changes in economic conditions, including decreased government and commercial reimbursement, hospital acquisition of ASCs for physician practices, or changes in the state or federal regulatory environment could influence future actions of our partners or other customers. To the extent that any significant agreement or agreements with our partners or other customers are canceled, or are not renewed or replaced with other arrangements having at least as favorable terms, our business, financial condition and results of operations could be materially adversely affected.

We may be unable to enforce the non-competition and other restrictive covenants in our agreements.

As a material term and condition of each anesthesia medical practice acquisition, the sellers and owners enter into a restrictive covenant in favor of our purchasing entity, whereby the sellers and owners agree not compete in a specific restricted territory (the “Restrictive Covenants”). The restricted territory varies based upon the jurisdiction where the anesthesia medical practice is located. The length of the restricted period also varies based

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upon the jurisdiction where the anesthesia medical practice is located. If the sellers and owners, individually or collectively, breach the Restrictive Covenants, the definitive purchase agreements provide us with the remedies of injunctive relief and liquidated damages based upon a negotiated, predetermined estimate of damages. Additionally, we have negotiated additional special covenants, which vary from transaction to transaction, that provide us with the remedy of liquidated damages based upon a negotiated, predetermined estimate of damages. If a court determines that such liquidated damages are unenforceable as a penalty, as a result of such determination our business, financial condition and results of operations could be adversely affected.

The law governing non-competition agreements and other forms of restrictive covenants varies from jurisdiction to jurisdiction. Although we believe that the Restrictive Covenants applicable to our anesthesiologists, contractors, and other business partners are reasonable in scope and duration and therefore enforceable under applicable law, courts and arbitrators in some jurisdictions are reluctant to strictly enforce non-competition agreements and restrictive covenants. If we are unable to enforce the Restrictive Covenants in these agreements, our business, financial condition, results of operations and cash flows could be materially adversely affected. We cannot predict whether a court or arbitration panel would enforce these Restrictive Covenants.

We may need to raise additional capital to fund future operations.

The Company became profitable in the first quarter of 2011, which was consistent with the Company’s new business development strategy introduced in the fourth quarter of 2010 to focus exclusively on selling its CRH O’Regan System directly to physicians. With the GAA acquisition in the fourth quarter of 2014, the Company altered its business strategy further to provide anesthesia services in addition to its existing medical product.

Based on our current cash resources, estimated capital requirements and anticipated revenues, we expect that we can maintain current operations. There can be no assurance that unforeseen developments or circumstances will not alter our requirements for capital. Any additional equity financing would be dilutive to our shareholders. If access to sufficient capital is not available as and when needed, our business may be impaired.

Advancing our product and current business operations, market expansion of our currently marketed product or growth of our anesthesia services, service of our debt, or acquisition and development of any new products, businesses or operations will require considerable resources and additional access to capital markets. In addition, our future cash requirements may vary materially from those now expected. For example, our future capital requirements may increase if:

• we experience more competition from other companies or in more markets than anticipated;

• we experience delays or unexpected increases in costs in connection with maintaining regulatory approvals for our product or services in the various markets where we sell our product and provide our services;

• we experience unexpected or increased costs relating to preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, or other lawsuits, brought by either us or our competition;

• we elect to raise additional capital in order to service or repay all or a portion of our outstanding debt;

• we elect to develop, acquire or license new technologies, products or businesses; or

• we are presented with suitable opportunities and elect to accelerate the pace of our continued growth strategy.

We could potentially seek additional funding through public or private equity or debt financing, corporate collaborations or through other transactions. However, if revenues are slow to increase or if industry and capital

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market conditions in general are unfavorable, our ability to obtain significant additional funding on acceptable terms, if at all, will be negatively affected. Additional financing that we may pursue may involve the sale of our common shares or financial instruments that are exchangeable for, or convertible into, our common shares, which could result in significant dilution to our shareholders.

If sufficient capital is not available, we may be required to delay or alter our current operations or our business expansion, either of which could have a material adverse effect on our business, financial condition, prospects or results of operations.

We are subject to various restrictive covenants and events of default under the Credit Facilities.

Under the Company’s credit facilities with the Bank of Nova Scotia, syndicated with JP Morgan and US Bank (the “Credit Facilities”), the Company has made various restrictive covenants to the lenders, including payment of interest and principal when due. The Credit Facilities are available for review on SEDAR at www.sedar.com and on the SEC’s website at www.sec.gov.

If there is an event of default under either of these agreements, the principal amount owing under the Credit Facilities, plus accrued and unpaid interest, may be declared immediately due and payable. If such an event occurs, it could have a material negative impact on the Company financially. Any extended default under the Credit Facilities, could result in the loss of the Company’s entire business.

In addition, the Credit Facilities include various conditions and covenants that require CRH to obtain consents prior to carrying out certain activities and entering into certain transactions, such as incurring additional debt, repurchasing common shares of the Company, creating additional charges on the Company’s assets, and providing additional guarantees or disposing of certain assets. As a result of the restrictive covenants or other terms of any existing or new loan or other financing agreements, the Company may be significantly restricted in its ability to raise additional capital through bank borrowings and to engage in some transactions that CRH expects to be of benefit to the Company. The inability to meet these conditions and covenants or obtain lenders’ consent to carry out restricted activities could materially and adversely affect the business and results of operations of CRH.

We are exposed to market risk related to changes in interest rates. Our earnings are affected by changes in short-term interest rates as a result of borrowings under the Credit Facilities. As a result, if interest rates rise, our cost of borrowing will increase, negatively impacting our earnings.

Despite current indebtedness levels, we may still be able to incur substantially more debt, which could further exacerbate the risks associated with increased leverage.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. Although our Credit Facilities contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. If we incur additional debt above the levels currently in effect, the risks associated with our leverage, including those described above, would increase.

Our common shares may be subject to significant price and volume fluctuations.

The Company’s common shares trade on the Toronto Stock Exchange (“TSX”) and on the NYSE American. Public markets, from time to time, experience significant price and volume fluctuations unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the market price of the common shares of the Company. In addition, the market price of the common shares is likely to be highly volatile. Moreover, it is likely that during future quarterly periods, the Company’s results and operations may fluctuate significantly or may fail to meet the expectations of stock market analysts and investors and, in such event, the market price of the common shares could be materially adversely affected. In the past, securities class

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action litigation or shareholder activism has often been initiated following periods of volatility in the market price of a company’s securities. Such litigation or shareholder activism, if brought against the Company, could result in substantial costs and a diversion of management’s attention and resources, which could have a material adverse effect on the Company’s business, financial condition and results of operations.

We may write-off intangible assets.

The carrying value of our intangible assets is subject to periodic impairment testing. Under current accounting standards, intangible assets are tested for impairment on a recurring basis and we may be subject to impairment losses as circumstances change after an acquisition. If we record an impairment loss related to our intangible assets, which results from the anesthesia contracts that we acquire or other significant intangible assets, it could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.

If we are unable to maintain or increase anesthesia procedure volumes at our existing ASCs, the operating margins and profitability of our anesthesia segment could be adversely affected.

Part of our growth strategy for our anesthesia services segment includes increasing our revenues and earnings through increasing the number of procedures performed at the ASCs we service. Procedure volume at the ASCs we serve may be adversely impacted by economic conditions, high unemployment rates, natural disasters, physicians who no longer utilize the ASCs we serve, and other factors that may cause patients to delay or cancel procedures. There are no assurances that we will be successful at increasing or maintaining procedure volumes, revenues and operating margins at our ASCs.

We may not be able to successfully recruit and retain qualified anesthesiologists or other independent contractors.

The healthcare business is highly competitive. We compete with other healthcare providers, primarily hospitals and other surgery centers in recruiting and retaining a sufficient number of anesthetists and anesthesiologists to perform our services operations. We compete with many types of healthcare providers including teaching, research, and government institutions and other practice groups for the services of qualified anesthesiologists.

Some of our competitors may have greater resources than we do, including financial, marketing, staff and capital resources. We may not be able to continue to recruit new anesthesiologists or renew contracts with existing contractors on acceptable terms. If we are not able to do so, our ability to provide anesthesia services and generate revenue and net income could be adversely affected.

Adverse events related to our product or our services may subject us to risks associated with product liability, medical malpractice or other legal claims, insurance claims, product recalls and other liabilities, which may adversely affect our operations.

There is an inherent risk in rubber band ligation of hemorrhoids and in the use of anesthesia services of the occurrence of an adverse event. One example of such an event is that in rare cases rubber band ligation of hemorrhoids can lead to sepsis, which if left untreated, can result in serious medical consequences, including death. Examples of adverse events related to anesthesia include anaphylaxis, nerve damage and embolism, which can result in serious medical consequences and in rare circumstances, can lead to death. Such adverse events could have material adverse consequences on our sales, business, operations and financial performance.

The occurrence of unanticipated serious adverse events or other safety problems could cause the governing agencies to impose significant restrictions on the indicated uses for which our product and services may be marketed, the distribution or sale of the product, or the provision of our services. In addition, post-market discovery of previously unknown safety problems or increased severity or significance of a pre-existing safety signal could result in withdrawal of the product from the market, product recalls or other material adverse effects on our operations.

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We may be held liable or incur costs to settle liability claims if our product, services or contracted anesthesiologists cause injury. Although we currently maintain product liability and medical malpractice insurance, we cannot assure you that this insurance is adequate, and, at any time, it is possible that such insurance coverage may cease to be available on commercially reasonable terms, or at all. A product liability or medical malpractice claim, or a claim based in related legal theories of negligence or vicarious liability among others, could result in liability to us greater than our total assets or insurance coverage. Moreover, product liability, medical malpractice or other claims could have an adverse impact on our business even if we have adequate insurance coverage.

Our product and services may also fail to meet patient expectations or produce harmful side effects. Such unexpected quality, safety or efficacy issues may be caused by a number of factors, including manufacturing defects, failure to adhere to good clinical practices, failure to adhere to good manufacturing practices, non-compliance with clinical protocols or the presence of other inadequacies of product-related information conveyed to physicians or patients, or other factors or circumstances unique to the patient. Whether or not scientifically justified, such unexpected safety or efficacy concerns can arise and may lead to product recalls, loss of or delays in market acceptance, market withdrawals, or declining sales, as well as liability, consumer fraud and/or other claims.

It is impossible to predict the scope of injury or liability from such defects, adverse events or unexpected reactions, the impact on the market for such products and services of any allegations of these claims, even if unsupported, the measure of damages which might be imposed as a result of any claims, or the cost of defending such claims. Substantial damages, awards and/or settlements have been handed down, notably in the United States and other common law jurisdictions, against medical companies in connection with claims for injuries allegedly caused by the use of their products and services. Although our shareholders would not have personal liability for such damages, the expenses of litigation or settlements, or both, in connection with any such injuries or alleged injuries and the amount of any award imposed on us in excess of existing insurance coverage, if any, may have a material adverse impact on us and on the price of our common shares. In addition, we may not be able to avoid significant liability exposure even if we take appropriate precautions, including maintaining liability coverage (subject to deductibles and maximum payouts). Any liability that we may have as a result could have a material adverse effect on our business, financial condition and results of operations. Liability claims in the future, regardless of their ultimate outcome, could have a material adverse effect on our reputation and on our ability to attract and retain customers.

The Affordable Care Act (“ACA”) and potential changes to it may have a significant effect on our business.

The ACA contains a number of provisions that have affected us and may continue to affect us over the next several years. These provisions include the establishment of health insurance exchanges to facilitate the purchase of qualified health plans, expanded Medicaid eligibility, subsidized insurance premiums and additional requirements and incentives for businesses to provide healthcare benefits. Moreover, we could be affected by potential changes to various aspects of the ACA, including subsidies, healthcare insurance marketplaces and Medicaid expansion.

The ACA remains subject to continuing legislative and administrative flux and uncertainty. In 2017, Congress unsuccessfully sought to replace substantial parts of the ACA with different mechanisms for facilitating insurance coverage in the commercial and Medicaid markets. Additionally, CMS has administratively revised a number of provisions and may seek to advance additional significant changes through regulation, guidance and enforcement in the future. At the end of 2017, Congress repealed part of the ACA that required most individuals to purchase and maintain health insurance or face a tax penalty, known as the individual mandate. In December 2018, a federal judge in Texas declared that key portions of the ACA were inconsistent with the United States Constitution and pacifically that the ACA cannot stand on its own since Congress repealed the individual mandate. Several states are now engaged in appealing this decision. It is possible that as a result of these actions, enrollment in healthcare exchanges declined during 2018.

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If the ACA is repealed or further substantially modified, or if implementation of certain aspects of the ACA are diluted or delayed, such repeal, modification or delay may impact our business, financial condition, results of operations, cash flows and the trading price of our securities. We are unable to predict the impact of any repeal, modification or delay in the implementation of the ACA, including the repeal of the individual mandate, on us at this time.

The Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) and potential changes to it may have a significant effect on our business.

MACRA contains numerous measures that could affect us, including, requirements that providers participate in quality measurement programs that differentiate payments to providers under Medicare based on quality and cost of care, rather than the quantity of procedures performed. MACRA requires providers to choose to participate in one of two payment formulas, MIPS or Alternative Payment Models (“APMs”). Beginning in 2019, MIPS will allow eligible providers to receive incentive payments based on the achievement of certain quality and cost metrics, among other measures, and be reduced for those who are underperforming against those same metrics and measures. As an alternative, providers can choose to participate in an Advanced APMs, and providers who are meaningful participants in APMs will receive bonus payments from Medicare pursuant to the law. MACRA also remains subject to review and potential modification by Congress, as well as shifting regulatory requirements established by CMS. We currently anticipate that our affiliated providers will be eligible to receive bonus payments in 2019 through participation in the MIPS, although the amounts of such bonus payments are not expected to be material. We will continue to operationalize the provisions of MACRA and assess any further changes to the law or additional regulations enacted pursuant to the law.

We cannot ultimately predict with any assurance the ultimate effect of these laws and resulting changes to payments under GHC Programs, nor can we provide any assurance that they will not have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. Further, any fiscal tightening impacting GHC Programs or changes to the structure of any GHC Programs could have a material adverse effect on our financial condition, results of operations, cash flows and the trading price of our securities.

Failure to manage third-party service providers may adversely affect our ability to maintain the quality of service that we provide.

We outsource a majority of our revenue cycle management functions to a third-party service provider. If our outsourcing partner fails to perform their obligations in a timely manner or at satisfactory quality levels, or if they are unable to attract or retain sufficient personnel with the necessary skill sets to meet our needs, the quality of our services and operations could suffer. In addition, our reliance on a workforce of others exposes us to disruptions in their business. Our ability to manage any difficulties encountered could be largely outside of our control. Diminished service quality from outsourcing or our inability to utilize service providers could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.

Income tax audits and changes in our effective income tax rate could affect our results of operations.

Our effective tax rate could be adversely affected by changes in the mix of earnings and losses in countries with differing statutory tax rates, certain non-deductible expenses arising from stock option compensation, the valuation of deferred tax assets and liabilities and changes in federal, state or provincial tax laws and accounting principles. Increases in our effective tax rate could materially affect our net results.

In addition, we are subject to income tax audits by many tax jurisdictions. Although we believe our income tax liabilities are reasonably estimated and accounted for in accordance with applicable laws and principles, an adverse resolution of one or more uncertain tax positions in any period could have a material impact on the results of operations for that period.

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Our dependence on suppliers could have a material adverse effect on our business, financial condition and results of operations.

The Company is economically dependent on one critical supplier for the CRH O’Regan System. The supplier, a clean room injection molding manufacturing company based in Ontario, Canada, performs contract manufacturing and assembly for the Company. Currently, the Company has one set of manufacturing molds for each product produced which is used for the injection molding, and these molds are inventoried at the supplier’s facility.

Manufacturing operations are subject to numerous unanticipated technological problems and delays. Our manufacturers are, and will be, subject to regulations specified by the various regulatory bodies such as Health Canada and the FDA. There can be no assurance that we will be able to comply with all stated manufacturing regulations. Failure or delay by our manufacturers to comply with such regulations or to satisfy regulatory inspections could have an adverse effect on the Company’s business and operations.

The Company’s anesthesia services are dependent on utilizing a continual supply of Propofol. CRH currently sources Propofol through supply agreements with narcotics manufacturers and its physicians and medical practitioners. A breach of any of these agreements, or a deterioration of the relationships with the parties thereto, could result in an interruption of the Company’s Propofol supply. Any interruption in the Company’s Propofol supply could have a material adverse effect on the Company’s anesthesia business and operations.

As the Company is dependent on a minimal number of suppliers for all manufacturing services and procurement of Propofol, any interruption caused by a business shutdown by the supplier (e.g., bankruptcy, fire or labor dispute) could be challenging for the Company. Although the Company mitigates these risks by maintaining open relationships with other suppliers that could perform similar services, maintaining an appropriate level of inventory, and performing quality and business audits of its suppliers on a regular basis, we cannot guarantee that we will be able to enter into new supply contracts, advantageous to us or at all, in the event of a shutdown. Any such shutdown may have a material adverse effect on our business, financial condition or results of operations.

Unfavorable economic conditions could have an adverse effect on our business.

Global economic conditions continue to be unpredictable and may result in slow economic growth and impact the number of unemployed and under-employed workers. We could experience additional shifts in the nature of patient reimbursement if economic conditions change. This may result in lower patient volumes.

Unfavorable economic conditions could also lead to additional increases in the number of unemployed and under-employed workers and decline in the number of private employers that offer healthcare insurance coverage to their employees. Employers that do offer healthcare coverage may increase the required contributions from employees to pay for their coverage and increase patient responsibility amounts. As a consequence the number of patients who participate in government-sponsored programs or are uninsured could increase. Payments received from government sponsored programs are substantially less than payments received from commercial and other third-party payors. A payor mix shift from commercial and other third-party payors to government payors may result in a decrease in our net revenue per patient case.

We may be subject to a variety of regulatory investigations, claims, lawsuits, and other proceedings.

Due to the nature of the Company’s business, including without limitation the Company’s public listing, operations in the medical industry, product and anesthesia services, the Company may be subject to a variety of regulatory investigations, claims, lawsuits and other proceedings in the ordinary course of its business. The results of these legal proceedings cannot be predicted with certainty due to the uncertainty inherent in litigation, including the effects of discovery of new evidence or advancement of new legal theories, the difficulty of predicting decisions of judges and juries and the possibility that decisions may be reversed on appeal. There can be no assurances that these matters will not have a material adverse effect on our business.

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If we are unable to adequately protect or enforce our intellectual property, our competitive position could be impaired.

Our commercial success and competitive position with the CRH O’Regan System are dependent in part upon our proprietary intellectual property, including our ability to:

• obtain patents and maintain their validity;

• protect our trade secrets; and

• effectively enforce our proprietary rights or patents against infringers.

Patent applications may not result in patents being issued. Until a patent is issued, the claims covered by the patent may be narrowed or removed entirely and therefore we may not obtain adequate patent protection. As a result, we may face unanticipated competition, or conclude that, without patent rights, the risk of bringing products to the market is too great. Any patents that we own may be challenged, invalidated or circumvented and may not provide us with protection against competitors. We may be forced to engage in costly and time-consuming litigation in order to protect our intellectual property rights. Patent rights may not provide us with adequate proprietary protection or competitive advantages against competitors with similar products or technologies. Patent rights are limited in time and have expiration dates. The laws of certain foreign countries do not protect our intellectual property rights to the same extent as do U.S. laws, and the scope of our patent claims also may vary between countries, as individual countries have distinctive patent laws.

In addition to patents, we rely on trade secrets and proprietary know-how. We seek protection, in part, through confidentiality and non-disclosure agreements. These agreements may not provide meaningful protection of our technology and operations model or adequate remedies in the event of unauthorized use or disclosure of confidential and proprietary information and, in any event, others may develop independently, or obtain access to, the same or similar information. Our failure or inability to protect our trade secrets and proprietary know-how could impair our competitive position.

We may spend significant resources to enforce our intellectual property rights and such enforcement could result in litigation. Intellectual property litigation is complex and can be expensive and time-consuming, and our efforts in this regard may not be successful. We also may not be able to detect infringement. In addition, competitors may design around our technology or develop competing technologies. Patent litigation can result in substantial cost and diversion of effort. Intellectual property protection may also be unavailable or limited in some foreign countries, enabling our competitors to capture increased market position. Patents issued to or licensed by us in the past or in the future may be challenged and held invalid. The invalidation of key intellectual property rights or an unsuccessful outcome in lawsuits filed to protect our intellectual property could have a material adverse effect on our financial condition, results of operations or prospects.

The success of our business depends in part on our ability to obtain and maintain intellectual property protection for our technology and know-how and operate without infringing the intellectual property rights of others. It is possible that as a result of future litigation our products currently marketed may be found to infringe or otherwise violate third party intellectual property rights.

The patent protection for our products may expire before we are able to maximize their commercial value, which may subject us to increased competition and reduce or eliminate our opportunity to generate revenues.

Our patents have varying expiration dates and, if these patents expire, we may be subject to increased competition, which could reduce or eliminate our opportunity to generate revenues or limit our ability to market our approved products. For example, our primary patents in the United States and Canada expired on March 8, 2016. Upon expiration of our patents, we may be subject to increased competition and our opportunity to

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establish or maintain product revenues could be substantially reduced or eliminated. Although we will continue to protect our proprietary rights through a variety of means, including the filing of three additional patents in September 2013 – one of which was issued in 2015, with a second one issued in 2016 – we cannot guarantee that the protective steps we have taken are adequate to protect these rights. In addition, as our patents expire, we may be unsuccessful in extending their protection through patent term extensions. The expiration of, or the failure to maintain or extend our patents could have a material adverse effect on our financial condition, results of operations or prospects.

The Company may not be successful in marketing its products and services.

In order to sustain and increase revenues, the Company’s products and services must achieve a significant degree of market acceptance. If the Company is unable to promote, market and sell its products and services or secure relationships with physicians and ambulatory surgery centers, the Company’s business, financial condition and results of operations would be materially adversely affected.

Levels of market acceptance for our products and services could be impacted by several factors, many of which are not within our control, including but not limited to:

• safety, efficacy, convenience and cost-effectiveness of our products and services;

• scope of approved uses and marketing approval;

• difficulty in, or excessive costs to, manufacturing;

• infringement or alleged infringement of the patents or intellectual property rights of others;

• maintenance of business arrangements with healthcare providers;

• availability of alternative products or services from our competitors; and

• acceptance of the price of our products and services.

If our competitors are able to develop and market products that are preferred over the CRH O’Regan System, are able to grow service businesses that are preferred over CRH’s anesthesia services or other businesses preferred over other products and services that we may develop, we may not be able to generate sufficient revenues to continue our operations.

We may not be able to contend successfully with competitors. The medical industry is highly competitive and subject to significant and rapid technological change as researchers learn more about diseases and develop new technologies, services and treatments. Certain of our competitors, either alone or together with their collaborators, have substantially greater resources than we do. The existence of other products, services or treatments of which we are not aware, or products, services or treatments that may be developed in the future, may reduce the marketability of the CRH O’Regan System, CRH’s anesthesia services, and any future operations, particularly to the extent such products or services:

• are more effective;

• have fewer or less severe adverse side effects;

• have better patient compliance;

• receive better reimbursement terms;

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• are accepted by more physicians;

• have better distribution channels;

• are easier to administer; or

• are less expensive.

Our anesthesia employees and third-party contractors may not appropriately record or document services that they provide.

Our anesthesia employees are responsible for appropriately recording and documenting the services they provide. We use this information to seek reimbursement for their services from third-party payors. In addition, we utilize third-party contractors to perform certain revenue cycle management functions for medical providers and payors, including medical coding and data reporting. If our employees and third-party contractors do not appropriately document, or where applicable, code for their services or our customers’ services, we could be subjected to administrative, regulatory, civil, or criminal investigations or sanctions and our business, financial condition, results of operations and cash flows could be materially adversely affected.

Failure to timely or accurately bill for services could have a negative impact on our net revenue, bad debt expense and cash flow.

Billing for healthcare services is an important and complex aspect of our business. We bill numerous and varied payors, such as managed care payors and Medicare Medicaid, and self-pay patients. These different payors typically have different billing requirements that must be satisfied prior to receiving payment for services rendered. Reimbursement is typically conditioned on our documenting medical necessity, the appropriate level of service and correctly applying diagnosis codes. Incorrect or incomplete documentation and billing information could result in non-payment for services rendered.

Additional factors that could complicate our ability to timely or accurately bill payors include:

• disputes between payors as to which party is responsible for payment;

• failure of information systems and processes to submit and collect claims in a timely manner;

• variation in coverage for similar services among various payors;

• our reliance on third-parties to provide billing services;

• the difficulty of adherence to specific compliance requirements, diagnosis coding and other procedures mandated by various payors;

• failure to obtain proper provider credentialing and documentation in order to bill various payors; and

• failure to collect patient balances due to economic conditions or other unknown reasons.

To the extent that the complexity associated with billing for healthcare services we provide causes delays in our cash collections, we may experience increased carrying costs associated with the aging of our accounts receivable, as well as increased potential for bad debt expense.

Our industry is already competitive and could become more competitive.

The healthcare industry is highly competitive and subject to continual changes in the methods by which services are provided and the manner in which healthcare providers are selected and compensated.

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Because some of our operations consist primarily of anesthesia services provided within ASCs, we compete with other healthcare services companies and physician groups for contracts with ASCs to provide our services to patients. Our anesthesia services are provided under exclusive professional service agreements of varying duration which we may need to renew, renegotiate or replace. Our ability to renew, renegotiate or replace significant agreements will be critical to our success. We also face competition from hospitals to provide our services.

Companies in other healthcare industry segments, some of which have greater financial and other resources than ours, may become competitors in providing gastroenterology services or anesthesia care. Additionally we face competition from healthcare-focused and other private equity groups that are active in acquiring and consolidating physician practices, including related ancillary services, such as GI anesthesia. We may not be able to continue to compete effectively in this industry and additional competitors may enter metropolitan areas where we operate. This increased competition may have a material adverse effect on our business, financial condition, results of operations and cash flows.

If there is a change in federal or state laws, rules, regulations, or in interpretations of such federal or state laws, rules or regulations, we may be required to redeem our physician partners’ ownership interests in anesthesia companies under the savings clause in our joint venture operating agreements.

The operating agreements with our physician partners contain a savings clause that is triggered upon an adverse governmental action, including a change in federal or state laws, rules or regulations or an interpretation of such federal or state laws, rules or regulations (each an “Adverse Governmental Action”). Upon the occurrence of an Adverse Governmental Action the savings clause will require divestiture of the physicians’ ownership in the anesthesia company and we would be required to redeem the physicians’ ownership interest. If an Adverse Governmental Action occurs under a particular state’s law, we would be required to redeem the ownership interests of each physician partner in such state. If an Adverse Governmental Action occurs under federal law, we would be required to redeem the ownership interest of each physician partner in the United States. The redemption price of each anesthesia company is based upon a predetermined multiple of such anesthesia company’s EBITDA, which reflects the fair market value of the redeemed interests. This could impact our cash flow during the redemption period. The redemption occurs over a period of four or five years depending on each applicable operating agreement.

Our failure to comply with U.S. federal and state fraud and abuse laws, including anti-kickback laws and other U.S. federal and state anti-referral laws, could have a material, adverse impact on our business.

There are numerous U.S. federal and state laws pertaining to healthcare fraud and abuse, including anti-kickback laws and physician self-referral laws. Our relationships with healthcare providers and other third parties are subject to scrutiny under these laws. Violations of these laws are punishable by criminal and civil sanctions, including, in some instances, imprisonment and exclusion from participation in federal and state healthcare programs, including the Medicare, Medicaid and Veterans Administration health programs.

Healthcare fraud and abuse regulations are complex, and even minor irregularities can potentially give rise to claims that a statute or prohibition has been violated. The laws that may affect our ability to operate include, among others:

• the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs

• the federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent;

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• HIPAA, as amended, among other things, prohibits executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

• federal physician self-referral law (the “Stark Law”), prohibits, subject to certain exceptions, physicians from making referrals of certain federal health care beneficiaries for a “designated health service” to an entity if the physician or an immediate family member has a financial relationship with the entity. Some of the services our affiliated physicians and professional groups provide include designated health services. foreign and U.S. state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; and

• foreign and U.S. state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.

To enforce compliance with the federal laws, the U.S. Department of Justice (the “DOJ”) has recently increased its scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Dealing with investigations can be time- and resource-consuming and can divert management’s attention from our core business. Additionally, if we settle an investigation with the DOJ or other law enforcement agencies, we may be forced to agree to additional onerous compliance and reporting requirements as part of a consent decree or corporate integrity agreement. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.

The scope and enforcement of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations. Federal or state regulatory authorities might challenge our current or future activities under these laws. Any of these challenges could have a material adverse effect on our reputation, business, financial condition and operating results. Any state or federal regulatory review of us, regardless of the outcome, would be costly and time-consuming. Additionally, we cannot predict the impact of any changes in these laws, whether or not retroactive.

Our employees and business partners may not appropriately secure and protect confidential information in their possession.

Each of our employees and business partners is responsible for the security of the information in our systems and to ensure that private and financial information is kept confidential. Should an employee or business partner not follow appropriate security measures, including those related to cyber threats or attacks, such non-compliance may result in the release of private or confidential financial information. The release of such information could have material adverse effect on our business, financial condition, results of operations and cash flows.

Failure to protect our information technology infrastructure against cyber-based attacks, network security breaches, service interruptions or data corruption could significantly disrupt our operations and adversely affect our business and operating results.

We rely extensively on information technology systems and telephone networks and systems, including the Internet, to process and transmit sensitive electronic information and to manage or support a variety of business processes and activities, including sales, billing, customer service, procurement and supply chain, manufacturing, and distribution. We use enterprise information technology systems to record, process, and summarize financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting, legal, and tax requirements. Our information technology systems, some of which are managed by third-parties, may be susceptible to damage, disruptions or shutdowns due to computer viruses, attacks by computer hackers, failures during the process of upgrading or replacing software, databases or components

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thereof, power outages, hardware failures, telecommunication failures, user errors or catastrophic events. Despite the precautionary measures we have taken to prevent breakdowns in our information technology and telephone systems, if our systems suffer severe damage or disruption or shutdown and we are unable to effectively resolve the issues in a timely manner, our business and operating results may suffer.

In addition, we accept payments for many of our sales through credit and debit card transactions, which are handled through a third-party payment processor. As a result, we are subject to a number of risks related to credit and debit card payments, including that we pay interchange and other fees, which may increase over time and could require us to either increase the prices we charge for our products or experience an increase in our costs and expenses. In addition, as part of the payment processing process, we transmit our patients’ and clinicians’ credit and debit card information to our third-party payment processor. We may in the future become subject to lawsuits or other proceedings for purportedly fraudulent transactions arising out of the actual or alleged theft of our patients’ credit or debit card information if the security of our third-party credit card payment processor is breached. We and our third-party credit card payment processor are also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we or our third-party credit card payment processor fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from our patients, and there may be an adverse impact on our business.

We may be subject to criminal or civil sanctions if we fail to comply with privacy regulations regarding the protection, use and disclosure of patient information.

The HIPAA Privacy Rule (the “Privacy Rule”) restricts the use and disclosure of patient information and requires entities to safeguard that information and to provide certain rights to individuals with respect to that information. The HIPAA Security Rule (the “Security Rule”) establishes elaborate requirements for safeguarding patient health information transmitted or stored electronically.

The Privacy Rule and Security Rule require the development and implementation of detailed policies, procedures, contracts and forms to assure compliance. We have implemented such compliance measures, but we may be required to make additional costly system purchases and modifications to comply with evolving HIPAA rules, and our failure to comply may result in liability and adversely affect our business.

New health information standards, whether implemented pursuant to HIPAA, congressional action or otherwise, could have a significant effect on the manner in which we must handle healthcare related data, and the cost of complying with standards could be significant. If we do not properly comply with existing or new laws and regulations related to patient health information, we could be subject to criminal or civil sanctions.

We have a legal responsibility to the minority owners of the entities through which we own our anesthesia services business, which may conflict with our interests and prevent us from acting solely in our own best interests.

As the owner of majority interests in the limited partnerships and limited liability companies that own our anesthesia service businesses, we owe a fiduciary duty to the non-controlling interest holders in these entities and may encounter conflicts between our interests and those of the minority holders. In these cases, our representatives on the governing board of each partnership or joint venture are obligated to exercise reasonable, good faith judgment to resolve the conflicts and may not be free to act solely in our own best interests. In our role as manager of the limited partnership or limited liability companies, we generally exercise our discretion in managing the business of our anesthesia practices. Disputes may arise between us and our physician partners regarding a particular business decision, or the interpretation of the provisions of the limited partnership agreement or limited liability company operating agreement. These agreements provide for arbitration as a dispute resolution process in some circumstances. There is no assurance that any possible dispute will be resolved amicably, or that any dispute resolution will be on terms satisfactory to us.

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A significant number of our affiliated physicians could leave our affiliated ASCs.

Our affiliated physicians may leave our affiliated ASCs for a variety of reasons, including retirement, death and to provide services for other types of healthcare providers, such as teaching, research and government institutions, hospitals and health systems and other practice groups. If a substantial number of our affiliated physicians leave our affiliated ASCs, our business, financial condition, results of operations and cash flows could be materially adversely affected.

If regulations or regulatory interpretations change, we may be obligated to re-negotiate agreements of our anesthetists, anesthesiologists or other contractors.

Due to regulations prohibiting the corporate practice of medicine, the shares of GAA, CRH GAA PLLC, W GAA and NC GAA, PC are owned by an individual medical practitioner. GAA, CRH GAA PLLC, W GAA and NC GAA, PC operations and corporate structures are governed by certain agreements, including a loan by CRH Medical Corporation to the individual medical practitioner. These agreements, including the affirmative and negative covenants therein in favour of CRH, effectively provide CRH control of GAA, CRH GAA PLLC, W GAA and NC GAA, PC. If certain regulations or regulatory interpretations change, particularly in relation to the medical practice and physician ownership, we will be obligated to adapt or re-negotiate our operating agreements to comply with such regulations. The cost of adapting or re-negotiating these agreements could be substantial. There can be no assurance, however, that our existing capital resources would be sufficient for us to meet any future obligations to adapt or re-negotiate our operating agreements, if they arise.

The re-negotiating of these agreements could have a material adverse effect on our financial condition and results of operations. While we believe physician ownership and our operating strategy is in compliance with applicable law, we can give no assurances that legislative or regulatory changes would not have an adverse impact on us. From time to time, these issues are considered by some state legislatures and federal and state regulatory agencies.

The continuing development of our products and provision of our services depends upon us maintaining strong relationships with physicians.

The marketing and sales of our products and services is dependent upon our maintaining working relationships with physicians. If we are unable to maintain our strong relationships with these professionals, the development and marketing of our products and services could suffer, which could have a material adverse effect on our consolidated earnings, financial condition, and/or cash flows.

We operate in an industry that is subject to extensive federal, state, and local regulation, and changes in law and regulatory interpretations.

The healthcare industry in the United States is subject to extensive federal, state, and local laws, rules, and regulations relating to, among other things:

• payment for services;

• corporate practice of medicine;

• conduct of operations, including fraud and abuse, anti-kickback, physician self-referral, and false claims prohibitions;

• reporting of quality measures;

• protection of patient information; and

• medical waste disposal and environmental protection.

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Unfavorable changes or conditions could occur in the states where our operations are concentrated.

A majority of our anesthesia services revenue in 2018 was generated by our operations in 10 states. In particular, Georgia, North Carolina, Massachusetts, Colorado and Texas accounted for approximately 74% of our anesthesia revenue in 2018. Adverse changes or conditions affecting these particular states, such as healthcare reforms, changes in laws and regulations, reduced reimbursements and government investigations, economic conditions, extreme weather conditions, and natural disasters may have a material adverse effect on our business, financial condition, results of operations, cash flows, and the trading price of our securities.

Government authorities or other parties may assert that our business practices violate antitrust laws.

The healthcare industry is subject to close antitrust scrutiny. In recent years, U.S. regulatory authorities have taken increasing steps to review and in some cases take enforcement action against business conduct and acquisitions in the healthcare industry. Violations of antitrust laws may be punishable by substantial penalties including significant monetary fines, civil penalties, criminal sanctions, and consent decrees and injunctions prohibiting certain activities or requiring divestiture or discontinuance of business operations. Any of these penalties could have material adverse effects on our business’ financial condition and results of operations.

Significant shareholders of the Company could influence our business operations, and sales of our shares by such significant shareholders could influence our share price.

The exercise of voting rights associated with shares held by any significant shareholder of the Company at meetings of shareholders may have significant influences on our business, and operations. If such a shareholder holds those shares for the purpose of investment, and if it were to sell those shares in the market in the future, it could have significant influences on our share price, depending on the market environment at the time of such sale.

Anti-takeover provisions could discourage a third party from making a takeover offer that could be beneficial to our shareholders.

From time to time, another entity could pursue us as an acquisition target, or could otherwise seek to influence our corporate affairs. However, some of the provisions in our articles of incorporation could delay or prevent a third party from acquiring us or replacing members of our Board of Directors, even if the acquisition or the replacements would be beneficial to our shareholders. These provisions could also reduce the price that certain investors might be willing to pay for our securities and result in the market price for our securities, including the market price for our common shares, being lower than it would be without these provisions.

Changes in the medical industry and the economy may affect the Company’s business.

The Company’s business may be affected by factors beyond its control, such as an economic recession or the aggressive pricing policies of competitors. Future technological advances in the continually-changing medical industry can be expected to result in the availability of new products and services that will compete with the products and services that the Company may develop or render the Company’s current product and anesthesia services obsolete. We expect that market demand, governmental regulation, government and third-party reimbursement policies and societal pressures will continue to change the worldwide healthcare industry, resulting in further business consolidations and alliances, which may exert further downward pressure on the prices of our products and services and could adversely impact our business, financial condition, and results of operations.

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Our industry is the subject of numerous governmental investigations into marketing and other business practices which could result in the commencement of civil and/or criminal proceedings, substantial fines, penalties, and/or administrative remedies, divert the attention of our management, and have an adverse effect on our financial condition and results of operations.

Our industry is the subject of numerous governmental investigations into marketing and other business practices. This has included increased regulation, enforcement, inspections, and governmental investigations of the medical device industry and disclosure of financial relationships with healthcare professionals. These investigations could result in the commencement of civil and/or criminal proceedings, substantial fines, penalties, and/or administrative remedies, divert the attention of our management, and have an adverse effect on our financial condition and results of operations. We anticipate that the government will continue to scrutinize our industry closely, and that additional regulation by governmental authorities, both foreign and domestic, may increase compliance costs, exposure to litigation and other adverse effects to our operations.

Evolving regulation of corporate governance and public disclosure may result in additional expenses and continuing uncertainty.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including those of the CSA, the SEC, the TSX and the NYSE American are creating uncertainty for companies such as ours. These new or changed laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and we may be harmed.

Future changes in financial accounting standards may cause adverse, unexpected revenue fluctuations and affect our financial position or results of operations. New pronouncements and varying interpretations of pronouncements have occurred with greater frequency and are expected to occur in the future. Compliance with changing regulations of corporate governance and public disclosure may result in additional expenses. All of these uncertainties are leading generally toward increasing insurance costs, which may adversely affect our business, results of operations and our ability to purchase any such insurance, at acceptable rates or at all, in the future.

We may face exposure to adverse movements in foreign currency exchange rates.

Our business is primarily based in the United States with a significant portion of our revenues, expenses, current assets and current liabilities denominated in U.S. dollars. Our financial statements are also expressed in U.S. dollars. An increase or decrease in the value of foreign currencies relative to the U.S. dollar could result in increased expenses and losses from currency exchange rate fluctuations.

If we or some of our suppliers fail to comply with the FDA’s Quality System Regulation and other applicable requirements, our manufacturing or processing operations could be disrupted, our sales and profitability could suffer, and we may become subject to a wide variety of FDA enforcement actions.

We are subject to inspection and marketing surveillance by the FDA to determine our compliance with all regulatory requirements. If the FDA finds that we have failed to comply with any regulatory requirements, it can institute a wide variety of enforcement actions.

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We and some of our suppliers must comply with the FDA’s Quality System Regulation, which governs the methods used in, and the facilities and controls used for, the design, testing, manufacture, control, quality assurance, installation, servicing, labeling, packaging, storage, and shipping of medical devices. The FDA enforces its regulations through pre-announced and unannounced inspections. We have been, and anticipate in the future being, subject to such inspections by the FDA and other regulatory bodies. The timing and scope of future audits is unknown and it is possible, despite our belief that our quality systems and the operation of our manufacturing facilities will remain in compliance with U.S, and non-U.S. regulatory requirements, that a future audit may result in one or more unsatisfactory results. If we or one of our suppliers fails an inspection, or if a corrective action plan adopted by us or one of our suppliers is not sufficient, the FDA may bring an enforcement action against us, which could result in significant financial penalties, the recall of our products or the suspension or permanent enjoinment of some or all our operations.

We are also subject to the FDA’s general prohibition against promoting our products for unapproved or off-label uses and to the medical device reporting regulations that require us to report to the FDA if our products may have caused or contributed to a death or serious injury, or if our device malfunctions and a recurrence of the malfunction would likely result in a death or serious injury. We must also file reports with the FDA of some device corrections and removals, and we must adhere to the FDA’s rules on labeling and promotion. If we fail to comply with these or other FDA requirements or fail to take adequate corrective action in response to any significant compliance issue raised by the FDA, the FDA can take significant enforcement actions, which could harm our business, results of operations, and our reputation.

We do not intend to pay dividends on our common shares, and, consequently, your ability to achieve a return on your investment will depend on appreciation, if any, in the price of our common shares.

We have never declared or paid any cash dividend on our common shares and do not currently intend to do so for the foreseeable future. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business. In addition, any future debt financing arrangement may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our common shares. Any return to shareholders will therefore be limited to any appreciation of their shares. Therefore, the success of an investment in our common shares will depend upon any future appreciation in their value. There is no guarantee that our common shares will appreciate in value or even maintain the price at which our shareholders purchased their shares.

Tax reform could have a material adverse effect on us.

The December 2017 legislation commonly referred to as the “Tax Cuts and Jobs Act” (the “Tax Act”) made significant changes to federal income tax law including, among other things, reducing the statutory corporate income tax rate to 21 percent from 35 percent and changing the U.S. taxation of our non-U.S. business activities. We may be adversely affected by these changes in U.S. tax laws and regulations, and it is possible that governmental authorities in the United States and/or other countries could further amend tax laws that would adversely affect us. In addition, we are required to evaluate the impact of the Tax Act on our operations and financial statements, and to the extent we initially do so inaccurately, we may not provide investors or the public with advance notice of any adverse effect. Currently, we have accounted for the effects of the Tax Act using reasonable estimates based on currently available information and our interpretations thereof. This accounting may change due to, among other things, changes in interpretations we have made and the issuance of new tax or accounting guidance.

Certain changes in tax law implemented by the Tax Act were only partially effective in the 2018 fiscal year and become fully effective in the 2019 fiscal year. The primary impacts to us include repeal of the alternative minimum tax regime, decrease of the corporate income tax rate structure, net operating loss limitations, and changes to the limits on executive compensation deductions. These changes will have a material impact to the value of deferred tax assets and liabilities, and our future taxable income and effective tax rate. Although we

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currently anticipate the enacted changes in the corporate tax rate and calculation of taxable income will have a favorable effect on our financial condition, profitability, and/or cash flows, we are still analyzing the Tax Act with our professional advisers. Until such analysis is complete and verified, the full impact of the Tax Act on us in future periods is uncertain, and no assurances can be made by us that it will not have any negative impacts on us.

We are an “emerging growth company” and a “smaller reporting company,” and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to such companies could make our common shares less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”), and a “smaller reporting company,” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and we have taken advantage of, and intend to continue to take advantage of, certain exemptions from various reporting and compliance requirements that apply to other public companies that are not “emerging growth companies” or “smaller reporting companies.” These exemptions include, but are not limited to, the following:

• not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act;

• only being required to include two, as opposed to three, years of audited financial statements in our annual reports;

• less extensive disclosure obligations regarding executive compensation in our registration statements, periodic reports and proxy statements; and

• exemptions from the requirements to hold a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

We intend to continue to take advantage of exemptions relating to emerging growth companies and smaller reporting companies but cannot guarantee that we will not be required to implement these requirements sooner than budgeted or planned and thereby incur unexpected expenses. We cannot predict if investors will find our common shares less attractive because of our reliance on these exemptions. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares, which could result in a reduction in the price of our common shares or cause our share price to be more volatile.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common shares.

Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, is designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404(a) of the Sarbanes-Oxley Act, or the subsequent testing by our independent registered public accounting firm conducted in connection with Section 404(b) of the Sarbanes-Oxley Act after we no longer qualify as an “emerging growth company,” may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common shares.

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We are required to disclose changes made to our internal control procedures on a quarterly basis and our management is required to assess the effectiveness of these controls annually. However, for as long as we are an “emerging growth company” under applicable SEC rules and regulations, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404. An independent assessment of the effectiveness of our internal control could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls could lead to financial statement restatements and require us to incur the expense of remediation.

If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our share price and trading volume could decline.

The trading market for our common shares depends, in part, on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who cover us downgrade our shares or publish inaccurate or unfavorable research about our business, our share price would likely decline. In addition, if our operating results fail to meet the forecasts of analysts, our share price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our common shares could decrease, which might cause our share price and trading volume to decline.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

Our headquarters are located in Vancouver, British Columbia, where we lease and occupy 3,921 square feet of office space. The term of the lease for our headquarters expires in April 2020. We have two U.S. offices, located in Kirkland, Washington and Atlanta, Georgia, where we lease and occupy approximately 1,700 and 3,100 square feet of office space, respectively. These leased office spaces expire in December 2021 and April 2020, respectively.

We believe that our existing facilities are adequate to meet our business requirements for the near-term and that additional space will be available on commercially reasonable terms, if required.

Item 3. Legal Proceedings

From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. As of December 31, 2018, we are not a party to any legal proceedings that, in the opinion of our management, would reasonably be expected to have a material adverse effect on our business, financial condition, operating results or cash flows if determined adversely to us. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common shares have been traded on the TSX since May 31, 2012 under the symbol “CRH” and on the NYSE American since September 3, 2015 under the symbol “CRHM.” Prior to May 31, 2012 our common shares had been traded on the TSX Venture Exchange. The following table sets forth the high and low sales prices per common share as reported on the NYSE American and TSX for the periods indicated.

	NYSE American				TSX
	High		Low		High		Low
Quarter Ended	US$				C$
31-Dec-18		4.00		2.79		5.16		3.80
30-Sep-18		4.50		2.92		5.91		3.83
30-Jun-18		3.75		2.40		4.76		3.09
31-Mar-18		3.30		2.45		4.25		3.15
31-Dec-17		2.75		1.46		3.44		1.86
30-Sep-17		5.78		2.15		7.50		2.63
30-Jun-17		9.25		4.95		12.35		6.72
31-Mar-17		8.70		5.25		11.50		7.06

On March 12, 2019, the last reported sale price of our common shares on the NYSE American was $3.04 per share, and on the TSX was C$4.07 per share.

Holders

As of December 31, 2018, we had approximately 26 shareholders of record holding our common shares. This number does not reflect the beneficial holders of our common shares who hold shares in street name through brokerage accounts or other nominees.

Dividends

We have not declared or paid any dividends on our outstanding common shares since our inception and we do not anticipate that we will do so in the foreseeable future. The declaration of dividends on our common shares is within the discretion of the Board of Directors and will depend on the assessment of, among other factors, earnings, capital requirements and our operating and financial condition. At the present time, anticipated capital requirements are such that we intend to follow a policy of retaining earnings in order to finance the further development of the business.

Issuer Purchases of Equity Securities

On November 7, 2017, our Board of Directors authorized us to repurchase up to 7,120,185 common shares pursuant to issuer repurchase plan and automatic repurchase plan agreements, each dated November 7, 2017 (the “Original Repurchase Plans”). On November 5, 2018, our Board of Directors authorized the renewal of the Original Repurchase Plans and the repurchase of up to 7,044,410 common shares pursuant to issuer repurchase plan and automatic repurchase plan agreements, each dated November 5, 2018 (together with the Original Repurchase Plans, the “Repurchase Plans”).

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During the fourth quarter of 2018, we repurchased a total of 685,000 common shares for $2.2 million at an average price of $3.17 per common share pursuant to the Repurchase Plans. Our repurchase activity during the fourth quarter of 2018 is summarized in the following table:

Period	Total Number of Shares Purchased		Average Price Paid per Share (including commission cost)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that may yet be Purchased under the Plans or Programs
October 1 – 31		319,000	$	3.08		319,000		4,881,485
November 1 – 30		235,200	$	3.19		235,200		6,833,610
December 1 – 31		130,800	$	3.38		130,800		6,702,810
Total		685,000				685,000

Certain Canadian Income Tax Considerations for United States Holders

The following summarizes, as of the date hereof, certain Canadian federal income tax considerations generally applicable under the Income Tax Act (Canada) and the regulations thereunder (collectively, the “Canadian Tax Act”) and the Canada-United States Tax Convention (1980), as amended (the “Convention”) to the holding and disposition of our common shares.

Comment is restricted to beneficial owners of our common shares each of whom, at all relevant times and for purposes of the Canadian Tax Act and the Convention: (i) is neither resident nor deemed to be resident in Canada; (ii) is resident solely in the United States and is entitled to benefits of the Convention; (iii) does not use or hold, and is not deemed to use or hold, our common shares in, or in the course of, carrying on a business in Canada; (iv) deals at arm’s length with and is not affiliated with the Company; (v) holds our common shares as capital property; and (vi) is not an “authorized foreign bank” or an insurer that carries on business in Canada and elsewhere (each such holder, a “US Resident Holder”). Generally, a US Resident Holder’s common shares will be considered to be capital property of the holder provided that the holder is not a trader or dealer in securities, does not acquire, hold or dispose of (or is not deemed to have acquired, held or disposed of) our common shares in one or more transactions considered to be an adventure or concern in the nature of trade, and does not hold or use (or is not deemed to hold or use) our common shares in the course of carrying on a business.

Certain U.S.-resident entities that are fiscally transparent for United States federal income tax purposes (including limited liability companies) may not in all circumstances be entitled to benefits under the Convention. US Resident Holders are urged to consult with their own tax advisors to determine their entitlement to benefits under the Convention based on their particular circumstances.

This summary is based upon the current provisions of the Canadian Tax Act and the Convention in effect as of the date hereof, and the Company’s understanding of the current published administrative policies and assessing practices of the Canada Revenue Agency (“CRA”) published in writing prior to the date hereof. This summary does not anticipate or take into account any changes in law or in the administrative policies or assessing practices of the CRA, whether by legislative, governmental or judicial decision or action, except only the specific proposals to amend the Canadian Tax Act publicly and officially announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Tax Proposals”). This summary assumes that the Tax Proposals will be enacted in the form proposed. This summary does not take into account any other federal or any provincial, territorial or foreign tax legislation or considerations, which may differ significantly from those set out herein. No assurances can be given that the Tax Proposals will be enacted as proposed or at all, or that legislative, judicial or administrative changes will not modify or change the statements expressed herein.

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This summary is of a general nature only, is not exhaustive of all possible Canadian federal income tax considerations, and is not intended and should not be construed as legal or tax advice to any particular US Resident Holder. No representations with respect to the income tax consequences to any prospective purchaser or holder of our common shares are made herein. Accordingly, prospective purchasers or holders of our common shares are urged to consult their own tax advisors with respect to their own particular circumstances. This summary is qualified accordingly.

Taxation of Dividends

Under the Canadian Tax Act, dividends paid or credited, or deemed to be paid or credited, to a US Resident Holder on our common shares will be subject to Canadian withholding tax at a rate of 25% of the gross amount of such dividends, unless the rate is reduced under the Convention. Under the Convention, the rate of withholding tax on dividends applicable to US Resident Holders who are entitled to benefits under the Convention and beneficially own the dividends is generally reduced to 15% (or, if the US Resident Holder is a company that owns at least 10% of the voting shares of the Company, 5%) of the gross amount of such dividends.

Disposition of Common Shares

Generally, a US Resident Holder will not be subject to tax under the Canadian Tax Act in respect of any capital gain realized by such US Resident Holder on a disposition or deemed disposition of our common shares unless our common shares constitute “taxable Canadian property” of the US Resident Holder and are not “treaty-protected property” (each as defined in the Canadian Tax Act).

Common shares of the Company generally will not be “taxable Canadian property” to a holder provided that, at the time of the disposition or deemed disposition, the common shares are listed on a “designated stock exchange” for purposes of the Canadian Tax Act (which currently includes the TSX and the NYSE American), unless at any time during the 60-month period immediately preceding the disposition of the common shares the following two conditions are met concurrently: (a) (i) the US Resident Holder, (ii) persons with whom the US Resident Holder did not deal at arm’s length, (iii) a partnership in which the US Resident Holder or a person described in (ii) holds a membership interest directly or indirectly through one or more partnerships, or (iv) any combination of the persons and partnerships described in (i) through (iii), owned 25% or more of the issued shares of any class or series of the capital stock of the Company; and (b) more than 50% of the fair market value of the common shares was derived directly or indirectly, from one or any combination of real or immovable property situated in Canada, “Canadian resource properties”, “timber resource properties” (each as defined in the Canadian Tax Act), and options in respect of or interests in, or for civil law rights in, any such properties (whether or not such property exists). In certain circumstances set out in the Canadian Tax Act, the common shares may be deemed to be “taxable Canadian property.”

Even if the common shares are taxable Canadian property to a US Resident Holder, any capital gain realized on the disposition or deemed disposition of such common shares will not be subject to tax under the Canadian Tax Act if the common shares are treaty-protected property.

A US Resident Holder contemplating a disposition of our common shares that may constitute taxable Canadian property should consult a tax advisor prior to such disposition.

Certain United States Income Tax Considerations For United States Holders

The following discussion summarizes certain U.S. federal income tax considerations relating to the ownership and disposition of our common shares. It applies only to U.S. Holders (as defined below) that acquire and hold our common shares as capital assets (generally, property held for investment purposes) and is of a general nature. This summary should not be construed to constitute legal or tax advice to any particular U.S. Holder.

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This section does not apply to U.S. Holders subject to special rules, including, without limitation, brokers, dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting for securities holdings, tax-exempt organizations, insurance companies, banks, thrifts and other financial institutions, persons liable for alternative minimum tax, persons that hold an interest in an entity that holds the common shares, persons that will own, or will have owned, directly, indirectly or constructively 10% or more (by vote or value) of the Company’s equity, persons that hold the common shares as part of a hedging, integration, conversion or constructive sale transaction or a straddle, or persons whose functional currency is not the U.S. dollar.

This discussion does not purport to be a complete analysis of all of the potential U.S. federal income tax considerations that may be relevant to U.S. Holders in light of their particular circumstances. Further, it does not address any aspect of foreign, state, local or estate or gift taxation or the 3.8% surtax imposed on certain net investment income. U.S. Holders should consult their own tax advisor as to the U.S. federal, state, local, foreign and any other tax consequences of the ownership and disposition of the common shares.

This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, U.S. Treasury Regulations, IRS rulings, published court decisions, and the Convention, all as in effect as of the date hereof, and any of which may be repealed, revoked or modified (possibly with retroactive effect) so as to result in U.S. federal income tax consequences different from those discussed below. This summary is applicable to U.S. Holders who are residents of the United States for purposes of the Convention and who qualify for the full benefits of the Convention.

A “U.S. Holder” is a beneficial owner of the common shares who, for U.S. federal income tax purposes, is a citizen or individual resident of the United States, a corporation (or other entity that is classified as a corporation for U.S. federal income tax purposes) that is created or organized in or under U.S. laws or any State thereof or the District of Columbia, an estate whose income is subject to U.S. federal income tax regardless of its source, or a trust (i) if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) that validly elects to be treated as a U.S. person for U.S. federal income tax purposes.

If a partnership or other pass-through entity holds the common shares of the Company, the U.S. federal income tax treatment of a partner, beneficiary, or other stakeholder will generally depend on the status of that person and the tax treatment of the pass-through entity. A partner, beneficiary, or other stakeholder in a pass-through entity holding the common shares should consult its own tax advisor with regard to the U.S. federal income tax treatment of its investment in the common shares.

Distributions on the Common Shares

Subject to the passive foreign investment company, or PFIC, rules discussed below, the gross amount of any distribution received by a U.S. Holder with respect to the common shares (including any amounts withheld to pay Canadian withholding taxes) will be included in the gross income of the U.S. Holder as a dividend to the extent attributable to the Company’s current or accumulated earnings and profits, as determined under U.S. federal income tax principles. The Company generally does not calculate its earnings and profits under U.S. federal income tax rules. Accordingly, U.S. Holders should expect that a distribution generally will be treated as a dividend for U.S. federal income tax purposes. Unless the Company is treated as a PFIC for the taxable year in which it pays a distribution or in the prior taxable year (see “Passive Foreign Investment Company Rules” below), the Company believes that it may qualify as a “qualified foreign corporation,” in which case distributions treated as dividends and received by non-corporate U.S. Holders may be eligible for a preferential tax rate. Distributions on the common shares generally will not be eligible for the dividends received deduction available to U.S. Holders that are corporations.

The amount of any dividend paid in Canadian dollars (including any amounts withheld to pay Canadian withholding taxes) will equal the U.S. dollar value of the Canadian dollars calculated by reference to the

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exchange rate in effect on the date the dividend is received by the U.S. Holder, regardless of whether the Canadian dollars are converted into U.S. dollars. A U.S. Holder will have a tax basis in the Canadian dollars equal to their U.S. dollar value on the date of receipt. If the Canadian dollars received are converted into U.S. dollars on the date of receipt, the U.S. Holder should generally not be required to recognize foreign currency gain or loss in respect of the distribution. If the Canadian dollars received are not converted into U.S. dollars on the date of receipt, a U.S. Holder may recognize foreign currency gain or loss on a subsequent conversion or other disposition of the Canadian dollars. Such gain or loss will be treated as U.S. source ordinary income or loss.

A U.S. Holder may be entitled to deduct or credit Canadian withholding tax imposed on dividends paid to a U.S. Holder, subject to applicable limitations in the Code. For purposes of calculating a U.S. Holder’s foreign tax credit, dividends received by such U.S. Holder with respect to the common shares of a foreign corporation generally constitute foreign source income. However, and subject to certain exceptions, a portion of the dividends paid by a foreign corporation will be treated as U.S. source income for U.S. foreign tax credit purposes, in proportion to its U.S. source earnings and profits, if U.S. persons own, directly or indirectly, 50% or more of the voting power or value of the foreign corporation’s common shares. If a portion of any dividends paid with respect to the common shares are treated as U.S. source income under these rules, it may limit the ability of a U.S. Holder to claim a foreign tax credit for any Canadian withholding taxes imposed in respect of such dividend. Dividends distributed by the Company will generally constitute “passive category” income for U.S. foreign tax credit purposes. The rules governing the foreign tax credit are complex. U.S. Holders are urged to consult their own tax advisors regarding the availability of the foreign tax credit under their particular circumstances, including the impact of, and any exception available to, the special income sourcing rule described in this paragraph.

Sale, Exchange or Other Taxable Disposition of the Common Shares

Subject to the PFIC rules discussed below, a U.S. Holder will recognize a capital gain or loss on the sale, exchange or other taxable disposition of our common shares in an amount equal to the difference between the amount realized for the common shares and the U.S. Holder’s adjusted tax basis in the common shares. Capital gains of non-corporate U.S. Holders derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any capital gain or loss recognized by a U.S. Holder generally will be treated as U.S. source gain or loss for U.S. foreign tax credit purposes.

Passive Foreign Investment Company Rules

A foreign corporation will be considered a PFIC for any taxable year in which (1) 75% or more of its gross income is “passive income” under the PFIC rules or (2) 50% or more of the average quarterly value of its assets produce (or are held for the production of) “passive income.” For this purpose, “passive income” generally includes interest, dividends, certain rents and royalties, and certain gains. The Company does not currently believe that it was a PFIC for the prior taxable year or will be in the current or a foreseeable future taxable year. The determination as to whether we will be a PFIC for any taxable year, however, is based on the application of complex U.S. federal income tax rules, which are subject to differing interpretations. In addition, our actual PFIC status for any taxable year is not determinable until after the end of such taxable year, and therefore cannot be predicted with certainty. Because of the above described uncertainties, there can be no assurance that the U.S. Internal Revenue Service will not challenge the determination made by us concerning our PFIC status or that we will not be a PFIC for any taxable year. If we are classified as a PFIC in any year a U.S. Holder owns the commons shares, certain adverse tax consequences could apply to such U.S. Holder. Certain elections may be available (including a mark-to-market election) to U.S. Holders that may mitigate some of the adverse consequences resulting from the Company’s treatment as a PFIC. U.S. Holders should consult their own tax advisors regarding the application of PFIC rules to their investments in the common shares.

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Required Disclosure with Respect to Foreign Financial Assets

Certain U.S. Holders are required to report information relating to an interest in our common shares, subject to certain exceptions (including an exception for common shares held in accounts maintained by certain financial institutions), by attaching a completed IRS Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold an interest in the common shares. U.S. Holders are urged to consult their own tax advisors regarding information reporting requirements relating to their ownership of the common shares.

Unregistered Sales of Equity Securities

There were no sales of unregistered securities during the period covered by this Annual Report.

Use of Proceeds From Registered Securities

There were no proceeds from sales of registered securities during the period covered by this Annual Report.

Item 6. Selected Financial Data

Not applicable.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

The following discussion should be read in conjunction with the attached financial statements and notes thereto. The Company prepares its financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). This Annual Report on Form 10-K, including the following section, contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those expressed or implied by such forward-looking statements. For a detailed discussion of these risks and uncertainties, see Item 1A, “Risk Factors” of this Annual Report on Form 10-K. We caution the reader not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date of this Annual Report on Form 10-K. We undertake no obligation to update forward-looking statements which reflect events or circumstances occurring after the date of this Annual Report on Form 10-K, except as required by law. Throughout this discussion, unless the context specifies or implies otherwise, the terms “CRH,” “we,” “us,” and “our” refer to CRH Medical Corporation and its subsidiaries.

Overview

CRH is a North American company focused on providing GIs with innovative services and products for the treatment of GI diseases. In 2014, CRH acquired a full service gastroenterology anesthesia company, GAA, which provides anesthesia services for patients undergoing endoscopic procedures. CRH has complemented this transaction with twenty additional acquisitions of GI anesthesia companies since GAA.

According to the CDC, colorectal cancer is the second leading cause of cancer-related deaths in the United States and recent research indicates that the incidence of colon cancer in young adults is on the rise. The CDC has implemented campaigns to raise awareness of GI health and drive colorectal cancer screening rates among at risk populations. Colon cancer is treatable if detected early and screening colonoscopies are the most effective way to detect colon cancer in its early stages. Anesthesia-assisted endoscopies are the standard of care for colonoscopies and upper endoscopies.

CRH’s goal is to establish itself as the premier provider of innovative products and essential services to GIs throughout the United States. The Company’s CRH O’Regan System distribution strategy focuses on physician education, patient outcomes, and patient awareness. The O’Regan System is a single use, disposable, hemorrhoid banding technology that is safe and highly effective in treating hemorrhoid grades I – IV. CRH distributes the CRH O’Regan System, treatment protocols, operational and marketing expertise as a complete, turnkey package directly to physicians, allowing CRH to create meaningful relationships with the physicians it serves.

The Company has financed its cash requirements primarily from revenues generated from the sale of its product directly to physicians, GI anesthesia revenue, equity financings, debt financing and revolving and term credit facilities. The Company’s ability to maintain the carrying value of its assets is dependent on successfully marketing its products and services, obtaining reasonable rates for anesthesia services and maintaining future profitable operations, the outcome of which cannot be predicted at this time. The Company has also stated its intention to acquire or develop additional GI anesthesia businesses. In the future, it may be necessary for the Company to raise additional funds for the continuing development of its business plan, including additional acquisitions.

Recent Events

In the year ended December 31, 2018, the Company’s financial results reflect the impact of the CMS 2018 Medicare Final Physician Fee Schedule and the acquisition of five additional anesthesia services providers.

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CMS 2018 Medicare Final Physician Fee Schedule – January 2018

The final CMS (“Centers for Medicare and Medicaid Services”) 2018 Medicare Physician Fee Schedule was announced on November 2, 2017 and updated the payment policies, payment rates, and other provisions for services furnished under the Medicare Physician Fee Schedule on or after January 1, 2018.

The Medicare Final Physician Fee Schedule changed the billing structure for CRH’s primary billing code for anesthesia provided in conjunction with a lower endoscopy by eliminating the existing billing code and replacing it with three new billing codes. Two of the new billing codes had lower base unit values with the net effect of decreasing the amount CRH billed and collected for anesthesia services provided in conjunction with a lower endoscopy.

Shreveport Sedation Associates, LLC (“SSA”) – March 2018

On March 19, 2018, a subsidiary of the Company entered into an asset purchase agreement to acquire 100% of certain assets of an anesthesia services provider in Louisiana. The purchase consideration, paid via cash, for the acquisition was $9,404,148. The allocated cost of the exclusive professional service agreement which was acquired as part of this acquisition was $9,391,036. The Company also acquired a prepaid asset as part of the acquisition.

Western Ohio Sedation Associates, LLC (“WOSA”) – May 2018

On May 1, 2018, a subsidiary of the Company entered into an asset contribution and exchange agreement to acquire 51% of the ownership interest in an anesthesia services provider in Ohio. The purchase consideration, paid via cash, for the acquisition was $6,409,000. The allocated cost of the exclusive professional services agreement which was acquired as part of this acquisition was $12,713,133.

Lake Washington Anesthesia Associates, LLC (“LWA”) – July 2018

On July 26, 2018, a subsidiary of the Company entered into a membership interest purchase agreement, effective July 1, 2018, to acquire a 51% interest in Lake Washington Anesthesia Associates, LLC (”LWA”), a gastroenterology anesthesia services provider in Washington State. The purchase consideration, paid via cash, for the acquisition of the Company’s 51% interest was $5,000,000. The allocated cost of the exclusive professional service agreement which was acquired as part of this acquisition was $9,886,156.

LWA is the Company’s first Monitored Anesthesia Care (“MAC”) program to be completed. The MAC program was announced on March 15, 2017 with Puget Sound Gastroenterology (“PSG”). CRH assisted PSG in the development of PSG’s MAC program under LWA. CRH retained an option to acquire a 51% interest in LWA, which has since been exercised.

Lake Erie Sedation Associates, LLC (“LESA”) – September 2018

On September 4, 2018, a subsidiary of the Company entered into an asset purchase agreement to acquire 100% of certain assets of an anesthesia services provider in Ohio. The purchase consideration, paid via cash, for the acquisition was $4,180,000. The allocated cost of the exclusive professional service agreement which was acquired as part of this acquisition was $4,233,115.

Triad Sedation Associates LLC (“TSA”) – October 2018

In October 2018, the Company entered into an agreement with Digestive Health Specialists (“DHS”), located in North Carolina, to assist DHS in the development and management of a monitored anesthesia care program. Under the terms of the agreement, CRH is a 15% equity owner in the anesthesia business, Triad Sedation

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Associates LLC, and receives compensation for its billing and collection services. Under the terms of the limited liability company agreement, CRH has the right, at CRH’s option, to acquire an additional 36% interest in the anesthesia business at a future date. The Company will not recognize any material revenue or expense from this transaction unless CRH elects to exercise its option.

Normal Course Issuer Bid Renewal – November 2018

On November 5, 2018, the Company received approval from the Toronto Stock Exchange (“TSX”) of its intention to renew its existing Normal Course Issuer Bid. Pursuant to the bid, the Company may purchase for cancellation up to 7,044,410 of its common shares, or approximately 9.74% of the common shares outstanding as of November 5, 2018. Purchases under the bid are subject to a daily restriction of 46,958 shares. As of December 31, 2018, the Company has repurchased 2,604,700 common shares under both its previous and current normal course issuer bids for a total of $6,657,446 (CAD$8,614,275), including transaction fees.

Tennessee Valley Anesthesia Associates LLC (“TVAA”) – December 2018

On December 1, 2018, the Company entered into an asset contribution and exchange agreement to acquire 51% of the ownership interest in an anesthesia services provider in Tennessee. The purchase consideration, paid via cash, for the acquisition was $2,200,000. The allocated cost of the exclusive professional services agreement which was acquired as part of the transaction was $4,423,284.

Anesthesia Care Associates LLC (“ACA”) – January 2019

On January 1, 2019, a subsidiary of the Company entered into a membership interest purchase agreement to acquire a 100% interest in Anesthesia Care Associates, LLC (”ACA”), a gastroenterology anesthesia services provider in Indiana. The purchase consideration, paid via cash, for the acquisition of the Company’s 100% interest was $5,239,003. The allocated cost of the exclusive professional service agreement which was acquired as part of this acquisition was $5,355,028.

Results of Operations

As a non-U.S. company listed on the NYSE American, the United States Securities and Exchange Commission (“SEC”) requires us to perform a test on the last business day of the second quarter of each fiscal year to determine whether we continue to meet the definition of a foreign private issuer (“FPI”). Historically, we met the definition of an FPI, and as such, prepared consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”), reported with the SEC on FPI forms, and complied with SEC rules and regulations applicable to FPIs.

On June 30, 2018, we performed the test and determined that we no longer met the definition of an FPI. As such, from January 1, 2019, the Company is required to prepare consolidated financial statements in accordance with United States Generally Accepted Accounting Principles (“US GAAP”), report with the SEC on domestic forms, and comply with SEC rules and regulations applicable to domestic issuers.

The Company’s historical financial statements were previously presented under International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) up to and including the Company’s September 30, 2018 interim report.

The conversion from IFRS to US GAAP resulted in adjustments to the Company’s balance sheet and statement of operations for the year ended December 31, 2017, as well as adjustments to the Company’s interim balance sheets and statements of operations for the quarters ended March 31, 2018, June 30, 2018 and September 30, 2018. All financial data contained within this document has been restated and presented in accordance with

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US GAAP. A summary of the impact of conversion from IFRS to US GAAP on the Company’s statement of operations and balance sheet for the year ended December 31, 2017 is presented below:

	Year ended December 31, 2017
	As previously reported (IFRS)1		Adjustments			Restated (US GAAP)
Net and comprehensive income	$	13,668,118	$	5,506,952		$	19,175,070
Attributable to:
Shareholders of the Company		6,558,966		5,519,887			12,078,853
Non-controlling interest	$	7,109,152	$	(12,935	)	$	7,096,217
Total assets		198,450,878		5,504,627			203,955,505
Total liabilities		73,514,590		(857,130	)		72,657,460
Total equity attributable to shareholders of the Company		67,658,972		6,187,225			73,846,197
Non-controlling interest		57,277,316		174,532			57,451,848

¹ The IFRS numbers are non-GAAP amounts as IFRS is no longer the Company’s primary GAAP. However, these numbers are presented in order to provide context to the Company’s previously issued 2017 financial statements under IFRS.

The primary driver of the IFRS to US GAAP adjustments was the elimination of the Company’s impairment charge in relation to its GAA professional services intangible asset and related tax impact. This increase in income was offset by an incremental increase in stock based compensation expense related to the Company’s performance based share units, and related tax impact, and additional amortization relating to the capitalization of acquisition costs on the Company’s acquisitions completed during the year ended December 31, 2017. Previously, under IFRS, the Company accounted for its acquisitions as business combinations. Under US GAAP, these transactions are accounted for as asset acquisitions. The conversion from IFRS to US GAAP had no impact on the Company’s Adjusted Operating EBITDA².

The following tables provide a detailed analysis of our results of operations and financial condition. For each of the periods indicated below, we present our revenues by business segment, as well as present key metrics, such as operating expenses, operating income and net and comprehensive income attributable to shareholders of the company and non-controlling interest, from our statements of operations.

The selected financial information provided below has been prepared in accordance with United States Generally Accepted Accounting Principles (“US GAAP”) beginning December 31, 2018 on a retrospective basis.

²  See “Use of Non-GAAP Financial Measures” below for definitions of Non-GAAP-based measures and reconciliations of GAAP-based measures to Non-GAAP-based measures

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SELECTED US GAAP FINANCIAL INFORMATION

	2018			2017			% Change
Anesthesia services revenue	$	101,790,165		$	83,505,140			22	%
Product sales revenue		10,959,215			11,501,005			(5	%)
Total revenue		112,749,380			95,006,145			19	%
Total operating expenses, including:		92,454,250			74,186,860			25	%
Depreciation and amortization expense		31,486,055			23,834,400			32	%
Stock based compensation expense		2,800,750			4,036,070			(31	%)
Operating income		20,295,130			20,819,285			(3	%)
Operating margin		18.0	%		21.9	%
Net finance expense (recovery)		4,567,327			(5,514,850	)		183	%
Tax expense		2,711,886			7,159,065			(62	%)
Net and comprehensive income	$	13,015,917		$	19,175,070			(32	%)
Attributable to:
Shareholders of the Company		4,679,921			12,078,853			(61	%)
Non-controlling interest1		8,335,996			7,096,217			17	%
Earnings per share attributable to shareholders:
Basic	$	0.064		$	0.164
Diluted	$	0.063		$	0.161

¹  Non-controlling interest reflects the ownership interest of persons holding non-controlling interests in non-wholly owned subsidiaries of the Company.

NON-GAAP FINANCIAL MEASURES

In addition to results reported in accordance with US GAAP, the Company uses certain non-GAAP financial measures, including adjusted operating expenses (in total and broken down by operating segment), adjusted operating EBITDA (in total and broken down as attributable to non-controlling interest and shareholders of the Company) and adjusted operating EBITDA margin as supplemental indicators of its financial and operating performance. These non-GAAP measures are not recognized measures under US GAAP and do not have a standardized meaning prescribed by US GAAP, and are therefore unlikely to be comparable to measures presented by other companies. These measures are provided as additional information to complement US GAAP measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analyses of the Company’s financial information reported under US GAAP. See “Use of Non-GAAP Financial Measures” elsewhere in this Annual Report on Form 10-K.

SELECTED FINANCIAL INFORMATION – NON-GAAP MEASURES¹

	2018			2017			% Change
Total Adjusted operating expenses	$	58,060,387		$	45,871,663			27	%
Adjusted operating EBITDA – non-controlling interest2		18,856,198			14,798,542			27	%
Adjusted operating EBITDA – shareholders of the Company		35,832,795			34,335,942			4	%
Adjusted operating EBITDA – total	$	54,688,993		$	49,134,485			11	%
Adjusted operating EBITDA margin		48.5	%		51.7	%

¹ See “Use of Non-GAAP Financial Measures” below for definitions of Non-GAAP-based measures and reconciliations of GAAP-based measures to Non-GAAP-based measures.

² Non-controlling interest reflects the ownership interest of persons holding non-controlling interests in non-wholly owned subsidiaries of the Company.

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Summary of Quarterly Results (Unaudited)

The following table sets forth certain unaudited consolidated statements of operations data for each of the eight most recent quarters that, in management’s opinion, have been prepared on a basis consistent with the audited consolidated financial statements for the year ended December 31, 2018.

Seasonality impacts quarterly anesthesia and product revenues. With our expenses primarily fixed, adjusted operating EBITDA margins will fluctuate quarterly with operating EBITDA margins being greater during the fourth quarter of each year and operating EBITDA margins being less during the first quarter of each year. Seasonality also impacts net income as net income will fluctuate with fluctuations in adjusted operating EBITDA.¹

(in 000’s of US$, except EPS)	Q4 ‘18			Q3 ‘18			Q2 ‘18			Q1 ‘18			Q4 ‘17			Q3 ‘17			Q2 ‘17			Q1 ‘17
Anesthesia services revenue		28,931			26,073			24,677			22,109			27,478			19,294			18,140			18,592
Product sales revenue		3,090			2,658			2,654			2,557			3,072			2,865			2,788			2,776
Total revenue		32,022			28,732			27,331			24,666			30,550			22,159			20,928			21,369
Total operating expense		25,094			24,232			22,902			20,226			21,634			18,149			17,156			17,248
Adjusted operating expenses
Anesthesia services		13,554			13,047			12,102			10,416			11,411			9,177			8,712			8,299
Product sales		1,237			1,065			1,271			1,093			1,295			1,094			1,142			1,037
Corporate		1,361			1,108			1,064			743			882			994			844			985
Total adjusted operating expenses		16,151			15,220			14,437			12,252			13,588			11,265			10,698			10,320
Operating income		6,928			4,499			4,428			4,439			8,917			4,010			3,772			4,121
Operating margin		22	%		16	%		16	%		18	%		29	%		18	%		18	%		19	%
Adjusted operating EBITDA - non-controlling interest2		5,215			4,996			4,464			4,182			5,473			3,119			2,878			3,329
Adjusted operating EBITDA- shareholders of the Company		10,656			8,515			8,429			8,231			11,489			7,775			7,352			7,719
Adjusted operating EBITDA - total		15,871			13,512			12,893			12,414			16,963			10,894			10,230			11,048
Adjusted operating EBITDA margin		50	%		47	%		47	%		50	%		56	%		49	%		49	%		52	%
Net finance (income) expense		1,721			1,625			609			612			(9,822	)		(392	)		3,425			1,274
Income tax expense (recovery)		1,059			390			593			669			7,562			658			(401	)		(660	)
Net income		4,148			2,484			3,226			3,157			11,176			3,744			748			3,507
Net income attributable to:
Shareholders of the Company		1,711			267			1,291			1,411			8,168			2,528			(364	)		1,747
Non-controlling interest2		2,437			2,218			1,935			1,746			3,009			1,216			1,111			1,760
Adjusted Operating EBITDA per share attributable to shareholders
Basic		0.146			0.116			0.116			0.113			0.156			0.105			0.099			0.106
Diluted		0.143			0.114			0.114			0.111			0.153			0.103			0.097			0.102
Earnings (loss) per share attributable to shareholders
Basic		0.023			0.004			0.018			0.019			0.111			0.034			(0.005	)		0.024
Diluted		0.023			0.004			0.017			0.019			0.109			0.033			(0.005	)		0.023

¹ See “Use of Non-GAAP Financial Measures” below for definitions of Non-GAAP-based measures and reconciliations of GAAP-based measures to Non-GAAP-based measures.

² Non-controlling interest reflects the ownership interest of persons holding non-controlling interests in non-wholly owned subsidiaries of the Company.

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Results of Operations for the Years Ended December 31, 2018 and 2017

Revenues for the year ended December 31, 2018 were $112,749,380 compared to $95,006,145 for the year ended December 31, 2017. The 19% increase is mainly attributable to revenue contributions from the anesthesia businesses acquired by the Company in 2018, along with acquisitions completed mid-year in fiscal 2017. Revenues for the three months ended December 31, 2018 reflect the revenue contributions from anesthesia businesses acquired during 2018 and were $32,021,768, an increase of 5% or $1,471,023 when compared to the three months ended December 31, 2017.

Revenues from anesthesia services for the year ended December 31, 2018 were $101,790,165 compared to $83,505,140 for the year ended December 31, 2017. As above, the increase was primarily due to the Company’s anesthesia acquisitions throughout 2018 and 2017; however, there were additional factors which impacted the change in revenue between fiscal 2018 and fiscal 2017. The $18.3 million increase in revenue from the prior period is reflective of the following:

• growth through acquisitions completed in 2017 and 2018 contributed $28.2 million of the increase when comparing the two periods. This is comprised of growth from acquisitions completed in 2017 ($16.3 million) and growth from acquisitions completed in 2018 ($11.9 million);

• the impact of the CMS final fee schedule, effective January 1, 2018, resulted in a decrease in revenue of approximately $7.5 million or 9% when compared to the full year 2017;

• executing contracts with non-contracted payors and changes in payor mix, primarily related to entities acquired prior to 2018, decreased 2018 revenue by $3.0 million or approximately 4% when compared to 2017;

• revenues relating to our monitored anesthesia care program decreased by $0.1 million as a result of the acquisition of LWA; and

• the company incurred a positive adjustment as a result of a non-recurring change in estimate of $0.7 million.

Anesthesia revenues for the three months ended December 31, 2018 were $28,931,460 compared to $27,478,475 for the three months ended December 31, 2017. The $1.4 million increase in revenue from the prior period is reflective of the following:

• growth through acquisitions completed in 2018 contributed $5.5 million of the increase when comparing the two periods;

• the impact of the CMS final fee schedule, effective January 1, 2018, resulted in a decrease in revenue of approximately $2.4 million or 9% when compared to the fourth quarter of 2017;

• executing contracts with non-contracted payors and changes in payor mix, primarily related to entities acquired prior to 2018, decreased revenue in the fourth quarter of 2018 by $1.5 million or approximately 5% when compared to the fourth quarter of 2017;

• revenues relating to our monitored anesthesia care program decreased by $0.2 million as a result of the acquisition of LWA; and

• the company incurred a positive adjustment as a result of a non-recurring change in estimate of $0.1 million.

As adjusted operating expenses are largely fixed in nature, changes in revenue primary drive changes in operating income and adjusted operating EBITDA¹.

¹ See “Use of Non-GAAP Financial Measures” below for definitions of Non-GAAP-based measures and reconciliations of GAAP-based measures to Non-GAAP-based measures.

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In the year ended December 31, 2018, the anesthesia services segment serviced 276,766 patient cases compared to 201,578 patient cases during the year ended December 31, 2017. Patient cases serviced in the fourth quarter of 2018 were 81,528 compared to 64,684 patient cases in the fourth quarter of 2017.

The tables below summarize our approximate payor mix as a percentage of all patient cases for the years ended December 31, 2018 and 2017 and for the fourth quarters of 2018 and 2017.

	Three months ended									Years ended
Payor	December 31, 2018			December 31, 20171			Change			December 31, 2018			December 31, 20176			Change
Commercial		62.8	%		63.3	%		(0.8	%)		59.3	%		60.0	%		(1.3	%)
Federal		37.2	%		36.7	%		1.5	%		40.7	%		40.0	%		1.9	%
Total		100.0	%		100.0	%					100.0	%		100.0	%

¹ Restated to conform with presentation adopted in 2018.

The payor mix for the three months and year ended December 31, 2018 includes acquisitions completed during 2017 and 2018 and as a result is not directly comparable to the three months and year ended December 31, 2017. As we acquire anesthesia providers, these providers may have different payor mix profiles and impact our overall payor mix above.

The table below summarizes our approximate payor mix as a percentage of all patient cases for the three months and year ended December 31, 2018 and 2017, but exclude patient cases related to acquisitions completed in 2017 and 2018 as inclusion of these acquisitions would reduce comparability of the data presented.

	Three months ended									Years ended
Payor	December 31, 2018			December 31, 20176			Change			December 31, 2018			December 31, 20176			Change
Commercial		64.0	%		63.6	%		0.6	%		59.8	%		60.4	%		(1.0	%)
Federal		36.0	%		36.4	%		(1.0	%)		40.2	%		39.6	%		1.5	%
Total		100.0	%		100.0	%					100.0	%		100.0	%

The table below summarizes our approximate payor mix as a percentage of all patient cases for the year ended December 31, 2018, by quarter, and excludes patient cases related to acquisitions completed in 2018 as inclusion of these acquisitions would reduce the comparability of the date presented.

Payor	Q4 2018			Q3 2018			Q2 2018			Q1 2018
Commercial		63.6	%		59.3	%		58.2	%		57.5	%
Federal		36.4	%		40.7	%		41.8	%		42.5	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

Seasonality is driven by both patient cases and seasonal payor mix. As a result, revenue per patient will fluctuate quarterly. The seasonality of patient cases for fiscal 2018 is provided below for organic patient cases; it excludes patient cases relating to acquisitions completed in 2018.

Seasonality	Q4 2018			Q3 2018			Q2 2018			Q1 2018
Patient cases		26.3	%		24.7	%		25.2	%		23.8	%

Revenues from product sales for the year ended December 31, 2018 were $10,959,215 compared to $11,501,005 for 2017. The decrease in product sales is the result of decreased sales of the CRH O’Regan System at previously trained practices due to changes in practice emphasis and to a lesser extent the introduction of competitive products. In the last quarter of the year we have initiated additional practice support initiatives, including a greater emphasis on re-training physicians in practices where usage has decreased. We have seen traction with

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these initiatives with revenues from product sales for the three months ended December 31, 2018 increasing by 1%, when compared to the three months ended December 31, 2017. As of December 31, 2018, the Company has trained 2,944 physicians to use the O’Regan System, representing 1,124 clinical practices. This compares to 2,686 physicians trained, representing 1,034 clinical practices, as of December 31, 2017.

Total operating expenses

Total operating expense for the year ended December 31, 2018 was $92,454,250 compared to $74,186,860 for the year ended December 31, 2017. Total operating expense for the three months ended December 31, 2018 was $25,093,657 compared to $21,634,236. The increase in operating expenses is largely driven by increases seen in total adjusted operating expense (refer to the “Total adjusted operating expenses – Non-GAAP section below) as well as increases in amortization expense related to acquisitions completed in 2018 and throughout 2017, offset by a decrease in stock-based compensation expense.

Amortization expense increased by 32% from 2017. This is a result of acquisitions completed in 2017 and 2018 and the related intangible assets that were acquired. Stock-based compensation expense decreased by 31% when compared to 2017. This decrease is due to the fact that certain performance based share unit awards early vested in 2017, resulting in recognition of the full expense relating to those awards. There was no similar early vest of performance based awards in 2018.

Total adjusted operating expenses – Non-GAAP¹

For the year ended December 31, 2018, total adjusted operating expenses were $58,060,387 compared to $45,871,663 for the year ended December 31, 2017. For the three months ended December 31, 2018, total adjusted operating expenses were $16,151,179 compared to $13,588,201 for the three months ended December 31, 2017. Increases in adjusted operating expenses are primarily related to adjusted operating expenses in the anesthesia services business. Factors impacting the fluctuation of total adjusted operating expenses are consistent with those impacting operating expenses.

Anesthesia services adjusted operating expenses for the year ended December 31, 2018 were $49,119,072, compared to $37,598,984 for the year ended December 31, 2017. Anesthesia services adjusted operating expenses primarily include labor related costs for Certified Registered Nurse Anesthetists and MD anesthesiologists, billing and management related expenses, medical drugs and supplies, and other related expenses. The Company’s first anesthesia acquisition was in the fourth quarter of 2014, with nineteen further acquisitions completed in 2015, 2016, 2017 and 2018. As a result, fiscal 2018 is not directly comparable to 2017, with the majority of the increase relating to operating expenses for acquired companies. Though revenue may fluctuate significantly, adjusted operating expenses, which are primarily employee related costs, due to their fixed nature, increase as a result of the Company’s acquisition strategy. Total adjusted operating expenses per case for the anesthesia segment were $177 per case for the year ended December 31, 2018, as compared to $187 per case for the year ended December 31, 2017. The decrease in expense per case is reflective of the leverage of our existing infrastructure and the cost profile of acquisitions completed in fiscal 2018. Anesthesia services adjusted operating expenses for the three months ended December 31, 2018 were $13,553,945 compared to $11,410,880 for the three months ended December 31, 2017. Total adjusted operating expenses per case were $166 per case for the three months ended December 31, 2018 as compared to $176 per case for the three months ended December 31, 2017.

Product sales adjusted operating expenses for the year ended December 31, 2018 were $4,665,616 compared to $4,568,422 for the year ended December 31, 2017. Employment and related costs have remained consistent with fiscal 2017, with the slight overall increase in costs relating to higher product support costs, specifically related

¹ See “Use of Non-GAAP Financial Measures” below for definitions of Non-GAAP-based measures and reconciliations of GAAP-based measures to Non-GAAP-based measures.

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to marketing and training, offset by a decrease in professional fees. The product operating segment incurred higher than normal professional fees in 2017 as part of its efforts to distribute the company’s product offering in China. In the future, the Company expects adjusted operating expenses to increase as the Company continues to invest in activities aimed at increasing demand for training and increasing the use or adoption of the CRH O’Regan System. Product sales adjusted operating expenses for the three months ended December 31, 2018 were $1,236,732 compared to $1,295,163 for the three months ended December 31, 2017.

Corporate adjusted operating expenses for the year ended December 31, 2018 were $4,275,699 compared to $3,704,255 for the year ended December 31, 2017. The increase in corporate adjusted operating expense is a reflection of higher professional fees and employee related costs, and, in general, is reflective of the increasing complexity of our business which is also increasing our compliance costs. Corporate adjusted operating expenses for the three months ended December 31, 2018 were $1,360,502 compared to $882,158 for the three months ended December 31, 2017.

Operating Income

Operating income for the year ended December 31, 2018 was $20,295,130 compared to $20,819,285 for the same period in 2017. Operating income for the three months ended December 31, 2018 was $6,928,201 compared to $8,916,509 for the comparable period in 2017. The following schedule reconciles the changes in operating income between periods:

	Year ended December 31, 2018			Quarter ended December 31, 2018
Prior period operating income	$	20,819,285		$	8,916,509
Increase in period revenues		17,743,235			1,471,023
Increase in period adjusted operating expenses1		(12,188,732	)		(2,562,978	)
Increase in period amortization and depreciation expense		(7,651,655	)		(1,127,469	)
Decrease in period stock based compensation expense		1,235,320			138,227
Decrease in period acquisition expenses		337,678			92,890
Current period operating income	$	20,295,130		$	6,928,201

¹ See “Use of Non-GAAP Financial Measures” below for definitions of Non-GAAP-based measures and reconciliations of GAAP-based measures to Non-GAAP-based measures.

Changes in the company’s revenues and adjusted operating expenses¹ are described above within their respective sections. Fluctuations in revenue will not necessarily result in correlating fluctuations in operating expenses due to the fixed nature of these costs and as such will impact operating income.

Contributing to the decrease in operating income for the year are incremental amortization costs related to the acquired professional service agreements relating to acquisitions completed in 2017 and 2018 of $7,651,655 and decreases in stock based compensation expense of $1,235,320 and a decrease in acquisition expenses of $337,678.

Contributing to the decrease in operating income for the quarter are incremental amortization costs related to the acquired professional service agreements relating to acquisitions completed in 2018 of $1,127,469 and decreases in stock based compensation expense of $138,227 and a decrease in acquisition expenses of $92,890.

Anesthesia operating income for the year ended December 31, 2018 was $20,711,015, a decrease of $658,678 from the same period in 2017. This decrease is primarily reflective of the incremental costs related to the amortization of acquired professional service agreements relating to acquisitions completed in 2017 and 2018, offset by the increase in operating EBITDA in the year (calculated above as revenues less adjusted operating expenses). Anesthesia operating income for the three months ended December 31, 2018 was $6,957,715 compared to income of $8,693,176 for the three months ended December 31, 2017.

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Product operating income for the year ended December 31, 2018 was $5,936,478, a decrease of $566,977 from the same period in 2017. The decrease is primarily driven by the decline in revenues in the year, offset by a slight increase in adjusted operating expenses. Product operating income for the three months ended December 31, 2018 was $1,825,090 compared to $1,664,559 for the three months ended December 31, 2017.

Adjusted operating EBITDA¹ – Non-GAAP

Adjusted operating EBITDA attributable to shareholders of the Company for the year ended December 31, 2018 was $35,832,795, an increase of $1,496,853 from the year ended December 31, 2017. The increase in adjusted operating EBITDA attributable to shareholders is primarily a reflection of the contributions from acquisitions completed in 2017 and 2018, offset by the impacts of the CMS final rule, and the impact of moving from non-contracted to a contracted status for commercial payors. Adjusted operating EBITDA is also favourably impacted by the decrease in adjusted anesthesia operating expense per case.

Adjusted operating EBITDA attributable to shareholders of the Company for the three months ended December 31, 2018 was $10,655,670, a decrease of 7% from the same period in 2017. The decrease is primarily a reflection of contributions from acquisitions completed in 2018, offset by the impact of the CMS final rule and the impact of moving from non-contracted to a contracted status for commercial payors.

Adjusted operating EBITDA attributable to non-controlling interest was $18,856,198 for the year ended December 31, 2018. This comprises the non-controlling interests’ share of revenues of $32,328,448 and adjusted operating expenses of $13,472,250. Adjusted operating EBITDA attributable to non-controlling interest was $5,214,919 for the three months ended December 31, 2018. This comprises the non-controlling interests’ share of revenues of $8,973,998 and adjusted operating expenses of $3,759,079.

Total adjusted operating EBITDA was $54,688,993 for the year ended December 31, 2018, an increase of 11% from the same period in 2017. Total adjusted operating EBITDA was $15,870,589 for the three months ended December 31, 2018, a decrease of 6% from the same period in 2017.

Net finance (income) / expense

As a result of the Company’s debt facilities and long-term finance obligations, the Company has recorded a net finance expense of $4,567,327 for the year ended December 31, 2018, compared to a net finance recovery of $5,514,850 for the year ended December 31, 2017. Net finance expense is comprised of both interest and other debt related expenses, including fair value adjustments, as well as foreign exchange gains and losses on the Crown debt which was denominated in Canadian dollars. On June 26, 2017, the Company paid off and extinguished its Crown debt. As a result of the extinguishment of the Crown debt, the Company’s effective interest rate is lower than it has been in previous years with the difference between cash interest expense in 2018 versus 2017 reflective of this. The net change in the fair value of the Company’s earn out obligation, offset by the

¹ See “Use of Non-GAAP Financial Measures” below for definitions of Non-GAAP-based measures and reconciliations of GAAP-based measures to Non-GAAP-based measures.

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Company’s extinguishment of its Crown debt in the second quarter of 2017, was the primary driver of the finance recovery in fiscal 2017.

	2018		2017
Finance income:
Foreign exchange gain	$	—	$	—
Net change in fair value of financial liabilities at fair value through earnings (note 20)		—		(11,825,256	)
Total finance income	$	—	$	(11,825,256	)
Finance expense:
Interest and accretion expense on borrowings	$	3,168,762	$	3,322,321
Accretion expense on earn-out obligation and deferred consideration		166,575		600,602
Amortization of deferred financing fees		260,363		204,057
Net change in fair value of financial liabilities at fair value through earnings		971,627		—
Foreign exchange loss		—		88,084
Extinguishment of notes payable and bank indebtedness		—		2,044,867
Other		—		50,475
Total finance expense	$	4,567,327	$	6,310,406
Net finance (income) expense	$	4,567,327	$	(5,514,850	)
Net finance expense, excluding fair value adjustments, debt extinguishment and foreign exchange	$	3,595,700	$	4,177,455

During the year ended December 31, 2018, the Company recognized a fair value adjustment of $971,627 in respect of its earn-out obligation. The fair value adjustment resulted from changes in estimates underlying the Company’s earn-out obligation. The changes in estimates underlying the Company’s earn-out obligation were driven primarily by the changes in the cash flow estimates and the discount rate utilized. During the three months ended December 31, 2018, the Company recognized a fair value adjustment of $735,359 in respect of its earn-out obligation.

Cash interest paid in the year ended December 31, 2018 was $3,180,808 compared to $3,563,837 cash interest paid in 2017. As at December 31, 2018, the Company owed $70.25 million under the amended Scotia Facility as compared to $61.7 million owed at December 31, 2017. The Company anticipates that, in future, cash interest will fluctuate as the Company draws or repays on its Facility and as LIBOR rates fluctuate.

Income tax expense

For the year ended December 31, 2018, the Company recorded an income tax expense of $2,711,886 compared to income tax expense of $7,159,065 for the year ended December 31, 2017. Income tax expense relates only to income attributable to the Company’s shareholders. The Company recorded an income tax expense of $1,059,442 in the three months ended December 31, 2018 compared to $7,562,137 recorded in the three months ended December 31, 2017. In 2017, the US Federal government enacted a reduced federal tax rate. As a result, the valuation of the Company’s deferred tax assets reduced, creating additional tax expense in 2017. This is the primary driver of the decline in tax expense period over period as 2018 did not experience any significant tax rate changes.

Net and comprehensive income

For the year ended December 31, 2018, the Company recorded net and comprehensive income attributable to shareholders of the Company of $4,679,921 compared to net and comprehensive income attributable to shareholders of $12,078,853 for the year ended December 31, 2017. The decrease year over year is largely a reflection of the net finance recovery experienced in 2017 of $5,514,850, whereas the Company incurred net finance expense of $4,567,327 in 2018. This net unfavourable change in finance expense of approximately $10 million was offset by a net tax expense decrease of approximately $4.5 million, leading to a decrease in net income attributable to shareholders of approximately $7.4 million.

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For the three months ended December 31, 2018, the Company recorded net and comprehensive income attributable to shareholders of the Company of $1,711,144 compared to $8,167,640 for the same period in 2017. The decrease period over period is largely due to the unfavourable change in finance expense of approximately $11.5 million period over period, offset by a net tax expense decrease of approximately $6.5 million.

Net and comprehensive income attributable to non-controlling interest was $8,335,996 for the year ended December 31, 2018. This is an increase of 17% from 2017 and reflects the business model adopted by CRH whereby recent acquisitions, though controlled by CRH, attribute a portion of income earned to non-controlling interests. Net and comprehensive income attributable to non-controlling interests was $2,437,108 for the three months ended December 31, 2018 compared to $3,008,655 for the three months ended December 31, 2017.

Use of Non-GAAP Financial Measures

As discussed above, in addition to results reported in accordance with US GAAP, the Company uses certain non-GAAP financial measures, including adjusted operating expenses (in total and broken down by operating segment), adjusted operating EBITDA (in total and broken down as attributable to non-controlling interest and shareholders of the Company), and adjusted operating EBITDA margin as supplemental indicators of its financial and operating performance. These non-GAAP measures are not recognized measures under US GAAP and do not have a standardized meaning prescribed by U.S. Generally Accepted Accounting Principles (“US GAAP”) and thus the Company’s definition may be different from and unlikely to be comparable to non-GAAP measures presented by other companies. These measures are provided as additional information to complement US GAAP measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analyses of the Company’s financial information reported under US GAAP. Management uses these non-GAAP measures to provide investors with a supplemental measure of the Company’s operating performance and thus highlight trends in the Company’s core business that may not otherwise be apparent when relying solely on US GAAP financial measures. Management also believes that securities analysts, investors and other interested parties frequently use non-GAAP measures in the evaluation of issuers. In addition, management uses these non-GAAP measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets, and to assess its ability to meet future debt service, capital expenditure, and working capital requirements. The definitions of these measures, as well as a reconciliation of the most directly comparable financial measure calculated and presented in accordance with GAAP to each non-GAAP measure, are presented below.

Adjusted operating EBITDA: The Company defines adjusted operating EBITDA as operating earnings before interest, taxes, depreciation, amortization, stock based compensation, acquisition related expenses and asset impairment charges. Adjusted operating EBITDA is presented on a basis consistent with the Company’s internal management reports. The Company analyzes and discloses adjusted operating EBITDA to capture the profitability of its business before the impact of items not considered in management’s evaluation of operating unit performance.

Adjusted operating EBITDA margin. The Company defines adjusted operating EBITDA margin as operating earnings before interest, taxes, depreciation, amortization, stock based compensation, acquisition related expenses and asset impairment charges as a percentage of revenue. Adjusted operating EBITDA margin is presented on a basis consistent with the Company’s internal management reports. The Company analyzes and discloses adjusted operating EBITDA margin to capture the profitability of its business before the impact of items not considered in management’s evaluation of operating performance.

Adjusted operating expenses: The Company defines adjusted operating expenses as operating expenses before acquisition related expenses, stock based compensation, depreciation, amortization and asset impairment charges. Adjusted operating expenses are presented on a basis consistent with the Company’s internal management reports. The Company analyzes and discloses adjusted operating expenses to capture the operating cost of the business before the impact of items not considered in management’s evaluation of operating costs.

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The Company’s management believes that the presentation of the above defined Non-GAAP financial measures provides useful information to investors because they reflect the Company’s ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in its business. In addition, they portray the financial results of the Company before the impact of certain non-operational charges. The use of the term “non-operational charge” is defined for this purpose as an expense that does not impact the ongoing operating decisions taken by the Company’s management. These items are excluded based upon the way the Company’s management evaluates the performance of the Company’s business for use in the Company’s internal reports and are not excluded in the sense that they may be used under US GAAP.

The Company does not acquire businesses on a predictable cycle, and therefore believes that the presentation of non-GAAP measures, which adjusts for the impact of amortization of intangible assets, will provide readers of financial statements with a more consistent basis for comparison across accounting periods and be more useful in helping readers understand the Company’s operating results and underlying operational trends.

In summary, the Company believes the provision of supplemental Non-GAAP measures allow investors to evaluate the operational and financial performance of the Company’s core business using the same evaluation measures that management uses and is therefore a useful indication of CRH’s performance or expected performance of future operations and facilitates period-to-period comparison of operating performance (although prior performance is not necessarily indicative of future performance). As a result, the Company considers it appropriate and reasonable to provide, in addition to U.S. GAAP measures, supplementary Non-GAAP financial measures that exclude certain items from the presentation of its financial results.

The following charts provide unaudited reconciliations of US GAAP-based financial measures to Non-GAAP-based financial measures for the following periods presented:

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures

ADJUSTED OPERATING EBITDA

	2018										2017
(USD in thousands)	FY ‘18		Q4 ‘18		Q3 ‘18		Q2 ‘18		Q1 ‘18		FY ‘17			Q4 ‘17			Q3 ‘17			Q2 ‘17			Q1 ‘17
Net and comprehensive income		13,016		4,148		2,484		3,226		3,157		19,175			11,176			3,744			748			3,507
Net finance (income) expense		4,567		1,720		1,625		609		612		(5,515	)		(9,822	)		(392	)		3,425			1,274
Income tax expense (recovery)		2,712		1,059		390		593		669		7,159			7,562			658			(401	)		(660	)
Operating income		20,295		6,928		4,499		4,428		4,439		20,819			8,917			4,010			3,772			4,121
Amortization expense		31,390		8,313		8,185		7,695		7,196		23,755			7,185			5,904			5,608			5,057
Depreciation and related expense		96		25		24		24		23		80			25			22			20			13
Stock based compensation		2,801		600		745		719		738		4,036			738			770			743			1,786
Acquisition expenses1		107		5		59		26		18		445			97			188			88			71
Total adjusted operating EBITDA		54,689		15,871		13,512		12,893		12,414		49,134			16,963			10,894			10,230			11,048
Adjusted operating EBITDA attributable to:
Shareholders of the Company		35,833		10,656		8,515		8,429		8,231		34,336			11,489			7,775			7,352			7,719
Non-controlling interest		18,856		5,215		4,996		4,464		4,182		14,799			5,473			3,119			2,878			3,329

ADJUSTED OPERATING EBITDA MARGIN

	2018															2017
(USD in thousands)	FY ‘18			Q4 ‘18			Q3 ‘18			Q2 ‘18			Q1 ‘18			FY ‘17			Q4 ‘17			Q3 ‘17			Q2 ‘17			Q1 ‘17
Revenue		112,749			32,022			28,732			27,331			24,666			95,006			30,550			22,159			20,928			21,369
Operating income		20,295			6,928			4,499			4,428			4,439			20,819			8,917			4,010			3,772			4,121
Operating margin		18.0	%		21.6	%		15.7	%		16.2	%		18.0	%		21.9	%		29.2	%		18.1	%		18.0	%		19.3	%
Amortization expense		27.8	%		26.0	%		28.5	%		28.2	%		29.2	%		25.0	%		23.5	%		26.6	%		26.8	%		23.7	%
Depreciation and related expense		0.1	%		0.1	%		0.1	%		0.1	%		0.1	%		0.1	%		0.1	%		0.1	%		0.1	%		0.1	%
Stock based compensation		2.5	%		1.9	%		2.6	%		2.6	%		3.0	%		4.2	%		2.4	%		3.5	%		3.6	%		8.4	%
Acquisition expenses1		0.1	%		0.0	%		0.2	%		0.1	%		0.1	%		0.5	%		0.3	%		0.8	%		0.4	%		0.3	%
Total adjusted operating EBITDA margin		48.5	%		49.6	%		47.0	%		47.2	%		50.3	%		51.7	%		55.5	%		49.2	%		48.9	%		51.7	%

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ADJUSTED OPERATING EXPENSES

	2018															2017
(USD in thousands)	FY ‘18			Q4 ‘18			Q3 ‘18			Q2 ‘18			Q1 ‘18			FY ‘17			Q4 ‘17			Q3 ‘17			Q2 ‘17			Q1 ‘17
Anesthesia services expense		81,079			21,973			21,405			19,957			17,743			62,135			18,785			15,332			14,478			13,540
Amortization expense		(31,387	)		(8,312	)		(8,184	)		(7,695	)		(7,196	)		(23,752	)		(7,184	)		(5,903	)		(5,607	)		(5,057	)
Depreciation and related expense		(7	)		(2	)		(2	)		(2	)		(1	)		(9	)		(3	)		(2	)		(3	)		(2	)
Stock based compensation		(459	)		(100	)		(114	)		(132	)		(112	)		(330	)		(89	)		(62	)		(67	)		(111	)
Acquisition expenses1		(107	)		(5	)		(59	)		(26	)		(18	)		(445	)		(97	)		(188	)		(88	)		(71	)
Anesthesia services – adjusted operating expense		49,119			13,554			13,047			12,102			10,416			37,599			11,411			9,177			8,712			8,299
Product sales expense		5,023			1,265			1,182			1,359			1,217			4,998			1,408			1,199			1,231			1,160
Amortization expense		(3	)		(1	)		(1	)		(1	)		(1	)		(7	)		(1	)		(1	)		(1	)		(5	)
Depreciation and related expense		(66	)		(17	)		(16	)		(16	)		(16	)		(51	)		(16	)		(14	)		(12	)		(8	)
Stock based compensation		(289	)		(11	)		(100	)		(71	)		(107	)		(372	)		(95	)		(90	)		(76	)		(110	)
Product sales - adjusted operating expense		4,665			1,237			1,065			1,271			1,093			4,568			1,295			1,094			1,142			1,037
Corporate expense		6,352			1,855			1,644			1,586			1,267			7,054			1,441			1,617			1,448			2,547
Amortization expense		—			—			—			—			—			4			—			—			—			4
Depreciation and related expense		(23	)		(6	)		(6	)		(6	)		(5	)		(20	)		(6	)		(6	)		(5	)		(3	)
Stock based compensation		(2,053	)		(488	)		(530	)		(516	)		(519	)		(3,334	)		(553	)		(618	)		(599	)		(1,564	)
Corporate - adjusted operating expenses		4,276			1,361			1,108			1,064			743			3,704			882			994			844			985
Total operating expense		92,454			25,093			24,232			22,902			20,226			74,187			21,634			18,149			17,156			17,248
Total adjusted operating expense		58,060			16,151			15,220			14,437			12,252			45,872			13,588			11,265			10,698			10,320

¹  Acquisition expenses relating to incomplete acquisitions.

Liquidity and Capital Resources

At December 31, 2018, the Company had $9,946,945 in cash and cash equivalents compared to $12,486,884 at the end of 2017. The decrease in cash and equivalents is primarily a reflection of cash generated from operations and debt financing activities, less cash used to finance normal course issuer bid repurchases and acquisitions during 2018, less repayment of debt in the period.

Working capital was $20,012,424 at December 31, 2018 compared to working capital of $21,167,275 at December 31, 2017. The Company expects to meet its short-term obligations, including short-term obligations in respect of its notes payable and deferred consideration through cash earned through operating activities. The average number of days receivables outstanding at December 31, 2018 was 54 days. At December 31, 2017, the average number of days receivables outstanding was 42 days. Impacting the days receivable outstanding in 2018 is the implementation of the new CMS billing codes in the first quarter of 2018, which resulted in delays in the processing of payments by payors. This has had a prolonged impact in 2018, but is expected to improve in 2019.

The Company has financed its operations primarily from revenues generated from product sales and anesthesia services and through equity and debt financings and a revolving credit facility. As of December 31, 2018, the Company has raised approximately $51 million from the sale and issuance of equity securities. The Company also obtained debt financing of $52 million via senior and subordinated credit facilities in 2014 and entered into a revolving credit facility with the Bank of Nova Scotia for $33 million in 2015, which was subsequently increased to $55 million in 2016. Most recently, the Company amended its debt facility with the Bank of Nova Scotia, increasing its facility to $100 million on June 26, 2017. As at December 31, 2018, the Company owed $70.25 million under the facility. The terms of the Company’s facility is described below.

The Bank of Nova Scotia (“Scotia Facility”)

On November 24, 2015, the Company entered into a credit facility with the Bank of Nova Scotia. The Scotia Facility, which had a maturity date of April 30, 2018, provided financing of up to $55,000,000, after amendment on June 15, 2016.

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On June 26, 2017, the Company amended the Scotia Facility, which includes US Bank and JP Morgan as part of the lending syndicate, to provide financing of up to $100,000,000 via a revolving and term facility. The amended facility has a maturity date of June 26, 2020. In conjunction with this amendment, the Company incurred fees of $445,598 which were capitalized. As at December 31, 2018, the Company had drawn $70,250,000 on the amended facility (2017—$61,700,000). Since there was no reduction in borrowing capacity as a result of this amendment, no existing deferred or new financing fees were expensed upon this modification. The Facility is repayable in full at maturity, with scheduled principal repayments on a quarterly basis beginning September 30, 2017 based on the initial principal issued under the term facility. The facility bears interest at a floating rate based on the US prime rate, LIBOR or bankers’ acceptance rates plus an applicable margin. At December 31, 2018, interest on the facility is calculated at LIBOR plus 2.50% on the revolving portion and term portion of the facility. The Facility is secured by the assets of the Company. As at December 31, 2018 the Company is required to maintain the following financial covenants in respect of the Facility:

Financial Covenant	Required Ratio
Total funded debt ratio		2.50:1.00
Fixed charge coverage ratio		1.15:1.00

The Company is in compliance with all covenants at December 31, 2018.

Cash provided by operating activities for the year ended December 31, 2018 was $40,992,563 compared to $35,750,754 in the same period in fiscal 2017. Cash provided by operating activities for the quarter ended December 31, 2018 was $11,144,081 compared to $10,708,935 for the same period in fiscal 2017. Cash used in investing activities for the year ended December 31, 2018 was $27,660,941 as compared to $33,502,134 for the year ended December 31, 2017. Cash used in investing activities for the quarter-ended December 31, 2018 was $2,397,652 as compared to $8,728 for the three months ended December 31, 2017.

The Company’s near-term cash requirements relate primarily to interest payments, quarterly principal payments in respect of the Scotia Facility, annual payments in respect of the deferred consideration in relation to the Austin acquisition, purchases under the Company’s normal course issuer bid, operations, working capital and general corporate purposes, including further acquisitions. Based on the current business plan, the Company believes cash and cash equivalents and the availability of its revolving credit facility will be sufficient to fund the Company’s operating, debt repayment and capital requirements for at least the next 12 months. The Company updates its forecasts on a regular basis and will consider additional financing sources as appropriate.

The following table summarizes the relative maturities of the financial liabilities of the Company at December 31, 2018:

At December 31, 2018	Maturity
	TOTAL		Less than one year		One to three years		Four to five years		After five years
Trade and other payables	$	5,763,222	$	5,763,222	$	—	$	—	$	—
Employee benefits		827,426		827,426		—		—		—
Notes payable and bank indebtedness		75,732,207		6,190,464		69,541,743		—		—
Earn-out obligation		2,920,583		2,920,583				—		—
Deferred consideration		2,300,000		1,100,000		1,200,000		—		—
	$	87,543,438	$	16,801,695	$	70,741,743	$	—	$	—

As at December 31, 2018, the Company has no material contractual obligations, other than those obligations relating to its leases of premises and those obligations under its debt agreements, deferred consideration agreements, normal course issuer bid agreements, and earn-out obligations as described above. The minimum lease payments in respect of the Company’s leases will be $364,068 in fiscal 2019.

The Company’s earn-out obligation arose in respect of the Company’s acquisition of Gastroenterology Anesthesia Associates LLC in 2014. The Company’s earn-out obligation is recorded at fair value and reflects

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management’s best estimate of the contingent consideration payable. As at December 31, 2018, the fair value of the earn-out obligation is $2,920,583.

Deferred consideration relates to deferred consideration in respect of the Company’s Austin Gastroenterology Anesthesia Associates acquisition, which completed in 2016.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates under different assumptions or conditions.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. We believe that the assumptions and estimates associated with anesthesia revenue, the valuation of intangible assets, including our assessment of useful lives and impairment, the valuation of our earn out obligation and the valuation of our deferred tax assets have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. For further information on all of our significant accounting policies, see Note 3 — Significant Accounting Policies in the accompanying notes to consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K

Impairment and useful lives of intangible assets:

The Company’s intangible assets are comprised of purchased technology, purchased professional service agreements, and patents. The cost of the Company’s intangible assets is amortized on a straight-line basis over the estimated useful life of the asset. Factors considered in estimating the useful life of intangible assets include the expected use of the asset by the Company, legal, regulatory and contractual provisions that may limit the useful life, and the effects of competition. Costs incurred to establish and maintain patents for intellectual property developed internally are expensed in the period incurred.

The carrying amounts of the Company’s intangible assets are reviewed at each reporting date to determine whether there are any events or changes in circumstances indicated that the carrying value may not be recoverable. Example factors that could trigger impairment reviews include significant underperformance relative to historical or projected future operating results, significant changes in the use of the acquired assets or strategy for the overall business and significant negative economic trends. Depending on the specific asset and circumstances, assets are assessed for impairment as an individual asset, as part of an asset group or at the reporting unit (RU”) level. A reporting unit is an operating segment or one level below an operating segment if certain conditions are met. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of cash inflows from other assets or groups of assets.

If indicators of impairment exist, an asset or asset group is impaired if its carrying amount exceeds its fair value, being the projected future undiscounted cash flows that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset or asset group. Projected cash flows are based upon the historical results adjusted to reflect management’s best estimate of future market and operating conditions which may differ from actual cash flows.

At December 31, 2018, the Company identified indicators of impairment in respect of four of its professional services agreements. Upon performing undiscounted cash flow models for these assets, the Company identified only two assets that required further review for impairment.

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The Company performed discounted cash flow modelling for these assets and compared the resultant discounted cash flows expected over the life of the assets to the carrying amounts as at December 31, 2018. The income approach is used for the quantitative assessment to estimate the fair value of the assets, which requires estimating future cash flows and risk-adjusted discount rates in the Company’s discounted cash flow model. The overall market outlook and cash flow projections of the reporting unit involves the use of key assumptions, including anesthesia growth rates, discount rates and operating cost growth rates. Due to uncertainties in the estimates that are inherent to the Company’s industry, actual results could differ significantly from the estimates made. Many key assumptions in the cash flow projections are interdependent on each other. A change in any one or combination of these assumptions could impact the estimated fair value of the reporting unit.

As a result of this test, no write-downs to the intangible assets were required.

At December 31, 2017, the Company identified indicators of impairment in respect of two of its professional services agreements. Upon performing undiscounted cash flow models for these assets, no impairment was indicated.

Revenue recognition – Anesthesia services:

Anesthesia services revenue consists primarily of patient revenues and is recognized as services are rendered. Patient service revenue is reported net of provisions for contractual allowances and other discounts from third party payors and patients. The Company has agreements with third-party payors that provide for payments to the Company at amounts different from its established billing rates. The differences between the estimated program reimbursement rates and the standard billing rates are accounted for as contractual adjustments, which are deducted from gross revenues to arrive at net operating revenues. Retroactive adjustments, if any, are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as final settlements are determined.

Income taxes:

The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, it recognizes deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. The Company recognizes the deferred income tax effects of a change in tax rates in the period of the enactment. The Company records a valuation allowance to reduce its deferred tax assets to the net amount that management believes is more likely than not to be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than fifty percent likely of being realized. The Company records interest related to unrecognized tax benefits in interest expense and penalties in operating expenses.

Income tax expense is comprised of current and deferred tax.

Earn-out obligation:

Provisions are recognized if, as a result of a past event, it is probable that a liability has been incurred and the amount is reasonably estimable. Provisions where the timing of payments are fixed or determinable generally are determined by discounting expected future cash outflows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Management uses judgment to estimate the amount, timing and probability of the liability based on facts known at the reporting date. The unwinding of the discount is recognized as a finance expense.

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The Company’s earn-out obligation is measured at fair value on a recurring basis using significant unobservable inputs (Level 3). The Company measures the fair value of the earn-out obligation based on its best estimate of the cash outflows payable in respect of the earn-out obligation. This valuation technique includes inputs relating to estimated cash outflows under the arrangement and the use of a discount rate appropriate to the Company. The Company evaluates the inputs into the valuation technique at each reporting period.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. The Company plans to adopt the standard effective January 1, 2019 and expects nearly all operating classified leases to also be classified as operating leases under this new standard with a right-of-use asset and a corresponding obligation recognized on the balance sheet at the adoption date. The lease obligation is measured at amortized cost using the effective interest method. The Company will apply the exemption to treat short-term leases as executory contracts.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. This guidance will be effective for us in the first quarter of 2020 on a prospective basis, and early adoption is permitted. We do not expect the standard to have a material impact on our consolidated financial statements.

Off-Balance Sheet Arrangements

The Company has no material undisclosed off-balance sheet arrangements that have or are reasonably likely to have, a current or future effect on our results of operations or financial condition.

Tabular Disclosure of Contractual Obligations

Not applicable.

Outstanding Share Data

As at December 31, 2018, there were 72,055,688 common shares issued and outstanding for a total of $55,372,884 in share capital.

As at December 31, 2018, there were 1,344,687 options outstanding at a weighted-average exercise price of $0.50 per share, of which 1,344,687 were exercisable into common shares at a weighted-average exercise price of $0.50 per share. As at December 31, 2018, there were 2,545,250 share units (“SUs”) issued and outstanding.

As at March 12, 2019, there were 71,694,388 common shares issued and outstanding, excluding shares held as treasury, for a total of $55,153,945 in share capital.

As at March 12, 2019, there were 1,344,687 options outstanding at a weighted-average exercise price of $0.51 per share, of which 1,344,687 were exercisable into common shares at a weighted-average exercise price of $0.51 per share. As at March 12, 2019, there were 2,542,750 share units (“SUs”) issued and outstanding.

68

JOBS Act

In April 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

We continue the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements under the JOBS Act. Subject to certain conditions, as an emerging growth company, we may rely on certain of these exemptions. As of the date of this Annual Report, we have elected to rely on exemptions for (i) providing an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an emerging growth company until the earlier of (i) the last day of the fiscal year in which we have total annual gross revenue of $1.07 billion or more; (ii) the last day of the fiscal year following the fifth anniversary of the date of the completion of our initial public offering; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

Not applicable.

Item 8. Financial Statements and Supplementary Data

CRH Medical Corporation

Index to Consolidated Financial Statements

Year ended December 31, 2018

	Page
Report of Independent Registered Public Accounting Firm		70
Management’s Report		71
Consolidated Balance Sheets at December 31, 2018 and 2017		72
Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2018 and 2017		73
Consolidated Statements of Changes in Equity for the years ended December 31, 2018 and 2017		74
Consolidated Statements of Cash Flows for the years ended December  31, 2018 and 2017		75
Notes to the Consolidated Financial Statements		76

69

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

CRH Medical Corporation:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of CRH Medical Corporation (the Company) as of December 31, 2018 and 2017, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows for each of the years in the two year period ended December 31, 2018, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the two year period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

Change in Comprehensive Basis of Accounting

As discussed in Note 2 to the consolidated financial statements, the Company changed its comprehensive basis of accounting from International Financial Reporting Standards as issued by the International Accounting Standards Board to U.S. generally accepted accounting principles effective with the preparation of the consolidated financial statements as of and for the year ended December 31, 2018. As a result, U.S. generally accepted accounting principles were applied retrospectively to the balance sheet as of December 31, 2017, the related consolidated statements of operations and comprehensive income, cash flows, and changes in equity for the year ended December 31, 2017, and the related notes.

Change in Accounting Principle

As discussed in Note 3 to the consolidated financial statements, the Company has changed its accounting policies for revenue recognition as of January 1, 2018 due to the adoption of ASC 606 — Revenue from Contracts with Customers.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company’s auditor since 2008.

Vancouver, Canada

March 13, 2019

70

MANAGEMENT’S REPORT

The accompanying consolidated financial statements of CRH Medical Corporation are the responsibility of management and have been approved by the Board of Directors. The consolidated financial statements have been prepared by management in accordance with United States Generally Accepted Accounting Principles, and where appropriate, reflect management’s best estimates and assumptions based upon information available at the time that these estimates and assumptions were made.

Management is responsible for establishing and maintaining a system of internal controls over financial reporting designed to provide reasonable assurance as to the reliability of financial information and the safeguarding of assets.

The Board of Directors is responsible for ensuring that management fulfills its responsibility for financial reporting and internal control. The Board of Directors exercises this responsibility principally through the Audit Committee. The Audit Committee consists of directors not involved in the daily operations of the Company. The Audit Committee is responsible for engaging the external auditor and meets with management and the external auditors to satisfy itself that management’s responsibilities are properly discharged and to review the financial statements prior to their presentation to the Board of Directors for approval.

The Company’s external auditors, who are appointed by the shareholders, conducted an independent audit in accordance with the standards of the Public Company Accounting Oversight Board (United States) and express their opinion thereon.

Chief Executive Officer	Chief Financial Officer
(signed) “Edward Wright”	(signed) “Richard Bear”
March 13, 2019	March 13, 2019

71

CRH MEDICAL CORPORATION

Consolidated Balance Sheets

(Expressed in United States dollars)

As at December 31, 2018 and 2017

	Note	2018			2017
Assets
Current assets:
Cash and cash equivalents		$	9,946,945		$	12,486,884
Trade and other receivables, net	5		19,467,803			15,486,312
Income tax receivable			2,243,319			374,943
Prepaid expenses and deposits			822,119			889,882
Inventories			402,544			423,445
			32,882,730			29,661,466
Non-current assets:
Property and equipment, net	7		303,291			364,366
Intangible assets, net	8		179,384,263			170,127,415
Deferred asset acquisition costs			116,025			—
Deferred tax assets	11		6,301,687			3,802,258
			186,105,266			174,294,039
Total assets		$	218,987,996		$	203,955,505
Liabilities
Current liabilities:
Trade and other payables	6	$	5,763,222		$	5,661,844
Employee benefits			827,436			500,754
Notes payable and bank indebtedness	9		2,239,637			989,637
Deferred consideration			1,043,645			906,956
Earn-out obligation	13		2,920,583			—
Short-term advances			26,783			—
Member loan			49,000			435,000
			12,870,306			8,494,191
Non-current liabilities:
Deferred consideration			1,183,092			2,226,737
Notes payable and bank indebtedness	9		67,621,470			60,061,105
Earn-out obligation	13		—			1,875,427
Deferred tax liabilities	11		21,951			—
			68,826,513			64,163,269
Equity
Common stock, no par value; 72,055,688 and 73,018,588 shares issued and outstanding at December 31, 2018 and 2017, respectively	10		55,372,884			54,614,601
Additional paid-in capital			9,329,335			8,219,760
Accumulated other comprehensive income (loss)			(66,772	)		(66,772	)
Retained earnings			12,916,565			11,078,608
Total equity attributable to shareholders of the Company			77,552,012			73,846,197
Non-controlling interest			59,739,165			57,451,848
Total equity			137,291,177			131,298,045
Total liabilities and equity		$	218,987,996		$	203,955,505

See accompanying notes to consolidated financial statements.

Subsequent event (note 17)

Commitments and contingencies (note 14)

Approved on behalf of the Board:

(signed) “Edward Wright”	Director	(signed) “Anthony Holler”	Director
Edward Wright		Anthony Holler

72

CRH MEDICAL CORPORATION

Consolidated Statements of Operations and Comprehensive Income

(Expressed in United States dollars, except for number of shares)

Years ended December 31, 2018 and 2017

	Notes		2018		2017
Revenue:
Anesthesia services		16	$	101,790,165	$	83,505,140
Product sales		16		10,959,215		11,501,005
				112,749,380		95,006,145
Expenses:
Anesthesia services expense				81,079,150		62,135,447
Product sales expense				5,022,737		4,997,550
Corporate expense				6,352,363		7,053,863
				92,454,250		74,186,860
Operating income				20,295,130		20,819,285
Finance income		12		—		(11,825,256	)
Finance expense		12		4,567,327		6,310,406
				4,567,327		(5,514,850	)
Income before tax				15,727,803		26,334,135
Income tax expense		11		2,711,886		7,159,065
Net and comprehensive income			$	13,015,917	$	19,175,070
Attributable to:
Shareholders of the Company			$	4,679,921	$	12,078,853
Non-controlling interest				8,335,996		7,096,217
			$	13,015,917	$	19,175,070
Earnings per share attributable to shareholders
Basic		10(f)	$	0.064	$	0.164
Diluted		10(f)	$	0.063	$	0.161
Weighted average shares outstanding:
Basic		10(f)		72,582,733		73,712,670
Diluted		10(f)		74,085,172		75,056,003

See accompanying notes to consolidated financial statements.

73

CRH MEDICAL CORPORATION

Consolidated Statements of Changes in Equity

(Expressed in United States dollars, except for number of shares)

For the years ended December 31, 2018 and 2017

	Number of shares			Common stock			Additional paid-in capital			Accumulated other comprehensive loss			Retained earnings			Non-controlling interest			Total equity
Balance as at January 1, 2017		72,745,939		$	52,706,484		$	6,987,072		$	(66,772	)	$	881,695		$	36,410,456		$	96,918,935
Total net and comprehensive income for the year		—			—			—			—			12,078,853			7,096,217			19,175,070
Stock-based compensation		—			—			4,036,070			—			—			—			4,036,070
Common shares purchased on exercise of options		247,500			218,436			(65,410	)		—			—			—			153,026
Common shares issued on vesting of share units		1,292,549			2,670,951			(2,737,972	)		—			—			—			(67,021	)
Common shares repurchased in connection with normal course issuer bid and cancelled (note 10(e))		(1,267,400	)		(928,244	)		—			—			(1,780,244	)		—			(2,708,488	)
Common shares repurchased in connection with normal course issuer bid and held as treasury shares (72,400 treasury shares) (note 10(e))		—			(53,026	)		—			—			(101,696	)		—			(154,722	)
Distributions to members		—			—			—			—			—			(12,899,353	)		(12,899,353	)
Acquisition of non-controlling interest (note 4)		—			—			—			—			—			26,844,528			26,844,528
Balance as at December 31, 2017		73,018,588		$	54,614,601		$	8,219,760		$	(66,772	)	$	11,078,608		$	57,451,848		$	131,298,045
Total net and comprehensive income for the year		—			—			—			—			4,679,921			8,335,996			13,015,917
Stock based compensation expense		—			—			2,800,750			—			—			—			2,800,750
Common shares issued on vesting of share units		364,000			1,691,175			(1,691,175	)		—			—			—			—
Common shares repurchased in connection with normal course issuer bid and cancelled (note 10(e))		(1,254,500	)		(925,076	)		—			—			(2,818,472	)		—			(3,743,548	)
Common shares repurchased in connection with normal course issuer bid and held as treasury shares (10,400 treasury shares) (note 10(e))		—			(7,816	)		—			—			(23,492	)		—			(31,308	)
Cancellation of treasury shares (held as treasury shares as of 12/31/2017)		(72,400	)		—			—			—			—			—			—
Distributions to members		—			—			—			—			—			(19,289,740	)		(19,289,740	)
Acquisition of non-controlling interest (note 4)		—			—			—			—			—			13,241,061			13,241,061
Balance as at December 31, 2018		72,055,688		$	55,372,884		$	9,329,335		$	(66,772	)	$	12,916,565		$	59,739,165		$	137,291,177

See accompanying notes to consolidated financial statements.

74

CRH MEDICAL CORPORATION

Consolidated Statements of Cash Flows

(Expressed in United States dollars)

For the years ended December 31, 2018 and 2017

	Notes			2018			2017
Operating activities:
Net income				$	13,015,917		$	19,175,070
Adjustments for:
Depreciation of property, equipment and intangibles					31,486,055			23,834,400
Stock-based compensation					2,800,750			4,036,070
Unrealized foreign exchange					(4,494	)		73,735
Deferred income tax expense (recovery)					(2,407,176	)		2,755,707
Change in fair value of contingent consideration					971,627			(11,825,256	)
Accretion on contingent consideration and deferred consideration					166,575			600,602
Amortization of deferred financing fees					260,363			204,057
Loss on extinguishment of debt					—			1,408,221
Change in current tax receivable (payable)					(1,936,436	)		(1,106,541	)
Change in trade and other receivables					(3,981,491	)		(5,649,573	)
Change in prepaid expenses					171,911			(339,071	)
Change in inventories					20,902			(122,685	)
Change in trade and other payables					101,379			2,432,159
Change in employee benefits					326,681			273,880
Cash provided by operating activities					40,992,563			35,750,775
Financing activities
Proceeds from member loans					303,351			566,819
Repayment of member loans					(662,568	)		(131,819	)
Repayment of notes payable and bank indebtedness					(14,250,000	)		(52,543,750	)
Proceeds on bank indebtedness					22,800,000			68,200,000
Payment of deferred consideration					(1,000,000	)		(900,000	)
Distributions to non-controlling interest					(19,289,740	)		(12,899,353	)
Proceeds on settlement of derivative asset					—			1,313,874
Proceeds from the issuance of shares relating to stock-based compensation					—			(6,626	)
Repurchase of shares for cancellation		10	(e)		(3,774,856	)		(2,863,210	)
Cash (used in) provided by financing activities					(15,873,813	)		735,935
Investing activities
Acquisition of property and equipment					(35,105	)		(125,285	)
Deferred asset acquisition costs					(116,025	)		—
Acquisition of anesthesia services providers		4			(27,509,811	)		(33,376,849	)
Cash used in investing activities					(27,660,941	)		(33,502,134	)
Effects of foreign exchange on cash and cash equivalents					2,252			(4,696	)
Increase (decrease) in cash and cash equivalents					(2,539,939	)		2,979,880
Cash and cash equivalents, beginning of year					12,486,884			9,507,004
Cash and cash equivalents, end of year				$	9,946,945		$	12,486,884
Supplemental disclosure of cash interest and taxes paid:
Cash interest paid				$	(3,180,808	)	$	(3,563,837	)
Taxes paid				$	(7,055,498	)	$	(5,509,915	)

See accompanying notes to consolidated financial statements.

75

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

1.     Reporting entity:

CRH Medical Corporation (“CRH” or “the Company”) was incorporated on April 21, 2001 and is incorporated under the Business Corporations Act (British Columbia). The Company provides anesthesiology services to gastroenterologists in the United States through its subsidiaries and sells its patented proprietary technology for the treatment of hemorrhoids directly to physicians in the United States and Canada.

CRH principally operates in the United States and is headquartered from its registered offices located at Unit 578, 999 Canada Place, Vancouver, British Columbia, Canada.

2.     Basis of preparation:

(a)    Change in basis of presentation:

As a non-U.S. company listed on the NYSE, the United States Securities and Exchange Commission (“SEC”) requires us to perform a test on the last business day of the second quarter of each fiscal year to determine whether we continue to meet the definition of a foreign private issuer (“FPI”). Historically, we met the definition of an FPI, and as such, prepared consolidated financial statements in accordance with IFRS, reported with the SEC on FPI forms, and complied with SEC rules and regulations applicable to FPIs.

On June 30, 2018, we performed the test and determined that we no longer met the definition of a FPI. As such, from January 1, 2019, the Company is required to prepare consolidated financial statements in accordance with United States Generally Accepted Accounting Principles (“US GAAP”), report with the SEC on domestic forms, and comply with SEC rules and regulations applicable to domestic issuers.

These consolidated financial statements have been prepared in accordance with US GAAP beginning December 31, 2018 on a retrospective basis. The Company’s historical financial statements were previously presented under International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) up to and including the Company’s September 30, 2018 interim report.

(b)    Functional and presentation currency:

These consolidated financial statements are presented in United States dollars, which is the Company’s presentation currency. The functional currency of the Company and its subsidiaries is the United States dollar.

(c)    Use of estimates, assumptions and judgments:

The preparation of the Company’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Reported amounts and note disclosures reflect the overall economic conditions that are most likely to occur and anticipated measures management intends to take. Actual results could differ from those estimates.

76

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

2.     Basis of preparation (continued):

(c)    Use of estimates, assumptions and judgments (continued):

(i)    Use of estimates and assumptions:

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Significant areas requiring the use of management estimates relate to the assessment for impairment and useful lives of intangible assets, determining the fair value of share units and derivatives, estimates supporting reported anesthesia revenues, the recoverability of trade receivables, the valuation of certain long term liabilities and other assets, including liabilities relating to contingent consideration, the vesting term for share units with market and non-market based performance targets, the valuation of acquired intangibles, the valuation of deferred tax assets.

(ii)    Judgments:

Significant judgments made by management in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements includes the determination of control for the purposes of consolidation and the Company’s assessment of whether an acquisition is a business acquisition or an asset acquisition.

3.     Significant accounting policies:

The accounting policies have been applied consistently by the subsidiaries of the Company.

(a)    Basis of consolidation:

These consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities controlled by the Company through voting control and for anesthesia business, control over the assets and business operations of the subsidiary through operating agreements. Control exists when the Company has the continuing power to govern the financial and operating polices of the investee. Subsidiaries are included in the consolidated financial results of the Company from the effective date of acquisition up to the effective date of disposition or loss of control. Minority interests, if any, are valued at fair value at inception. All significant intercompany transactions and balances have been eliminated in consolidation.

(b)    Cash equivalents

The Company considers all highly liquid investments with an original maturity of 90 days or less, when acquired, to be cash equivalents.

(c)    Foreign currency:

Transactions in foreign currencies are translated to the respective functional currencies of the subsidiaries of the Company at exchange rates at the dates of the transactions.

Period end balances of monetary assets and liabilities in foreign currency are translated to the respective functional currencies using period end foreign currency rates. Foreign currency gains and

77

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

3.     Significant accounting policies (continued):

(c)    Foreign currency (continued):

losses arising from settlement of foreign currency transactions are recognized in earnings. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date on which the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

(d)    Inventories:

Inventories are measured at the lower of cost, determined using the first-in first-out method, and net realizable value. Inventory costs include the purchase price and other costs directly related to the acquisition of inventory and costs related to bringing the inventories to their present location and condition.

Net realizable value is the estimated selling price in the Company’s ordinary course of business, less the estimated costs of completion and selling expenses. All inventory held is finished goods inventory.

(e)    Property and equipment, net:

Property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

The estimated useful lives and the methods of depreciation for the current and comparative periods are as follows:

Asset	Basis	Rate
Computer equipment	Declining balance	30%
Computer software	Declining balance	100%
Furniture and equipment	Declining balance	20%
Leasehold improvements	Straight-line	Shorter of initial lease term or useful life
Injection mold	Straight-line	5 years

These depreciation methods most closely reflect the expected pattern of consumption of the future economic benefits embodied in the asset.

Estimates for depreciation methods, useful lives and residual values are reviewed at each reporting period-end and adjusted if appropriate.

78

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

3.     Significant accounting policies (continued):

(f)    Intangible assets:

Intangible assets, consisting of acquired exclusive professional service agreements to provide anesthesia services and the cost of acquiring patents, are recorded at historical cost. For patents, costs also include legal costs involved in expanding the countries in which the patents are recognized to the extent expected cash flows from those countries exceed these costs over the amortization period and costs related to new patents. The amortization term for professional services agreements are based on the contractual terms of the agreements. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives and are measured at cost less accumulated amortization and accumulated impairment losses. Intangible assets with finite lives are amortized over the following periods:

Asset	Basis		Rate
Intellectual property rights to the CRH O’Regan System		Straight-line	15 years
Intellectual property new technology		Straight-line	20 years
Exclusive professional services agreements		Straight-line	4.5 to 15 years

(g)    Impairment:

Non-financial assets:

The carrying amounts of the Company’s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there are any events or changes in circumstances indicated that the carrying value may not be recoverable. Example factors that could trigger impairment reviews include significant underperformance relative to historical or projected future operating results, significant changes in the use of the acquired assets or strategy for the overall business and significant negative economic trends. Depending on the specific asset and circumstances, assets are assessed for impairment as an individual asset, as part of an asset group or at the reporting unit (RU”) level. A reporting unit is an operating segment or one level below an operating segment if certain conditions are met. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of cash inflows from other assets or groups of assets.

If indicators of impairment exist, an asset or asset group is impaired if its carrying amount exceeds its fair value, being the projected future discounted cash flows that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset or asset group. Projected cash flows are based upon historical results adjusted to reflect management’s best estimate of future market and operating conditions which may differ from actual cash flows. Significant assumptions included in projected cash flows include anesthesia revenue growth rates, discount rates, and operating cost growth rates.

(h)    Income taxes:

The Company is subject to income taxes in Canada and the United States. Judgment is required in determining the provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.

79

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

3.     Significant accounting policies (continued):

(h)    Income taxes (continued):

The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, it recognizes deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. The Company recognizes the deferred income tax effects of a change in tax rates in the period of the enactment. The Company records a valuation allowance to reduce its deferred tax assets to the net amount that management believes is more likely than not to be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than fifty percent likely of being realized. The Company records interest related to unrecognized tax benefits in interest expense and penalties in operating expenses.

Income tax expense is comprised of current and deferred tax.

(i)    Share-based compensation:

The Company records share-based compensation related to equity classified stock options and share units granted using the fair value based method estimated using either the Black-Scholes model or Binomial method. The vesting components of graded vesting employee awards, with only a service vesting condition, are accounted for as separate share-based arrangements. Each vesting installment is measured separately and expensed over the related installment’s vesting period. Compensation cost is measured at fair value at the date of grant and expensed as employee benefits over the period in which employees unconditionally become entitled to the award. Forfeitures are estimated in recognizing share-based compensation, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting date.

Prior to January 1, 2018, each vesting tranche of equity classified non-employee awards were remeasured each reporting period at the award’s fair value each reporting period with a final measurement date of each vesting date of each vesting tranche. Post vesting, if continued services are not required, the award would become subject to other standards. Starting January 1, 2018, the accounting standards for non-employee awards were amended by ASU 2018-07 (note 3 p(v)).

(j)    Share capital:

Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares, stock options and share options are recognized as a deduction from equity, net of any tax effects.

(k)    Earnings per share:

The Company presents basic and diluted earnings per share (EPS) data for its common shares. Basic EPS is calculated by dividing the net income or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period, adjusted for own shares held, if applicable. Diluted EPS is determined by adjusting the income or loss attributable to common shareholders and the weighted average number of common shares outstanding,

80

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

3.     Significant accounting policies (continued):

(k)    Earnings per share (continued):

adjusted for own shares held if applicable, for the effects of all dilutive potential common shares. Diluted EPS for year-to-date (including annual) periods is based on the weighted average of the incremental shares included in each interim period for the year-to-date period.

(l)    Segment reporting:

The Company’s operating segments consist of the sale of medical products and the provision of anesthesia services.

(m)  Finance costs:

Finance cost is primarily comprised of interest on the Company’s notes payable and bank indebtedness and also includes the amortization of costs incurred to obtain loan financing and any fees in respect of arranging loan financing. Deferred finance costs are amortized using the effective interest method over the term of the related loan financing. Deferred finance costs are presented as a reduction to the related liability.

(n)   Asset acquisitions:

Asset acquisitions are accounted for using the cost accumulation and allocation method. The acquisition cost includes directly related acquisition costs. The cost of the acquisition is allocated to the net assets acquired on a relative fair value basis.

Contingent consideration, where the arrangement is not a derivative, is recognized when it is probable and estimable. After the initial acquisition accounting, changes in contingent and deferred consideration are recorded within finance (income) expense.

The Company’s policy is to recognize any non-controlling interest on consolidation either at fair value of the non-controlling interest or at the fair value of the proportionate share of the net assets acquired.

(o)   Revenue recognition:

Our anesthesia service revenues are derived from anesthesia procedures performed under our professional services agreements. The fees for such services are billed either to a third party payor, including Medicare or Medicaid or to the patient. We recognize anesthesia service revenues, net of contractual adjustments and implicit price concessions, which we estimate based on the historical trend of our cash collections and contractual adjustments.

Anesthesia services procedures for each patient qualify as a distinct service obligation, as they are provided simultaneously with other readily available resources during the service procedure. The transaction price is variable and not constrained. Variable consideration relates to contractual allowances, credit provisions and other discounts. The standard requires management to estimate the transaction price, including any implicit concessions from the credit approval process. The Company adopted a portfolio approach to estimate variable consideration transaction price by payor type (patient, government and/or insurer) and the specifics of the services being provided. These portfolios share characteristics such that the results of applying a portfolio approach are not materially different than if the standard was applied to individual patient contracts. Revenue is recognized upon completion of the services to the customer (patient) for practical reasons as the service period is performed over a short time period.

81

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

3.     Significant accounting policies (continued):

(o)   Revenue recognition (continued):

The Company recognizes revenue from product sales at the time the product is shipped, which is when title passes to the customer, and when all significant contractual obligations have been satisfied, collection is probable and the amount of revenue can be estimated reliably.

Product sales contracts generally contain a single distinct performance obligation, but multiple performance obligations may exist when multiple product types are ordered by a physician in a contract. The transaction price for product sales is fixed and no variable consideration exists. Contract consideration is allocated to each distinct performance obligation in the contract based upon available stand-alone selling prices obtained from historical sales transactions for each product. The Company recognizes revenue from product sales at the point in time when control of the goods passes to the customer (physician) when the product is shipped, which is when title passes to the customer and an obligation to pay for the goods arises. Shipping services performed after control has passed to the customer, if any, is a separate performance obligation, but was determined to be nominal.

(p)   Adoption of new accounting standards:

i)    Revenue from Contracts with Customers

This standard establishes a comprehensive framework for determining whether, how much and when revenue is recognized. The Company adopted the standard effective January 1, 2018 applying the full retrospective method, resulting with the standard being applied to the prior reporting period with a cumulative effect of adjustment, if any, recognized as at January 1, 2017.

The Company has elected to make use of the following practical expedients:

• incremental costs of obtaining a contract are recognized as an expense when incurred because the amortization period of the asset that the Company otherwise would have recognized is one year or less; and

• the promised amount of consideration has not been adjusted for the effects of a significant financing component because, at contract inception, the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

The adoption of this standard did not have a material impact on the results of operations or cash flows and there was no adjustment to retained earnings as at January 1, 2017. However, the standard did require the Company’s provision for net uncollectable accounts, previously recognized as bad debt expense in anesthesia services expenses, to be recognized as a reduction to anesthesia service revenues. There was no impact to the Company’s other operating segments. For the year ended December 31, 2017, the adoption of the standard resulted in a reduction of anesthesia services revenue and a similar reduction of anesthesia services expenses of $5,235,934.

ii)    Financial Instruments – Overall

In January 2016, FASB issued ASU No. 2016-01, “Financial Instruments – Overall,” which requires equity investments, not subject to consolidation or equity accounting, to be measured at fair value at fair value and fair value through profit and loss subsequently, unless a practical exception applies. This update did not change the classification and measurement of investments in debt securities and loans.

82

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

3.     Significant accounting policies (continued):

(p)   Adoption of new accounting standards (continued):

ii)    Financial Instruments – Overall (continued)

This standard was effective January 1, 2018 and it had no impact on the Company’s balance sheet, results of operations or cash flows.

iii)    Employee Share-based Payments

In March 2016, FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting”, which requires companies to recognize the income tax effects of awards in the income statement when awards vest or are settled. The Company adopted the standard effective January 1, 2017, with no cumulative transition impact. The Company recognized a tax recovery of $952,495 related to awards that were either exercised or vested during the year ended December 31, 2017.

iv)    Clarifying the Definition of a Business

In January 2017, FASB issued ASU No. 2017-01, “Business Combinations (Topic 805) – Clarifying the Definition of a Business”, which changes the definition of a business to assist entities with evaluating when a set of transferred assets is a Business and business acquisition or an asset acquisition. This guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. This guidance is effective for annual periods beginning after December 15, 2017 and can be early adopted in certain situations and is applied prospectively to acquisitions after the effective date of adoption only. The Company early adopted this standard and concluded that all previously reported business combinations in 2017 would be asset acquisitions under this new guidance. The change in classification to asset acquisitions resulted in an increase to the cost allocation to PSA intangible assets due to the capitalization of acquisition costs of $223,581. As a result, anesthesia services expenses reduced by $194,326 for the year ended December 31, 2017 and the net allocation to PSA intangible asset, minority interest and retained earnings increased by $381,794, $173,194 and $14,274, respectively, as at December 31, 2017.

v)    Nonemployee Share-Based Payment Accounting

In June 2018, FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718) – Improvements to Non-Employee Share-based Payment Accounting”, which is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. This ASU substantially aligns non-employee award accounting with employee awards accounting under ASC 718, with the exception of attribution of compensation costs and certain inputs used to value non-employee awards. Vested non-employee awards will continued to be accounted under ASC 718 unless they are modified after the non-employee stops providing goods and services. The ASU is applied to unsettled liability awards and equity classified awards for which a measurement date has not been established only at the effective adoption date using the modified retrospective method. This standard is effective for fiscal years beginning after December 15, 2018, but may be early adopted. The Company adopted this ASU on January 1, 2018 and it had no impact on the Company’s balance sheet, results of operations or cash flows.

83

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

3.     Significant accounting policies (continued):

(q)   New standards and interpretations not yet applied:

(i)    ASU 2016-02 Leases

In February 2016, FASB issued ASU No. 2016-02 “Leases”, and subsequently ASU No. 2017-13, establishes principles for the recognition, measurement, presentation and disclosure of leases. The standard requires lessees to recognize most leases on the balance sheet and certain limited changes to lessor accounting. The standard is effective for annual periods beginning after December 15, 2018, with early adoption permitted. The standard requires a modified retrospective application to all leases outstanding at, or entered into after the date of initial application, with options to use various transitional relief. The Company plans to adopt the standard effective January 1, 2019 and expects nearly all operating classified leases to also be classified as operating leases under this new standard with a right-of-use asset and a corresponding obligation recognized on the balance sheet at the adoption date. The lease obligation is measured at amortized cost using the effective interest method. The Company will apply the exemption to treat short-term leases as executory contracts. The Company has evaluated the impact of this standard and determined that the impact from this ASU on its consolidated balance sheet, results of operations and cash flows is not material at January 1, 2019.

(ii)    Credit Losses

In June 2016, FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326)”, which requires companies to measure credit losses on financial instruments measured at amortized cost applying an “expected credit loss” model based upon past events, current conditions and reasonable and supportable forecasts that affect collectability. Previously, companies applied an “incurred loss” methodology for recognizing credit losses. This standard is effective for fiscal years beginning after December 15, 2019, but may be early adopted by the Company on January 1, 2019.

The Company is in the process of evaluating the impact of this standard on its balance sheet, results of operations and cash flows.

4.     Asset acquisitions:

During the year ended December 31, 2018, the Company completed five asset acquisitions. These asset acquisitions have been included in the anesthesia segment of the Company and represents the following:

Acquired Operation	Date Acquired	Consideration
Shreveport Sedation Associates LLC (“SSA”)	March 2018	$	9,495,184
Western Ohio Sedation Associates LLC (“WOSA”)	May 2018	$	6,483,698
Lake Washington Anesthesia LLC (“LWA”)	July 2018	$	5,041,939
Lake Erie Sedation Associates LLC (“LESA”)	September 2018	$	4,233,115
Tennessee Valley Anesthesia Associates LLC (“TVAA”)	December 2018	$	2,255,875

The results of operations of the acquired entities have been included in the Company’s consolidated financial statements from the date of acquisition as the Company has control over these entities.

84

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

4.     Asset acquisitions (continued):

The following table summarizes the fair value of the consideration transferred and the allocated costs of the assets and liabilities acquired at the acquisition date.

	SSA			WOSA			LWA			LESA			TVAA			Total
Cash	$	9,404,148		$	6,409,000		$	5,000,000		$	4,180,000		$	2,200,000		$	27,193,148
Acquisition Costs		91,036			74,698			41,939			53,115			55,875			316,663
Purchase consideration	$	9,495,184		$	6,483,698		$	5,041,939		$	4,233,115		$	2,255,875		$	27,509,811
Non-controlling interest	$	—		$	6,229,435		$	4,844,217		$	—		$	2,167,409		$	13,241,061
	$	9,495,184		$	12,713,133		$	9,886,156		$	4,233,115		$	4,423,284		$	40,750,872
Assets and liabilities acquired:
Exclusive professional services agreements	$	9,391,036		$	12,713,133		$	9,886,155		$	4,233,115		$	4,423,284		$	40,646,723
Prepaid expenses and deposits		104,149			—			—			—						104,149
Pre-close accounts receivable		—			—			652,506			—						652,506
Pre-close accounts payable		—			—			(652,506	)		—						(652,506	)
Fair value of net identifiable assets and liabilities acquired	$	9,495,185		$	12,713,133		$	9,886,155		$	4,233,115		$	4,423,284		$	40,750,872
Exclusive professional services agreements – amortization term		7 years			10 years			7 years			10 years			7 years
CRH ownership interest		100	%		51	%		51	%		100	%		51	%

The value of the acquired intangible assets, being exclusive professional services agreements, relate to the acquisition of exclusive professional services agreements to provide professional anesthesia services. The amortization term for the agreements is based upon contractual terms within the acquisition agreement and professional services agreement.

The non-controlling interest was determined with reference to the non-controlling interest shareholder’s share of the fair value of the net identifiable assets as estimated by the Company.

The Company has obtained control over the acquired assets via the Company’s majority ownership in the shares of the entities and its agreements with the non-controlling interest shareholders.

85

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

4.     Asset acquisitions (continued):

For those asset acquisitions where CRH ownership interest is less than 100%, in conjunction with the acquisition, both the Company and the non-controlling interest shareholder contributed loans. The terms of the loans are such that they will be repaid first, prior to any future distributions and are non-interest bearing.

	SSA		WOSA		LWA		LESA		TVAA		Total
CRH member loan	$	—	$	193,800	$	—	$	—	$	51,000	$	244,800
Non-controlling interest member loan	$	—	$	186,200	$	—	$	—	$	49,000	$	235,200
Amount outstanding at December 31, 2018	$	—	$	—	$	—	$	—	$	100,000	$	100,000

In conjunction with the LWA acquisition, the non-controlling interest shareholder of LWA provided a working capital advance to LWA totaling $254,351 at July 1, 2018. The balance of the advance at December 31, 2018 is $26,783.

The Company also incurred legal costs of $116,025 associated with its acquisition of the assets of Anesthesia Care Associates, LLC (“ACA”) which closed subsequent to December 31, 2018 (see note 17). These costs are deferred as of December 31, 2018 on the statements of financial position.

In October 2018, the Company entered into an agreement with Digestive Health Specialists (“DHS”), located in North Carolina, to assist DHS in the development and management of a monitored anesthesia care program. Under the terms of the agreement, CRH is a 15% equity owner in the anesthesia business, Triad Sedation Associates LLC, and receives compensation for its billing and collection services. Under the terms of the limited liability company agreement, CRH has the right, at CRH’s option, to acquire an additional 36% interest in the anesthesia business at a future date, but no sooner than November 2019. The Company assessed and concluded that CRH does not have significance influence over TSA. The option agreement was determined to be an executory contract and both the equity interest and option agreement were determined to have only nominal value upon grant and as at December 31, 2018.

During the year ended December 31, 2017, the Company completed six asset acquisitions. All asset acquisitions completed during the period have been included in the anesthesia segment of the Company and include the following:

Acquired Operation	Date Acquired	Consideration
DDAB, LLC (“DDAB”)	February 2017	$	5,278,940
Osceola Gastroenterology Anesthesia Associates, LLC (“OGAA”)	March 2017	$	3,452,247
West Florida Anesthesia Associates, LLC (“WFAA”)	August 2017	$	5,904,980
Central Colorado Anesthesia Associates, LLC (“CCAA”)	September 2017	$	7,909,243
Raleigh Sedation Associates, LLC & Blue Ridge Sedation Associates, PLLC (“RSA”)	September 2017	$	7,328,060
Alamo Sedation Associates, LLC (“ASA”)	September 2017	$	3,503,379

The results of operations of the acquired entities have been included in the Company’s consolidated financial statements from the date of acquisition as the Company has control over these entities.

86

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

4.     Asset acquisitions (continued):

The following table summarizes the fair value of the consideration transferred and the allocated costs of the assets and liabilities acquired at the acquisition date.

	DDAB			OGAA			WFAA			CCAA			RSA			ASA			Total
Cash and acquisition costs	$	4,089,791		$	3,401,819		$	5,840,000		$	7,888,919		$	7,248,960		$	3,500,000		$	31,969,489
Acquisition costs		5,370			50,428			64,980			20,324			79,100			3,379			223,581
Contingent consideration		1,183,779			—			—			—			—			—			1,183,779
Purchase consideration	$	5,278,940		$	3,452,247		$	5,904,980		$	7,909,243		$	7,328,060		$	3,503,379			33,376,849
Non-controlling interest		5,071,922			2,301,498			4,831,346			7,599,077			7,040,685			—			26,844,528
	$	10,350,862		$	5,753,745		$	10,736,326		$	15,508,320		$	14,368,745		$	3,503,379		$	60,221,377
Assets and liabilities acquired:
Exclusive professional services agreements		10,350,862		$	5,753,745		$	10,724,338		$	15,508,320		$	14,368,745		$	3,503,379		$	60,209,389
Pre-close trade receivables		525,000			—			—			—			—			—			525,000
Pre-close trade payables		(525,000	)		—			—			—			—			—			(525,000	)
Prepaid expenses and deposits		—			—			11,988			—			—			—			11,988
Fair value of net identifiable assets and liabilities acquired	$	10,350,862		$	5,753,745		$	10,736,326		$	15,508,320		$	14,368,745		$	3,503,379		$	60,221,377
Exclusive professional services agreements – amortization term		4.5 years			5 years			15 years			7 years			5 years			7 years
CRH ownership interest		51	%		60	%		55	%		51	%		51	%		100	%

The value of the acquired intangible assets, being exclusive professional services agreements relate to the acquisition of exclusive professional services agreements to provide professional anesthesia services. The amortization terms for the agreements are based upon contractual terms within the acquisition agreements and professional services agreements.

The non-controlling interest was determined with reference to the non-controlling interest shareholders share of the fair value of the net identifiable assets as estimated by the Company.

The Company has obtained control over the acquired assets via the Company’s majority ownership in the shares of the entities and its agreements with the non-recurring interest shareholders.

87

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

4.     Asset acquisitions (continued):

For those asset acquisitions where CRH ownership interest is less than 100%, in conjunction with the acquisition, both the Company and the non-controlling interest shareholder contributed loans. The terms of the loans are such that they will be repaid first, prior to any future distributions and are non-interest bearing.

	DDAB		OGAA		WFAA		CCAA		RSA		ASA		Total
CRH member loan	$	—	$	90,000	$	82,500	$	178,500	$	204,000	$	—	$	555,000
Non-controlling interest member loan	$	—	$	60,000	$	67,500	$	171,500	$	196,000	$	—	$	495,000
Amount outstanding at December 31, 2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—

In conjunction with the acquisition, the non-controlling interest shareholder of DDAB provided a working capital advance to DDAB totaling $71,819 at March 31, 2017. The working capital advance was repaid as of December 31, 2017.

5.     Trade and other receivables:

	2018			2017
Trade receivables, gross	$	19,373,260		$	15,325,553
Other receivables		141,141			260,759
Less: allowance for doubtful accounts		(46,598	)		(100,000	)
	$	19,467,803		$	15,486,312
Anesthesia segment – trade receivables, gross		18,199,847			13,405,303
Product segment – trade receivables, gross		1,173,413			1,920,250
	$	19,373,260		$	15,325,553

6.     Trade and other payables:

	2018		2017
Trade payables	$	1,316,821	$	2,042,487
Payments due to former owners of acquired entities		—		76,403
Accruals and other payables		4,446,401		3,542,954
	$	5,763,222	$	5,661,844

88

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

7.    Property and equipment:

Property and equipment consist of the following:

	December 31,
	2018			2017
Computer equipment and software	$	94,566		$	82,055
Furniture and equipment		237,616			215,021
Leasehold improvements		5,784			5,784
Injection mold		408,062			408,062
Property and equipment	$	746,028		$	710,922
Less: Accumulated depreciation		(442,737	)		(346,556	)
Property and equipment, net	$	303,291		$	364,366

8.    Intangible assets:

	Professional Services Agreements		Patents		Total
Cost
Balance as at January 1, 2017		155,635,148		532,598		156,167,746
Additions through asset acquisitions (note 4)		60,209,389		—		60,209,389
Balance as at December 31, 2017	$	215,844,537	$	532,598	$	216,377,135
Additions through asset acquisitions (note 4)		40,646,723		—		40,646,723
Balance as at December 31, 2018	$	256,491,260	$	532,598	$	257,023,858

	Professional Services Agreements		Patents			Total
Accumulated depreciation
Balance as at January 1, 2017		21,999,771		500,664			22,500,435
Amortization expense		23,752,532		(3,247	)		23,749,285
Balance as at December 31, 2017	$	45,752,303	$	497,417		$	46,249,720
Amortization expense		31,387,429		2,446			31,389,875
Balance as at December 31, 2018	$	77,139,732	$	499,863		$	77,639,595

	Professional Services Agreements		Patents		Total
Net book value
December 31, 2018	$	179,351,528	$	32,735	$	179,384,263
December 31, 2017	$	170,092,234	$	35,181	$	170,127,415

At December 31, 2018, the Company identified indicators of impairment in respect of four of its professional services agreements. Upon performing undiscounted cash flow models for these assets, the Company identified only two assets that required further review for impairment.

89

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

8.    Intangible assets (continued):

The Company performed discounted cash flow modelling for these assets and compared the resultant discounted cash flows expected over the life of the assets to the carrying amounts as at December 31, 2018. The income approach is used for the quantitative assessment to estimate the fair value of the assets, which requires estimating future cash flows and risk-adjusted discount rates in the Company’s discounted cash flow model. The overall market outlook and cash flow projections of the reporting unit involves the use of key assumptions, including anesthesia growth rates, discount rates and operating cost growth rates. Due to uncertainties in the estimates that are inherent to the Company’s industry, actual results could differ significantly from the estimates made. Many key assumptions in the cash flow projections are interdependent on each other. A change in any one or combination of these assumptions could impact the estimated fair value of the reporting unit.

As a result of this test, no write-downs to the intangible assets were required.

At December 31, 2017, the Company identified indicators of impairment in respect of two of its professional services agreements. Upon performing undiscounted cash flow models for these assets, no impairment was indicated.

Various of the Company’s professional services agreements are subject to renewal terms. The weighted average period before the Company’s professional services agreements are up for renewal is 4 years. The Company anticipates that it will be able to renew all contract terms under its professional services agreements. The weighted average remaining amortization period for the Company’s professional services agreements is 6.23 years.

Based on the Company’s professional services agreements in place at December 31, 2018, the Company anticipates that the amortization expense to be incurred by the Company over the next five years is as follows:

	Amortization Expense
For professional services agreements as at December 31, 2018:
2019	$	33,674,000
2020		33,593,000
2021		28,287,000
2022		21,565,000
2023		17,419,000
	$	134,538,000

9.    Notes payable:

	December 31,
	2018		2017
Current portion	$	2,239,637	$	989,637
Non-current portion		67,621,470		60,061,105
Total loans and borrowings	$	69,861,107	$	61,050,742

90

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

9.    Notes payable (continued):

The Bank of Nova Scotia (“Scotia Facility”)

On November 24, 2015, the Company entered into a credit facility with the Bank of Nova Scotia. The facility, which had a maturity date of April 30, 2018, provided financing of up to $55,000,000, after amendment on June 15, 2016.

On June 26, 2017, the Company amended the Scotia Facility to provide financing of up to $100,000,000 via a revolving and term facility. The amended facility has a maturity date of June 26, 2020. In conjunction with this amendment, the Company incurred fees of $445,598 which were capitalized. As at December 31, 2018, the Company had drawn $70,250,000 on the amended facility (2017 – $61,700,000). Since there was no reduction in borrowing capacity as a result of this amendment, no existing deferred or new financing fees were expensed upon this modification. The Facility is repayable in full at maturity, with scheduled principal repayments on a quarterly basis beginning September 30, 2017 based on the initial principal issued under the term facility. The facility bears interest at a floating rate based on the US prime rate, LIBOR or bankers’ acceptance rates plus an applicable margin. At December 31, 2018, interest on the facility is calculated at LIBOR plus 2.50% on the revolving portion and term portion of the facility. The Facility is secured by the assets of the Company. As at December 31, 2018 the Company is required to maintain the following financial covenants in respect of the Facility:

Financial Covenant	Required Ratio
Total funded debt ratio		2.50:1.00
Fixed charge coverage ratio		1.15:1.00

The Company is in compliance with all covenants at December 31, 2018.

The consolidated minimum loan payments (principal) for all loan agreements in the future are as follows:

	Minimum Principal
At December 31, 2018
2019	$	2,500,000
2020		67,750,000
	$	70,250,000

10.  Share capital:

(a)   Authorized:

100,000,000 common shares without par value.

(b)   Issued and outstanding – common shares:

Other than in connection with shares issued in respect of the Company’s share unit and share option plans and in connection with the Company’s normal course issuer bid (note 16(e)), there were no share transactions in the years ended December 31, 2018 and 2017.

91

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

10.  Share capital (continued):

(c)   Stock option plan:

Under the Company’s Stock Option Plan, the Company may grant options to its directors, officers, consultants and eligible employees. The plan provides for the granting of stock options at the fair market value of the Company’s stock at the date of grant, and the term of options range from two to ten years. The Board of Directors may, in its sole discretion, determine the time during which options shall vest and the method of vesting. All options under the Plan will be subject to vesting provisions determined by the Board of Directors, over a period of not less than 18 months, in equal portions on a quarterly basis. Options granted to consultants providing investor relations activities will vest at the end of 12 months or longer from the date of issuance. As of December 31, 2018, the Company is authorized to grant 2,258,097 awards under its stock options plan, but has chosen not to issue further awards under its stock option plan. A summary of the status of the plan as of December 31, 2018 and 2017 is as follows (options are granted in CAD and USD amounts are calculated using prevailing exchange rates):

	Number of options			Weighted average exercise price
				CAD		USD
Outstanding, January 1, 2017		1,603,124		$	0.63	$	0.47
Issued		—			—		—
Exercised		(247,500	)		0.32		0.25
Forfeited		(10,937	)		0.60		0.48
Expired		—			—		—
Outstanding, December 31, 2017		1,344,687			0.69		0.55
Issued		—			—		—
Exercised		—			—		—
Forfeited		—			—		—
Expired		—			—		—
Outstanding, December 31, 2018		1,344,687			0.69		0.50

All options are vested as of December 31, 2018 and 2017.

For those options that vested in 2017, the intrinsic value of the options that vested was $1,198,495 and the fair value of the options that vested was $147,730.

The following table summarizes information about the stock options outstanding as at:

December 31, 2018:

Exercise price

Options outstanding

Options exercisable

$CAD

$USD

Number of options

Weighted average remaining contractual life (years)

Weighted average exercise price ($CAD)

Weighted average exercise price ($USD)

Number of options

Weighted average exercise price ($CAD)

Weighted average exercise price ($USD)

0.44 – 0.51

1,344,687

5.05

0.69

0.50

1,344,687

0.69

0.50

92

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

10.  Share capital (continued):

(c)   Stock option plan (continued):

All options are vested as of December 31, 2018 and 2017.

December 31, 2017:

Exercise price

Options outstanding

Options exercisable

$CAD

$USD

Number of options

Weighted average remaining contractual life (years)

Weighted average exercise price ($CAD)

Weighted average exercise price ($USD)

Number of options

Weighted average exercise price ($CAD)

Weighted average exercise price ($USD)

0.60 – 0.70

0.48 – 0.56

1,344,687

6.05

0.69

0.55

1,272,812

0.68

0.54

As of December 31, 2017, 1,272,812 options are vested.

For the year ended December 31, 2018, the Company recognized $468 (2017 – $22,179), in compensation expense as a result of stock options awarded and vested. Compensation expense is recorded in the consolidated statement of operations and comprehensive income and is allocated to product sales expenses, corporate expenses and anesthesia expenses on the same basis as the allocations of cash compensation.

(d)   Share unit plan:

In June 2017, the shareholders of the Company approved a Share Unit Plan. Employees, directors and eligible consultants of the Company and its designated subsidiaries are eligible to participate in the Share Unit Plan. In accordance with the terms of the plan, the Company will approve those employees, directors and eligible consultants who are entitled to receive share units and the number of share units to be awarded to each participant. Each share unit awarded conditionally entitles the participant to receive one common share of the Company upon attainment of the share unit vesting criteria. The vesting of share units is conditional upon the expiry of time-based vesting conditions or performance-based vesting conditions or a combination of the two. Once the share units vest, the participant is entitled to receive the equivalent number of underlying common shares; the Company issues new shares in satisfying its obligations under the plan. As at December 31, 2018, the Company is authorized to grant 1,057,534 awards under its share unit plan.

93

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

10.  Share capital (continued):

(d)   Share unit plan (continued):

A summary of the status of the plan as of December 31, 2018 and 2017 is as follows:

	Time based share units			Performance based share units
Outstanding, January 1, 2017		1,068,000			2,350,000
Issued		324,000			—
Exercised		(302,000	)		(1,000,000	)
Forfeited		(53,500	)		—
Expired		—			—
Outstanding, December 31, 2017		1,036,500			1,350,000
Vested		—			—
Expected to vest		1,036,500			1,100,000
Outstanding, January 1, 2018		1,036,500			1,350,000
Issued		452,125			150,000
Exercised		(364,000	)		—
Forfeited		(79,375	)		—
Expired		—			—
Outstanding, December 31, 2018		1,045,250			1,500,000
Vested		—			—
Expected to vest		1,045,250			1,100,000

	Time based share units		Performance based share units
Outstanding, January 1, 2017		1,036,500		1,350,000
Weighted average contractual life (years)		2.96		8.86
Outstanding, December 31, 2017		1,045,250		1,500,000
Weighted average contractual life (years)		2.74		7.99

During the year ended December 31, 2018, the Company granted 452,125 time based share units and 150,000 performance based share units. The weighted average fair value for the time based units at the date of grant was $3.45 (CAD$4.71) per unit and the weighted average fair value per unit for the performance based share units granted in the in the period was $2.78 (CAD$3.79) per unit. The fair value per unit was based on the market value of the underlying shares at the date of issuance.

During the year ended December 31, 2018, the Company issued 364,000 shares in respect of the 364,000 time-based share units which vested during the year.

During the year ended December 31, 2017, the Company issued 324,000 share units (“Time based share units”). The weighted average fair value per unit was $3.31 (CAD$4.16) based on the market value of the underlying shares at the date of issuance.

During the year ended December 31, 2017, 1,000,000 of those Performance based share units which vest upon the Company meeting certain market-based performance targets vested. Upon vesting, the

94

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

10.  Share capital (continued):

(d)   Share unit plan (continued):

Company issued 1,000,000 common shares. The Company also issued net shares of 292,549 in respect of 302,000 time-based share units which vested during the year.

During the year ended December 31, 2018, the Company recognized $2,800,280 (2017 – $4,013,891), in compensation expense in relation to the granting and vesting of share units.

(e)   Normal Course Issuer Bid:

On November 6, 2017, the Board of Directors of the Company approved a normal course issuer bid to purchase outstanding shares of the Company. On November 8, 2018, the Company’s normal course issuer bid was renewed. Under the renewed bid, the Company may purchase up to 7,044,410 shares pursuant to the bid, representing no more than 10.0% of the Company’s shares outstanding on October 31, 2018. All purchases of shares under the bid are made pursuant to an Automated Share Purchase Plan. Subject to any block purchases made in accordance with the rules of the TSX, the bid is subject to a daily repurchase maximum of 46,958 shares. Shares are purchased at the market price of the shares at the time of purchase and are purchased on behalf of the Company by a registered investment dealer through the facilities of the TSX or alternative Canadian and US marketplaces.

During 2018, the Company repurchased 1,264,900 of its shares for a total cost, including transaction fees, of $3,784,733 (CAD$4,945,155). As at December 31, 2018, 1,254,500 of these shares have been cancelled with the remaining 10,400 shares cancelled on January 4, 2019.

As of December 31, 2017, the Company repurchased 1,339,800 of its shares for a total cost, including transaction fees, of $2,872,713 (CAD$3,669,120). As at December 31, 2017, 1,267,400 of these shares had been cancelled with the remaining 72,400 shares cancelled on January 5, 2018.

(f)   Earnings per share:

The calculation of basic earnings per share for the years ended December 31, 2018 and 2017 is as follows:

	2018						2017
	Net earnings		Weighted average number of common shares outstanding		Per share amount		Net earnings		Weighted average number of common shares outstanding		Per share amount
Net earnings attributable to shareholders:
Earnings per common share:
Basic	$	4,679,921		72,582,733	$	0.064	$	12,078,853		73,712,670	$	0.164
Share options				1,122,708						925,286
Share units				379,731						418,047
Diluted	$	4,679,921		74,085,172	$	0.063	$	12,078,853		75,056,003	$	0.161

95

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

10.    Share capital (continued):

(f)   Earnings per share (continued):

For the year ended December 31, 2018, 221,979 options (2017 – 539,624) and 2,095,260 share units (2017 – 2,094,363) were excluded from the diluted weighted average number of common shares calculation.

The average market value of the Company’s shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for the period during which the options were outstanding. The treasury method is used to determine the calculation of dilutive shares.

11.    Income taxes:

(a)   Income tax expense is comprised of the following:

	2018			2017
Current tax expense	$	5,119,062		$	4,403,358
Deferred tax expense (recovery):		(2,407,176	)		2,755,707
Total tax expense (recovery)	$	2,711,886		$	7,159,065

The reconciliation of income tax computed at statutory tax rates to income tax expense, using a 27% (2017 – 23%) statutory rate, is:

	2018			2017
Net income before tax – Canada	$	5,957,089		$	10,239,231
Net income before tax – United States		9,770,714			16,094,904
Net income before tax – All jurisdictions	$	15,727,803		$	26,334,135
Tax expense at statutory income tax rates	$	4,259,890		$	6,060,003
Permanent differences		503,964			(513,050	)
Income attributable to non-controlling interest		(2,245,809	)		(1,571,060	)
Foreign income taxed at different rates		(26,042	)		1,458,302
Impact of change in tax rates		216,295			1,767,124
Other		3,588			(42,254	)
Total tax expense (recovery)	$	2,711,886		$	7,159,065

In 2018, the Canadian statutory tax rate increased from 26% to 27% due to a 1% increase in the provincial rate. The Company’s statutory tax rate in Canada in 2017 was lower, at 23%, as a result of the IBA patent program in Canada, which was cancelled at the end of 2017.

On December 22, 2017, in the United States the 2017 Tax Cuts and Jobs Act (the 2017 Act) was enacted into law. The 2017 Act contains several key tax provisions, including a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. At December 31, 2017, the Company’s deferred tax balances for its U.S. subsidiaries have been re-measured based on the newly enacted tax rates at which the deferred tax assets and liabilities are expected to reverse in future fiscal years. As a result of tax legislation enacted in the U.S. at the end of 2017, the federal corporate tax rate applicable to years after 2017 was substantially reduced.

96

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

11.    Income taxes (continued):

(b)   Deferred tax assets and liabilities:

The Company had the following deferred tax assets and liabilities resulting from temporary differences recognized for financial statement and income tax purposes.

	2018			2017
Deferred tax assets:
Property and equipment	$	356			3,501
Intangible assets		4,752,898			2,448,322
Finance related costs		375,182			472,428
Reserves		—			34,048
Share transaction costs		87,337			196,508
Stock-based compensation		534,926			410,448
Earn-out obligation		732,986			499,052
Deferred tax liabilities:
Property and equipment		(40,357	)		(3,396	)
Deferred consideration		(18,388	)		(44,255	)
Reserves		(55,568	)		(41,205	)
Unrealized foreign exchange		(20,698	)		—
Finance related costs		(68,938	)		(173,193	)
Net deferred tax asset	$	6,279,736		$	3,802,258

Deferred tax assets by jurisdiction	2018			2017
Canada:
Deferred tax asset	$	87,343		$	200,009
Deferred tax liability		(109,294	)		(173,194	)
Net deferred tax asset (liability)	$	(21,951	)	$	26,815
United States:
Deferred tax asset	$	6,396,340		$	3,864,298
Deferred tax liability		(94,654	)		(88,855	)
Net deferred tax asset (liability)	$	6,301,687		$	3,775,443

The realization of deferred income tax assets is dependent on the generation of sufficient taxable income during future periods in which the temporary differences are expected to revers. If it is more likely than not that all or a portion of deferred tax assets will not be realized, a valuation allowance is provided against such deferred tax assets. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

As at December 31, 2018 and 2017, the Company had no valuation allowance against its deferred income tax assets. The Company currently does not have any unrecognized tax benefits or uncertain tax positions.

The Company currently files income tax returns in Canada and the US, the jurisdiction in which the Company believes that it is subject to tax. Management is not aware of any material income tax

97

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

11.    Income taxes (continued):

(b)   Deferred tax assets and liabilities (continued):

examination currently in progress by any taxing jurisdiction. Tax years ranging from 2016 to 2018 remain subject to Canadian income tax examinations. Tax years ranging from 2015 to 2018 remain subject to U.S. income tax examinations.

12.    Net finance expense

Recognized in earnings in the years ended December 31:

	2018		2017
Finance income:
Foreign exchange gain	$	—	$	—
Net change in fair value of financial liabilities at fair value through earnings (note 13)		—		(11,825,256	)
Total finance income	$	—	$	(11,825,256	)
Finance expense:
Interest and accretion expense on borrowings	$	3,168,762	$	3,322,321
Accretion expense on earn-out obligation and deferred consideration		166,575		600,602
Amortization of deferred financing fees		260,363		204,057
Net change in fair value of financial liabilities at fair value through earnings		971,627		—
Foreign exchange loss		—		88,084
Extinguishment of notes payable and bank indebtedness		—		2,044,867
Other		—		50,475
Total finance expense	$	4,567,327	$	6,310,406
Net finance (income) expense	$	4,567,327	$	(5,514,850	)

13.    Financial instruments:

The Company’s financial instruments consist of cash and cash equivalents, trade and other receivables, trade and other payables, employee benefit obligations, short term advances, loans, notes payable and bank indebtedness, deferred consideration and the Company’s earn-out obligation. The fair values of these financial instruments, except the notes payable balances, the deferred consideration and the earn-out obligation, approximate carrying value because of their short-term nature. The earn-out obligation is recorded at fair value. The fair value of the notes payable and bank indebtedness, which is comprised of the Scotia Facility, approximates carrying value as it is a floating rate instrument. The Company’s deferred consideration was initially measured at fair value and is being accreted to its face value over a period of four years from the acquisition date. The amounts payable as deferred compensation are specified in the acquisition agreement for Austin Gastroenterology Anesthesia Associates LLC, which was acquired in 2016.

An established fair value hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization

98

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

13.    Financial instruments (continued):

within the fair value hierarchy is based upon the lowest level of input that is available and significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value:

• Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Liabilities	December 31, 2018		Level 1		Level 2		Level 3
Earn-out obligation	$	2,920,583	$	—	$	—	$	2,920,583
Total	$	2,920,583	$	—	$	—	$	2,920,583
Liabilities	December 31, 2017		Level 1		Level 2		Level 3
Earn-out obligation	$	1,875,427	$	—	$	—	$	1,875,427
Total	$	1,875,427	$	—	$	—	$	1,875,427

The Company’s earn-out obligation is measured at fair value on a recurring basis using significant unobservable inputs (Level 3). The earn-out obligation relates to the Company’s Gastroenterology Anesthesia Associates LLC acquisition, which was acquired in 2014. As part of the business combination, the Company is required to pay consideration contingent on the post-acquisition earnings of the acquired asset. The Company measures the fair value of the earn-out obligation based on its best estimate of the cash outflows payable in respect of the earn-out obligation. This valuation technique includes inputs relating to estimated cash outflows under the arrangement and the use of a discount rate appropriate to the Company. The Company evaluates the inputs into the valuation technique at each reporting period. During the year ended December 31, 2018, the Company revised its assumptions underlying the discount rate used in the calculation of the fair value of the earn-out obligation to account for changes in the underlying credit risk of the Company as well as the estimates underlying the amount of payment. The upward adjustment of the discount rate from 3.59% at December 31, 2017 to 4.69% at December 31, 2018 and the amendment of cash outflow estimates underlying the earn-out resulted in an increase of $971,625 to the fair value of the earn-out obligation. The impact of this adjustment was recorded through finance expense in the period.

The fair value measurements are sensitive to the discount rate used in calculating the fair values as well as the probability assessments used. A 1% increase in the discount rate would reduce the fair value of the earn-out obligation by $13,870. During the year ended December 31, 2018, the Company recorded accretion expense of $73,531 (2017 – $473,738), in relation to this liability, reflecting the change in fair value of the liabilities that is attributable to credit risk.

Reconciliation of level 3 fair values:
	Earn-out obligation
Balance as at January 1, 2018	$	1,875,427
Payment		—
Recorded in finance expense:
Accretion expense		73,529
Fair value adjustment		971,627
Balance as at December 31, 2018	$	2,920,583

99

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

13.    Financial instruments (continued):

The Company’s financial instruments are exposed to certain financial risks, including credit risk, and market risk.

(a)   Credit risk:

Credit risk is the risk of financial loss to the Company if counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s cash and cash equivalents, and trade receivables. The carrying amount of the financial assets represents the maximum credit exposure.

The Company limits its exposure to credit risk on cash and cash equivalents by placing these financial instruments with high-credit quality financial institutions and only investing in liquid, investment grade securities.

The Company has a number of individual customers and no one customer represents a concentration of credit risk.

No one customer accounts for more than 10% of the Company’s consolidated revenue. The Company establishes a provision for losses on accounts receivable if it is determined that all or part of the outstanding balance is uncollectable. Collectability is reviewed regularly and an allowance is established or adjusted, as necessary, using a combination of the specific identification method, historic collection patterns and existing economic conditions. Estimates of allowances are subject to change as they are impacted by the nature of healthcare collections, which may involve delays and the current uncertainty in the economy.

(b)   Market risk:

Market risk is the risk that changes in market prices, such as and interest rates, will affect the Company’s income or the value of the financial instruments held.

(ii)   Interest rate risk:

As at December 31, 2018, the Company’s only interest bearing liability is its Scotia Facility. With respect to the Company’s Scotia Facility, with all other variables held constant, a 10% point increase in the interest rate would have reduced net income by approximately $295,000 (2017 – $164,000) for the year ended December 31, 2018. There would be an equal and opposite impact on net income with a 10% point decrease.

14.   Commitments and contingencies:

(a) The following are the minimum payments required for the lease of premises:

Less than one year	$	364,068
One to three years		229,764
Four to five years		—
Thereafter		—
Total	$	593,832

Rent expense for the year ended December 31, 2018 was $227,743 (2017 – $236,455).

(b) The Company is a party to a variety of agreements in the ordinary course of business under which it may be obligated to indemnify third parties with respect to certain matters. These obligations include,

100

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

14.   Commitments and contingencies (continued):

but are not limited to contracts entered into with physicians where the Company agrees, under certain circumstances, to indemnify a third party, against losses arising from matters including but not limited to medical malpractice and product liability. The impact of any such future claims, if made, on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to final outcome of these potential claims.

15.   Related party transactions:

Balances and transactions between the Company and its wholly owned and controlled subsidiaries have been eliminated on consolidation and are not disclosed in this note. Details of the transactions between the Company and other related parties are disclosed below:

(a) Related party transactions:

During the year ended December 31, 2018, the Company made product sales totaling $29,685 (2017 – $39,485) to one company owned or controlled by one of the Company’s Directors. The transaction terms with related parties may not be on the same price as those that would result from transactions among non-related parties. There were no amounts owing by or to this related party as of December 31, 2018 (2017 – $nil).

16.   Segmented information:

The Company operates in two industry segments: the sale of medical products and the provision of anesthesia services. The revenues relating to geographic segments based on customer location, in United States dollars, for the years ended December 31, 2018 and 2017 are as follows:

	2018		2017
Revenue:
Canada and other	$	271,803	$	238,342
United States		112,477,577		94,767,803
Total	$	112,749,380	$	95,006,145

The Company’s revenues are disaggregated below into categories which differ in terms of the economic factors which impact the amount, timing and uncertainty of revenue and cash flows.

	2018		2017
Revenue:
Commercial Insurers	$	86,992,218	$	72,264,107
Federal Insurers		14,246,626		10,568,096
Physicians		10,959,215		11,501,005
Other		551,321		672,937
Total	$	112,749,380	$	95,006,145

101

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

16.   Segmented information (continued):

The Company’s property and equipment, intangibles, other assets and total assets are located in the following geographic regions as at December 31, 2018 and 2017:

	2018		2017
Property and equipment:
Canada	$	276,621	$	347,676
United States		26,670		16,690
Total	$	303,291	$	364,366
Intangible assets:
Canada	$	32,735	$	35,181
United States		179,351,528		170,092,234
Total	$	179,384,263	$	170,127,415
Total assets:
Canada	$	9,293,796	$	4,595,719
United States		209,694,200		199,359,786
Total	$	218,987,996	$	203,955,505

The financial measures reviewed by the Company’s Chief Operating Decision Maker are presented below for the years ended December 31, 2018 and 2017. The Company does not allocate expenses related to corporate activities. These expenses are presented within “Other” to allow for reconciliation to reported measures.

	2018
	Anesthesia services		Product sales		Other			Total
Revenue	$	101,790,165	$	10,959,215	$	—		$	112,749,380
Operating costs		81,079,150		5,022,737		6,352,363			92,454,250
Operating income (loss)	$	20,711,015	$	5,936,478	$	(6,352,363	)	$	20,295,130

	2017
	Anesthesia services		Product sales		Other			Total
Revenue	$	83,505,140	$	11,501,005	$	—		$	95,006,145
Operating costs		62,135,447		4,997,550		7,053,863			74,186,860
Operating income (loss)	$	21,369,693	$	6,503,455	$	(7,053,863	)	$	20,819,285

102

CRH MEDICAL CORPORATION

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

Years ended December 31, 2018 and 2017

16.   Segmented information (continued):

Additionally, the company incurs the following in each of its operating segments:

	2018
	Anesthesia services		Product sales		Other		Total
Finance income	$	—	$	—	$	—	$	—
Finance expense		1,138,200		—		3,429,127		4,567,327
Depreciation and amortization expense		31,394,245		68,509		23,301		31,486,055

	2017
	Anesthesia services			Product sales		Other		Total
Finance income	$	(11,825,256	)	$	—	$	—	$	(11,825,256	)
Finance expense		600,602			—		5,709,804		6,310,406
Depreciation and amortization expense		23,762,012			56,907		15,481		23,834,400

17.   Subsequent event:

On January 1, 2019, a subsidiary of the Company entered into a membership interest purchase agreement to acquire a 100% interest in Anesthesia Care Associates, LLC (”ACA”), a gastroenterology anesthesia services provider in Indiana. The purchase consideration, paid via cash, for the acquisition of the Company’s 100% interest was $5,239,003 plus deferred acquisition costs of $116,025. The allocated cost of the exclusive professional service agreement which was acquired as part of this acquisition was $5,355,028.

103

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the period covered by this Annual Report on Form 10-K, our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the design and operating effectiveness of our disclosure controls and procedures in accordance with the provisions of Section 404 and Canadian National Instrument 52-109 (“NI 52-109”). The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

The term “disclosure controls and procedures,” as defined in Part 1, Subsection 1.1 of NI 52-109, means controls and other procedures of an issuer that are designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in the securities legislation. Such controls and procedures include controls and procedures designed to ensure that information required to be disclosed by an issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is accumulated and communicated to the issuer’s management, including its certifying officers, as appropriate, to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on our evaluation of our disclosure controls and procedures as of December 31, 2018, our Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were, in design and operation, effective at the reasonable assurance level.

Management’s Annual Report on Internal Control over Financial Reporting

Pursuant to Section 404 and NI 52-109, our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”), as such term is defined in Exchange Act Rule 13a-15(f). ICFR is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles.

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute, assurance. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

104

Management, including the Company’s Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate ICFR, which has been developed based on the framework established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO (2013)). The Company’s Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the COSO (2013) framework and concluded that the Company’s internal control over financial reporting was effective as of December 31, 2018.

We have elected to take advantage of certain exceptions from reporting requirements that are available to emerging growth companies under the JOBS Act and therefore we are not required to deliver an auditor’s attestation report on the effectiveness of our internal control over financial reporting pursuant to Section 404 until after the date we are no longer an emerging growth company. While our management did perform an evaluation of the design and operating effectiveness of our internal control over financial reporting in accordance with the provisions of NI 52-109 and Section 404(a) of the Sarbanes-Oxley Act, this Annual Report on Form 10-K does not include an attestation report from our registered public accounting firm due to the transition period established under the JOBS Act for emerging growth companies.

Changes in Internal Control Over Financial Reporting

During the fiscal quarter ended December 31, 2018, there were no significant changes in the Company’s internal control over financial reporting that have materially affected or are reasonably likely to affect the Company’s internal control over financial reporting.

Item 9B. Other Information

None.

Item 10. Directors, Executive Officers and Corporate Governance

Pursuant to Paragraph G(3) of the General Instructions to Form 10-K, the information required by Part III (Items 10, 11, 12, 13, and 14) is being incorporated by reference herein to our definitive proxy statement to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2018 in conjunction with our 2019 Annual Meeting of Shareholders.

Item 11. Executive Compensation

See Item 10.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

See Item 10.

Item 13. Certain Relationships and Related Transactions and Director Independence

See Item 10.

Item 14. Principal Accounting Fees and Services

See Item 10.

105

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a)(1) Financial Statements — The financial statements included in Item 8 are filed as part of this Annual Report on Form 10-K.

(a)(2) Financial Statement Schedules — All schedules have been omitted because they are not applicable or required, or the information required to be set forth therein is included in the consolidated Financial Statements or notes thereto included in Item 8 of this Annual Report on Form 10-K.

(a)(3) Exhibits — The exhibits required by Item 601 of Regulation S-K are listed in paragraph (b) below.

(b) Exhibits — The exhibits listed on the Exhibit Index below are filed herewith or are incorporated by reference to exhibits previously filed with the SEC.

EXHIBITS INDEX

Exhibit No.	Description
3.1	Notice of Articles of the Registrant.
3.2	Articles of the Registrant (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 (File No. 333-206945), originally filed with the SEC on September 14, 2015).
4.1	Specimen Common Share certificate (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 (File No. 333-206945), originally filed with the SEC on September 14, 2015).
10.1#	Employment Agreement, dated April  10, 2017, by and between the Registrant and Richard Bear
10.2#	Employment Agreement, dated June  23, 2016, by and between the Registrant and James Kreger.
10.3#	Amended and Restated Employment Agreement, dated January  8, 2018, by and between the Registrant and Edward Wright.
10.4#	Amended and Restated Employment Agreement, dated February  12, 2018, by and between the Registrant and Richard Bear.
10.5#	Form of Indemnity Agreement between the Registrant and its officers and directors.
10.6#	Amended and Restated 2009 Stock Option Plan (incorporated by reference to Schedule B to Exhibit 99.18 to the Registrant’s Registration Statement on Form 40-F (File No. 001-37542), originally filed with the SEC on August 17, 2015).
10.7#	2017 Share Unit Plan (incorporated by reference to Schedule A to Exhibit 99.1 to a Report of Foreign Private Issuer on Form 6-K (File No. 001-37542), originally furnished to the SEC on May 10, 2017).

106

10.8	Membership Interest Purchase Agreement, dated December  1, 2014, between Gastroenterology Anesthesia Associates, LLC and certain parties named therein.
10.9	Agreement for Purchase and Sale of Assets, dated December  1, 2014, between Gastroenterology Anesthesia Associates, LLC and certain parties named therein.
10.10	Second Amended and Restated Credit Agreement, dated as of June  26, 2017, between the Registrant, as borrower, certain affiliates of the Registrant, as guarantors, the lenders from time to time party thereto and The Bank of Nova Scotia, as Administrative Agent, Lead Arranger and Sole Bookrunner and a syndicate of lenders led by the Bank of Nova Scotia.
10.11	Amended and Restated Credit Agreement, dated as of June 15, 2016, between the Registrant, as borrower, certain affiliates of the Registrant, as guarantors, the lenders from time to time party thereto and The Bank of Nova Scotia, as Administrative Agent, Lead Arranger and Sole Bookrunner and a syndicate of lenders led by the Bank of Nova Scotia (incorporated by reference to Exhibit 99.1 to a Report of Foreign Private Issuer on Form 6-K (File No. 001-37542), originally furnished to the SEC on January 6, 2017.
14.1	Code of Business Conduct and Ethics of the Registrant.
21.1	Subsidiaries of the Registrant.
23.1	Consent of KPMG LLP, an Independent Registered Public Accounting Firm.
24.1	Power of Attorney (included as part of signature page).
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section  1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section  1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL instance document.
101.SCH	XBRL taxonomy extension schema.
101.CAL	XBRL taxonomy extension calculation linkbase.
101.DEF	XBRL taxonomy extension definition linkbase.
101.LAB	XBRL taxonomy extension label linkbase.
101.PRE	XBRL taxonomy extension presentation.

# Indicates management contract or compensatory plan.

Item 16. Form 10-K Summary

Not applicable.

107

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 13, 2019	CRH MEDICAL CORPORATION
	By:	/s/ Edward Wright
		Name:	Edward Wright
		Title:	Chief Executive Officer and Director (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

We, the undersigned directors and officers of CRH Medical Corporation, hereby severally constitute and appoint Edward Wright and Richard Bear, and each of them singly, our true and lawful attorneys with full power to them and each of them to sign for us, in our names in the capacities indicated below, any and all amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Signature	Title	Date
/s/ Edward Wright Edward Wright	Chief Executive Officer and Director (Principal Executive Officer)	March 13, 2019
/s/ Richard Bear Richard Bear	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	March 13, 2019
/s/ Anthony F. Holler Anthony F. Holler	Director	March 13, 2019
/s/ David Johnson David Johnson	Director	March 13, 2019
/s/ Todd Patrick Todd Patrick	Director	March 13, 2019
/s/ Ian Webb Ian Webb	Director	March 13, 2019

108

EX-3.1

Exhibit 3.1

Mailing Address: PO Box 9431 Stn Prov Govt Victoria BC V8W 9V3 www.corporateonline.gov.bc.ca Location: 2nd Floor - 940 Blanshard Street Victoria BC 1 877 526-1526

	CERTIFIED COPY Of a Document filed with the Province of British Columbia Registrar of Companies
Notice of Articles BUSINESS CORPORATIONS ACT
	CAROL PREST

  This Notice of Articles was issued by the Registrar on: June 1, 2017 12:53 PM Pacific Time

  Incorporation Number:                     BC0626013

  Recognition Date:         Incorporated on April 12, 2001

NOTICE OF ARTICLES

Name of Company:

CRH MEDICAL CORPORATION

REGISTERED OFFICE INFORMATION

Mailing Address:	Delivery Address:
SUITE 2600, THREE BENTALL CENTRE P.O. BOX 49314, 595 BURRARD STREET VANCOUVER BC V7X 1L3 CANADA	SUITE 2600, THREE BENTALL CENTRE P.O. BOX 49314, 595 BURRARD STREET VANCOUVER BC V7X I L3 CANADA

RECORDS OFFICE INFORMATION

Mailing Address:	Delivery Address:
SUITE 2600, THREE BENTALL CENTRE P.O. BOX 49314,595 BURRARD STREET VANCOUVER BC V7X 1L3 CANADA	SUITE 2600, THREE BENTALL CENTRE P.O. BOX 49314, 595 BURRARD STREET VANCOUVER BC V7X I L3 CANADA

DIRECTOR INFORMATION

Last Name, First Name, Middle Name:

Johnson, David

Mailing Address:	Delivery Address:
7464 NORTH SHORE ROAD NORFOLK VA 23505 UNITED STATES	7464 NORTH SHORE ROAD NORFOLK VA 23505 UNITED STATES

Page: 1 of 2

Last Name, First Name, Middle Name:

Patrick, Todd

Mailing Address:	Delivery Address:
9029 NE 36TH STREET YARROW POINT WA 98004 UNITED STATES	9029 NE 36TH STREET YARROW POINT WA 98004 UNITED STATES

Last Name, First Name, Middle Name:

HOLLER, ANTHONY

Mailing Address:	Delivery Address:
SUITE 578, 999 CANADA PLACE VANCOUVER BC V6C 3E2 CANADA	SUITE 578, 999 CANADA PLACE VANCOUVER BC V6C 3E2 CANADA

Last Name, First Name, Middle Name:

Wright, Edward

Mailing Address:	Delivery Address:
578 - 999 CANADA PLACE VANCOUVER BC V6C 3E1 CANADA	578 - 999 CANADA PLACE VANCOUVER BC V6C 3E1 CANADA

Last Name, First Name, Middle Name:

Webb, Ian A.

Mailing Address:	Delivery Address:
578 - 999 CANADA PLACE VANCOUVER BC V6C 3E1 CANADA	578 - 999 CANADA PLACE VANCOUVER BC V6C 3E1 CANADA

AUTHORIZED SHARE STRUCTURE
1. 100,000,000	Common Shares	Without Par Value
		Without Special Rights or Restrictions attached

Page: 2 of 2

Date and Time: April 28, 2006 11:14 AM Pacific Time

Ministry of Finance Corporate and Personal Property Registries www.corporateonline.gov.bc.ca Mailing Address: PO BOX 9431 Stn Prov Govt. Victoria BC V8W 9V3 Location: 2nd Floor -940 Blanshard St. Victoria BC 250 356-8626

Notice of Alteration

FORM 11

BUSINESS CORPORATIONS ACT

Section 257

Filed Date and Time:	April 27, 2006 11:28 AM Pacific Time
Alteration Date and Time:	Notice of Articles Altered on April 28, 2006 12:01 AM Pacific Time

NOTICE OF ALTERATION

Incorporation Number:	Name of Company:
BC0626013	MEDSURGE MEDICAL PRODUCTS CORP.

Name Reservation Number:	Name Reserved:
NR8279601	CRH MEDICAL CORPORATION

ALTERATION EFFECTIVE DATE:

Specified Date and Time of Alteration: April 28, 2006 12:01 AM Pacific Time

CHANGE OF NAME OF COMPANY

From:   MEDSURGE MEDICAL PRODUCTS CORP. To:   CRH MEDICAL CORPORATION

BC0626013 Page: 1 of 1

Ministry of Finance Corporate and Personal Property Registries www.corporateonfine.gov.bc.ca Mailing Address: PO BOX 9431 Stn Prov Govt Victoria BC V8W 9V3 Location: 2nd Floor - 940 Blanshard St Victoria BC 250 356-8626

Transition Application	CERTIFIED COPY Of a Document filed with the Province of British Columbia Registrar of Companies
Form 43 BUSINESS CORPORATIONS ACT Section 437	J S Powell March 15, 2005

FILING DETAILS :	Transition Application for: MEDSURGE MEDICAL PRODUCTS CORP.
Filed Date and Time :	March 15, 2005 02:45 PM Pacific Time
Transition Date and Time :	Transitioned on March 15, 2005 02:45 PM Pacific Time

TRANSITION APPLICATION

This confirms there has been filed with the registrar all records necessary to ensure that the information in the corporate registry respecting the directors of the company is, immediately before the transition application is submitted to the registrar for filing, correct.

Incorporation Number:	Name of Company:
BC0626013	MEDSURGE MEDICAL PRODUCTS CORP.

NOTICE OF ARTICLES

Name of Company:

MEDSURGE MEDICAL PRODUCTS CORP.

BC0626013 Page: 1 of 3

REGISTERED OFFICE INFORMATION

Mailing Address:	Delivery Address:
17TH FLOOR, 1750 - 1185 WEST GEORGIA ST. VANCOUVER BC V6E 4E6	17TH FLOOR, 1750 - 1185 WEST GEORGIA ST. VANCOUVER BC V6E 4E6

RECORDS OFFICE INFORMATION

Mailing Address:	Delivery Address:
17TH FLOOR, 1750 - 1185 WEST GEORGIA ST. VANCOUVER BC V6E 4E6	17TH FLOOR, 1750 - 1185 WEST GEORGIA ST. VANCOUVER BC V6E 4E6

DIRECTOR INFORMATION

Last Name, First Name Middle Name:

LLEWELLYN, NOEL

Mailing Address:	Delivery Address:
826 WEST 48 AVE VANCOUVER BC V5Z2R9	826 WEST 48 AVE VANCOUVER BC V5Z2R9

Last Name, First Name Middle Name:

MORIN, MARC G.

Mailing Address:	Delivery Address:
4025 RIPPLE RD WEST VANCOUVER BC V7V3K8	4025 RIPPLE RD WEST VANCOUVER BC V7V3K8

Last Name, First Name Middle Name:

O’REGAN , PATRICK J.

Mailing Address:	Delivery Address:
KING FISAL SPECIALIST HOSPITAL RIYADH SAUDI ARABIA	KING FISAL SPECIALIST HOSPITAL RIYADH SAUDI ARABIA

BC0626013 Page: 2 of 3

PRE-EXISTING COMPANY PROVISIONS

The Pre-existing Company Provisions apply to this company.

AUTHORIZED SHARE STRUCTURE
1. 100,000,000	Common Shares	Without Par Value
		Without Special Rights or Restrictions attached

BC0626013 Page: 3 of 3

EX-10.1

Exhibit 10.1

CHIEF FINANCIAL OFFICER EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”), dated as of the ___ day of ______, 2017, is entered into by and between CRH Medical Corp, a Delaware corporation (“Company”), and Richard Bear (“Employee”) (each a “Party” and collectively the “Parties”). The Parties, in consideration of the mutual covenants and representations, Employee’s continued employment, and the additional consideration of $500.00 paid to Employee upon entering into this Agreement, agree as follows:

1.    Employment. Company employs Employee and Employee agrees to accept such employment, upon the terms and conditions set forth in this Agreement.

2.    Term of Employment. Employee’s Employment pursuant to the terms of this Agreement shall commence on                     , 2017. Employee’s employment and this Agreement may be terminated pursuant to the terms of this Agreement, or at any time, with or without Cause and with or without notice, by either Employee or Company. Employee specifically acknowledges and agrees that his employment under this Agreement is “at-will.” This Agreement supersedes Employee’s March 16, 2006 employment agreement with the Company, and any amendments.

3.    Position, Duties, Responsibilities.

3.1    Position. Employee is employed by the Company in the position of Chief Financial Officer (“CFO”) and shall perform all services appropriate to that position for an organization the size of the Company that is engaged in the type of business engaged in by the Company, provided that Employee’s precise duties may be changed or extended from time to time, at the Company’s direction, and Employee shall assume and perform further reasonable responsibilities and duties that the Company may assign from time to time. Employee will report directly to the Chief Executive Officer (“CEO”) of the Company.

3.2    Other Activities. Employee will devote all of his working time, attention, knowledge and skills as is reasonably required under this Agreement to diligently, competently and effectively perform his duties. During the term of this Agreement, except upon the prior written consent of the Company, Employee will not (i) accept any other full-time or part-time employment, (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be in conflict with, or that might place Employee in a conflicting position to that of the Company, or prevent Employee from devoting such time as necessary to fulfill his responsibilities under this Agreement, (iii) sell, market, or represent any product or service other than the Company’s products or services unless otherwise specified, or (iv) serve on any board of directors for any other company except with the consent of the Company, which consent will not be unreasonably withheld. Nothing in Section 3.2(iv) is intended to or does prevent Employee from serving on the board of directors of trade associations and charitable organizations, engaging in charitable activities and community affairs, or managing Employee’s personal investments and affairs, provided that these activities do not interfere with Employee’s obligations under this Section 3.

3.3    Work Location. Employee’s principal place of work shall be located in Bellevue, Washington, or such other location as the parties may agree upon from time to time.

4.    Compensation.

In consideration of the services to be rendered under this Agreement, Employee shall be entitled to the following:

4.1    Base Salary. The Company shall pay to Employee an annual base salary of three hundred and fifty thousand dollars ($350,000), less all applicable taxes and withholdings, which will be payable in accordance with the Company’s payroll practices, as amended from time to time (“Base Salary”).

Page 1 of 9 Employment Agreement — CFO

4.2    Bonus. At the Company’s sole discretion, Employee may be eligible to receive an annual forty percent (40%) bonus based upon metrics agreed to between Employee and the Company, payable no later than March 15 of each year for work performed in the preceding calendar year (“Bonus”). In order to be eligible to receive any Bonus, except as otherwise set out in Section 6 below, Employee must be employed with the Company at the time of issue of any Bonus.

4.3    Employee Benefits. While Employee is employed with the Company, Employee shall be entitled to participate in all employee benefit plans and programs of the Company to the extent that Employee meets the eligibility requirements for each individual plan or program. The Company provides no assurance as to the adoption or continuance of any particular employee benefit plan or program, and Employee’s participation in any such plan or program shall be subject to the provisions, rules, and regulations applicable to each benefit plan or program.

4.4    Vacation. Employee shall be entitled to four (4) weeks of paid vacation per year, which will be in accordance with and subject to the Company’s policies and as set out in this Section 4.4.

4.5    Expenses. The Company shall reimburse Employee for reasonable business expenses incurred by Employee in the performance of his duties hereunder in accordance with the Company’s general policies, subject to proof of payment by Employee.

4.6    Equity Compensation. Employee’s participation in the Company’s Share Unit Plan established by the Company, or any successor plan thereto, as such may be amended from time to time in accordance with its terms (the “Plan”), shall be subject to the terms, conditions, regulations and provisions applicable to the Plan and to the terms and conditions of the Share Unit Plan Grant Agreement and any amendments entered into between Employee and the Company.

5.    Definitions and Effect of Termination.

5.1    Definition of Cause. For purposes of this Agreement, “Cause” is defined as:

i. Any gross negligence or willful or intentional act or omission of Employee having the effect or reasonably likely to have the effect of injuring the reputation, business, or business relationships of the Company in any way as determined in the discretion of the Company. If in the Company’s discretion, the gross negligence or willful or intentional act or omission of Employee has not yet had the effect of injuring the reputation, business or business relationships of the Company in any way as determined in the discretion of the Company, the Company will provide written notice to Employee of the gross negligence or willful or intentional act or omission of Employee, and provide him an opportunity to cure and/or present Employee’s case to the contrary to the CEO, and as determined in the discretion of the Company, Employee has not remedied such gross negligence or willful or intentional act or omission of Employee within fifteen (15) business days of the notice or other longer cure period as may be specified by the Company;

ii. Employee has engaged in a failure or refusal to carry out the reasonable and lawful duties of his position or the CEO’s lawful directives, provided that the Company provides written notice to the Employee notifying him of such failure, and an opportunity to cure and/or present his case to the contrary to the Board, if applicable, and Employee does not remedy such failure or refusal within fifteen (15) business days or other longer cure period as may be specified by the Company;

iii. Any unethical or dishonest conduct engaged in by Employee in the course of his employment with the Company, including but not limited to dishonesty or falsification of any employment or Company records;

iv. Any conviction of or plea or nolo contendere or the equivalent in respect to any felony offense or crime involving dishonesty or moral turpitude by Employee;

Page 2 of 9 Employment Agreement — CFO

v. Employee’s use of alcohol interfering with the performance of Employee’s obligations under this Agreement or Employee’s use of illegal drugs or abuse of prescription medications, provided that the Company provides written notice to the Employee notifying him of such conduct, and an opportunity to cure and/or present his case to the contrary to the Board, if applicable, and Employee does not remedy such conduct within fifteen (15) business days or other longer cure period as may be specified by the Company;

vi. Any violation or breach by Employee of any term of this Agreement, including but not limited to any breach by Employee of his fiduciary duties to the Company, and/or any violation or breach by Employee of any term of the Proprietary Information Agreement discussed in Section 7 below.

5.2    Definition of Change of Control. For purposes of this Agreement, “Change of Control” is defined as any of the following:

i. Change in the Ownership of the Company: A change in the ownership of a corporation occurs on the date that any one person, or more than one person acting as a group (as defined in 26 C.F.R. § 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of such corporation.

ii. Change in the Ownership of a Substantial Portion of a Corporation’s Assets: A change in the ownership of a substantial portion of a corporation’s assets occurs on the date that any one person, or more than one person acting as a group (as defined in 26 C.F.R. § 1.409A-3 (i)(5)(v)(B)), acquires (or has acquired during the 12—month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than 80 percent of the total gross fair market value of all of the assets of the corporation immediately before such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. There is no change of control event under this paragraph when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer, as provided for in 26 C.F.R. § 1.409A-3 (i)(5)(vii)(B).

iii. Change in the Effective Control of the Company: A change in the effective control of the corporation occurs only on either of the following dates:

a. The date any one person, or more than one person acting as a group (as defined in 26 C.F.R. § 1.409A-3 (i)(5)(v)(B)), acquires (or has acquired during the 12—month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing 30 percent or more of the total voting power of the stock of such corporation; or

b. The date a majority of members of the corporation’s board of directors is replaced during any 12—month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation’s board of directors before the date of the appointment or election, provided that for purposes of this Section the term “corporation” refers solely to the relevant corporation as defined in 26 C.F.R. § 1.409A-3(i)(5)(ii) for which no other corporation is a majority shareholder for purposes of that paragraph 26 C.F.R. § 1.409A-3(i)(5)(ii).

5.3    Definition of Disability. For purposes of this Agreement, “Disability” is defined as follows: if Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the participant’s employer.

Page 3 of 9 Employment Agreement — CFO

5.4    Definition of Good Reason. For purposes of this Agreement, “Good Reason” is defined as follows:

i. A material reduction of Employee’s Base Salary without his written consent other than in connection with a commensurate reduction (in percentage terms) in the base salaries of all officers of the Company holding the title of vice president or above; or

ii. A requirement that Employee relocate his primary work location to a location more than 50 miles from Bellevue, Washington; or

iii. A material change in Employee’s primary job responsibilities without his written consent; or

iv. The Company’s failure to make all or any portion of any payments due to Employee pursuant to this Agreement within a reasonable time after such payments are due.

A termination of employment by Employee for any of the reasons in this Section 5.4 will not constitute “Good Reason” unless (i) Employee has given written notice to the Company within the 90-calendar day period immediately following his discovery of the occurrence of such Good Reason event (or if earlier, the date he is notified in writing), specifying in reasonable detail the events relied upon for termination, and (ii) the Company has not remedied such events within thirty (30) business days after receiving Employee’s notice. Employee must terminate his employment within thirty (30) calendar days following the expiration of such cure period for the termination to be on account of Good Reason.

5.5    Effect of Termination. Upon termination of Employee’s employment with the Company, regardless of whether such termination is initiated by Employee or the Company, Employee shall be deemed to have resigned from all positions (including all officer positions) then held with the Company. Employee agrees that for a period of three (3) months following any termination of employment, unless the termination is for Cause, Employee shall fully cooperate with the Company in all matters relating to his continuing obligations under this Agreement, including but not limited to the winding up of pending work on behalf of the Company and the orderly transfer of work to other employees of the Company, provided that Employee shall not be expected to incur any out of pocket cost or expense or devote any material time with respect to such cooperation.

6.    Termination Payments.

6.1    Payment Through Termination. All compensation and benefits set forth in this Agreement will terminate effective on the date of termination of Employee’s employment with the Company, except Employee shall be entitled to receive the following:

i Employee’s accrued but unpaid Base Salary, subject to lawful deductions, through the effective date of termination;

ii. Reimbursement of reasonable business expenses incurred by Employee in the performance of his duties hereunder in accordance with the Company’s general policies, subject to proof of payment by Employee.

Upon termination or separation of Employee’s employment for any reason, whether voluntary or involuntary, Employee shall not be entitled to any severance payments, except for the reasons specifically outlined in this Section 6.

6.2    Severance Pay for Termination without Cause or for Good Reason. Except as set forth below in Section 6.3, in the event the Company seeks to terminate this Agreement and the employment of Employee without Cause, or the Employee terminates his employment for Good Reason, then the Company shall pay to Employee the following:

i. a sum equal to eighteen (18) months’ Base Salary, subject to lawful deductions;

ii. an amount equal to the Bonus that Employee would have received if Employee had been employed with the Company at the time of issue of any Bonus, determined by the Board in good faith exercising

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its reasonable discretion and prorated based upon the number of days elapsed in the preceding calendar year through the effective date of termination, subject to lawful deductions. For example, if Employee’s employment is terminated effective March 15 and, at the end of the calendar year in which the Employee’s employment was terminated, the Board determines certain metrics have been met that would trigger the Bonus provision in Section 4.2, Employee will receive a prorated amount based upon the number of days elapsed in the preceding calendar year through March 15;

iii. COBRA coverage for Employee’s own medical premium under the Company’s existing health care plan, for up to eighteen (18) months, as allowed under COBRA, as long as Employee completes all required documentation to obtain such coverage and only if he remains eligible for COBRA coverage. Any amounts under this Section 6.2.iii. will be paid directly to the Company’s health care provider. If at any time during this eighteen (18) month period, Employee secures equivalent or greater benefits, the Company’s payment of Employee’s benefits under this Section 6.2.iii. will automatically cease. Employee agrees that he will not waive any opportunity to obtain such benefits, and further agrees that he will promptly notify the Company in the event he does obtain such benefits. Nothing in this Section 6.2.iii. is intended to or does create any other rights or obligations of any kind on the part of the Company with regard to payment of Employee’s COBRA coverage, except those specifically required by law.

Severance pay for involuntary termination without Cause, or for Good Reason, may not be distributed before the date which is six months after the date of separation from employment (or, if earlier, the death of Employee), but shall be paid, in a lump sum, no later than five (5) business days after expiration of such six month period.

6.3    Severance Pay for Termination as a Result of a Change of Control of the Company. In the event Employee’s employment terminates: (a) as a result of an involuntary termination without Cause within thirteen (13) months after a Change of Control of the Company; or (b) as a result of termination by Employee for Good Reason within twelve (12) months after a Change of Control of the Company (subject to the qualification set forth in this Section below regarding termination for Good Reason); or (c) as a result of Employee choosing to terminate his employment for any reason or no reason at all within thirty (30) calendar days after twelve (12) months have elapsed following a Change of Control, then the Company shall pay to Employee the following:

i. a sum equal to twenty-four (24) months’ Base Salary, subject to lawful deductions;

ii. a bonus amount commensurate with the period set forth in Section 6.3.i. above. For purposes of calculating the bonus amount commensurate with Section 6.3.i., the amount shall be calculated by taking the average bonus received by Employee from the two (2) Bonus payments preceding the termination date, and multiplying that average bonus amount by two (2) to equal the total bonus amount due under this Section 6.3.ii. (For illustration only, if Employee received a $30,000 bonus and a $100,000 bonus in the two consecutive bonus payments preceding termination, the average bonus amount would be $65,000 multiplied by 2, equaling $130,000 for the total bonus amount.);

iii. COBRA coverage for Employee’s own medical premium under the Company’s existing health care plan, for up to eighteen (18) months, as allowed under COBRA, as long as Employee completes all required documentation to obtain such coverage and only if he remains eligible for COBRA coverage. Any amounts under this Section 6.3.iii. will be paid directly to the Company’s health care provider. If at any time during this eighteen (18) month period, Employee secures equivalent or greater benefits, the Company’s payment of Employee’s benefits under this Section 6.3.iii. will automatically cease. Employee agrees that he will not waive any opportunity to obtain such benefits, and further agrees that he will promptly notify the Company in the event he does obtain such benefits. Nothing in this Section 6.3.iii. is intended to or does create any other rights or obligations of any kind on the part of the Company with regard to payment of Employee’s COBRA coverage, except those specifically required by law.

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A termination of employment by Employee following a Change of Control will not constitute “Good Reason” under Section 6.3(a) unless the requirements of Section 5.4 are met. If Employee chooses to terminate employment other than for Good Reason at any time within twelve (12) months after a Change of Control, then Employee shall not be entitled to receive severance pay under this Agreement. If Employee chooses to terminate his employment later than thirty (30) calendar days after twelve (12) months have elapsed following a Change of Control, or if the Company terminates Employee’s employment after thirteen (13) months have elapsed following a Change of Control, then Employee shall not be entitled to receive severance pay under this section.

Severance pay for termination as a result of a Change of Control of the Company may not be distributed before the date which is six months after the date of separation from employment (or, if earlier, the death of Employee), but shall be paid, in a lump sum, no later than five (5) business days after expiration of such six month period. In the event that any compensation paid to Employee or for Employee’s benefit by the Company in respect of the Change of Control would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any comparable federal, state, or local excise tax (the “Excise Tax”), the Company will make an additional payment to Employee so that the net amount received and retained by Employee from the Company after satisfaction of the Excise Tax shall be the same amount as if no Excise Tax were imposed. The “gross up” payment shall be made no later than the date on which the Excise Tax is due and payable.

6.4    Severance Pay for Separation from Employment Due to Death or Disability. In the event of Employee’s separation from employment due to the death or Disability of Employee, then the Company shall pay Employee a sum equal to six (6) months’ Base Salary which may not be distributed earlier than the date of death of Employee or the date Employee has a Disability as defined above. In the event of the death of Employee, severance shall be paid to Employee’s surviving spouse, estate, or personal representative as applicable. Severance pay for Separation from Employment Due to Death or Disability shall be paid no later than two and one half (2 ‘A) months after the date of death or Disability of Employee.

7.    Proprietary Information, Inventions Assignment, and Non-Competition.

7.1    Employee agrees to comply with the provisions contained in the Company’s Employee Proprietary Information, Inventions Assignment and Noncompete Agreement (“Proprietary Information Agreement”), which shall be executed separately in a written document entered into between Employee and the Company and governed by the terms thereof.

8.    Dispute Resolution, Legal Fees and Employee’s Liability Insurance.

8.1    Dispute Resolution. All disputes arising under this Agreement shall be settled by binding arbitration; provided, however, that this Section 8 shall not preclude either Party from seeking injunctive relief in a court of competent jurisdiction. Arbitration shall be held in Washington, under the auspices of the American Arbitration Association (the “AAA”) pursuant to the Commercial Arbitration Rules of the AAA, and shall be by one arbitrator, independent of the Parties to this Agreement, selected from a list provided by the AAA in accordance with such Commercial Arbitration Rules. To the maximum extent permitted by law, the decision of the arbitrator shall be final and binding on the Parties to this Agreement and not be subject to appeal. If a Party against whom the arbitrator renders an award fails to abide by such award, the other Party may bring an action to enforce the same in a court of competent jurisdiction, pursuant to the provisions of Section 9.7 below. The Parties agree that all facts and information relating to any arbitration arising under this Agreement shall be kept confidential to the extent possible. The Parties waive, for themselves and for any person or entity acting on behalf of or otherwise claiming through them, any right they may otherwise have to resolve claims by a court or by a jury, except as necessary to enforce an award rendered in arbitration, to enforce this Section 8, or to seek injunctive or other equitable relief.

8.2    Legal Fees and Costs. In any legal action or other proceeding to enforce this Agreement, the successful or prevailing Party shall be entitled to recover such reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled, as may be permitted by law.

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8.3    Indemnification; Directors and Officers Liability Insurance. Employee will be provided indemnification to the maximum extent permitted by the Company’s Articles of Incorporation or Bylaws, with the indemnification to be on terms determined by the Board of Directors for the Company or any of its committees, but on terms no less favorable than provided to any other Company executive officer or director and subject to the terms of any separate written indemnification agreement. During Employee’s employment, Employee will be named as an insured on the Company’s directors’ and officers’ liability insurance coverage (“D&O Coverage”) that the Company provides generally to directors and officers of the Company, as may be amended from time to time for such directors and officers. The Company shall maintain this D&O Coverage at all times during Employee’s employment at a level and with coverages consistent with the D&O Coverage currently maintained by the Company. Upon termination of the Employee’s employment for any reason, the Company will cause such policies to cover Employee in respect of acts and omissions during the period of employment as if the Employee was still an officer, director and/or employee, as applicable.

9.    Miscellaneous.

9.1    Section 409A. The Company and Employee intend that any amounts or benefits payable or provided under this Agreement comply with the provisions of Section 409A of the Internal Revenue Code and the treasury regulations and other guidance promulgated thereunder, to the extent applicable, and this Agreement shall be construed and interpreted in a manner consistent with such intent and if necessary, the Company and Employee agree that any such provision shall be deemed amended in a manner that brings this Agreement into compliance with section 409A of the Code and treasury regulations and other guidance promulgated thereunder.

9.2    Entire Agreement. Including Employee’s obligations under the Proprietary Information Agreement, as set forth in Section 7 above, this Agreement is intended to be the final, complete, and exclusive statement of the terms of Employee’s employment by the Company and supersedes all other prior and contemporaneous agreements and statements pertaining in any manner to the employment of Employee. To the extent that the practices, policies, or procedures of the Company, now or in the future, apply to Employee and are inconsistent with the terms of this Agreement, the provisions of this Agreement shall control. Any subsequent change in Employee’s duties or compensation will not affect the validity or scope of this Agreement.

9.3    Amendments, Waivers. This Agreement may only be modified by an instrument in writing, signed by Employee and by a duly authorized representative of the Company other than Employee. No failure to exercise and no delay in exercising any right, remedy, or power under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, or power under this Agreement preclude any other or further exercise thereof, or the exercise of any other right, remedy, or power provided herein or by law or in equity.

9.4    Assignment; Successors and Assigns. This Agreement and the rights and duties hereunder are personal to Employee and shall not be assigned, delegated, transferred, pledged or sold by Employee without the prior written consent of the Company. Employee hereby acknowledges and agrees that the Company may assign, delegate, transfer, pledge or sell this Agreement and the rights and duties hereunder (i) to an affiliate of the Company or (ii) to any third party upon a Change of Control. This Agreement shall inure to the benefit of and be enforceable by the Parties hereto, and their respective heirs, personal representatives, successors and assigns.

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9.5    Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given (i) upon receipt, if delivered personally or via courier, (ii) on the third business day following mailing, if mailed first-class, postage prepaid, registered or certified mail as follows:

TO CRH Medical Corp:	Edward Wright CRH Medical Corp. Suite 522 — 999 Canada Place Vancouver, B.C. V6C 3E1
TO EMPLOYEE:	[***Redacted***]

Or to such other address as either Party may designate by written notice to the other. Rejection or other refusal to accept, or inability to deliver because of a changed address of which no notice was given, shall be deemed to be a receipt of the notice, request, or other communication.

9.6    Severability; Enforcement. If any provision of this Agreement, or its application to any person, place, or circumstance, is held by an arbitrator or a court of competent jurisdiction to be invalid, unenforceable, or void, such provision shall be enforced to the greatest extent permitted by law, and the remainder of this Agreement and such provision as applied to other persons, places, and circumstances shall remain in full force and effect.

9.7    Governing Law; Consent to Personal Jurisdiction. This Agreement shall be governed by and construed in accordance with the substantive and procedural laws of the State of Washington. The Parties hereby agree that the forum for any action, suit, arbitration or other proceeding arising out of or related to this Agreement or any document referenced in this Agreement shall be solely in Washington. Each Party hereby irrevocably consents and submits to the personal jurisdiction of and venue as set forth in Section 8, and further consents and submits to the personal jurisdiction and venue in state and/or federal courts located in Washington for any injunctive relief or enforcement proceeding as described in Section 8.

9.8    Employee Acknowledgment. Employee acknowledges (i) that he has consulted with or has had the opportunity to consult with independent counsel of his own choice concerning this Agreement and has been advised to do so by the Company, and (ii) that he has read and understands this Agreement, is fully aware of its legal effect, and has entered into it freely based on his own judgment.

9.9    Construction. The headings herein are for reference only and shall not affect the interpretation of this Agreement. Whenever the context requires in this Agreement, the masculine pronoun shall include the feminine and the neutral, and the singular shall include the plural.

9.10    Counterparts. This Agreement may be executed in counterparts and by facsimile, or electronic mail each of which when so executed, will be deemed an original, and all of which together shall constitute one and the same instrument.

9.11    Equal Opportunity to Draft. Each party to this Agreement represents and warrants that he has had an equal opportunity to draft this Agreement and that this Agreement will not be construed against either Party for purposes of interpretation or enforcement.

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IN WITNESS WHEREOF, this Agreement has been executed as of the date and year signed by the Company below.

COMPANY:	EMPLOYEE:
/s/ Edward Wright Edward Wright, CEO	/s/ Richard Bear Richard Bear
Date signed: April 7, 2017	Date signed: April 10, 2017

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EX-10.2

Exhibit 10.2

PRESIDENT OF CRH ANESTHESIA EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”), dated as of the 23 day of June, 2016, is entered into by and between CRH Medical Corp., a Delaware corporation (“Company”), and James T. Kreger (“Employee”) (each a “Party” and collectively the “Parties”). The Parties, in consideration of the mutual covenants and representations, agree as follows:

1.    Employment. Company employs Employee and Employee agrees to accept such employment, upon the terms and conditions set forth in this Agreement.

2.    Term of Employment. Employment of Employee pursuant to this Agreement shall commence on July 11, 2016. Employee’s employment and this Agreement may be terminated pursuant to the terms of this Agreement, or at any time, with or without cause and with or without notice, by either Employee or Company. Employee specifically acknowledges and agrees that his employment under this Agreement is “at-will.”

3.    Position, Duties, Responsibilities.

3.1    Position. Employee is employed by the Company in the position of President of CRH Anesthesia and shall perform all services appropriate to that position for an organization the size of the Company that is engaged in the type of business engaged in by the Company, provided that Employee’s precise duties may be changed or extended from time to time, at the Company’s direction, and Employee shall assume and perform further reasonable responsibilities and duties that the Company may assign from time to time. Employee will report directly to the Chief Executive Officer (“CEO”) of the Company.

3.2    Other Activities. Employee will devote all of his working time, attention, knowledge and skills as is reasonably required under this Agreement to diligently, competently and effectively perform his duties. During the term of this Agreement, except upon the prior written consent of the Company, Employee will not (i) accept any other full-time or part-time employment, (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be in conflict with, or that might place Employee in a conflicting position to that of the Company, or prevent Employee from devoting such time as necessary to fulfill his responsibilities under this Agreement, (iii) sell, market, or represent any product or service other than the Company’s products or services unless otherwise specified, or (iv) serve on any board of directors for any other company except with the consent of the Company, which consent will not be unreasonably withheld. Nothing in Section 3.2 (iv) is intended to or does prevent Employee from serving on the board of directors of trade associations and charitable organizations, engaging in charitable activities and community affairs, or managing Employee’s personal investments and affairs, provided that these activities do not interfere with Employee’s obligations under this Section 3.

4.    Compensation.

In consideration of the services to be rendered under this Agreement, Employee shall be entitled to the following:

4.1    Base Salary. The Company shall pay to Employee an annual base salary of two hundred and seventy-five thousand dollars ($275,000), less all applicable taxes and withholdings, which will be payable in accordance with the Company’s payroll practices, as amended from time to time (“Base Salary”), subject to review and increases as determined by the CEO and in the Company’s sole discretion.

4.2    Bonus. At the Company’s sole discretion, Employee may be eligible to receive an annual thirty percent (30%) bonus based upon metrics agreed to between Employee and the Company, generally payable in February of each year for work performed in the preceding calendar year (“Bonus”). In order to be eligible to receive any Bonus, Employee must be employed with the Company at the time of issue of any Bonus, except as set out in Section 6.2 below.

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4.3    Employee Benefits. While Employee is employed with the Company, Employee shall be entitled to participate in all employee benefit plans and programs of the Company to the extent that Employee meets the eligibility requirements for each individual plan or program. The Company provides no assurance as to the adoption or continuance of any particular employee benefit plan or program, and Employee’s participation in any such plan or program shall be subject to the provisions, rules, and regulations applicable to each benefit plan or program.

4.4    Vacation. Employee shall be entitled to three (3) weeks of paid vacation per year, which will be in accordance with and subject to the Company’s policies and as set out in this Section 4.4. The Company agrees that a portion of the above referenced paid vacation each year may be taken by Employee for the calendar workweek before Christmas and the calendar workweek before New Year’s Day each year.

4.5    Expenses. The Company shall reimburse Employee for reasonable business expenses incurred by Employee in the performance of his duties hereunder in accordance with the Company’s general policies, subject to proof of payment by Employee.

4.6    Equity Compensation. Employee’s participation in the Company’s Share Unit Plan established by the Company, or any successor plan thereto, as such may be amended from time to time in accordance with its terms (the “Plan”), shall be subject to the terms, conditions, regulations and provisions applicable to the Plan and to the terms and conditions of the Share Unit Plan Grant Agreement and any amendments entered into between Employee and the Company (the “Grant Agreement”).

5.    Definitions and Effect of Termination.

5.1    Definition of Cause. For purposes of this Agreement, “Cause” is defined as:

i. Any gross negligence or willful or intentional act or omission of Employee having the effect or reasonably likely to have the effect of injuring the reputation, business, or business relationships of the Company in any way as determined in the discretion of the Company;

ii. Any disregard by Employee of lawful instructions from the Company consistent with Employee’s position relating to the business of the Company, or any breach of duties by Employee, including by not limited to any breach by Employee or his fiduciary duties to the Company;

iii. Any unethical or dishonest conduct engaged in by Employee in the course of his employment with the Company, including but not limited to dishonesty or falsification of any employment or Company records;

iv. Any conviction of or plea or nolo contendere or the equivalent in respect to any felony offense or crime involving dishonesty or moral turpitude by Employee;

v. Employee’s use of alcohol interfering with the performance of Employee’s obligations under this Agreement or Employee’s use of illegal drugs or abuse of prescription medications;

vi. Employee’s performance that is deemed by the Company to be unsatisfactory, after thirty (30) days prior written notice that such performance must be corrected to the satisfaction of the Company;

vii. Any violation or breach by Employee of any term of this Agreement or the Proprietary Information Agreement discussed in Section 7 below.

5.2    Definition of Change of Control. For purposes of this Agreement, “Change of Control” is defined as either of the following:

i. Change in the Ownership of the Company: A change in the ownership of a corporation occurs on the date that any one person, or more than one person acting as a group (as defined in 26 C.F.R. § 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of such corporation.

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ii. Change in the Effective Control of the Company: A change in the effective control of the corporation occurs only on either of the following dates:

a. The date any one person, or more than one person acting as a group (as defined in 26 C.F.R. § 1.409A-3 (i)(5)(v)(B)), acquires (or has acquired during the 12—month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing 30 percent or more of the total voting power of the stock of such corporation; or

b. The date a majority of members of the corporation’s board of directors is replaced during any 12—month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation’s board of directors before the date of the appointment or election, provided that for purposes of this Section the term “corporation” refers solely to the relevant corporation as defined in 26 C.F.R. § 1.409A-3(i)(5)(ii) for which no other corporation is a majority shareholder for purposes of that paragraph 26 C.F.R. § 1.409A-3(i)(5)(ii).

5.3    Definition of Disability. For purposes of this Agreement, “Disability” is defined as follows: if Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the participant’s employer.

5.4    Definition of Good Reason. For purposes of this Agreement, “Good Reason” is defined as follows:

i. A material reduction of the Employee’s base salary without his express or implied consent;

ii. A material change in Employee’s primary job responsibilities without his express or implied consent;

iii. The Company’s failure to make all or any portion of any payments due to Employee pursuant to this Agreement within a reasonable time after such payments are due.

5.5    Effect of Termination. Upon termination of Employee’s employment with the Company, regardless of whether such termination is initiated by Employee or the Company, Employee shall be deemed to have resigned from all positions (including all officer positions) then held with the Company. Each Party agrees that, following any termination of employment, each Party shall fully cooperate with the other Party in all matters relating to such party’s continuing obligations under this Agreement, including but not limited to the winding up of pending work of Employee on behalf of the Company and the orderly transfer of such work to other employees of the Company.

6.    Termination Payments.

6.1    Payment through Termination. All compensation and benefits set forth in this Agreement will terminate effective on the date of termination of Employee’s employment with the Company, except employee shall be entitled to receive the following:

i. Employee’s accrued but unpaid base salary through the effective date of termination;

ii. Reimbursement of reasonable business expenses incurred by Employee in the performance of his duties hereunder in accordance with the Company’s general policies, subject to proof of payment by Employee.

Other than provided in this Section 6.1, upon the voluntary or involuntary termination of Employee, including but not limited to, voluntary termination by Employee or involuntary termination of Employee by the Company for Cause, Employee shall not be entitled to any other compensation, severance, or benefits upon termination except: (i) any benefits Employee may be entitled to under the Grant Agreement, and the Plan; or (ii) unless specifically provided for in Sections 6.2 and 6.3 below.

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6.2.    Severance Pay for Involuntary Termination without Cause, for Good Reason, or because of a Change in Control. In the event the Company terminates the employment of the Employee without Cause, the Employee terminates his employment for Good Reason, or Employee’s employment is terminated because of a Change of Control, then the Company shall pay to the Employee, or upon his behalf, the following:

i. base salary continuation payments for a twelve (12) calendar month period, beginning on the first payroll immediately following the effective date of termination, paid in accordance with the Company’s normal and customary payroll practices at the same rate as Employee’s base salary;

ii. any unpaid prorated Bonus, should any exist, in the fiscal year ending immediately prior to the effective date of termination, paid in twelve (12) equal monthly installments, in accordance with the Company’s normal and customary payroll practices;

iii. COBRA coverage for employee’s own medical premium under the Company’s existing health care plan, for up to twelve (12) months, as allowed under COBRA, as long as Employee completes all required documentation to obtain such coverage. Any amounts under this Section 6.3.iii will be paid directly to the Company’s health care provider. If at any time during this twelve (12) month period, Employee secures equivalent or greater benefits, the Company’s payment of Employee’s benefits under this Section 6.3.iii will automatically cease. Employee agrees that he will no waive any opportunity to obtain such benefits, and further agrees that he will promptly notify the Company in the event he does obtain such benefits. Nothing in this Section 6.3.iii is intended to or does create any other rights or obligations of any kind on the part of the Company with regard to payment of Employee’s COBRA coverage, except those specifically required by law.

Employee’s right to receive any installment payments payable hereunder shall be treated as a right to receive a series of separate payments, and accordingly, each such installment payment shall at all times be considered a separate and distinct payment for purposes of Section 409.

6.4    Severance Pay for Separation from Employment Due to Death or Disability. In the event of the Employee’s termination from employment due to the death or Disability of the Employee, then the Company shall pay the Employee a sum equal to three (3) months’ base salary which may not be distributed earlier than the date of death of the Employee or the date the Employee has a Disability as defined above. In the event of the death of the Employee, severance shall be paid to the Employee’s surviving spouse, estate, or personal representative as applicable.

7.    Proprietary Information anti Non-Competition.

7.1    Employee agrees to comply with the provisions contained in the Company’s Employee Proprietary Information and Noncompete Agreement (“Proprietary Information Agreement”), which shall be executed separately in a written document entered into between Employee and the Company and governed by the terms thereof.

8.    Relocation Expenses.

8.1    The Company agrees to reimburse Employee for reasonable expenses incurred as a result of and in relation to Employee’s relocation of himself and his family to the greater Atlanta, Georgia area, including, without limitation, reasonable expenses related to selling Employee’s current home (inclusive of brokerage commission and other closing costs), packing and moving services, reasonable expenses for travel to Atlanta, Georgia, reasonable costs and expenses associated with the purchase of a new home (except the actual cost of the home or any expenses associated with any upgrades, renovations or other improvements to the home). Reasonable relocation expenses shall be reimbursed to Employee within thirty (30) days following Employee’s submission of an invoice to the Company detailing such expenses.

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9.    Dispute Resolution, Legal Fees and Employee’s Liability Insurance.

9.1    Dispute Resolution. All disputes arising under this Agreement shall be settled by binding arbitration; provided, however, that this Section 9 shall not preclude either Party from seeking injunctive relief in a court of competent jurisdiction in Seattle, Washington. Arbitration shall be held in Seattle, Washington, under the auspices of the American Arbitration Association (the “AAA”) pursuant to the Commercial Arbitration Rules of the AAA, and shall be by one arbitrator, independent of the Parties to this Agreement, selected from a list provided by the AAA in accordance with such Commercial Arbitration Rules. To the maximum extent permitted by law, the decision of the arbitrator shall be final and binding on the Parties to this Agreement and not be subject to appeal. If a Party against whom the arbitrator renders an award fails to abide by such award, the other Party may bring an action to enforce the same in a court of competent jurisdiction, pursuant to the provisions of Section 10.6 below. The Parties agree that all facts and information relating to any arbitration arising under this Agreement shall be kept confidential to the extent possible. The Parties waive, for themselves and for any person or entity acting on behalf of or otherwise claiming through them, any right they may otherwise have to resolve claims by a court or by a jury, except as necessary to enforce an award rendered in arbitration, to enforce this Section 9, or to seek injunctive or other equitable relief.

9.2    Legal Fees and Costs. In any legal action or other proceeding to enforce this Agreement, the successful or prevailing Party shall be entitled to recover such reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled, as may be permitted by law.

9.3    Directors and Officers Liability Insurance. During Employee’s Employment, Employee will be a named as an insured on the Company’s directors’ and officers’ liability insurance coverage that the Company provides generally to directors and officers of the Company, as may be amended from time to time for such directors and officers.

10.    Miscellaneous

10.1    Entire Agreement. Including the Party’s obligations under the Proprietary Information Agreement, as set forth in Section 7 above, and the Share Plan Grant Agreement and the Plan, as set forth in Section 3 above, this Agreement is intended to be the final, complete, and exclusive statement of the terms of Employee’s employment by the Company and supersedes all other prior and contemporaneous agreements and statements pertaining in any manner to the employment of Employee. To the extent that the practices, policies, or procedures of the Company, now or in the future, apply to Employee and are inconsistent with the terms of this Agreement, the provisions of this Agreement shall control. Any subsequent change in Employee’s duties or compensation will not affect the validity or scope of this Agreement.

10.2 Amendments, Waivers. This Agreement may only be modified by an instrument in writing, signed by Employee and by a duly authorized representative of the Company other than Employee. No failure to exercise and no delay in exercising any right, remedy, or power under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, or power under this Agreement preclude any other or further exercise thereof, or the exercise of any other right, remedy, or power provided herein or by law or in equity.

10.3 Assignment; Successors and Assigns. This Agreement and the rights and duties hereunder are personal to Employee and shall not be assigned, delegated, transferred, pledged or sold by Employee without the prior written consent of the Company. Employee hereby acknowledges and agrees that the Company may assign, delegate, transfer, pledge or sell this Agreement and the rights and duties hereunder (a) to an affiliate of the Company or (b) to any third party acquiring through merger, consolidation or purchase all or substantially all of the business and/or assets of the Company. This Agreement shall inure to the benefit of and be enforceable by the Parties hereto, and their respective heirs, personal representatives, successors and assigns.

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10.4 Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given (i) upon receipt, if delivered personally or via courier, (ii) on the third business day following mailing, if mailed first-class, postage prepaid, registered or certified mail as follows:

TO CRH Medical Corp:	Richard Bear CRH Medical Corp. 227 Bellevue Way NE #188 Bellevue, WA 98004
TO EMPLOYEE:	[***Redacted***]

Or to such other address as either Party may designate by written notice to the other. Rejection or other refusal to accept, or inability to deliver because of a changed address of which no notice was given, shall be deemed to be a receipt of the notice, request, or other communication.

10.5 Severability; Enforcement. If any provision of this Agreement, or its application to any person, place, or circumstance, is held by an arbitrator or a court of competent jurisdiction to be invalid, unenforceable, or void, such provision shall be enforced to the greatest extent permitted by law, and the remainder of this Agreement and such provision as applied to other persons, places, and circumstances shall remain in full force and effect.

10.6 Governing Law; Consent to Personal Jurisdiction. This Agreement shall be governed by and construed in accordance with the substantive and procedural laws of the State of Washington. The Parties hereby agree that the forum for any action, suit, arbitration or other proceeding arising out of or related to this Agreement or any document referenced in this Agreement shall be solely in Washington. Each Party hereby irrevocably consents and submits to the personal jurisdiction of and venue as set forth in Section 8, and further consents and submits to the personal jurisdiction and venue in state and/or federal courts located in Washington for any injunctive relief or enforcement proceeding as described in Section 8.

10.7 Employee Acknowledgment. Employee acknowledges (i) that he has consulted with or has had the opportunity to consult with independent counsel of his own choice concerning this Agreement and has been advised to do so by the Company, and (ii) that he has read and understands this Agreement, is fully aware of its legal effect, and has entered into it freely based on his own judgment.

10.8 Construction. The headings herein are for reference only and shall not affect the interpretation of this Agreement. Whenever the context requires in this Agreement, the masculine pronoun shall include the feminine and the neuter, and the singular shall include the plural.

10.9 Counterparts. This Agreement may be executed in counterparts and by facsimile, or electronic mail each of which when so executed, will be deemed an original, and all of which together shall constitute one and the same instrument.

10.10 Equal Opportunity to Draft. Each Party to this Agreement represents and warrants that such Party has had an equal opportunity to draft this Agreement and that this Agreement will not be construed against either Party for purposes of interpretation or enforcement.

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IN WITNESS WHEREOF, this Agreement has been executed as of the date and year signed by the Company below.

COMPANY:	EMPLOYEE:
/s/ Richard Bear	/s/ James T. Kreger
Richard Bear, CFO	James T. Kreger
Date signed: 06/23/16	Date signed: 6/26/16

President of CRH Anesthesia Employment Agreement — Page 7 of 7

EX-10.3

Exhibit 10.3

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AGREEMENT made as of January 8, 2018 (the “Effective Date”).

BETWEEN:

CRH MEDICAL CORPORATION, a corporation having an office at Suite 522 — 999 Canada Place, in the City of Vancouver, in the Province of British Columbia, Canada (hereinafter called the “Corporation”)

OF THE FIRST PART

AND:

EDWARD WRIGHT, of [***Redacted***]

OF THE SECOND PART

WHEREAS the Employee and the Corporation entered into an employment agreement dated May 7, 2014 for the employment of the Employee by the Corporation in the Corporation’s business and the Employee and the Corporation have agreed to amend the terms of the May 7, 2014 agreement as provided in this Employment Agreement (the “Agreement”), which amendments are intended to confer additional benefits to the Employee and the Corporation.

AND WHEREAS the Employee and the Corporation have also entered into an agreement dated May 7, 2014 not to compete with the business carried on by the Corporation and to keep certain information of a proprietary nature confidential, on and subject to the terms thereof (the “Non Competition Agreement”);

NOW THEREFORE, in consideration of the mutual covenants and conditions contained herein as well as the increased benefits to the Employee outlined in Article 9 hereof, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS AND INTERPRETATIONS

1.1 Wherever in this Agreement, including the recitals and any Schedule attached hereto, the following terms appear, the following meanings shall be ascribed thereto:

(a) “BCBCA” means the Business Corporations Act (British Columbia), as amended from time to time;

(b) “affiliate” has the meaning ascribed to it in the BCBCA;

(c) “Annual Salary” means the annual salary of the Employee as established from time to time by the Board, and paid or payable by the Corporation. In any event, the Annual Salary at any time shall be interpreted to mean the greater of the current Annual Salary received by the Employee or the Annual Salary paid to the Employee in the preceding fiscal year of the Corporation;

(d) “Board” or “Board of Directors” means the board of directors of the Corporation;

(e) “Change of Control” means any one of the following:

(i) the acquisition, by a person or persons, acting jointly or in concert, and their affiliate(s) or associates(s) of 51% or more of the issued and outstanding voting shares of the Corporation or the acquisition of instruments convertible or exercisable, alone or in conjunction with existing share holdings, such that the persons and their affiliate(s) and associate(s) are able to acquire 51% or more than the then issued and outstanding shares of the Corporation, which acquisition results in a change of at least fifty percent (50%) of the members of the Board;

(ii) the sale, lease or exchange of all or substantially all of the property of the Corporation other than in the ordinary course of business of the Corporation;

(iii) approval by the shareholders of the Corporation of an amalgamation, arrangement, merger or other consolidation, or combination of the Corporation with another corporation, or a liquidation, dissolution or winding up of the Corporation, which results in a change of at least fifty percent (50%) of the members of the Board;

(f) “Non-Competition Agreement” means the non-competition and confidentiality agreement entered into between the parties hereto as of the date hereof;

(g) “Notice” means a statement, payment, account, notice or other writing required or permitted to be given hereunder; and

(h) “Term” has the meaning ascribed thereto in Section 2.1 hereof.

1.2 Except where the context otherwise requires, the term “this Agreement” shall include all terms and provisions of this agreement in writing between the parties hereto, including the recitals and any Schedules attached hereto and made a part hereof.

1.3 The division of this Agreement into Articles and Sections, or any other divisions, and the inclusion of headings is for convenience only and shall not affect the construction or interpretation of all or any part hereof.

1.4 Wherever in this Agreement the masculine or other gender is used, it shall be construed as including all genders, as the context so requires, and whatever the singular number is used, it shall be deemed to include the plural and vice versa, were the context so requires.

1.5 Time shall in all respects be of the essence in this Agreement.

1.6 Unless otherwise specifically provided, any period of time required to be measured hereunder shall be exclusive of the date of the giving of Notice or the occurrence of the event from which the period is to be measured and inclusive of the last day of the period.

1.7 Any term or condition of this Agreement by which obligations of either party are expressed to be applicable or which extend or may extend beyond termination of this Agreement shall survive and continue in full force and effect, except to the extent expressly set out herein.

ARTICLE 2

TERM OF AGREEMENT

2.1 This Agreement shall be effective for a term (the “Term”) commencing upon the Effective Date and terminating on the date that this Agreement is terminated pursuant to Article 8 hereof.

ARTICLE 3

EMPLOYMENT SERVICES

3.1 The Employee shall have such responsibilities and powers and shall hold the office of Chief Executive Officer of the Corporation and each of its wholly owned subsidiaries, and perform such duties normally associated with such position and those which the Board may reasonably request from time to time. The Employee’s authority shall at all times remain subject to the authority of the Board. The Employee will also be invited to sit as a member of the Board of Directors.

3.2 The Employee shall devote the whole of his business time and effort to the Employee’s duties and obligations hereunder, faithfully serve the Corporation during his employment hereunder, and shall use his

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best efforts to promote the interests of the Corporation. Nothing herein shall prohibit the Employee from engaging in enterprises and activities which do not conflict with his duties hereunder and which do not materially affect his performance hereunder, provided that the Employee shall neither consent to nor act as a director of another corporation, other than the companies for which the Employee acts as a director as of the date hereof, without the prior consent of a majority of the directors of the Corporation. Schedule “A” hereto sets out the Employee’s position and involvement with any other business or non profit or charitable entity, including private and public corporations, joint ventures, partnerships, proprietorships and associations.

3.3 The Employee acknowledges that the Employee’s relationship to the Corporation and its wholly-owned subsidiaries is that of fiduciary, and the Employee agrees to act towards the Corporation and its wholly-owned subsidiaries and otherwise behave as a fiduciary of the Corporation and its wholly-owned subsidiaries.

ARTICLE 4

REMUNERATION

4.1 As of the date hereof, the Employee’s Annual Salary shall be equal to $375,000 USD per annum. The Annual Salary may be increased annually by merit and general increases in amounts determined by the Board. The Annual Salary shall be paid in semi-monthly instalments, each equal to 1/24 of the Annual Salary.

4.2 In addition to the Annual Salary, the Corporation shall pay the Employee an annual bonus, which at 100% achievement of the established performance milestones and business growth targets shall equal 40% of the Annual Salary, but which shall not be capped at 40% of the Annual Salary. The bonus will be paid and based on the Employee’s achievement of performance milestones and business growth targets as may be established by the Board of Directors from time to time.

ARTICLE 5

STOCK OPTIONS

5.1 The Corporation has previously granted options to the Employee. The Corporation may grant additional options to the Employee from time to time based on the Employee’s performance and other relevant factors as the Board may determine.

5.2 All options to purchase the Corporation’s common shares granted to the Employee shall be subject to the terms and provisions of the stock option agreement pursuant to which same were granted and the terms and provisions of the stock option plan of the Corporation which is in effect from time to time, as approved by the Board, the shareholders of the Corporation (if required) and the Toronto Stock Exchange or any other stock exchange on which the Corporation’s shares are listed.

ARTICLE 6

BENEFITS

6.1 The Employee shall be entitled to four (4) weeks of paid vacation in each year of this Agreement.

6.2 The Employee and his family will be provided with the same medical, dental, life and disability insurance coverage as is provided to other full time employees of the Corporation (See Exhibit B), with the exception that, in lieu of group life insurance coverage, the Corporation shall pay the premiums on a $2,000,000, thirty (30) year term, individual life insurance policy naming the Employee’s estate or any other designee of the Employee as beneficiary.

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ARTICLE 7

EXPENSES

7.1 The Corporation agrees that during the Term of this Agreement, the Employee shall be reimbursed by the Corporation for all reasonable travelling and other costs actually and properly incurred by the Employee in connection with his duties hereunder in accordance with policies set by the Board, subject to the Employee furnishing to the Corporation statements and vouchers for all such expenses.

ARTICLE 8

TERMINATION

8.1 This Agreement shall terminate as follows:

(a) automatically upon the death or total incapacity of the Employee. For the purpose of this provision the Employee may be deemed to be totally incapacitated if he shall, by reason of accident, sickness, becoming of unsound mind or becoming incapable of managing his own affairs as determined by a court of law or by two (2) certified medical practitioners, be unable to perform the whole or any material part of his duties and obligations pursuant to this Agreement for a continuous period of five (5) months, the total incapacity to be deemed to have occurred upon the expiration of such five (5) month period. The resumption of duties by the Employee for a period of twenty-nine (29) days or less shall not interrupt the continuity of the fine (5) month period aforesaid;

(b) forthwith upon Notice of termination served by the Corporation upon the Employee for just cause. Without restricting the generality of the foregoing, just cause shall include but not be limited to the following:

(i) breach of this Agreement or of the Non-Competition Agreement;

(ii) conviction of a criminal offence relating to a breach of trust or a crime of violence;

(iii) refusal to comply with a lawful order or direction of the Corporation, acting through the Board, or the Employee’s immediate superior or supervisor, that is not inconsistent with this Agreement;

(iv) neglect or incompetence of the Employee to carry out the duties and responsibilities of his position in a diligent, professional and efficient manner; and

(v) any other act of misconduct harmful to the best interests of the Corporation.

(c) by the Employee;

(i) where the effective date of termination set forth in the Notice is prior to July 1, 2020, by giving at least ninety (90) days of Notice of termination to the Corporation,; or

(ii) where the effective date of termination set forth in the Notice is July 1, 2020 or later, by giving six (6) months of Notice of termination to the Corporation.

(d) by the Corporation giving Notice of termination to the Employee, which Notice shall set forth the effective date of termination; or

(e) if there is a Change of Control, by the Employee giving at least ninety (90) days Notice of termination to the Corporation, within ninety (90) days from and after the effective date of such Change of Control. In such event, the effective date of termination shall be the earlier of the ninetieth day following the date of such Notice and such earlier date as the Corporation may advise the Employee by Notice.

8.2 This Agreement shall continue in full force and effect during the Term hereof, unless earlier terminated pursuant to the provisions of Section 8.1.

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8.3 Upon termination of the Employees employment with the Corporation regardless of whether such termination is initiated by the Employee or the Corporation, the Employee shall be deemed to have resigned from all positions including all officer positions then held with the Corporation and the Employee agrees that for a period of six months following any termination of employment unless the termination is for just cause the Employee shall fully cooperate with the Corporation in all matters relating to his continuing obligations under this Agreement including but not limited to the winding up of pending work on behalf of the Corporation and the orderly transfer of work to other employees of the Corporation, without additional compensation above eligible amounts payable pursuant to Article 9 herein, provided that the Employee shall not be expected to incur any out-of-pocket cost or expense or devote any material time with respect to such cooperation. In the course of such cooperation, the Corporation shall use commercially reasonable efforts to limit the information received by the Employee from the Corporation after termination to information that is not publicly undisclosed material information relating to the Corporation.

ARTICLE 9

TERMINATION PAYMENT

9.1 Upon termination of this Agreement pursuant to Section 8.1(a) or 8.1(b), the Corporation shall pay the Employee a payment in the amount equal to six (6) months of salary or provide at least six (6) months of notice of termination of this Agreement. Thereafter, the Corporation shall have no further obligations to the Employee under this Agreement other than payment of any amounts accrued as owing to the Employee prior to the effective date of termination. The Employee agrees that in the event of termination as contemplated in this Section 9.1, he shall not be entitled to any payment or benefit from the Corporation other than as contemplated in this Section 9.1.

9.2 Upon termination of this Agreement pursuant to Section 8.1(c)(i) or 8.1(c)(ii), the Corporation shall be entitled, in its sole discretion, to terminate the employment of the Employee prior to the end of the period given in the Notice of termination, in which case the Corporation shall pay to the Employee the amount of his Annual Salary that the Employee would have earned for the remainder of such period. The Employee agrees that in the event of termination as contemplated in this Section 9.2, he shall not be entitled to any payment or benefit other than as contemplated in this Section 9.2 and any other amounts accrued as owing to the Employee prior to the effective date of termination unless provided for expressly in this Agreement.

9.3 Upon termination pursuant to 8.1(e), the Corporation shall provide to the Employee:

(a) a payment in an amount equivalent to twenty-four (24) months of his Annual Salary at the then current rate of such Annual Salary, net of applicable deductions and remittances under applicable tax and other laws;

(b) to the extent permitted by the Corporation’s group insurance carrier, continued group insurance benefits coverage, together with reimbursement of the individual life insurance premium for a period of twenty-four (24) months in respect of which payment is due pursuant to Section 9.3(a); and

(c) any other amounts, including any bonus earned and/or that would have been payable in respect of the payment made pursuant to 9.3(a), owing to the Employee effective the date of the termination. For the purpose of calculating the bonus payable in respect of the payment pursuant to Section 9.3(a), the multiplier shall be the average percentage of bonus received by the Employee the two (2) years preceding the termination date. The Corporation shall be entitled, in its sole discretion, to terminate the employment of the Employee prior to the end of the period given in the Notice of termination, in which case the Corporation shall also pay to the Employee the amount of his Annual Salary and bonus that the Employee would have earned for the remainder of such period.

The Employee agrees that in the event of termination as contemplated in this Section 9.3, he shall not be entitled to any payment or benefit other than as contemplated in this Section 9.3.

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9.4 Upon termination of this Agreement pursuant to Section 8.1(c)(ii) and Section 8.1(d), the Corporation shall provide to the Employee:

(a) a payment in the amount of his Annual Salary at the then current rate of such Annual Salary plus an additional one (1) month payment for each consecutive year the Employee was employed, after the first year of employment, to a maximum of 18 months payment, net of applicable deductions and remittances under applicable tax and other laws;

(b) to the extent permitted by the Corporation’s group insurance carrier, continued group insurance benefits coverage, together with reimbursement of the individual life insurance premium for the period of time equal to the number of months in respect of which payment is due pursuant to Section 9.4(a); and

(c) any other amounts (including but not limited to any bonuses that may be payable pursuant to this Agreement) accrued as owing to the Employee prior to the effective date of termination. In this regard, upon termination of this Agreement pursuant to Section 8.1(e), the Corporation shall be entitled, in its sole discretion, to terminate the employment of the Employee prior to the end of the period given in the Notice of termination, in which case the Corporation shall also pay to the Employee the amount of his Annual Salary and bonus that the Employee would have earned for the remainder of such period.

The Employee agrees that in the event of termination as contemplated in this Section 9.4, he shall not be entitled to any payment or benefit other than as contemplated in this Section 9.4.

ARTICLE 10

CONFIDENTIAL INFORMATION

10.1 During the Term of this Agreement and thereafter, the Employee covenants an agrees to keep confidential all information of a confidential or proprietary nature concerning the Corporation and its affiliates and further covenants and agrees not to use such information for personal advantage or for that of any other person, or use such information against the interests of the Corporation and its affiliates without the prior written consent of the Corporation, except as may be necessary in the proper discharge of his employment, or after the date of termination of his employment, however caused, except with the prior written consent of the Corporation; provided that nothing contained in this Section 10.1 shall preclude or prevent the use or disclosure of information which is publicly available (other than as a result of a breach by the Employee of this Section 10.1 or a breach of confidentiality by any other person) or which is required to be disclosed under appropriate statutes, rules of law or legal process.

10.2 Upon termination of this Agreement for any reason, the Employee agrees to immediately deliver to the Corporation possession of all property of the Corporation and its affiliates over which he has possession or control.

10.3 The Employee acknowledges and agrees that the Employee will take all necessary steps to protect and maintain personal information of the employees, consultants or customers of the Corporation and its affiliates obtained in the course of the Employee’s employment with the Corporation. The Employee shall at all times comply, and shall assist the Corporation and its affiliates to comply, with any and all applicable laws relating to privacy and the collection, use and disclosure of personal information in all applicable jurisdictions, including but not limited to the Personal Information Protection and Electronic Documents Act (Canada) and/or any comparable provincial law (including the Personal Information Protection Act (British Columbia) (collectively, “Applicable Privacy laws”). The Employee acknowledges and agrees that the disclosure of the Employee’s personal information may be required as part of a potential business or commercial transaction or as part of the Corporations’ management of the employment relationship, and the Employee hereby grants consent as may be required by Applicable Privacy Laws to the disclosure of personal information for the purposes of any potential business or commercial transaction and the ongoing management of the employment relationship by the Corporation.

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10.4 Given the Employee’s access to detailed confidential information, patents and trade secrets concerning the business of the Corporation and its affiliates, the Employee agrees that, where applicable, he shall not:

(a) purchase or sell securities of the Corporation with knowledge of a material fact or material change with respect to the Corporation and its affiliates which has not been generally publicized by issuance of a press release or other public announcement; or

(b) info in, other than in the necessary course of business, any other person about a material fact or material change with respect to the Corporation and its affiliates before that fact or change has been generally publicized.

10.5 The parties acknowledge and agree that the provisions of this Article 10 are in addition to and not in derogation from the confidentiality and non-competition provisions of the Non-Competition Agreement.

ARTICLE 11

GENERAL

11.1 Except for the Employee’s rights to continued participation in employee benefit plans, if any, conditions of employment generally available to other employees of the Corporation and the Employee’s obligations regarding confidential information and non-competition in the Non-Competition Agreement, this Agreement contains the entire understanding of the parties with respect to the matters contained herein and there are no statements, representations, warranties, understandings, promises, undertakings or agreements, written or oral, express or implied, by either party hereto to the other, other that those expressly set forth herein. Except as otherwise expressly provided in this Agreement, this Agreement supersedes and replaces any earlier agreement(s), whether oral or in writing between the parties hereto respecting the subject matter of this Agreement.

11.2 This Agreement may be amended only by written instrument signed by each of the parties hereto.

11.3 No provision hereof shall be deemed waived and no breach excused, unless such waiver or consent excusing the breach shall be in writing and signed by the party to be charged with such waiver or consent. A waiver by a party of any provision of this Agreement shall not be deemed or construed as a waiver of a further breach of the same provision or of the provision itself.

11.4 In any covenant or obligation or either party contained herein or any provision of this Agreement or its application to any person or circumstance shall, to any extent, be invalid or unenforceable; the remainder of this Agreement or the application of such covenant or obligation to persons or circumstances other than those to which it is held invalid or unenforceable shall not be affected, and each provision and each covenant and obligation contained in this Agreement shall be separately valid and enforceable, to the fullest extent permitted by law or at equity.

11.5 This Agreement is for the personal services and employment of the Employee and may not be assigned in whole or in part to any third party by the Employee. Subject thereto, this Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, legal representatives, successors and permitted assigns, if any.

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11.6 All Notices permitted or required to be given hereunder shall be in writing and shall be addressed as follows:

To the Corporation:

CRH Medical Corporation

Suite 522    999 Canada Place

Vancouver, B.C. V6C 3E1

Telecopier No.: (604) 633-1440

Attention: Chairman

To the Employee:

[***Redacted***]

Notices may be delivered by personal delivery, by first class mail, postage prepaid, by telecopier or by e-mail. Notices which are personally delivered shall be deemed to be received upon actual receipt thereof Notices which are mailed shall be deemed to have been received seven (7) business days after the posting of such Notices (exclusive of the date of posting). Notices which are telecopied or e-mailed shall be deemed to have been received on the next business day after the date of transmission or sending, provided that confirmation of transmission is obtained. If for any reason, the method for giving Notice selected by a party is impractical, that party shall be obliged to select an alternative method of giving Notice from the methods provided herein. Either party may change its address or particulars respecting its address for receipt of Notices by giving Notice as aforesaid.

11.7 Except where otherwise expressly provided, all amounts in this Agreement are stated and shall be paid in Canadian currency.

11.8 This Agreement shall be governed exclusively by the laws of the Province of British Columbia and the laws of Canada in force in the Province of British Columbia. The parties hereto irrevocably attorn to the exclusive jurisdiction of the Courts of the Province of British Columbia and agree that any proceedings taken in respect of this Agreement shall be taken in such courts and no other.

11.9 This Agreement may be executed in separate counterparts and all such executed counterparts, when taken together shall constitute one (1) Agreement. The parties hereto shall be entitled to rely on delivery of a facsimile copy of the executed Agreement and such facsimile copy shall be legally effective to create a binding and valid Agreement.

IN WITNESS WHEREOF the parties have caused this Agreement to be executed as of the day and year first above written.

	CRH MEDICAL CORPORATION
	Per:	/s/ Anthony Holler
		Anthony Holler, Chairman
	/s/ Edward Wright
Witness	Edward Wright

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SCHEDULE “A”

Board Chair of Vancouver College Limited

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EX-10.4

Exhibit 10.4

AMENDED AND RESTATED CHIEF FINANCIAL OFFICER EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”), dated as of the 12th day of February, 2018 (the “Effective Date”), is entered into by and between CRH Medical Corp, a Delaware corporation (“Company”), and Richard Bear (“Employee”) (each a “Party” and collectively the “Parties”). The Parties, in consideration of the mutual covenants and representations, Employee’s continued employment, the increased benefits to the Employee outlined in Section 6, and the additional consideration of $500.00 paid to Employee upon entering into this Agreement, agree to amend and restate the terms of the existing employment agreement between the Employee and the FCompany most recently amended on April 7, 2017 (“Existing Agreement”) as follows:

1.    Employment. Company employs Employee and Employee agrees to accept such employment, upon the terms and conditions set forth in this Agreement.

2.    Term of Employment. Employee’s Employment pursuant to the terms of this Agreement shall continue following the Effective Date hereof. Employee’s employment and this Agreement may be terminated pursuant to the terms of this Agreement, or at any time, with or without Cause and with or without notice, by either Employee or Company. Employee specifically acknowledges and agrees that his employment under this Agreement is “at-will.” This Agreement supersedes the Existing Agreement.

3.    Position, Duties, Responsibilities.

3.1    Position. Employee is employed by the Company in the position of Chief Financial Officer (“CFO”) and shall perform all services appropriate to that position for an organization the size of the Company that is engaged in the type of business engaged in by the Company, provided that Employee’s precise duties may be changed or extended from time to time, at the Company’s direction, and Employee shall assume and perform further reasonable responsibilities and duties that the Company may assign from time to time. Employee will report directly to the Chief Executive Officer (“CEO”) of the Company.

3.2    Other Activities. Employee will devote all of his working time, attention, knowledge and skills as is reasonably required under this Agreement to diligently, competently and effectively perform his duties. During the term of this Agreement, except upon the prior written consent of the Company, Employee will not (i) accept any other full-time or part-time employment, (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be in conflict with, or that might place Employee in a conflicting position to that of the Company, or prevent Employee from devoting such time as necessary to fulfill his responsibilities under this Agreement, (iii) sell, market, or represent any product or service other than the Company’s products or services unless otherwise specified, or (iv) serve on any board of directors for any other company except with the consent of the Company, which consent will not be unreasonably withheld. Nothing in Section 3.2(iv) is intended to or does prevent Employee from serving on the board of directors of trade associations and charitable organizations, engaging in charitable activities and community affairs, or managing Employee’s personal investments and affairs, provided that these activities do not interfere with Employee’s obligations under this Section 3.

3.3    Work Location. Employee’s principal place of work shall be located in Bellevue, Washington, or such other location as the parties may agree upon from time to time.

4.    Compensation.

In consideration of the services to be rendered under this Agreement, Employee shall be entitled to the following:

4.1    Base Salary. The Company shall pay to Employee an annual base salary of three hundred and fifty thousand dollars ($350,000), less all applicable taxes and withholdings, which will be payable in accordance with the Company’s payroll practices, as amended from time to time (“Base Salary”).

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4.2    Bonus. At the Company’s sole discretion. Employee may be eligible to receive an annual forty percent (40%) bonus based upon metrics agreed to between Employee and the Company, payable no later than March 15 of each year for work performed in the preceding calendar year (“Bonus”). In order to be eligible to receive any Bonus, except as otherwise set out in Section 6 below, Employee must be employed with the Company at the time of issue of any Bonus.

4.3    Employee Benefits. While Employee is employed with the Company, Employee shall be entitled to participate in all employee benefit plans and programs of the Company to the extent that Employee meets the eligibility requirements for each individual plan or program. The Company provides no assurance as to the adoption or continuance of any particular employee benefit plan or program, and Employee’s participation in any such plan or program shall be subject to the provisions, rules, and regulations applicable to each benefit plan or program.

4.4    Vacation. Employee shall be entitled to four (4) weeks of paid vacation per year, which will be in accordance with and subject to the Company’s policies and as set out in this Section 4.4.

4.5    Expenses. The Company shall reimburse Employee for reasonable business expenses incurred by Employee in the performance of his duties hereunder in accordance with the Company’s general policies, subject to proof of payment by Employee.

4.6    Equity Compensation. Employee’s participation in the Company’s Share Unit Plan established by the Company, or any successor plan thereto, as such may be amended from time to time in accordance with its terms (the “Plan”), shall be subject to the terms, conditions, regulations and provisions applicable to the Plan and to the terms and conditions of the Share Unit Plan Grant Agreement and any amendments entered into between Employee and the Company.

5.    Definitions and Effect of Termination.

5.1    Definitions of Cause. For purposes of this Agreement, “Cause” is defined as:

i. Any gross negligence or willful or intentional act or omission of Employee having the effect or reasonably likely to have the effect of injuring the reputation, business, or business relationships of the Company in any way as determined in the discretion of the Company. If in the Company’s discretion, the gross negligence or willful or intentional act or omission of Employee has not yet had the effect of injuring the reputation, business or business relationships of the Company in any way as determined in the discretion of the Company, the Company will provide written notice to Employee of the gross negligence or willful or intentional act or omission of Employee, and provide him an opportunity to cure and/or present Employee’s case to the contrary to the CEO, and as determined in the discretion of the Company, Employee has not remedied such gross negligence or willful or intentional act or omission of Employee within fifteen (15) business days of the notice or other longer cure period as may be specified by the Company;

ii. Employee has engaged in a failure or refusal to carry out the reasonable and lawful duties of his position or the CEO’s lawful directives, provided that the Company provides written notice to the Employee notifying him of such failure, and an opportunity to cure and/or present his case to the contrary to the Board, if applicable, and Employee does not remedy such failure or refusal within fifteen (15) business days or other longer cure period as may be specified by the Company;

iii. Any unethical or dishonest conduct engaged in by Employee in the course of his employment with the Company, including but not limited to dishonesty or falsification of any employment or Company records;

iv. Any conviction of or plea or nolo contendere or the equivalent in respect to any felony offense or crime involving dishonesty or moral turpitude by Employee;

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v. Employee’s use of alcohol interfering with the performance of Employee’s obligations under this Agreement or Employee’s use of illegal drugs or abuse of prescription medications, provided that the Company provides written notice to the Employee notifying him of such conduct, and an opportunity to cure and/or present his case to the contrary to the Board, if applicable, and Employee does not remedy such conduct within fifteen (15) business days or other longer cure period as may be specified by the Company;

vi. Any violation or breach by Employee of any term of this Agreement, including but not limited to any breach by Employee of his fiduciary duties to the Company, and/or any violation or breach by Employee of any term of the Proprietary Information Agreement discussed in Section 7 below.

5.2    Definition of Change of Control. For purposes of this Agreement, “Change of Control” is defined as any of the following:

i. Change in the Ownership of the Company: A change in the ownership of a corporation occurs on the date that any one person, or more than one person acting as a group (as defined in 26 C.F.R. § 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of such corporation.

ii. Change in the Ownership of a Substantial Portion of a Corporation’s Assets: A change in the ownership of a substantial portion of a corporation’s assets occurs on the date that any one person, or more than one person acting as a group (as defined in 26 C.F.R. § 1.409A-3 (i)(5)(v)(B)), acquires (or has acquired during the 12—month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than 80 percent of the total gross fair market value of all of the assets of the corporation immediately before such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation. or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. There is no change of control event under this paragraph when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer, as provided for in 26 C.F.R. § I .409A-3 (i)(5)(vii)(B).

iii. Change in the Effective Control of the Company: A change in the effective control of the corporation occurs only on either of the following dates:

a. The date any one person, or more than one person acting as a group (as defined in 26 C.F.R. § 1.409A-3 (i)(5)(v)(B)), acquires (or has acquired during the 12—month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing 30 percent or more of the total voting power of the stock of such corporation; or

b. The date a majority of members of the corporation’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation’s board of directors before the date of the appointment or election, provided that for purposes of this Section the term “corporation” refers solely to the relevant corporation as defined in 26 C.F.R. § 1.409A-3(i)(5)(ii) for which no other corporation is a majority shareholder for purposes of that paragraph 26 C.F.R. § 1.409A-3(i)(5)(ii).

5.3    Definition of Disability. For purposes of this Agreement, “Disability” is defined as follows: if Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the participant’s employer.

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5.4    Definition of Good Reason. For purposes of this Agreement, “Good Reason” is defined as follows:

i. A material reduction of Employee’s Base Salary without his written consent other than in connection with a commensurate reduction (in percentage terms) in the base salaries of all officers of the Company holding the title of vice president or above: or

ii. A requirement that Employee relocate his primary work location to a location more than 50 miles from Bellevue, Washington; or

iii. A material change in Employee’s primary job responsibilities without his written consent; or

iv. The Company’s failure to make all or any portion of any payments due to Employee pursuant to this Agreement within a reasonable time after such payments are due.

A termination of employment by Employee for any of the reasons in this Section 5.4 will not constitute “Good Reason” unless (i) Employee has given written notice to the Company within the 90-calendar day period immediately following his discovery of the occurrence of such Good Reason event (or if earlier, the date he is notified in writing), specifying in reasonable detail the events relied upon for termination, and (ii) the Company has not remedied such events within thirty (30) business days after receiving Employee’s notice. Employee must terminate his employment within thirty (30) calendar days following the expiration of such cure period for the termination to be on account of Good Reason.

5.5    Definition of Resignation Notice. For the purposes of this Agreement, “Resignation” is defined as a termination of Employment by the Employee without Good Reason by providing notice to the Company as follows:

a) where the effective date of termination set forth in the notice is prior to July 1, 2020, by giving at least ninety (90) days of notice of termination to the Company; or

b) where the effective date of termination set forth in the notice is July 1, 2020 or later, by giving six (6) months of notice of termination to the Company.

5.6    Effect of Termination. Upon termination of Employee’s employment with the Company, regardless of whether such termination is initiated by Employee or the Company, Employee shall be deemed to have resigned from all positions (including all officer positions) then held with the Company. Employee agrees that for a period of six (6) months following any termination of employment, unless the termination is for Cause, Employee shall fully cooperate with the Company in all matters relating to his continuing obligations under this Agreement, including but not limited to the winding up of pending work on behalf of the Company and the orderly transfer of work to other employees of the Company, provided that Employee shall not be expected to incur any out of pocket cost or expense or devote any material time with respect to such cooperation. In the course of such cooperation, the Company shall use commercially reasonable efforts to limit the information received by the Employee from the Company after termination to information that is not publicly undisclosed material information relating to the Company.

6.    Termination Payments.

6.1    Payment Through Termination. All compensation and benefits set forth in this Agreement will terminate effective on the date of termination of Employee’s employment with the Company, except Employee shall be entitled to receive the following:

i. Employee’s accrued but unpaid Base Salary, subject to lawful deductions, through the effective date of “termination;

ii. Reimbursement of reasonable business expenses incurred by Employee in the performance of his duties hereunder in accordance with the Company’s general policies, subject to proof of payment by Employee.

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Upon termination or separation of Employee’s employment for any reason, whether voluntary or involuntary, Employee shall not be entitled to any severance payments, except for the reasons specifically outlined in this Section 6.

6.2    Severance Pay for Termination without Cause or for Good Reason. Except as set forth below in. Section 6.3, in the event the Company seeks to terminate this Agreement and the employment of Employee without Cause, or the Employee terminates his employment for Good Reason or provides Resignation Notice in accordance with Section 5.5(b), then the Company shall pay to Employee the following:

i. a sum equal to eighteen (18) months’ Base Salary, subject to lawful deductions;

ii. an amount equal to the Bonus that Employee would have received if Employee had been employed with the Company at the time of issue of any Bonus, determined by the Board in good faith exercising its reasonable discretion and prorated based upon the number of days elapsed in the preceding calendar year through the effective date of termination, subject to lawful deductions. For example, if Employee’s employment is terminated effective March 15 and, at the end of the calendar year in which the Employee’s employment was terminated, the Board determines certain metrics have been met that would trigger the Bonus provision in Section 4.2, Employee will receive a prorated amount based upon the number of days elapsed in the preceding calendar year through March 15;

iii. COBRA coverage for Employee’s own medical premium under the Company’s existing health care plan, for up to eighteen (18) months, as allowed under COBRA. as long as Employee completes all required documentation to obtain such coverage and only if he remains eligible for COBRA coverage. Any amounts under this Section. 6.2.iii. will be paid directly to the Company’s health care provider. If at any time during this eighteen (18) month period, Employee secures equivalent or greater benefits, the Company’s payment of Employee’s benefits under this Section 6.2.iii, will automatically cease. Employee agrees that he will not waive any opportunity to obtain such benefits, and further agrees that he will promptly notify the Company in the event he does obtain such benefits. Nothing in this Section 6.2.iii. is intended to or does create any other rights or obligations of any kind on the part of the Company with regard to payment of Employee’s COBRA coverage, except those specifically required by law,

Severance pay for involuntary termination without Cause, or for Good Reason, may not be distributed before the date which is six months after the date of separation from employment (or, if earlier, the death of Employee), but shall be paid, in a lump sum, no later than five (5) business days after expiration of such six month period.

6.3    Severance Pay for Termination as a Result of a Change of Control of the Company. In the event Employee’s employment terminates: (a) as a result of an involuntary termination without Cause within thirteen (13) months after a Change of Control of the Company; or (b) as a result of termination by Employee for Good Reason within twelve (12) months after a Change of Control of the Company (subject to the qualification set forth in this Section below regarding termination for Good Reason); or (c) as a result of Employee choosing to terminate his employment for any reason or no reason at all within thirty (30) calendar days after twelve (12) months have elapsed following a Change of Control, then the Company shall pay to Employee the following:

i. a sum equal to twenty-four (24) months’ Base Salary, subject to lawful deductions;

ii. a bonus amount commensurate with the period set forth in Section 6.3.i. above. For purposes of calculating the bonus amount commensurate with Section 6.3.i., the amount shall be calculated by taking the average bonus received by Employee from the two (2) Bonus payments preceding the termination date, and multiplying that average bonus amount by two (2) to equal the total bonus amount due under this Section 6.3.ii. (For illustration only, if Employee received a $30,000 bonus and a $100,000 bonus in the two consecutive bonus payments preceding termination, the average bonus amount would be $65,000 multiplied by 2, equaling $130,000 for the total bonus amount.);

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iii. COBRA coverage for Employee’s own medical premium under the Company’s existing health care plan, for up to eighteen (18) months, as allowed under COBRA, as long as Employee completes all required documentation to obtain such coverage and only if he remains eligible for COBRA coverage. Any amounts under this Section 6.3.iii. will be paid directly to the Company’s health care provider. If at any time during this eighteen (18) month period, Employee secures equivalent or greater benefits, the Company’s payment of Employee’s benefits under this Section 6.3.iii. will automatically cease. Employee agrees that he will not waive any opportunity to obtain such benefits, and further agrees that he will promptly notify the Company in the event he does obtain such benefits. Nothing in this Section 6.3.iii. is intended to or does create any other rights or obligations of any kind on the part of the Company with regard to payment of Employee’s COBRA coverage, except those specifically required by law.

A termination of employment by Employee following a Change of Control will not constitute “Good Reason” under Section 6.3(a) unless the requirements of Section 5.4 are met. if Employee chooses to terminate employment other than for Good Reason, at any time within twelve (12) months after a Change of Control, then Employee shall not be entitled to receive severance pay under this Agreement. If Employee chooses to terminate his employment later than thirty (30) calendar days after twelve (12) months have elapsed following a Change of Control, or if the Company terminates Employee’s employment after thirteen (13) months have elapsed following a Change of Control, then Employee shall not be entitled to receive severance pay under this section.

Severance pay for termination as a result of a Change of Control of the Company may not be distributed before the date which is six months after the date of separation from employment (or, if earlier, the death of Employee), but shall be paid, in a lump sum, no later than five (5) business days after expiration of such six month period. In the event that any compensation paid to Employee or for Employee’s benefit by the Company in respect of the Change of Control would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any comparable federal, state, or local excise tax (the “Excise Tax”), the Company will make an additional payment to Employee so that the net amount received and retained by Employee from the Company after satisfaction of the Excise Tax shall be the same amount as if no Excise Tax were imposed. The “gross up” payment shall be made no later than the date on which the Excise Tax is due and payable.

6.4    Severance Pay for Separation from Employment Due to Death or Disability. In the event of Employee’s separation from employment due to the death or Disability of Employee, then the Company shall pay Employee a sum equal to six (6) months’ Base Salary which may not he distributed earlier than the date of death of Employee or the date Employee has a Disability as defined above. In the event of the death of Employee, severance shall be paid to Employee’s surviving spouse, estate, or personal representative as applicable. Severance pay for Separation from Employment Due to Death or Disability shall be paid no later than two and one half (2 1/4) months after the date of death or Disability of Employee.

7.    Proprietary information, Inventions Assignment, and Non-Competition.

7.1    Employee agrees to comply with the provisions contained in the Company’s Employee Proprietary Information, Inventions Assignment and Noncompete Agreement (“Proprietary Information Agreement”), which shall be executed separately in a written document entered into between Employee and the Company and governed by the terms thereof

8.    Dispute Resolution, Legal Fees and Employee’s Liability Insurance.

8.1    Dispute Resolution. All disputes arising under this Agreement shall be settled by binding arbitration; provided, however, that this Section 8 shall not preclude either Party from seeking injunctive relief in a court of competent jurisdiction. Arbitration shall be held in Washington, under the auspices of the American Arbitration Association (the “AAA”) pursuant to the Commercial Arbitration Rules of the AAA, and shall be by one arbitrator, independent of the Parties to this Agreement, selected from a list provided by the AAA in accordance

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with such Commercial Arbitration Rules. To the maximum extent permitted by law, the decision of the arbitrator shall be final and binding on the Parties to this Agreement and not be subject to appeal. If a Party against whom the arbitrator renders an award fails to abide by such award, the other Party may bring an action to enforce the same in a court of competent jurisdiction, pursuant to the provisions of Section 9.7 below. The Parties agree that all facts and information relating to any arbitration arising under this Agreement shall be kept confidential to the extent possible. The Parties waive, for themselves and for any person or entity acting on behalf of or otherwise claiming through them, any right they may otherwise have to resolve claims by a court or by a jury. except as necessary to enforce an award rendered in arbitration, to enforce this Section 8, or to seek injunctive or other equitable relief

8.2    Legal Fees and Costs. In any legal action or other proceeding to enforce this Agreement, the successful or prevailing Party shall be entitled to recover such reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled, as may be permitted by law.

8.3    Indemnification; Directors and Officers Liability Insurance. Employee will be provided indemnification to the maximum extent permitted by the Company’s Articles of Incorporation or Bylaws, with the indemnification to be on terms determined by the Board of Directors for the Company or any of its committees, but on term is no less favorable than provided to any other Company executive officer or director and subject to the terms of any separate written indemnification agreement. During Employee’s employment, Employee will be named as an insured on the Company’s directors’ and officers’ liability insurance coverage (“D&O Coverage”) that the Company provides generally to directors and officers of the Company. as may be amended from time to time for such directors and officers. The Company shall maintain this D&O Coverage at all times during Employee’s employment at a level and with coverages consistent with the D&O Coverage currently maintained by the Company. Upon termination of the Employee’s employment for any reason, the Company will cause such policies to cover Employee in respect of acts and omissions during the period of employment as if the Employee was still an officer, director and/or employee, as applicable.

9.    Miscellaneous.

9.1    Section 409A. The Company and Employee intend that any amounts or benefits payable or provided under this Agreement comply with the provisions of Section 409A of the Internal Revenue Code and the treasury regulations and other guidance promulgated thereunder, to the extent applicable, and this Agreement shall be construed and interpreted in a manner consistent with such intent and if necessary, the Company and Employee agree that any such provision shall be deemed amended in a manner that brings this Agreement into compliance with section 409A of the Code and treasury regulations and other guidance promulgated thereunder.

9.2    Entire Agreement. Including Employee’s obligations under the Proprietary Information Agreement, as set forth in Section 7 above, this Agreement is intended to be the final, complete, and exclusive statement of the terms of Employee’s employment by the Company and supersedes all other prior and contemporaneous agreements and statements pertaining in any manner to the employment of Employee. To the extent that the practices, policies, or procedures of the Company, now or in the future, apply to Employee and are inconsistent with the terms of this Agreement, the provisions of this Agreement shall control.

Any subsequent change in Employee’s duties or compensation will not affect the validity or scope of this Agreement.

9.3    Amendments. Waivers. This Agreement may only be modified by an instrument in writing, signed by Employee and by a duly authorized representative of the Company other than Employee. No failure to exercise and no delay in exercising any right, remedy, or power under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, or power under this Agreement preclude any other or further exercise thereof, or the exercise of any other right, remedy, or power provided herein or by law or in equity.

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9.4    Assignment; Successors and Assigns. This Agreement and the rights and duties hereunder are personal to Employee and shall not be assigned, delegated. transferred, pledged or sold by Employee without the prior written consent of the Company. Employee hereby acknowledges and agrees that the Company may assign, delegate, transfer, pledge or sell this Agreement and the rights and duties hereunder (i) to an affiliate of the Company or (ii) to any third party upon a Change of Control. This Agreement shall inure to the benefit of and be enforceable by the Parties hereto, and their respective heirs, personal representatives, successors and assigns.

9.5    Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given (i) upon receipt, if delivered personally or via courier, (ii) on the third business day following mailing, if mailed first-class, postage prepaid, registered or certified mail as follows:

TO CRH Medical Corp:	Edward Wright CRH Medical Corp. Suite 522 — 999 Canada Place Vancouver, B.C. V6C 3E1
TO EMPLOYEE:	***Redacted***

Or to such other address as either Party may designate by written notice to the other. Rejection or other refusal to accept, or inability to deliver because of a changed address of which no notice was given, shall be deemed to be a receipt of the notice, request, or other communication.

9.6    Severability; Enforcement. If any provision of this Agreement, or its application to any person, place, or circumstance, is held by an arbitrator or a court of competent jurisdiction to be invalid, unenforceable, or void, such provision shall be enforced to the greatest extent permitted by law. and the remainder of this Agreement and such provision as applied to other persons, places, and circumstances shall remain in full force and effect.

9.7    Governing Law; Consent to Personal Jurisdiction. This Agreement shall be governed by and construed in accordance with the substantive and procedural laws of the State of Washington. The Parties hereby agree that the forum for any action, suit, arbitration or other proceeding arising out of or related to this Agreement or any document referenced in this Agreement shall be solely in Washington. Each Party hereby irrevocably consents and submits to the personal jurisdiction of and venue as set forth in Section 8, and further consents and submits to the personal jurisdiction and venue in state and/or federal courts located in Washington for any injunctive relief or enforcement proceeding as described in Section 8.

9.8    Employee Acknowledgment. Employee acknowledges (i) that he has consulted with or has had the opportunity to consult with independent counsel of his own choice concerning this Agreement and has been advised to do so by the Company, and (ii) that he has read and understands this Agreement, is fully aware of its legal effect, and has entered into it freely based on his own judgment.

9.9    Construction. The headings herein are for reference only and shall not affect the interpretation of this Agreement. Whenever the context requires in this Agreement, the masculine pronoun shall include the feminine and the neutral, and the singular shall include the plural.

9.10    Counterparts. This Agreement may be executed in counterparts and by facsimile, or electronic mail each of which when so executed, will be deemed an original, and all of which together shall constitute one and the same instrument.

9.11    Equal Opportunity to Draft. Each party to this Agreement represents and warrants that he has had an equal opportunity to draft this Agreement and that this Agreement will not be construed against either Party for purposes of interpretation or enforcement.

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IN WITNESS WHEREOF, this Agreement has been executed as of the date and year signed by the Company below:

COMPANY:	EMPLOYEE:
/s/ Anthony Holler Anthony Holler, Chairman	/s/ Richard Bear Richard Bear
Date Signed: 2/12/2018	Date Signed: 2/12/2018

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EX-10.5

Exhibit 10.5

INDEMNITY AGREEMENT

This Agreement has been entered into as of the      th day of                     , 20    ,

BETWEEN:

CRH MEDICAL CORPORATION, a company incorporated under the laws of the Province of British Columbia and having an address at 522 – 999 Canada Place, Vancouver, BC V6C 3E1

(the “Indemnitor”)

AND:

                             , Businessperson

(the “Indemnitee”)

WHEREAS the Indemnitee acts or has agreed to act as a director and/or officer of the Indemnitor and may, from time to time, act as a director and/or officer of another entity at the Indemnitor’s request, and the Indemnitee has agreed, subject to the granting of the indemnities herein provided for, to act or continue to act in the aforementioned capacities.

NOW THEREFORE in consideration of these premises, the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by each of the parties hereto, the parties hereto covenant and agree as set forth below.

ARTICLE 1—INDEMNITY

1.1    Scope of Indemnity. Subject to subsections 1.3, 1.8, 1.9, and 2.7 below, the Indemnitor shall to the fullest extent possible under applicable law indemnify and save harmless the Indemnitee against and from:

(a) any and all charges and claims of every nature and kind whatsoever which may be brought or made by any person, firm, corporation or government, or by any governmental department, body, commission, board, bureau, agency or instrumentality against the Indemnitee in connection with the execution of the duties of the Indemnitee’s office as a director and/or officer or by virtue of the Indemnitee’s holding any other directorship and/or officer position with any other entity held by the Indemnitee at the Indemnitor’s request;

(b) any and all costs, damages, expenses (including legal fees and disbursements on a full indemnity basis and including an amount paid to settle any action or to satisfy any judgment), fines, liabilities (statutory or otherwise), losses and penalties which the Indemnitee may sustain, incur or be liable for in consequence of the Indemnitee’s acting as a director and/or officer of the Indemnitor, whether sustained or incurred by reason of the Indemnitee’s negligence, default, breach of duty, breach of trust, intentional tortuous conduct, failure to exercise due diligence or otherwise in relation to the Indemnitor or any of its affairs; and

(c) in particular, and without in any way limiting the generality of the foregoing, any and all costs, damages, expenses (including legal fees and disbursements on a full indemnity basis), fines, liabilities, losses and penalties which the Indemnitee may sustain, incur or be liable for as a result of or in connection with the release of or presence in the environment of substances, contaminants, litter, waste, effluent, refuse, pollutants or deleterious materials and that arise out of or are in any way connected with the management, operation, activities or existence of the Indemnitor or by virtue of the Indemnitee holding any other directorship and/or officer position with any other entity held by the Indemnitee at the Indemnitor’s request.

1.2    Payments Advanced as Costs Incurred. Any amounts paid by the Indemnitor under section 1.1 shall be advanced by the Indemnitor promptly as and when costs, damages, expenses, fines, losses or penalties are incurred by the Indemnitee.

1.3    Indemnity Restricted. If, under applicable law, any payment by the Indemnitor under section 1.1 first requires the approval of any court, the Indemnitor, at its own expense and in good faith, will promptly take all necessary proceedings to obtain such approval.

1.4    Taxable Benefits. The Indemnitor shall gross up any indemnity payment made pursuant to this Indemnity Agreement by the amount of any income tax payable by the Indemnitee in respect of that payment.

1.5    Enforcement Costs. The Indemnitor shall indemnify the Indemnitee for the amount of all costs incurred by the Indemnitee in obtaining any court approval required to enable the Indemnitee to make a payment under or in enforcing this Indemnity Agreement, including without limitation legal fees and disbursements on a full indemnity basis.

1.6    Re-Election. The obligations of the Indemnitor under this Indemnity Agreement continue after and are not affected in any way by the re-election or re-appointment from time to time of the Indemnitee as a director and/or officer of the Indemnitor or of any entity in which the Indemnitee holds a directorship and/or officer position at the request of the Indemnitor.

1.7    Indemnitee’s Compensation. The obligations of the Indemnitor under this Indemnity Agreement are not diminished or in any way affected by:

(a) the Indemnitee holding from time to time any direct or indirect financial interest in the Indemnitor or in any entity in which the Indemnitee holds such directorship and/or officer position at the request of the Indemnitor;

(b) payment to the Indemnitee by the Indemnitor of director’s fees or any salary, wages, or any other form of compensation or remuneration or in any entity which the Indemnitee holds such directorship and/or officer position at the request of the Indemnitor; and

(c) except as otherwise herein provided, any directors’ or officers’ liability insurance placed by or for the benefit of the Indemnitee by the Indemnitee, the Indemnitor or any entity in which the Indemnitee holds a directorship and/or officer position at the request of the Indemnitor.

1.8    Limitation on Indemnity. Notwithstanding the provisions of subsection 1.1, the Indemnitor shall not be obligated to indemnify or save harmless the Indemnitee against and from any charge, claim, cost, damage, expense, fine, liability, loss or penalty if a court of competent jurisdiction finds that:

(a) the Indemnitee failed to act honestly and in good faith with a view to the best interest of:

(i) the Indemnitor, if the claim relates to the Indemnitee’s position as a director and/or officer of the Indemnitor, or

(ii) the entity with which the Indemnitee holds or held a directorship and/or officer position at the Indemnitor’s request;

(b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the Indemnitee did not have reasonable grounds for believing that the Indemnitee’s conduct was lawful; or

(c) in the case of any act, error or omission of the Indemnitee, the Indemnitee acted fraudulently or maliciously.

1.9    Insurance Limitation. Notwithstanding the provisions of subsection 1.7, the Indemnitor shall have no obligation to indemnify or save harmless the Indemnitee in respect of any liability for which the Indemnitee is entitled to indemnity pursuant to any valid and collectible policy of insurance obtained and maintained by the Indemnitor, to the extent of the amounts actually collected by the Indemnitee under such insurance policy. Where partial indemnity is provided by such insurance policy, the obligation of the Indemnitor under subsection 1.1 shall continue in effect but be limited to that portion of the liability for which indemnity is not provided by such insurance policy.

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1.10    Change in Law. The intention of this Agreement is to provide the Indemnitee indemnification to the fullest extent permitted by law and without limiting the generality of the foregoing and subject only to section 1.8 hereof:

(a) nothing in this agreement shall be interpreted, by implication or otherwise, in limitation of the scope of the indemnification provided in section 1.1; and

(b) section 1.1 is intended to provide indemnification to the Indemnitee that is not specifically prohibited by a court of competent jurisdiction and to the fullest extent permitted by the Business Corporations Act (British Columbia) (the “Act”) and, in the event that the Act is amended to permit a broader scope of indemnification (including, without limitation, the deletion or limiting of one or more of the provisos to the applicability of indemnification), Article 1 shall be deemed to be amended concurrently with the amendment to the Act so as to provide such broader indemnification.

1.11    Other Rights and Remedies. Indemnification and immediate payment of incurred costs, charges and expenses as provided by this Agreement shall not be deemed to derogate from or exclude any other rights to which the Indemnitee may be entitled under any provision of the Act or otherwise at law, the articles or by-laws of the Indemnitor or other entity, this agreement, any vote of shareholders of the Indemnitor or other entity, or otherwise, both as to matters arising out of his capacity as a director or officer of the Indemnitor or other entity, or as to matters arising out of another capacity with the Indemnitor or other entity while being a director or officer of the Indemnitor or other entity.

ARTICLE 2 - DEFENCE

2.1    Interpretation. For the purposes of section 2:

“Action” means any action, inquiry, investigation, suit or other proceeding before a court or other tribunal in which a Claim is brought, made or advanced by or against the Indemnitee;

“Claim” means any charge, claim, cost, damage, expense, fine, liability, loss or penalty contemplated by subsection 1.1;

“Judgment” means an award of damages or other monetary compensation made in an Action or any amounts the Indemnitee is ordered to pay by any court or other tribunal or any government, governmental department, body, commission, board, bureau, agency or instrumentality having proper jurisdiction as a result of any Claim brought, made or advanced of or against the Indemnitee; and

“Settlement” means an agreement to compromise a Claim or an Action.

2.2    Notice of Claim. Upon the Indemnitee or the Indemnitor becoming aware of any pending or threatened Claim or Action, written notice shall be given by or on behalf of one to the other as soon as is reasonably practicable provided, however, that the failure of the Indemnitee to give such notice to the Indemnitor shall not adversely affect the Indemnitee’s rights under this Agreement except to the extent that the Indemnitor shall have been materially prejudiced as a direct result of such failure.

2.3    Right to Conduct Investigation. The Indemnitor shall conduct such investigation of each Claim as is reasonably necessary in the circumstances and shall pay all costs of such investigation.

2.4    Defence of Claim. Subject to this subsection, the Indemnitor shall defend, on behalf of the Indemnitee, any Action, even if the Claim upon which the Action is founded is frivolous, vexatious, groundless, false or fraudulent.

2.5    Right to Retain Counsel. The Indemnitor agrees to promptly retain counsel who shall be reasonably satisfactory to the Indemnitee to represent the Indemnitee in connection with the indemnification contemplated herein.

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In any such matter the Indemnitee shall have the right to retain other counsel to act on his or her behalf, provided that the fees and disbursements of such other counsel shall be paid by the Indemnitee unless:

(a) the Indemnitee and the Indemnitor shall have mutually agreed to the retention of such other counsel, or

(b) the parties to any such civil, criminal or administrative action, proceeding, investigation, inquiry or hearing (including any added third, or interpleaded parties) include the Indemnitor, or entity with which the Indemnitee holds or held a directorship or officer position at the Indemnitor’s request, as applicable, and the Indemnitee and representation of more than one party by the same counsel would be inappropriate due to actual or potential differing interests between them (including the availability of different defences) in which event the Indemnitor agrees to pay the fees and disbursements of such counsel.

2.6    Settlement Negotiations. With respect to a Claim for which the Indemnitor is obliged to indemnify the Indemnitee hereunder, the Indemnitor may conduct negotiations towards a Settlement and, with the written consent of the Indemnitee (which the Indemnitee agrees not to unreasonably withhold), the Indemnitor may make such Settlement as it deems expedient; provided, however, that the Indemnitee shall not be required, as part of any proposed Settlement, to, and it will not be reasonable to request that the Indemnitee, admit liability or agree to indemnify the Indemnitor in respect of, or make contribution to, any compensation or other payment for which provision is made by such Settlement.

2.7    Settlement in Certain Circumstances. The Indemnitor, in consultation with the Indemnitee, shall have the right to negotiate a Settlement in respect of any Judgment which is founded upon any of the acts specified in subsection 1.8. In the event that the Indemnitor, in consultation with the Indemnitee, negotiates such Settlement, the Indemnitee shall pay any compensation or other payment for which provision is made under the Settlement as a result of such acts and shall not seek indemnity or contribution from the Indemnitor in respect of such compensation or payment. The Indemnitee shall pay to the Indemnitor, within 30 days of the Indemnitor making demand therefor, all fees, costs and expenses (including legal fees and disbursements on a full indemnity basis) which result from the defence of the Claim or the Action in respect of which the Settlement was made in connection with any of the acts specified in subsection 1.8, including the cost of any investigation undertaken by the Indemnitor in connection therewith, to the date the Settlement was made.

2.8    Payment of Judgment. The Indemnitor shall pay any Judgment which may be given against the Indemnitee unless any of the circumstances in subsection 1.8 applies to the Action in respect of which the Judgment is given or unless and to the extent the Indemnitee is otherwise entitled to indemnity under the policy of insurance as contemplated by subsection 1.9 in either case, the Indemnitee shall pay to the Indemnitor, within 30 days of the Indemnitor making demand therefor, all fees, costs and expenses (including legal fees and disbursements on a full indemnity basis) which result from the defence and appeal of the Action, including the costs of any investigation undertaken by the Indemnitor in connection with the Action, but only, in the case of indemnity under a policy of insurance, to the extent of any proceeds received under the policy.

2.9    Consequences of Settlement. For the purposes of this Agreement including, without limitation, Article 1 hereof, the termination of any civil, criminal or administrative action, proceeding, investigation, inquiry or hearing by way of a judgement, order, settlement, conviction or similar or other result shall not, of itself, create a presumption either that the Indemnitee did not act honestly or in good faith with a view to the best interests of the Indemnitor, or any entity with which the Indemnitee holds or held a directorship and/or officer position at the Indemnitor’s request, or that, in the case of a criminal or administrative action, proceeding, investigation, inquiry or hearing in which a monetary penalty could be imposed, the Indemnitee did not have reasonable grounds for believing that his or her conduct was lawful, unless any judgement or order of a court of competent jurisdiction specifically finds otherwise.

- 4 -

ARTICLE 3 - GENERAL

3.1    Limitation of Actions and Release of Claims. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Indemnitor or other entity against the Indemnitee, his estate, executors, administrators, legal representatives or lawful heirs after the expiration of two years from the date the Indemnitee ceased (for any reason) to be a director or officer of the Indemnitor or other entity and the Indemnitor agrees that any claim or cause of action of the Indemnitor or other entity shall be extinguished and the Indemnitor, his estate, executors, administrators, legal representatives and lawful heirs deemed released therefrom absolutely unless asserted by the commencement of legal action in a court of competent jurisdiction within such two-year period.

3.2    Nothing herein contained shall in any way affect the Indemnitee’s right to resign from the Indemnitee’s position as a director and/or officer of the Indemnitor or at any time to resign from the Indemnitee’s position with any other entity held at the Indemnitor’s request at any time. The obligations of the Indemnitor hereunder shall continue after and are not affected in any way by the Indemnitee ceasing to be a director and/or officer of the Indemnitor or ceasing to be a director and/or officer of any entity in which the Indemnitee held a directorship and/or officer position at the request of the Indemnitor, whether by resignation, removal, death, incapacity, disqualification under applicable law, or otherwise.

3.3    The indemnity herein provided for shall survive the termination of the Indemnitee’s position as a director and/or officer of the Indemnitor and the termination of any directorship and/or officer position held by the Indemnitee at the Indemnitor’s request and shall continue in full force and effect thereafter.

3.4    Unless stated otherwise, all monies to be paid hereunder shall be paid within 30 days of becoming payable.

3.5    If any provision of this Agreement is determined to be invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and the remaining part of such provision and all other provisions hereof shall continue in full force and effect. The parties hereto agree to negotiate in good faith to agree to a substitute provision which shall be as close as possible to the intention of any invalid or unenforceable provision as may be valid or enforceable. The invalidity or unenforceability of any provision in any particular jurisdiction shall not affect its validity or enforceability in any other jurisdiction where it is valid or enforceable.

3.6    In any proceeding concerning a disagreement between the Indemnitor and the Indemnitee as to the availability of indemnification under this Agreement, the Indemnitor shall have the burden of proving that the Indemnitee is not entitled to indemnification hereunder.

3.7    Each party hereto agrees to do all such things and take all such actions as may be necessary or desirable to give full force and effect to the matters contemplated by this Agreement.

3.8    This Agreement and the indemnification hereunder shall enure to the benefit of and be binding upon the parties hereto and their respective estates, heirs, executors, administrators, legal representatives, successors and permitted assigns.

3.9    Time shall be of the essence of this Agreement.

3.10    This Agreement shall be exclusively construed and governed by the laws in force in British Columbia and the federal laws of Canada applicable therein, and the courts of British Columbia (and Supreme Court of Canada, if necessary) shall have exclusive jurisdiction to hear and determine all disputes arising hereunder. Each of the parties hereto irrevocably attorns to the jurisdiction of said courts and consents to the commencement of proceedings in such courts. This section shall not be construed to affect the rights of a party to enforce a judgment or award outside said province, including the right to record and enforce a judgment or award in any other jurisdiction.

[Remainder of page left intentionally blank]

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3.11    This Agreement contains all of the terms and conditions agreed upon by the parties with respect to the subject matter of this Agreement, and any other previous agreements, understandings, representations or warranties, written or not, are superseded by this Agreement.

IN WITNESS WHEREOF the parties hereto have signed and delivered this agreement as of the date first written above.

CRH MEDICAL CORPORATION
Per:
	Authorized Signatory

SIGNED AND DELIVERED in the	)
presence of:	)
	)
	)
Witness	)
	)
Address	)
	)
	)
	)
Occupation	)

- 6 -

EX-10.8

Exhibit 10.8

MEMBERSHIP INTEREST PURCHASE AGREEMENT

AMONG

[REDACTED]

GASTROENTEROLOGY ANESTHESIA ASSOCIATES, LLC,

[REDACTED]

[REDACTED]

And the other Parties Named Therein

December 1, 2014

TABLE OF CONTENTS

			Page
1.	DEFINITIONS			2
2.	ACQUISITION TRANSACTIONS			6
	2.1	Purchase and Sale of Company’s Membership Interests		6
	2.2	Acquisition Consideration		7
	2.3	Closing		7
	2.4	Deliveries by the Company, the Seller and the Seller Owner		7
	2.5	Delivery by Buyer		7
	2.6	Delivery of Other Documents		8
	2.7	Tax Withholding		8
	2.8	Acquisition Consideration Allocation		8
3.	REPRESENTATIONS AND WARRANTIES			8
	3.1	Representations and Warranties of the Seller, the Company and the Seller Owner		8
	3.2	Representations and Warranties of Buyer		21
	3.3	No Broker		22
	3.4	Non-Waiver		22
	3.5	Nature and Survival of Representations, Warranties and Covenants		22
4.	CONDITIONS PRECEDENT TO THE PERFORMANCE OF THE OBLIGATIONS OF BUYER, THE SELLER, THE COMPANY AND THE SELLER OWNER			22
	4.1	Buyer’s Conditions		22
	4.2	The Seller’s, the Owner’s and the Seller Owner’s Conditions		24
5.	OTHER COVENANTS OF THE PARTIES			25
	5.1	Restrictive Covenants		25
	5.2	Post-Closing Access for Records Review		27
	5.3	Bank Accounts, Open Checks		28
	5.4	At-Will Employees		28
	5.5	Tax Matters		28
	5.6	Employee Benefit Matters		30
	5.7	Certain Matters Pending Closing		30
	5.8	Exclusivity		31
	5.9	Collection of Accounts Receivable		31
6.	INDEMNIFICATION			32
	6.1	Tax Indemnity		32
	6.2	Guarantors’ Indemnity for Acts or Omissions		33
	6.3	Buyer’s Indemnity for Act or Omissions		33
	6.4	Procedure for Indemnity		33
	6.5	Limitation on Liability		35
	6.6	Nature of Payments		36
	6.7	Intentionally Omitted		36
	6.8	Adjustments for Insurance		36
	6.9	Indemnification Provisions Survive Closing		36

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	6.10	CRH Guaranty	37
	6.11	Guarantors Guaranty	37
7.	TERMINATION		37
	7.1	Termination	37
	7.2	Rights on Termination	37
8.	CONFIDENTIALITY		38
	8.1	Confidential Information	38
	8.2	Maintenance of Confidentiality by the Seller and the Seller Owner	38
	8.3	Provisions Survive Closing	39
9.	MISCELLANEOUS		39
	9.1	Public Notice	39
	9.2	Expenses	39
	9.3	Time	39
	9.4	Notices	40
	9.5	Assignment	40
	9.6	Further Assurances	40
	9.7	Headings	41
	9.8	Integration	41
	9.9	No Third Party Beneficiaries	41
	9.10	Modification and Waiver	41
	9.11	Governing Law	41
	9.12	Attorneys’ Fees; Remedies	41
	9.13	Number; Gender	41
	9.14	Severability	41
	9.15	Exhibits and Schedules	42
	9.16	Recitals	42
	9.17	No Party Deemed Drafter	42
	9.18	Counterparts	42
	9.19	Rules of Construction	42
	9.20	Saturdays, Sundays and Legal Holidays	42
	9.21	CRH Guaranty	42
	9.22	Guarantors’ Guaranty	42

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SCHEDULES

[ALL SCHEDULES AND EXHIBITS HAVE BEEN REDACTED]

Schedule 1.24	CRNAs
Schedule 1.52	PSA Contracts
Schedule 2.2.1	Designated Accounts and Payment Amounts
Schedule 2.8	Acquisition Consideration Allocation
Schedule 3.1.3	No Conflicts
Schedule 3.1.6	Properties
Schedule 3.1.6.3	Leased Real Property
Schedule 3.1.8.1	Liabilities or Obligations Not Reflected in Financial Statements
Schedule 3.1.8.2	Outstanding Indebtedness, Liens and Defaults
Schedule 3.1.9	Real Property
Schedule 3.1.10	Licensing Information
Schedule 3.1.11	Tax Matters
Schedule 3.1.12	Absence of Certain Changes
Schedule 3.1.13	Absence of Unusual Transactions
Schedule 3.1.15.1	Contracts
Schedule 3.1.15.4	Non-Arms-Length Transactions
Schedule 3.1.17	Other Employee Benefit Matters
Schedule 3.1.18	Absence of Guarantees
Schedule 3.1.20	Employees; Independent Contractors
Schedule 3.1.21	Insurance
Schedule 3.1.24	Dealing with Affiliates
Schedule 3.1.25	No Subsidiaries
Schedule 3.1.27	Changes in Third-Party Payers
Schedule 4.1.4	Consents, Authorizations and Registrations
Schedule 4.1.6	Outstanding Indebtedness Paid
Schedule 4.1.10	Tail Coverage Insurance
Schedule 5.1.1	Exceptions to Non-Competition Covenants
Schedule 5.3	Bank Accounts, Open Checks
Schedule 5.4	At-Will Employees
EXHIBITS
Exhibit A —	Buyer’s Closing Certificate
Exhibit B —	Financial Statements
	INTENTIONALLY DELETED
Exhibit D —	Seller’s Closing Certificate
Exhibit E —	Form of Assignment of Membership Interest
Exhibit F —	Internal Revenue Service Form 8822-B
Exhibit G —	Interim Financial Statements
Exhibit H —	Accounts Receivable Worksheet

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MEMBERSHIP INTEREST PURCHASE AGREEMENT

This Membership Interest Purchase Agreement (“Agreement”) is entered into and executed as of December         , 2014, by and among (i) [REDACTED] (“Buyer”), (ii) [REDACTED] (the “Seller”), (iii) Gastroenterology Anesthesia Associates, LLC, a Georgia limited liability company (the “Company”), and (iv) [REDACTED] (the “Seller Owner”). CRH Medical Corporation, a Canadian corporation (“CRH”) is entering into this Agreement for the purposes of guaranteeing the obligations of Buyer hereunder. [REDACTED], [REDACTED], and [REDACTED], (“Guarantors”) are entering into this Agreement for the purposes of guaranteeing the obligations of Seller hereunder.

RECITALS

A. The Company is engaged in the business of owning and operating a medical practice specializing in anesthesiology (the “Specialty”) and providing medical services to patients at certain ambulatory surgical centers (the “Facilities”) pursuant to certain Agreements for Professional Anesthesia Services between the Company and such Facilities.

B. Buyer, through its owner, employees and contractors in the State of Georgia, is licensed to provide medical services to patients in the Specialty in the State of Georgia.

C. The Seller owns one hundred percent (100%) of the issued and outstanding membership interests of the Company.

D. The Seller Owner owns one hundred percent (100%) of the issued and outstanding capital stock of the Seller (the “Seller Stock”).

E. The Seller desires to sell, and Buyer desires to acquire, one hundred percent (100%) of the issued and outstanding membership interests of the Company, all in accordance with the terms of this Agreement (the “Acquisition”).

F. Pursuant to an Agreement for the Purchase and Sale of Assets, dated as of the date hereof and effective immediately following the Closing (the “Other Acquisition Agreement”), the Company is acquiring certain assets of [REDACTED], a Florida limited liability company (the “Other Acquisition”), as a result of which Guarantors will derive substantial benefit.

G. A significant inducement to Buyer entering into this Agreement and the Company entering into the Other Acquisition Agreement, and consummating the transactions contemplated hereby and thereby, are the Seller’s and the Seller Owner’s agreement to be bound by the covenants not to compete and other restrictive covenants set forth herein and in the Other Acquisition Agreement.

H. CRH, as parent of CRH Medical Corporation, a Delaware corporation, and the Guarantors will, respectively, derive substantial benefits as a result of the transactions contemplated by this Agreement.

NOW, THEREFORE, in consideration of the mutual benefits to be derived hereby and the representations, warranties and covenants contained herein and other consideration, the receipt and sufficiency of which is hereby mutually acknowledged by the Parties, the Parties hereto agree as follows:

1. DEFINITIONS

In addition to terms defined in the body of this Agreement, each of the following capitalized terms has the meaning hereinafter provided, for purposes of this Agreement, the words and terms listed below shall have the following respective meanings:

(a) “Acquisition” has the meaning set forth in the Recitals.

(b) “Acquisition Consideration” means that amount of purchase price to be paid to Seller in exchange for the Purchased Interests as set forth in Section 2.2 below.

(c) “Acquisition Consideration Allocation” has the meaning set forth in Section 2.8.

(d) “Advanced Expenses” has the meaning set forth in Section 5.9.1.

(e) “Agreement” means this Membership Interests Purchase Agreement together with all exhibits and schedules referenced herein or attached hereto, as the same shall be amended from time to time in accordance with the terms hereof.

(f) “Accounts Receivable” means all accounts receivable of Company related to the Business immediately prior to the Closing (other than Post-Closing Accounts Receivable).

(g) “Authority” means any United States or foreign, national, federal, state, municipal or local or other government, governmental, regulatory or administrative authority, agency or commission, or any court, tribunal, or judicial or arbitral body.

(h) “Billing and Management Services Agreement” means the mutually agreed upon billing and management services agreement between the Company and CRH Management.

(i) “Business” means the medical practice presently being conducted by the Company.

(j) “Business Day” means any day excluding Saturdays, Sundays and any day that is a legal holiday under the laws of the United States or is a day on which banking institutions located in Atlanta, Georgia are authorized or required by law or other governmental action to close.

(k) “Buyer” has the meaning set forth in the Preamble.

(l) “Buyer Closing Certificate” means the certificate of the Officers of Buyer in the form of Exhibit A attached hereto.

(m) “Buyer Indemnified Parties” has the meaning set forth in Section 6.1.

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(n) “CRH Management” means CRH Anesthesia Management, LLC, a Delaware limited liability company.

(o) “Charter Documents” means, with respect to any Party, the respective Articles of Incorporation, Articles of Organization, Bylaws, Operating Agreement or other applicable governance documents, as amended to date, of such Party.

(p) “Claims” has the meaning set forth in Section 6.2.

(q) “Closing” means the consummation of the Acquisition by, among other things, the delivery of the purchase and transfer documents and the payment of the Acquisition Consideration all in accordance with this Agreement.

(r) “Closing Date” means (i) December 1, 2014 (subject to the satisfaction of all conditions to Closing set forth in Section 4); or (ii) such other date as the Parties may mutually agree. Unless the Parties otherwise agree in writing, the Closing shall be deemed effective as of the Effective Time.

(s) “Code” means the U.S. Internal Revenue Code of 1986, as amended, collectively with any successor law, rules or regulations issued by the United States Treasury pursuant to the Code or any successor law.

(t) “Collateral Agreements” means any and all of the exhibits to this Agreement and any and all other agreements, instruments or documents required or expressly provided under this Agreement to be executed and delivered in connection with the transactions contemplated by this Agreement.

(u) “Company” has the meaning set forth in the Preamble.

(v) “Company Notes Payable” means that certain (a) Promissory Note by the Company in the original principal amount of up to $3,000,000 in favor of [REDACTED]; (b) Promissory Note dated October 31, 2012, by the Company in the original principal amount of $3,832,400 in favor of [REDACTED]; and (c) that certain Promissory Note dated October 31, 2012, by the Company in the original principal amount of $167,600 in favor of [REDACTED].

(w) “Contracts” means all written or oral contracts, agreements, evidences of indebtedness, guarantees, leases and executory commitments to which the Company is a party or by which any of the Company’s assets are bound, or otherwise related to the Business, including, without limitation, the PSA Contracts and the Management Contract.

(x) “CRNA” means any certified registered nurse anesthetist listed on Schedule 1.24.

(y) “Disclosure Schedules” has the meaning set forth in Section 3.1.

(z) “Effective Time” means 12:01 a.m. Eastern Time on the Closing Date.

(aa) “Employee Plan” has the meaning set forth in Section 3.1.16.1.

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(bb) “Employees” has the meaning set forth in Section 3.1.20.

(cc) “ERISA” has the meaning set forth in Section 3.1.16.1.

(dd) “Financial Statements” means the unaudited financial statements of the Seller for the year ended December 31, 2013, consisting of a balance sheet and income statement, copies of which are attached hereto as Exhibit B.

(ee) “Fundamental Representations” has the meaning set forth in Section 6.5.2.

(ff) “[REDACTED]” has the meaning set forth in the Recitals.

(gg) “GAAP” means generally accepted accounting principles in the United States of America, which includes the cash basis of accounting and other comprehensive bases of accounting.

(hh) “Government Programs” means Medicare and Medicaid programs, TRICARE and any other federal and state health care reimbursement program.

(ii) “Governmental Regulations” means any and all rules, regulations, orders, ordinances, and valid and enforceable policies or interpretations of a governmental body relating or applicable to the Company or its physicians, CRNAs and other professionals, or to which each or all of them is subject, including, without limitation, applicable Medicare and Medicaid manuals, coding and documentation requirements under Government Programs, and Laws.

(jj) “Guarantors” means collectively, [REDACTED], [REDACTED] and [REDACTED].

(kk) “HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as amended and regulations adopted by the U.S. Department of Health and Human Services pursuant thereto.

(ll) “HITECH” means the Health Information Technology for Economic and Clinical Health Act of 2009 and regulations adopted pursuant thereto.

(mm) “IPS” means Innovative Practice Strategies, LLC, a Florida limited liability company.

(nn) “IPS Billing and Management Agreement” means the mutually agreed upon Billing and Management Services Agreement, to be effective as of the Closing Date, between CRH Management and IPS.

(oo) “Indebtedness” means all obligations, contingent or otherwise, whether current or long-term (including, without limitation, the Company Notes Payable), and also includes capitalized lease obligations, guarantees, endorsements (other than for collection in the ordinary course of business) or other arrangements whereby responsibility is assumed for the obligations of others, including any agreement to purchase or otherwise acquire the obligations of others or any agreement, contingent or otherwise, to furnish funds for the purchase of goods, supplies or

4

services for the purpose of payment of the obligations of others, other than accounts or trade payables in the ordinary course of business.

(pp) “Independent Contractors” has the meaning set forth in Section 3.1.20.

(qq) “Knowledge of the Company” means the actual knowledge of the Seller Owner, [REDACTED], [REDACTED] or [REDACTED], with respect to the matter in question, and such knowledge as any of the them reasonably should have obtained upon diligent investigation and inquiry into the matter in question.

(rr) “Law” means all federal, state, local, municipal, foreign, international or other laws, statutes, constitutions, rules, regulations, ordinances, decrees, treaties, principle of common law, court decisions, and other pronouncements having the effect of law of any governmental body or agency.

(ss) “Lien” means any mortgage, deed of trust, pledge, hypothecation, security interest, encumbrance, claim, lien, option, lease (including any capitalized lease) or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, affecting the Purchased Interests, including any agreement to give or grant any of the foregoing, and the filing of or agreement to give any financing statement with respect to the Purchased Interests or any assets of the Company under the Uniform Commercial Code of the State of Florida or the State of Georgia or the comparable Law of any jurisdiction.

(tt) “Membership Interests” means the membership interests in the Company.

(uu) “Other Acquisition” has the meaning set forth in the Recitals.

(vv) “Other Acquisition Agreement” has the meaning set forth in the Recitals.

(ww) “Parties” means the Company, the Seller, the Seller Owner and Buyer, collectively, and “Party” means any one of them.

(xx) “Person” means any individual, corporation, association, limited liability company, partnership (general or limited), trustee or trust, unincorporated association, or other entity.

(yy) “Plavin Release” means the Settlement Agreement and Release dated as of October 13, 2014, entered into by Stanford Plavin, M.D., Technical Anesthesia Strategies & Solutions, LLC, the Company and the other GAA Parties party thereto.

(zz) “Post-Closing Accounts Receivable” has the meaning set forth in Section 5.9.

(aaa) “Pre-Closing Accounts Receivable” has the meaning set forth in Section 5.9.

(bbb) “PSA Contracts” means the various Agreements for Professional Anesthesia Services between the Company and each Facility (as defined therein) regarding the provision of Specialty services, all of which agreements are listed on Schedule 1.52 (as each may be amended

5

from time to time hereafter) plus any similar Agreements for Professional Anesthesia Services entered into by the Company and a Facility after the Closing.

(ccc) “Purchased Interests” means the Membership Interests of the Company to be acquired by Buyer from the Seller in connection with the Acquisition (representing one hundred percent (100%) of all outstanding Membership Interests of the Company).

(ddd) “Restricted Period” has the meaning set forth in Section 5.1.1.

(eee) “Seller” has the meaning set forth in the Preamble.

(fff) “Seller Owner” has the meaning set forth in the Preamble

(ggg) “Seller’s Closing Certificate” means the certificate of Seller in the form of Exhibit D attached hereto.

(hhh) “Specialty” has the meaning set forth in the Recitals.

(iii) “Tax(es)” means any and all taxes, fees, levies, tariffs, imposts, and other charges of any kind (together with any and all interest, penalties, fines, and additions to tax with respect thereto) imposed by any government or taxing Authority, including, without limitation (i) taxes or other charges on or with respect to income, franchises, concessions, windfall or other profits, gross receipts, escheat or unclaimed property, property, sales, use, capital, gains, capital stock or shares, membership interests or units, payroll, employment, social security, workers’ compensation, unemployment compensation, or net worth; (ii) taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; and (iii) any liability for payment of amounts described in clauses (i) and (ii) whether as a result of transferee liability or otherwise through operation of law, or as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to indemnify any other Person.

(jjj) “Tax Return” means all returns, declarations, reports, statements, information statements, forms or other documents filed or required to be filed with respect to any Tax, including all amendments thereto.

(kkk) “Work Product” has the meaning set forth in Section 3.1.26.

[ALL NAMES OF INDIVIDUALS HAVE BEEN REDACTED]

2. ACQUISITION TRANSACTIONS

2.1 Purchase and Sale of Company’s Membership Interests. The Seller hereby sells, assigns, conveys and transfers to Buyer, and Buyer hereby purchases and acquires from the Seller, at the Closing and on the terms and subject to the conditions set forth in this Agreement, all of the Membership Interests of the Company (hereinafter collectively referred to as the “Purchased Interests”) which represent one hundred percent (100%) of the issued and outstanding Membership Interests of the Company. The Seller and Buyer agree that for federal

6

income Tax purposes acquisition of the Purchased Interests will be treated as the acquisition of the assets of the Company.

2.2 Acquisition Consideration.

2.2.1 The aggregate Acquisition Consideration for the Purchased Interests shall be (U.S.) Four Million Forty-One Thousand Two Hundred Eleven and 74/100 Dollars ($4,041,211.74), which amount, shall be paid to the Seller at the Closing in immediately available federal funds, to the account hereby designated by the Seller (including the wiring instructions therefor) as set forth on Schedule 2.2.1.

2.3 Closing. The Closing shall take place on the Closing Date and shall be held at the offices of Greenberg Traurig, LLP in Atlanta, Georgia or remotely by the exchange of signed documents by PDF or other electronic means. At the Closing, all transactions contemplated by this Agreement shall take place contemporaneously and no such transaction shall be deemed completed or consummated until all such transactions are completed or consummated.

2.4 Deliveries by the Company, the Seller and the Seller Owner. At and upon the Closing, the Company, the Seller and the Seller Owner shall deliver or shall cause to be delivered to Buyer the following:

2.4.1 An Assignment of Membership Interests duly executed by the Seller transferring the Purchased Interests to Buyer. Such Assignment of Membership Interests shall be in the form of Exhibit E, attached hereto;

2.4.2 The Seller’s Closing Certificate duly executed by the Seller;

2.4.3 The other agreements, documents and instruments to be delivered to Buyer in accordance with Section 4.1 hereof;

2.4.4 The books and records of the Company;

2.4.5 Evidence, satisfactory to Buyer, that upon payment at the Closing of all Indebtedness of the Seller, (including, without limitation, the Company Notes Payable), all Liens filed against Seller or the Seller’s properties will be terminated;

2.4.6 Evidence, satisfactory to Buyer, that the Other Acquisition is closing contemporaneously with but effective immediately following the Closing; and

2.4.7 Executed Internal Revenue Service Form 8822-B, in the form of Exhibit F, attached hereto.

2.5 Delivery by Buyer. At and upon the Closing, Buyer shall deliver or cause to be delivered (i) immediately available funds in the aggregate amount of the Acquisition Consideration as described in Section 2.2 above, and (ii) the agreements, documents and instruments to be delivered by Buyer in accordance with Section 4.2 hereof, including, without

7

limitation, the Buyer’s Closing Certificate, the Billing and Management Services Agreement and the IPS Billing and Management Agreement.

2.6 Delivery of Other Documents. Such documents as evidence the satisfaction of any condition precedent shall have been delivered prior to or at the Closing. Each Party shall, at the Closing, deliver to the other Parties an acknowledgment of receipt of such documents upon request by any Party.

2.7 Tax Withholding. Notwithstanding anything herein to the contrary, Buyer or, if applicable, the Company, shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any Person such amounts required to be deducted and withheld from such Person with respect to the making of such payment under the Code and the rules and regulations promulgated thereunder, or any provision of state, local or foreign law relating to Taxes. To the extent that amounts are so withheld by Buyer or, if applicable, the Company, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to such Person in respect of which such deduction and withholding was made by Buyer or, if applicable, the Company. Any sales or use Tax or stamp Tax related to the sale of the Purchased Interests shall be payable by the Seller.

2.8 Acquisition Consideration Allocation. Each party hereto agrees (i) that the Acquisition Consideration will be allocated for all federal and state tax purposes (including but not limited to, income, excise, sales, use, personal property and transfer taxes, and otherwise) among the Purchased Assets in accordance with Schedule 2.8 which is in accordance with Section 1060 of the Internal Revenue Code, (ii) to file separately a Federal Form 8594 with its Federal Income Tax Return consistent with such allocation for the tax year in which the Closing Date occurs, and (iii) that no party will take a position on any tax returns or filings with any governmental or regulatory authority charged with the collection of taxes or having jurisdiction over the transaction contemplated hereunder or in any judicial proceeding, that is in any manner inconsistent with the terms of the allocation set forth on Schedule 2.8.

3. REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Seller, the Company and the Seller Owner. The Seller, the Company and the Seller Owner hereby, jointly and severally, represent and warrant to Buyer that each of the following representations and warranties, as supplemented by the disclosure schedules attached hereto (the “Disclosure Schedules”), are true as of the date of this Agreement, and unless otherwise expressly set forth herein, as of the Closing.

3.1.1 Organization and Valid Existence.

3.1.1.1 The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Georgia. The Company has all necessary power, authority and capacity to enter into this Agreement and the Collateral Agreements and carry out its obligations hereunder and thereunder, to own, manage and lease its property and assets (including, without limitation, the property and assets shown in the Financial Statements), and to carry on the Business as presently conducted by it. True, correct and complete copies of the Company’s Charter Documents have been delivered to Buyer,

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as well as true, correct and complete copies of the Seller’s minute books and membership interest transfer records or books, if any. Neither the character of the Company’s assets nor the nature of the Company’s business as presently conducted requires the Company to be qualified to transact business as a foreign entity in any other state or jurisdiction.

3.1.1.2 The Seller is a professional corporation duly organized, validly existing and in good standing under the laws of the State of Georgia and with all necessary power, authority and capacity to enter into this Agreement and to carry out its obligations thereunder.

3.1.2 Authority, Approval and Enforceability. This Agreement has been duly executed and delivered by the Seller, the Company and the Seller Owner and each such Party has all requisite power and legal capacity to execute, deliver and perform this Agreement and all Collateral Agreements (to which it is a party) executed and delivered or to be executed and delivered in connection with the transactions provided for hereby, to consummate the transactions contemplated hereby and by the Collateral Agreements, and to perform his, her, or its obligations hereunder and under the Collateral Agreements. The execution, delivery and performance by the Company and the Seller of this Agreement and the Collateral Agreements have been duly and validly approved and authorized by proper limited liability company or corporate action (including all necessary member or shareholder approval). This Agreement and each Collateral Agreement to which the Seller, the Company or the Seller Owner is a party constitutes, or upon execution and delivery will constitute, the legal, valid and binding obligation of such Party, enforceable in accordance with its terms, except as such enforcement may be limited by general equitable principles or by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the rights of creditors generally.

3.1.3 No Conflict. The execution, delivery and performance of this Agreement and the Collateral Agreements by the Seller, the Company and the Seller Owner do not, and the consummation by the Seller, the Company and the Seller Owner of the transactions contemplated hereby will not: (i) conflict with or violate the Charter Documents of the Seller or the Company; (ii) conflict with or violate any Laws applicable to the Seller or the Company or by which any of their respective properties is bound or affected, or give any Authority or other Person the right to challenge the Acquisition or any of the transactions contemplated hereunder; (iii) except as set forth on Schedule 3.1.3, result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any Lien on any of the properties or assets of the Company, the Seller or the Business pursuant to any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Seller or the Company is a party, or by which the Seller or the Company or any of their respective properties are bound or affected; or (iv) except as set forth on Schedule 3.1.3, require any consent, approval, authorization or permit of, or filing with or notification to, any Authority or other third party. No Person (other than Buyer) has any agreement, option or any rights capable of becoming an agreement or option for the acquisition of the Purchased Interests or any Membership Interests.

3.1.4 Capitalization and Ownership of the Company. The Seller owns one hundred percent (100%) of the issued and outstanding Membership Interests of the

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Company, free and clear of any and all Liens. All such Membership Interests are duly authorized, validly issued, fully paid and nonassessable and were not issued in violation of any preemptive or other rights of any Person to acquire securities of the Company. There are no outstanding subscriptions, options, convertible securities, rights (preemptive or other), warrants, calls or agreements relating to any membership interests or other equity interests of the Company.

3.1.5 Ownership of the Seller. The Seller Owner owns one hundred percent (100%) of the issued and outstanding capital stock of the Seller free and clear of any and all Liens. All such membership interests of the Seller are duly authorized, validly issued, fully paid and nonassessable and were not issued in violation of any preemptive or other rights of any Person to acquire securities of the Seller.

3.1.6 Properties. The Company has good and marketable title to, or valid leasehold interests in or other valid right to use, all its assets (real and personal) reflected in the Financial Statements or acquired thereafter. All such assets are free and clear of all Liens, except as set forth in Schedule 3.1.6.

3.1.6.1 Such assets constitute all of the material assets necessary for the continued operation by Buyer of the Business as currently conducted.

3.1.6.2 The Company has complied with the terms of any leases to which it is a party and any such lease is in full force and effect.

3.1.6.3 Schedule 3.1.6.3 sets forth a true and complete list of all real property and interests in real property leased by the Company and the lease agreements with respect thereto and a true and complete list of all personal property, equipment and fixtures (other than items having a book value of less than $500 individually) owned by the Company, all of which personal property, equipment and fixtures are in good condition and repair, normal wear and tear excepted.

3.1.7 Financial Statements. The Financial Statements present a true, accurate and complete statement of the financial condition and assets and liabilities of the Company, and the results of operations as of the dates shown thereon and have been prepared in accordance with the cash basis of accounting. The balance sheets included in the Financial Statements have been prepared on a consistent basis and fairly present the financial condition of the Company, as of the dates reflected therein and the statements of revenues and expenses and income statements, have been prepared on a consistent basis and fairly present the results of operations for the periods reflected therein and fairly present the financial condition of the Company, as of the date and for the period specified therein.

3.1.7.1 Attached as Exhibit G are true and complete copies of the unaudited balance sheets of the Company as of September 30, 2014, and the related income statement for the month then ended (the “Interim Financial Statements”). The Interim Financial Statements are in accordance with the books and records of the Company, have been prepared on a basis consistent with the Financial Statements and present fairly in all material respects the

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financial condition of the Company as at the date indicated and the results of its operations and changes in financial position for the period then ended.

3.1.7.2 The financial books and records of the Company, with respect to the Business are accurate and complete in all material respects and are maintained on a basis consistent with preceding years and fairly represent in all material respects the financial condition of the Company.

3.1.8 Absence of Undisclosed Liabilities; Indebtedness.

3.1.8.1 Except as set forth in Schedule 3.1.8.1, the Company does not have any debts, liabilities or obligations (absolute, accrued, contingent or otherwise) including, without limitation, any liability or obligation on account of Taxes or any governmental charges or penalties, interest or fines which are not fully reflected or reserved against in the Financial Statements, and the reserves reflected in the Financial Statements are adequate, appropriate and reasonable. All amounts payable by the Company under the Plavin Release have been paid in full.

3.1.8.2 Schedule 3.1.8.2 sets forth (i) the amount of all outstanding Indebtedness of the Company, (ii) any Lien with respect to such Indebtedness, and (iii) a list of each instrument or agreement governing such Indebtedness (true and correct copies of which have been provided to Buyer). No default exists with respect to or under any such Indebtedness or any instrument or agreement relating thereto.

3.1.8.3 None of the Seller nor the Seller Owner (nor any affiliate thereof) has any claim (direct or indirect) against the Company for which the Buyer (or the Company, after the Closing) could have any liability or which might adversely affect Buyer’s title to the Purchased Interests, whether arising under any contract or agreement (regardless of whether written or oral), Law, tort or otherwise.

3.1.9 Real Property. Except as set forth on Schedule 3.1.9, the Company does not own or lease any real property, and neither the Seller nor the Seller Owner owns, directly or indirectly, any real property or interest therein that is used in connection with the operation of the Business.

3.1.10 Licensing Information. Schedule 3.1.10 contains a complete and accurate list of all licenses, permits, registrations and approvals (collectively, “Licenses”) held by the Company and its employed or engaged physicians and CRNAs (including all provider numbers for the group and the individual providers). The Company has furnished for review or delivered complete and accurate copies of all such Licenses to Buyer. The Company and its employed or engaged physicians and CRNAs, and other clinical personnel, have all Licenses necessary for the Company to own, operate, use and/or maintain its assets and to conduct the Business and operations as presently conducted and as expected to be conducted in the future. All such Licenses are in full force and effect, no proceeding is pending or, to the Knowledge of the Company, threatened to modify, suspend or revoke, withdraw, terminate, or otherwise limit any such Licenses, and no administrative or governmental actions have been taken or, to the Knowledge of the Company, threatened in connection with the expiration or renewal of such

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Licenses which could adversely affect the ability of the Company to own, operate, use or maintain any of its assets or to conduct the Business as presently conducted and as expected to be conducted in the future. With respect to such Licenses, (i) no violations have occurred that remain uncured, unwaived, or otherwise unresolved, or are occurring in respect of any such Licenses, and (ii) no circumstances exist that would prevent or delay the obtaining of any requisite consent, approval, waiver or other authorization of the transactions contemplated hereby with respect to such Licenses that by their terms or under applicable Law may be obtained only after Closing.

3.1.11 Tax Matters. The Company and the Seller has each duly and timely filed with the appropriate taxing Authorities all Tax Returns required to be filed by it, and such Tax Returns are complete and accurate in all material respects. All Taxes due and payable by the Company and the Seller have been paid (whether or not shown on any Tax Return and whether or not any Tax Return was required), when due, to the applicable Authorities.

3.1.11.1 The 2012 and 2013 federal, state and local Tax Returns of the Seller and the Company provided to Buyer are true and accurate copies of those filed with the applicable Authorities, including all amendments thereto, and none of such Tax Returns have been amended. Except as set forth on Schedule 3.1.11, the Seller and the Company are not the beneficiary of any extension of time within which to file any Tax Return or pay any Tax.

3.1.11.2 Neither the Seller nor the Company with respect to the Business has received from any federal, state, or local taxing Authority any assessment, reassessment or notice of underpayment of any Taxes (including withholding and employment Taxes) and no such notice is expected, and no consents extending or waiving the limitation of time for reassessment of any Taxes or any statute of limitations related thereto have been filed for any fiscal year. No Tax Return of the Seller or the Company has been audited or is currently being audited and there are no pending or, to the Knowledge of the Company, threatened audits, assessments or other actions for or relating to any liability in respect of Taxes of the Seller or the Company.

3.1.11.3 The provision made for current and deferred Taxes included in the Financial Statements, if any, is sufficient for the payment of all accrued and unpaid Taxes (whether or not disputed), for the period ended the date thereof and for all periods prior thereto. Since December 31, 2013, the Company has not incurred any liability for Taxes outside the ordinary course of business consistent with past custom and practice.

3.1.11.4 The Seller and the Company have not (i) agreed, and is not required, to make any adjustment under Section 481(a) of the Code (or under any comparable state or local Tax provision) by reason of a change in accounting method or otherwise for any taxable period (or portion thereof) ending after the Closing Date; or (ii) made an election, and is not required, to treat any of its assets as owned by another Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect prior to amendment by the Tax Equity and Fiscal Responsibility Act of 1982; or (iii) made any of the foregoing elections and is not required to apply any of the foregoing rules under any comparable state or local Tax provision.

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3.1.11.5 The Company does not have any liability for Taxes of any Person as transferee or successor, by contract or otherwise, and is not a party to or bound by any tax indemnity, tax sharing, tax allocation agreement or similar arrangements.

3.1.11.6 The Company has not been a member of an affiliated group filing a consolidated federal income Tax Return.

3.1.11.7 The Company has withheld and paid to a taxing Authority all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party.

3.1.11.8 No taxing Authority is asserting or, to the Knowledge of the Company, threatening to assert a claim against the Company under or as a result of Section 482 of the Code or any similar provision of any foreign, state or local Tax law.

3.1.11.9 Neither the Seller nor the Company has entered into any transaction identified as a “reportable transaction” for purposes of Treasury Regulations Sections 1.301.6011-4(b).

3.1.11.10 The Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion of any taxable period) after the Closing Date as a result of any (i) closing agreement as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax law); (ii) installment sale or open transaction disposition occurring on or prior to the Closing Date; (iii) the cash method of accounting or (iv) prepaid amount received on or prior to the Closing.

3.1.11.11 Buyer will not be required to deduct and withhold any amount pursuant to Section 1445(a) of the Code upon the transfer of any cash or property pursuant to this Agreement. The Company does not have, and has not had, a permanent establishment in any foreign country and does not engage, and has not engaged, in a trade or business in any foreign country.

3.1.11.12 The Company is, and has been since its formation, disregarded as an entity separate from its owner as defined in Treasury Regulation Section 301.7701-3(b) for federal and state income Tax purposes and has not made any election to be treated as an association taxable as a corporation.

3.1.12 Absence of Changes. Other than as disclosed on Schedule 3.1.12 since December 31, 2013, the Company has conducted the Business only in the ordinary course, consistent with past practice, and there has not been:

3.1.12.1 any change in circumstances that had or might have an adverse effect on the condition (financial or otherwise), properties, assets, liabilities, rights, obligations, operations, business or prospects of the Company;

3.1.12.2 change in the Company’s method of accounting;

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3.1.12.3 any damage, destruction, or loss, or other event, development or condition of any character (whether or not covered by insurance) that had or might have an adverse effect on the condition (financial or otherwise), properties, assets, liabilities, rights, obligations, operations, business or prospects of the Company; or

3.1.12.4 since June 1, 2014, any reduction, or receipt of notice by Company of any proposed reduction, in the reimbursement rates payable to the Company, for services provided under the PSA Contracts, from any third-party, non-governmental, payor or insurer (in-network and out-of-network).

3.1.13 Absence of Unusual Transactions. Since December 31, 2013, except as contemplated by this Agreement or as set forth on Schedule 3.1.13, the Company has not:

3.1.13.1 transferred, assigned, sold or otherwise disposed of any assets or canceled any debts or claims, except in each case in the ordinary and usual course of business consistent with past practices;

3.1.13.2 incurred or assumed any obligation or liability (fixed or contingent), except unsecured current obligations and liabilities incurred in the ordinary and normal course of business consistent with past practices;

3.1.13.3 incurred any Indebtedness;

3.1.13.4 issued, sold, or transferred any of its membership interests, or issued, granted or delivered any right, option or other commitment for the issuance of any such capital stock or membership interests;

3.1.13.5 discharged or satisfied any Lien, or paid any obligation or liability (fixed or contingent) other than in the ordinary and normal course of business consistent with past practices;

3.1.13.6 acquired any Person or the business or, except in the ordinary course of business consistent with past practices, the assets of any Person;

3.1.13.7 suffered any operating loss or any extraordinary loss, or waived any rights of substantial value, or entered into any commitment or transaction not in the ordinary and usual course of business and consistent with past practices;

3.1.13.8 substantively amended or changed or taken any action to substantively amend or change its Charter Documents;

3.1.13.9 made any general wage or salary increases or paid any bonus, in respect of personnel which it employs, other than increases in the ordinary and normal course of business and consistent with past practices;

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3.1.13.10 subjected to any Lien, granted a security interest in, or otherwise encumbered the assets of the Company, or any of its other assets or property, whether tangible or intangible;

3.1.13.11 made any single capital expenditure in excess of $10,000;

3.1.13.12 made any change in any existing election, or made any new election, with respect to any tax law in any jurisdiction which election could have an effect on the tax treatment of the Company or the Business;

3.1.13.13 entered into, amended or terminated any material Contract;

3.1.13.14 settled any claim or litigation, or filed any motions, orders, briefs or settlement agreements in any proceeding before any governmental Authority or any arbitrator, other than in connection with the Plavin Release;

3.1.13.15 maintained its books of account on a basis inconsistent with prior periods or made any change in any of its accounting methods or practices;

3.1.13.16 engaged in any one or more activities or transactions outside the ordinary course of business; or

3.1.13.17 authorized or agreed or otherwise become committed to do any of the foregoing.

3.1.14 Powers of Attorney. No Person holds any power of attorney from the Company or the Seller which would permit such Person to take any action which would adversely affect Buyer’s title to the Purchased Interests or the Company’s title to its assets following the Closing.

3.1.15 Contracts and Commitments.

3.1.15.1 Set forth in Schedule 3.1.15.1 is a true and complete list of each Contract with respect to the Company or the Business including, without limitation, (i) the Management Contract, each PSA Contract and each managed care payor contract, (ii) each Contract which involves a financial relationship with the Seller, the Seller Owner or any affiliate thereof (including IPS), (iii) each Contract which restricts in any manner the Company’s or any affiliate’s right to compete with any Person, and (iv) each Contract which, if breached, terminated or allowed to expire could have a material adverse effect on the Company or the Business.

3.1.15.2 Each of the Contracts is (i) a legal, valid and binding obligation of the Company and, to the Knowledge of the Company, the other parties thereto, (ii) in full force and effect and is enforceable in accordance with its terms, and (iii) in compliance with 42 U.S.C § 1320a-7b and the regulations promulgated thereunder (i.e., the Federal Anti-Kickback Statute), 42 U.S.C. § 1395nn and the regulations promulgated thereunder (i.e., the

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Stark Law) and any equivalent state or local laws. The Company has not been notified or advised by any party thereto of such party’s intention or desire to terminate or modify any such Contract in any respect. Nor has the Company received any notice of default in regard to any of the Contracts and there exists no default or event that with notice or a lapse of time, or both, would constitute a default under any of the Contracts by Seller of, to the Knowledge of the Seller, the other parties thereto.

3.1.15.3 Neither the Company nor, to the Knowledge of the Company, any other party, is in breach of any of the material terms or covenants of any of the Contracts. True, correct and complete copies of the Contracts, and any amendments or supplements thereto, have been delivered to Buyer.

3.1.15.4 Except as set forth on Schedule 3.1.15.4, the Company is not a party to or bound by any Contract, the terms of which were arrived at by or otherwise reflect less-than-arm’s-length negotiations or bargaining or which contain payment obligations which compensate Persons for the volume or value of referrals for goods or services for which payment may be sought under federal or state health care programs.

3.1.16 Employee Plans.

3.1.16.1 The Company does not maintain or contribute to (and has not maintained or contributed to), and none of its employees or other personnel participates in or is a beneficiary of any plan, program or other arrangement providing for pension, profit sharing, employee pre-tax or after-tax contributions, retirement, health, disability, life insurance, cafeteria plan, medical expense reimbursement, dependent care reimbursement, adoption assistance, welfare benefit, incentive award, compensation, severance, termination pay, deferred compensation, performance awards, equity or equity-related awards, fringe benefits, transportation benefits, expense allowances or other employee benefits or remuneration of any kind (an “Employee Plan”), whether written or unwritten, funded or unfunded, including without limitation any “employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

3.1.16.2 Neither the Company nor any person under common control with the Company within the meaning of Section 414(b), (c) or (m) of the Code and the regulations thereunder (each an “ERISA Affiliate”) contributes to nor has contributed to or been required to contribute to any multiemployer plan (as defined in Section 3(37) of ERISA) or any other plan subject to Title IV of ERISA or any other Employee Plan. Neither the Company nor any ERISA Affiliate has, or could have, any liability (including, without limitation, withdrawal liability) under any multiemployer plan or any plan subject to Title IV of ERISA.

3.1.16.3 The Company does not maintain, and has not maintained, a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code)(a “Section 409A Plan”).

3.1.17 Other Employee Benefits Matters. Except as set forth on Schedule 3.1.17 hereto, the Company is not a party to any employment agreements or contracts or other agreements or arrangements providing for employee remuneration or benefit. There is

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no agreement, policy or practice requiring the Company to make a payment or provide any other form of compensation or benefit to any person performing services for the Company upon termination of such services which would not be payable or provided in the absence of the consummation of this Agreement and no payment to any person will be characterized as a “parachute payment,” within the meaning of Section 280G(b)(2) of the Code due in whole or in part to the transactions contemplated by this Agreement.

3.1.18 Absence of Guarantees. Except as set forth on Schedule 3.1.18 hereto, the Company has not given or agreed to give, or is not a party to or bound by, any guaranty of Indebtedness or other obligations of third parties, nor is the Company otherwise responsible for, or contingently responsible for, any such Indebtedness or other obligation.

3.1.19 Litigation and Investigations. There is no suit, action, litigation, arbitration proceeding, governmental, administrative hearing, or other proceedings (including disciplinary proceedings) including appeals and applications for review, pending or, to the Knowledge of the Company, threatened against or relating to the Company (or its employed or engaged physicians and CRNAs) or the Business or affecting the Company’s properties or Business or the assets of the Company. There is not presently outstanding against the Company (or any of its employed or engaged physicians and CRNAs) any adverse judgment, decrees, injunction, rule or order of any court, governmental department, commission, agency, instrumentality, arbitrator or other Authority. There is not currently, and there has not been, any pending or, to the Knowledge of the Company, threatened investigation with respect to the Company or any of its affiliates (or any of its employed or engaged physicians or CRNAs).

3.1.20 Employees; Independent Contractors. Set forth on Schedule 3.1.20 are the names and titles of all personnel employed by the Company (“Employees”), including rates of remuneration, positions held and date of commencement of employment. Except as set forth on Schedule 3.1.20, the Company does not have any liability in respect of former employees (or their dependents). Also set forth on Schedule 3.1.20 hereto is a complete list of all independent contractors, subcontractors, and agents (“Independent Contractors”) which are presently engaged by the Company and an indication of which, if any, of such Independent Contractors cannot be terminated by the Company on thirty (30) days’ notice or less, without penalty. To the Knowledge of the Company, no Employee or Independent Contractor has been in violation of any term of any employment contract, independent contractor agreement, non-disclosure agreement, non-competition agreement, or any restrictive covenant to a former employer relating to the right of any such Person to be employed or retained by the Company because of the nature of the business conducted or presently proposed to be conducted by the Company. To the Knowledge of the Company, no other Employee or Independent Contractor is or has ever been in violation of any term of any employment contract, independent contractor agreement, non-disclosure agreement, non-competition agreement or restrictive covenant relating to the Business, except for such violations which have been cured prior to the date hereof.

3.1.20.1 As of the date hereof, no Employee or Independent Contractor has given notice to the Company, nor does the Company otherwise have any Knowledge, that any such Person intends to terminate his or her employment or independent contractor relationship with the Company. The Company is in compliance with all Laws concerning the classification of employees and independent contractors and has properly

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classified all such persons (including its engaged physicians and CRNAs) for all purposes and under all applicable Laws.

3.1.20.2 The Company (i) is, and has at all times been, in compliance with all applicable Laws respecting employment, employment practices, terms and conditions of employment and wages and hours; (ii) has withheld and reported all amounts required by Law or by agreement to be withheld and reported from the wages, salaries and other payments to employees; (iii) is not liable for any arrears of wages or any Taxes or any penalty for failure to comply with any of the foregoing; and (iv) is not liable for any payment to any trust or other fund or to any governmental or administrative Authority, with respect to unemployment compensation benefits, social security or other benefits for employees (other than routine payments to be made in the normal course of business and consistent with past practice). There are no pending, threatened or reasonably anticipated claims or actions against the Company under any worker’s compensation policy or long-term disability policy.

3.1.20.3 No work stoppage or labor strike against the Company is pending, threatened or reasonably anticipated. The Company is not involved in or, to the Knowledge of the Company, is not threatened with, any labor dispute, grievance, or litigation relating to labor, safety or discrimination matters involving any Employee, including, charges of unfair labor practices or discrimination complaints, which, if adversely determined, would, individually or in the aggregate, result in material liability to the Company. The Company has not engaged in any unfair labor practices within the meaning of the National Labor Relations Act. The Company is not currently, nor has it been in the past, a party to, or bound by, any collective bargaining agreement or union contract with respect to its employees and no collective bargaining agreement or union contract is being negotiated by the Company. The Company has not incurred any material liability or material obligation under the Worker Adjustment and Retraining Notification Act or any similar state or local law which remains unsatisfied.

3.1.21 Insurance. The Company currently has in force the policies of insurance relating to the Business and its assets set forth on Schedule 3.1.21. Each of the Company’s employed or engaged physicians and CRNAs maintains professional liability insurance with no less than $1,000,000/$3,000,000 coverage limits. All such policies of insurance are in full force and effect and the Company (including each of its employed or engaged physicians and CRNAs) is not in default, whether as to the payment of premium or otherwise, under the terms of any such policy. Such policies (i) constitute insurance for all risks normally insured against by businesses, entities, and persons in the same line of Business as the Company (including each of its employed or engaged physicians and CRNAs), (ii) can be canceled without penalty, and (iii) are sufficient for compliance with all agreements to which the Company (or any of its employed or engaged physicians and CRNAs with respect to the Business) is a party. No notice of cancellation or indication of an intention not to renew any insurance policy has been received by the Company or to the Knowledge of the Company, any of its employed or engaged physicians or CRNAs. There are no current and open or known claims related to the Business or, to the Knowledge of the Company, with respect to any employed or engaged physician or CRNA, under any such policies. The Company has not received any written claims made against the Company (or any of its employed or engaged physicians and CRNAs) nor, to the Knowledge of the Company are there any events which are reasonably likely

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to give rise to a claim against the Company (or any of its employed or engaged physicians and CRNAs), whether or not covered by insurance.

3.1.22 Compliance with Environmental Laws. The Company and the Business are in compliance with all applicable Environmental Laws. The Company is not required to obtain any permits, licenses and other authorizations for the conduct of the Business under any federal, state and local laws and the regulations promulgated thereunder relating to pollution or protection of the environment, including laws relating to emissions, discharges, releases or threatened releases of hazardous substances, materials or wastes (collectively, “Hazardous Wastes”) into the environment (including, without limitation, ambient air, surface water, ground water, or land), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of Hazardous Wastes (collectively, “Environmental Laws”). There are no pending or, to the Knowledge of the Company, threatened investigations, actions or proceedings of any nature involving the Company or the Business or the properties leased by it or otherwise arising under any Environmental Laws.

3.1.23 Compliance.

3.1.23.1 The Company is not in violation of any Laws, decrees or ordinances applicable to the Business, the Company or the Purchased Interests, including, without limitation, any Laws pertaining to any Government Program, HIPAA or HI-TECH. None of the Company (nor any of its employed or engaged physicians and CRNAs), the Seller or the Seller Owner has received or entered into any citations, complaints, consent orders, compliance schedules, or other similar enforcement orders or received any written notice from any governmental Authority or any other written notice that would indicate that there is not currently compliance with all such legal requirements with respect to the Business, the Company (or any of its employed or engaged physicians and CRNAs) or the Purchased Interests. No event has occurred which, with either the giving of notice, the passage of time, or both, would constitute grounds for a violation, order or deficiency with respect to any of the foregoing. The Company and any affiliate have not engaged in any activities which are prohibited under 42 U.S.C. § 1320a-7b, 42 U.S.C. § 1395nn or 31 U.S.C. § 3729-3733 (or other federal or state statutes related to false or fraudulent claims) or the regulations promulgated thereunder pursuant to such statutes, or related state or local statutes or regulations.

3.1.23.2 None of the Company, any of Company’s affiliates nor their respective representatives, physicians or CRNAs (or other professionals) (i) is currently, or has ever been, excluded, suspended, debarred, or otherwise ineligible to participate in any Governmental Program (including Medicare, Medicaid and Tricare), (ii) has been convicted or indicted of a crime relating to the provision of health care, or (iii) has been reinstated to participate in any such governmental program after a period of exclusion, suspension, debarment or ineligibility.

3.1.23.3 The Company has queried the following databases with respect to each of its physicians or CRNAs (or other professionals): (a) the General Services Administration List of Parties Excluded from Federal Programs and (b) the Department of Health and Human Services, Office of Inspector General, list of Excluded Individuals and Entities.

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3.1.23.4 Each physician, CRNA and other professional employed or engaged by the Company maintains status as a participating provider in, and accepts assignment for payment under, Medicare and Medicaid and participates in each private reimbursement program, including any health maintenance organization and preferred provider organization, in which the Company has directed such individual to participate.

3.1.23.5 The Company compensates professionals providing medical services under the PSA Contracts in a manner that is commercially reasonable and consistent with fair market value for services and services actually provided and that does not vary with, reflect or relate, directly or indirectly, to either the volume or value of any actual or anticipated referrals to, or other business generated for, the Facilities. All such compensation arrangements comply with, or do not violate, applicable laws, regulations and interpretations thereof.

3.1.23.6 All of the Accounts Receivables arose in the ordinary course of the Company’s Business, in connection with bona fide transactions for medical services provided by the Company under the PSA Contracts and in compliance with all applicable Laws.

3.1.24 Dealing with Affiliates. None of the Company, the Seller or the Seller Owner or any other affiliate of the Company or the Seller has any interest in any property (whether real, personal or mixed and whether tangible or intangible) currently used in or pertaining to the Business. Schedule 3.1.24 sets forth a complete list, including the parties, of all oral or written agreements and arrangements to which the Company is or has been a party, at any time and to which any one or more of the Seller, the Seller Owner or any other affiliate of the Company or the Seller or the Seller Owner is also a party.

3.1.25 No Subsidiaries. Except as set forth on Schedule 3.1.25, there is no corporation, general partnership, limited partnership, limited liability company, joint venture, association, trust or other entity or organization which the Company controls, or has controlled, or in which the Company owns or owned equity interest or any other interests. There are no outstanding contractual obligations of the Company to acquire any outstanding shares of capital stock or other ownership interests of any corporation, partnership or other entity.

3.1.26 Intellectual Property. All copyrights, patents, trade secrets, trademarks, service marks, or other intellectual property or proprietary rights associated with any ideas, concepts, techniques, inventions, processes or works of authorship developed or created by any employee or independent contractor during the course of their performing work for the Company, and any other work product conceived, created, designed, developed or contributed to by each such person during the course of his or her employment or engagement with the Company that relates in any way to the Business (collectively, the “Work Product”) belongs exclusively to the Company, and such Work Product shall be transferred to Buyer as of the Closing.

3.1.27 Changes in Third-Party Payors. Except as set forth on Schedule 3.1.27, none of the Company, the Seller nor the Seller Owner has received notice, nor to the Knowledge of the Company, is any such notice threatened, that any health plan, insurance

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company or other third-party payor which is currently doing business with the Company intends to terminate, limit, restrict or amend in any material respect its current relationship with the Company or change its current reimbursement rates or amounts

3.1.28 Release of Claims. Each of the Seller and the Seller Owner represents and warrants that, as of the Closing, he or it (and its affiliates) has no claims (direct or indirect) against the Company (either individually or as a member of the Company or shareholder of the Seller), arising under any contract or agreement (regardless of whether written or oral), Law, tort or otherwise, other than his or its rights, if any, under this Agreement and the Collateral Agreements.

3.1.29 Full Disclosure. No representation or warranty of the Seller, the Company or the Seller Owner contained herein, or information with respect to the Seller, the Company or the Seller Owner contained herein, or in any statement, certificate or other schedule furnished to Buyer by the Seller, the Company or the Seller Owner pursuant hereto or in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not false or misleading.

3.1.30 Other Acquisition. The Seller, the Company and the Seller Owner acknowledge and confirm that the purchase price to be paid with respect to the Other Acquisition pursuant to the Other Acquisition Agreement has been separately negotiated with the selling party therein. The Seller, the Company and the Seller Owner further acknowledge and confirm that no representations or warranties have been made by Buyer or any of its affiliates or representatives to any of the Seller, the Company or Seller Owner with respect to any purchase price or other amounts to be paid in connection with the Other Acquisition Agreement and all decisions of the Seller, the Company and the Seller Owner to enter into this Agreement and the Collateral Agreements, and to sell the Purchased Interests pursuant to the terms hereof, have been made based on the terms hereof and without regard to any expectation or understanding by any of them as to the amounts being paid pursuant to the Other Acquisition Agreement.

3.2 Representations and Warranties of Buyer. Buyer hereby represents and warrants to the Seller, the Company and the Seller Owner that each of the following representations and warranties are true as of the date of this Agreement, and unless otherwise expressly set forth herein, as of Closing.

3.2.1 Organization and Valid Existence. Buyer is a corporation liability duly organized, validly existing and in good standing under the laws of the State of Georgia and has all necessary power, authority and capacity to enter into this Agreement and carry out its obligations hereunder, to own, manage and lease its property and assets, and to carry on its business as presently conducted by it.

3.2.2 Authority, Approval and Enforceability. This Agreement has been duly executed and delivered by Buyer and Buyer has all requisite corporate power to execute and deliver this Agreement and all Collateral Agreements executed and delivered or to be executed and delivered by it in connection with the transactions provided for hereby, to consummate the transactions contemplated hereby and by the Collateral Agreements, and to perform its

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obligations hereunder and under the Collateral Agreements. The execution, delivery and performance by Buyer of this Agreement and the Collateral Agreements have been duly and validly authorized by proper corporate action (including all necessary shareholder approval). This Agreement and each Collateral Agreement to which Buyer is a party constitutes, or upon execution and delivery will constitute, the legal, valid and binding obligation of Buyer enforceable in accordance with its terms, except as such enforcement may be limited by general equitable principles or by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the rights of creditors in general.

3.2.3 Absence of Conflicting Agreements. Buyer is not a party to, bound or affected by or subject to any indenture, mortgage, lease, agreement, instrument, order, judgment, decree or Law which would be violated, contravened or breached by, or under which any default would occur, as a result of the execution and delivery of this Agreement by Buyer or the consummation of any of the transactions described herein.

3.3 No Broker. Each of the Parties represents and warrants to each other Party that all negotiations relating to this Agreement and the transactions contemplated hereby have been carried on among them directly and without the intervention of any other Person in such manner as to give rise to any valid claims against any of the Parties for a brokerage commission, finder’s fee or other like payment.

3.4 Non-Waiver. No investigations made by or on behalf of Buyer at any time shall have the effect of waiving, diminishing the scope of or otherwise affecting any representation or warranty made by the Seller, the Company or the Seller Owner herein or pursuant hereto.

3.5 Nature and Survival of Representations, Warranties and Covenants. All statements contained in any certificate or other instrument executed and delivered by or on behalf of a Party pursuant to or in connection with the transactions described in this Agreement shall be deemed to be made by such Party hereunder. All representations, warranties, covenants and agreements contained herein on the part of each of the Parties shall survive the Closing, the execution and delivery hereunder of transfer instruments and other documents and payment of all consideration therefor, subject to Section 6.5.2.

4. CONDITIONS PRECEDENT TO THE PERFORMANCE OF THE OBLIGATIONS OF BUYER, THE SELLER, THE COMPANY AND THE SELLER OWNER

4.1 Buyer’s Conditions. The obligation of Buyer to complete the Acquisition hereunder shall be subject to the satisfaction of or compliance with, at or before the Closing, each of the following conditions precedent (each of which is hereby acknowledged to be inserted for the exclusive benefit of Buyer or its affiliates and may be waived by Buyer or its affiliates in whole or in part).

4.1.1 Compliance with Agreement. The Seller, the Company and the Seller Owner shall have performed and complied in all material respects with each of its

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obligations under this Agreement which are to be performed or complied with by it prior to or at the Closing.

4.1.2 Receipt of Closing Documentation. All documentation relating to the due authorization and completion of the Acquisition and all actions and proceedings taken on or prior to the Closing in connection with the performance by the Seller, the Company or the Seller Owner of their obligations under this Agreement shall be satisfactory to Buyer and Buyer’s legal counsel, and Buyer shall have received copies of all such documentation or other evidence as it may reasonably request in order to establish the consummation of the transactions described herein and the taking of all appropriate proceedings in connection therewith in compliance with these conditions, in form (as to certification and otherwise) and substance satisfactory to Buyer and Buyer’s legal counsel.

4.1.3 Representations and Warranties. The representations and warranties made by the Seller, the Company and the Seller Owner in this Agreement (disregarding any qualifiers and materiality exceptions) shall be true and correct as of the Closing Date with the same force and effect as though such representations and warranties had been made on the Closing Date, except for changes permitted or contemplated by this Agreement and except where the failure to be true and correct, individually or in the aggregate, have not resulted in and would not reasonably be expected to result in a material adverse effect to the Business or the Purchased Interests.

4.1.4 Consents, Authorizations and Registrations. All consents, approvals, orders and authorizations of any Persons or Authorities (or registrations, declarations, filings or recordings with any such authorities) required in connection with (i) the completion of any of the transactions described in this Agreement, (ii) the execution of this Agreement, (iii) the Closing or (iv) the performance of any of the terms and conditions hereof, as set forth on Schedule 4.1.4, shall have been obtained on or before the Closing.

4.1.5 Other Agreements and Documents. The agreements and documents set forth in Section 2.4 shall have been executed, certified and/or approved, as applicable, and originals thereof delivered to Buyer on or before the Closing, and the Seller, the Company and the Seller Owner shall have otherwise complied with Section 2.4.

4.1.6 Outstanding Indebtedness Paid. The Seller and the Seller Owner shall have caused to be paid in full on or before the Closing: (a) any and all of the Company’s outstanding Indebtedness (including, without limitation, all of the Company Notes Payable) or have provided payoff letters from the holders of all of the Company’s outstanding Indebtedness (including, without limitation, all of the Company Notes Payable), providing that, upon payment of all of the Company’s outstanding Indebtedness, all Liens filed against the Seller or Seller’s properties shall be terminated, (b) all of the Company’s obligations with respect to trade and accounts payable and other operating expenses incurred or accrued for all periods on or prior to the Closing Date (including compensation payable to physicians and CRNAs employed or engaged by the Company), and (c) other liabilities arising from the Company’s conduct of business prior to the Closing Date, including but not limited to, those set forth on Schedule 4.1.6. On the Closing Date and simultaneously with the Closing, the Company shall have no Indebtedness and there shall be no Liens on any of the Company’s assets.

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4.1.7 Litigation. At and upon the Closing, there shall be no litigation, governmental investigation or proceeding pending or threatened (i) for the purpose of enjoining or preventing the consummation of any of the transactions described in this Agreement or otherwise claiming that such consummation is improper or (ii) which might adversely affect the Company, the Purchased Interests or the Business after the Closing Date.

4.1.8 Opinion of Counsel. Buyer shall have received an opinion of counsel to the Company in a form satisfactory to Buyer’s counsel.

4.1.9 Resignation of Medical Director. The Company shall have delivered evidence reasonably satisfactory to Buyer that the Seller Owner shall have resigned as the Company’s Medical Director and Manager, without liability to the Company or Buyer (including any liability for Guaranteed Amounts under the Company’s Operating Agreement), such resignations to be effective as of the Effective Time of the Closing.

4.1.10 Tail Coverage Insurance. Buyer shall have received evidence that, effective as of the Closing Date with the premiums to be paid in full no later than five (5) days after the Closing Date by Seller, the Company shall have purchased extended reporting endorsements of five (5) years duration for all professional liability policies for the full limits of such policies covering the Company, its physicians and CRNAs (as set forth on Schedule 4.1.10) for periods prior to the Closing Date and otherwise complying in all respects with the Company’s existing insurance-related obligations under the Contracts.

4.1.11 Credentialing. Buyer or an affiliate of Buyer shall have completed to its satisfaction the credentialing process for each of the physicians, CRNAs and other clinical personnel to be employed or otherwise engaged by Buyer following the Closing in connection with this Agreement.

4.1.12 Other Acquisition Agreement and Consummation of the Other Acquisition. The Other Acquisition Agreement, together with the other documentation required thereunder, shall have been executed and delivered by the parties thereto and the Other Acquisition shall be consummated contemporaneously herewith but effective immediately following the consummation hereof.

4.1.13 Financing. Buyer shall have received third party financing in an amount sufficient to consummate the transactions contemplated hereby and by the Other Acquisition Agreement on terms acceptable to Buyer.

4.1.14 Due Diligence. Buyer shall have completed its due diligence review of the Company with results reasonably satisfactory to Buyer.

4.1.15 Approval of Boards of Directors. The execution, delivery and performance of this Agreement and the Collateral Agreements shall have been approved by Buyer’s sole stockholder and director and the Board of Directors of CRH.

4.2 The Seller’s, the Owner’s and the Seller Owner’s Conditions. The obligations of the Seller, the Company and the Seller Owner to complete the Acquisition hereunder shall be subject to the satisfaction of or compliance with, at or before the Closing, of

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each of the following conditions precedent (each of which is hereby acknowledged to be inserted for the exclusive benefit of the Seller Owner and the Seller and may be waived by them in whole or in part).

4.2.1 Receipt of Closing Documentation. All documentation relating to the due authorization and completion of the Acquisition and all actions and proceedings taken on or prior to the Closing in connection with the performance by Buyer of its obligations under this Agreement shall be satisfactory to the Seller and the Seller’s legal counsel, and the Seller shall have received copies of all such documentation or other evidence as they may reasonably request in order to establish the consummation of the transactions described herein and the taking of all appropriate proceedings in connection therewith in compliance with these conditions, in form (as to certification and otherwise) and substance satisfactory to the Seller and the Seller’s legal counsel.

4.2.2 Other Acquisition Agreement and Consummation of the Other Acquisition. The Other Acquisition Agreement, together with the other documentation required thereunder, shall have been executed and delivered by the parties thereto and the Other Acquisition shall be consummated contemporaneously herewith but effective immediately following the consummation hereof.

4.2.3 Other Agreements and Documents. The agreements and documents set forth in Section 2.5 shall have been executed, certified and/or approved, as applicable, and originals thereof delivered to the Seller on or before the Closing.

5. OTHER COVENANTS OF THE PARTIES

5.1 Restrictive Covenants. As a material and valuable inducement for Buyer to enter into this Agreement, pay and deliver the Acquisition Consideration and consummate the transaction provided for herein, and in order to protect the goodwill acquired by Buyer, the Seller and the Seller Owner agree to the restrictions set forth in this Section 5.1.

5.1.1 Non-Competition. Each of the Seller and the Seller Owner agrees that during the Restricted Period the Seller and the Seller Owner will not, without the prior written consent of Buyer, engage directly or indirectly in providing medical services, in the Specialty, either as a shareholder, member, officer, director, partner, employee, independent contractor, owner, or in any other comparable capacity, to any ambulatory surgical centers affiliated with or owned or operated by gastroenterologists or any gastroenterology medical practice within thirty (30) miles of any health care facility or office at which GAA rendered professional services in the Specialty as of the Closing (“Restricted Area”). The “Restricted Period” shall mean and include a period of seven (7) years, from the Closing Date. Nothing in this Section 5.1.1 shall prohibit the Seller and Seller Owner from (a) performing management and billing services to those medical practices listed on Schedule 5.1.1, (b) owning those medical practices listed on Schedule 5.1.1 or (c) performing billing and collection services (as opposed to management services) within the Restricted Area. Nor will Seller or the Seller Owner during the Restricted Period directly or indirectly consult, own, invest in, finance, or assist any physician or group of physicians to directly or indirectly own, acquire, operate any anesthesia medical practice providing anesthesia services similar to the anesthesia services provided by Company, to

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or for any ambulatory surgical center affiliated with a gastroenterology practice in the Restricted Area. Each of the Seller and the Seller Owner agrees that they will not at any time, in any fashion, form or manner, unless specifically consented to in writing by Buyer, either directly or indirectly, use or divulge, disclose, or communicate to any person, firm or corporation, in any manner whatsoever, any confidential information of any kind, nature, or description, including that which is a part of the goodwill, concerning any matters affecting or relating to the Business, except as necessary to provide patient care and subject to applicable Law.

5.1.2 Non-Solicitation of Employees or Contractors. Each of the Seller and the Seller Owner agrees that during the Restricted Period, the Seller and the Seller Owner will not, without the prior written consent of Buyer, directly or indirectly, as an individual or on behalf of a firm, corporation, partnership or other legal entity, solicit for employment or engagement or endeavor in any way to entice or lure away from employment or engagement with Buyer or its affiliates, or hire or offer to hire, or engage any individual who within the prior six (6) months is or was an employee, contractor, officer, director or agent of Buyer or its affiliates (including Company, after the Closing). This Section 5.1.2 shall not apply to the employment or engagement of [REDACTED].

5.1.3 Specific Performance. It is recognized and hereby acknowledged by the Parties hereto that a breach or violation by either of the Seller or the Seller Owner or any of their affiliates of any or all of the covenants and agreements contained in this Section 5.1 would cause irreparable harm and damage to Buyer or an affiliate of Buyer in a monetary amount which may be virtually impossible to ascertain. As a result, each of the Seller and the Seller Owner recognizes and hereby acknowledges that Buyer or an affiliate of Buyer shall be entitled to (a) a decree or order of specific performance to enforce the observance and performance of such covenant, obligation or other provision and (b) an injunction from any court of competent jurisdiction enjoining and restraining any breach or violation of any or all of the covenants and agreements contained in this Agreement by either of the Seller or the Seller Owner and/or their associates, affiliates, partners or agents, either directly or indirectly, (without the need to post bond), and that such rights shall be cumulative and in addition to whatever other rights or remedies Buyer or an affiliate of Buyer may possess hereunder, at law or in equity. THE RESTRICTIVE COVENANTS IN THIS SECTION HAVE BEEN NARROWLY TAILORED TO PROHIBIT THE SELLER AND THE SELLER OWNER FROM WORKING IN COMPETITION WITH BUYER WITHIN THE LIMITED GEOGRAPHIC AREA DESCRIBED ABOVE.

5.1.4 Tolling. The foregoing Restricted Period shall be tolled and extended for any period(s) of time during which either of the Seller Owner or the Seller is in breach of his or its obligations under this Section 5.1 and the enforcement of the covenants is being litigated or arbitrated, including any appeal or confirmation proceedings, provided that either the outcome of such litigation or arbitration is to enforce, in whole or in part, such covenants or the Seller Owner or the Seller in question voluntarily cease the breaching activity following the commencement of such enforcement filing.

5.1.5 Survival; Beneficiaries; Assistance. The provisions of this Section 5.1 shall survive the termination of this Agreement and are expressly intended to benefit and be enforceable by Buyer and other affiliated entities of Buyer, which are made express third party

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beneficiaries hereof. In addition, neither of the Seller Owner or the Seller may assist others in engaging in any of the foregoing restrictive activities.

5.1.6 Review. The Seller and the Seller Owner has each carefully read and considered the provisions of this Section 5.1, and having done so, agrees that the restrictions set forth in this Section 5.1 (including the time period of the restrictions and the geographical areas of restrictions set forth herein) are fair and reasonable and are reasonably required for the protection of the interests of Buyer or an affiliate of Buyer. In the event that, notwithstanding the foregoing, any part of the covenants set forth in this Section 5.1 shall be held to be invalid or unenforceable by a court of competent jurisdiction, the Parties hereto agree that such invalid or unenforceable provision(s) shall be construed in a manner that renders such provisions enforceable to the maximum extent possible and, if such construction is not possible, such invalid or unenforceable provision(s) may be severed from this Agreement without, in any manner, affecting the remaining portions hereof (all of which shall remain in full force and effect). In the event that any provision of this Section 5.1 related to time period or areas of restriction shall be declared by a court of competent jurisdiction to exceed the maximum time period, area or activities such court deems reasonable and enforceable, said time period or areas of restriction shall be deemed modified to the minimum extent necessary to make the geographic or temporal restrictions or activities reasonable and enforceable.

5.1.7 Independence. All covenants in this Section 5.1 shall be construed as an agreement independent of any other provision of this Agreement or any other Collateral Agreement or other transaction document, and the existence of any claim, cause of action or defense of the Seller Owner or the Seller against Buyer or its affiliates, whether predicated on this Agreement or otherwise, shall not constitute a defense to enforcement by Buyer or any of its affiliates of such covenants.

5.2 Post-Closing Access for Records Review. With respect to post-Closing access, the Parties agree as follows:

5.2.1 Post-Closing Access to the Seller Owner and Seller. Until the date which is seven (7) years following the Closing Date, Buyer will give the Seller and the Seller Owner access to (and the right to make copies thereof at the Seller Owner’s or Seller’s own expense) the books, files and records of Buyer solely to the extent they relate to the events arising on or prior to the Closing Date with respect to the Business. Any review or access permitted to the Seller Owner and the Seller under this Section shall be conducted by the Seller Owner or Seller in good faith, with a reasonable purpose and in a manner so as not to interfere unreasonably with the operations of Buyer following the Closing.

5.2.2 Post-Closing Access to Buyer. Until the date which is seven (7) years following the Closing Date, the Seller Owner and the Seller will give to Buyer free and unrestricted access to (and the right to make copies thereof at Buyer’s own expense) the books, files, records and tax returns of the Seller and the Seller Owner as to events arising prior to the Closing Date with respect to the Company and the Business (and shall cause IPS to give Buyer access to the books and records of IPS related to the Company); provided, however, nothing in this Section shall require the Seller or the Seller Owner to disclose or grant Buyer access to any information protected by the attorney-client privilege or the attorney work product doctrine.

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Each of the Seller Owner and the Seller covenant and agree that they will not destroy or dispose of such books, files, records or tax returns prior to the date which is seven (7) years following the Closing Date. Following expiration of such seven (7) year period, the Seller Owner and the Seller will provide Buyer with sixty (60) days advance notice of their intent to destroy or dispose of such materials, and during said sixty (60) day period, Buyer will have the right to take possession of said materials at its sole expense. Any review or access permitted to Buyer under this Section shall be conducted by Buyer in good faith, with a reasonable purpose and in a manner so as not to interfere unreasonably with the operations of the Seller Owner and the Seller following the Closing.

5.3 Bank Accounts, Open Checks. From and after the Closing Date, the Seller and the Seller Owner will cooperate with and assist Buyer and the Company, as and to the extent reasonably requested, in making or effecting changes to the bank accounts of, or for the benefit of, the Company (including all lockbox accounts), including, without limitation, for purposes of designating new authorized signatories for such accounts. At the Closing, there shall remain in the Company’s checking accounts sufficient funds on hand to satisfy all of the Company’s then outstanding, unpaid checks written prior to the Closing Date. A true and complete list of all bank and investment accounts of, or for the benefit of, the Company (including all lockbox accounts) is set forth on Schedule 5.3, along with the authorized signatories to each such account.

5.4 At-Will Employees. The Company, Buyer or one of their affiliates shall offer continued at will employment to each person listed on Schedule 5.4, provided that all compensation, bonuses and benefits owed to such persons in respect of periods prior to the Closing Date shall have been paid by the Company prior to the Closing or binding arrangements therefor have been made to the satisfaction of Buyer.

5.5 Tax Matters. In connection with Tax matters, the Parties agree as follows:

The Seller Owner shall cause to be prepared, at Seller’s sole expense, and cause to be filed all Tax Returns required to be filed by the Company for all periods ending prior to the Closing Date (“Pre-Closing Periods”) and pro forma Tax Returns for any Tax period of the Company that begins before the Closing Date and ends after the Closing Date (“Straddle Period”) as if such Straddle Period ended immediately prior to the Closing Date (“Pro Forma Returns”), provided that in the case of income Tax Returns, the Company is a disregarded entity (as a limited liability company owned by a single member) and thus no income Tax Returns will be required to be prepared by Company (since Seller will file the applicable income Tax returns). To the extent reasonably practicable and permitted by applicable Tax law, all such Tax Returns shall be prepared in accordance with past practice insofar as they relate to the Company. Prior to filing any such Company Tax Returns for any Pre-Closing Periods, the Seller Owner shall provide drafts of such Tax Returns for review and comment by Buyer not more than forty-five (45) days after the Closing. The Seller Owner shall deliver Pro Forma Returns not more than forty-five (45) days after the Closing along with all work papers associated with such Pro Forma Returns. The Seller Owner shall make such changes to any such Tax Returns for Pre-Closing Periods or Pro Forma Tax Returns as reasonably requested by Buyer if such changes are both (a) in accordance with applicable Tax law, rules and regulations and (b) not inconsistent with the Company’s past practices that were and still are lawful, and reasonably appropriate, under the circumstances. Buyer shall, and shall cause the Company to, cooperate with the Seller Owner in

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connection with the preparation, execution and filing of such Tax Returns for all Pre-Closing Periods and the Pro Forma Returns. All unpaid obligations of the Company with respect to any Pre-Closing Taxes of the Company for the Straddle Period, hypothetically assuming that the Straddle Period ended on the day immediately prior to the Closing Date, shall be estimated by the Seller Owner and shall be paid to the Company by Seller or the Seller Owner upon request of Buyer.

Buyer shall prepare or cause to be prepared and file or cause to be filed, at its own expense, any Tax Returns for any Straddle Periods. The Seller Owner acknowledges that Buyer will be entitled to rely on the Pro Forma Returns in preparing the actual Tax Return for such Straddle Period. Any Taxes due or payable by the Company for a Straddle Period shall be apportioned as determined from the books and records of the Company as follows: (i) the amount of any Taxes based on or measured by income, revenues or receipts of the Company for the Straddle Period shall be determined based on an interim closing of the books as of the end of the day immediately preceding the Closing Date, (ii) the amount of any employment or similar Taxes of the Company based on the payment of wages, salaries or other compensation amounts by or on behalf of the Company shall be treated as attributable to the date on which the compensation that gave rise to the Tax was earned and allocated between Pre-Closing Taxes and other Taxes based on an interim closing of the books as of the day immediately preceding the Closing Date, and (iii) the amount of any other Taxes of the Company for a Straddle Period shall be apportioned and treated as Pre-Closing Taxes based on the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period through the day immediately preceding the Closing Date and the denominator of which is the total number of days in the taxable period.

Buyer shall prepare or cause to be prepared, at its own expense, and file or cause to be filed all Tax Returns required to be filed by the Company after the Closing Date for all periods beginning on or after the Closing Date (“Post-Closing Periods”).

In connection with Tax matters, the Parties agree as follows:

5.5.1 All Parties shall cooperate fully, as and to the extent reasonably requested by another Party, in connection with the preparation and filing of Tax Returns pursuant to this Section 5.5 and preparing for and conducting any audit, litigation or other proceeding with respect to Taxes. For the avoidance of doubt, Buyer shall cause the Company to execute and deliver to the Seller Owner for filing the Company’s Tax Returns for Pre-Closing Periods that have not been filed before the Closing Date. Such cooperation shall further include the retention and (upon the other Party’s request) the provision of records and information that are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Buyer and the Company, on the one hand, and the Seller Owner, on the other hand, agree (a) to retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before, or ending on or before, the Closing Date until the expiration of the applicable federal, state or other statute of limitations regarding Taxes and Tax Returns for such periods (and, to the extent notified by another Party, any extensions thereof), and to abide by all record retention agreements entered into with any

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Authority relating to Taxes, and (b) to otherwise deal with such records in accordance with the applicable provisions of Section 5.2 hereof.

5.5.2 All Parties further agree, upon request and at the expense of the requesting Party, to use their commercially reasonable best efforts (not including the incurrence of expense unless reimbursed by the requesting Party) to obtain any certificate or other document from any Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby) as long as such mitigation, reduction or elimination of Tax does not result in a corresponding increase in Tax that could be imposed on the Party to whom the request is made.

5.5.3 For the avoidance of doubt, without the prior written consent of Buyer (which shall not be unreasonably withheld or delayed), the Seller shall not be entitled to make or change any election, change an annual accounting period, file any amended Tax Return, enter into any closing agreement, settle any Tax claim or assessment relating to the Company, surrender any right to claim a refund of Taxes, or take any other similar action, or omit to take any action relating to the filing of any Tax Return or the payment of any Tax, if such action or omission would have the effect of increasing the present or future Tax liability or decreasing any present or future Tax asset of the Company, Buyer or any affiliate of Buyer.

5.6 Employee Benefit Matters.

The Seller shall be responsible for all employee and independent contractor wages, benefits (including any payments for accrued vacation or sick pay, unemployment compensation, employment taxes, health claims or similar payments), severance pay obligations, any liability and responsibility for fulfilling all federal and/or state COBRA and continuation of coverage requirements with respect to the Company’s current and/or former employees and contractors and all other employee-related costs arising as a result of any events, acts (or failures to act) prior to Closing and as a result of any terminations contemplated hereby, whether or not disclosed on the Disclosure Schedules. In the event that Buyer incurs any liability or cost in respect of its obligation for fulfilling any federal and/or state COBRA and continuation of coverage requirements with respect to the Seller’s current or former employees or contractors (other than employees, if any, who continue employment with Buyer immediately following the Closing), the Seller and the Seller Owner shall reimburse Buyer for such liability or cost.

5.7 Certain Matters Pending Closing.

5.7.1 Buyer and its authorized agents, officers and representatives shall have reasonable access to the Company to conduct such examination and investigation of the Business and the Company as they deem reasonably necessary, provided that such examinations shall be during normal business hours and shall not unreasonably interfere with the Company’s normal business operations and activities. The Company shall, and shall cause the Company’s representatives to (a) afford Buyer and its representatives access to properties, books, records, accounts and documents, (b) as reasonably requested by Buyer, furnish Buyer and its representatives with copies of such books, records, accounts and documents, (c) furnish Buyer and its representatives with such additional financial, operating, and other data and information,

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all of or relating to the Business and its operations and all as Buyer may reasonably request and (d) afford Buyer and its representatives access to IPS’s properties, books, records, accounts and documents and employees, in each case with respect to services provided on behalf of the Company; provided, however, nothing in this Section shall require the Seller or the Seller Owner to disclose or grant Buyer access to any information protected by the attorney-client privilege or the attorney work product doctrine.

5.7.2 Buyer and the Company will cooperate in all reasonable respects in connection with giving notices to any governmental body, or securing the permission, approval, determination, consent or waiver of any governmental body, required by Law in connection with the transfer of the Purchased Interests from Seller to Buyer.

5.7.3 All Tax Returns required to be filed by the Seller or Company with respect to the Business prior to the Closing Date or relating to periods prior to the Closing Date will be timely filed when due with the appropriate governmental agencies or extensions will have been properly requested and all Taxes pertaining to operation of the Business prior to the Closing Date will be paid by the Seller when due and payable.

5.7.4 From and after the date hereof and prior to the Closing, the Company shall (i) operate the Business in the ordinary course of business consistent with past practices; (ii) not take or agree to take any action inconsistent with the foregoing or inconsistent with the consummation of the Closing as contemplated by this Agreement; (iii) not, without Buyer’s prior written consent, enter into, or become obligated under, any agreement or commitment on behalf of the Company with respect to the Business or the Purchased Interests; (iv) not incur any Indebtedness for borrow money; and (v) provide prompt written notice of the occurrence of any act, action, event or circumstance which would violate any representation and warranty contained in Section 3.1, would cause any representation and warranty in Section 3.1 to become incomplete or untrue in any respect; or could reasonably result in a material adverse effect with respect to the Business or the Purchased Interests.

5.8 Exclusivity. The Company, the Seller and the Seller Owner agree and covenant that until Closing or this Agreement is terminated in accordance with its terms, none of the Seller, the Seller Owner, the Company nor anyone acting on behalf of the Company, the Seller or the Seller Owner, shall, directly or indirectly, solicit or initiate discussions concerning, or enter into negotiation with or furnish information that is not publicly available to, any Person concerning any proposal for a merger, sale of assets, sale of membership interests or other takeover or Business combination transaction involving the Business or the Purchased Interests (a “Competing Sale”) and will notify Buyer immediately in writing if the Company, the Seller or the Seller Owner receives a written proposal with respect to any of the foregoing transactions. The Company, the Seller and the Seller Owner represent that none of the Company, the Seller nor the Seller Owner is a party to, or bound by, any agreement with respect to such a Competing Sale.

5.9 Collection of Accounts Receivable. From and after the Closing, Buyer shall use its commercially reasonable efforts to cause the Company and IPS, pursuant to that certain Billing Services Agreement entered into by and among IPS, [REDACTED] and the Company and dated as of November 1, 2012 and that certain Termination Agreement dated as of

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November 30, 2014 pursuant to which the foregoing billing services agreement is being terminated, to bill for services provided by the Company prior to the Closing Date and to collect, in the ordinary course, the Accounts Receivable attributable to services provided by the Company prior to the Closing Date (collectively, the “Pre-Closing Accounts Receivable”). The Company shall have no obligation to file collection actions or lawsuits with respect to any such Pre-Closing Accounts Receivable attributable to services provided by the Company prior to the Closing Date; nor shall the Company have any liability to Seller or Seller Owner (or [REDACTED] or IPS) for any failure by IPS to timely bill for services provided by the Company prior to the Closing Date or to collect any such Pre-Closing Accounts Receivable attributable to services provided by the Company prior to the Closing Date. This Section shall not apply with respect to any billing for services provided by the Company on or after the Closing Date or any Accounts Receivable attributable to services provided by the Company on or after the Closing Date (“Post-Closing Accounts Receivable”).

5.9.1 The Company shall pay to Seller, solely from Pre-Closing Accounts Receivable collections, by the tenth (10th) day of each calendar month, with respect to the immediately preceding calendar month (which calendar month begins after the Closing Date), an amount equal to the positive difference (if any) between (a) the aggregate of the Pre-Closing Accounts Receivable collected by IPS during such immediately preceding calendar month minus (b) the aggregate of the Management Fees payable to [REDACTED] pursuant to that certain Management Services Agreement entered into by and among [REDACTED] and the Company and dated as of November 1, 2012 (subject to that certain Termination Agreement dated as of even date herewith pursuant to which such foregoing Management Services Agreement is being terminated). An example of the intended application of this Section 5.9.1 in conjunction with the application of Section 5.8 of the Other Acquisition Agreement, relating to the collection of Pre-Closing Accounts Receivable is set forth in the Accounts Receivable Worksheet attached hereto as Exhibit H. For avoidance of doubt, in no event will Company (or Buyer) owe any amounts to Seller under this Section 5.9 other than from Pre-Closing Accounts Receivable collections.

5.9.2 Each monthly payment shall include a breakdown showing, in reasonable detail, the determination of the amount payable such month by the Company to the Seller.

5.9.3 Buyer shall not allow any Liens on the Pre-Closing Accounts Receivable.

6. INDEMNIFICATION

6.1 Tax Indemnity. The Guarantors hereby agree that they shall jointly and severally indemnify and save harmless Buyer and its affiliates and their respective directors, managers, officers, employees, and agents (collectively, including the Company following the Closing, the “Buyer Indemnified Parties”) from and against any and all Taxes relating to the operation of the Business, the practice of medicine, and the ownership of the assets of the Company and the Membership Interests, or otherwise arising out of or attributable to any liability for the Taxes of the Company, for any Pre-Closing Period and the portion of any Straddle Period ending on the day immediately preceding the Closing Date that are allocated in

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accordance with Section 5.5 (collectively, “Pre-Closing Taxes”), and the Guarantors agree that they shall be responsible for any and all out-of-pocket costs incurred by the Buyer Indemnified Parties with respect to such Pre-Closing Taxes, and any Taxes of any other Person imposed on the Company as a successor or transferee, by contract or agreement or pursuant to any Law.

6.2 Guarantors’ Indemnity for Acts or Omissions. Subject to the limitations and procedures set forth in this Section 6, the Guarantors hereby agree that they shall jointly and severally indemnify and save harmless Buyer and its Representatives from and against any claims, demands, actions, causes of action, damage, loss, costs, liability or expense (“Claims”) which may be brought against a Buyer Indemnified Party and/or which any of them may suffer or incur as a result of, in respect of, or arising out of (i) the acts, omissions, or other conduct of the Company or its employees, contractors or representatives, or other circumstance or event occurring or arising at or prior to Closing, with respect to the operation of the Business, the practice of medicine and/or ownership of the assets of the Company, or the Membership Interests including but not limited to matters to be addressed in the Plavin Release, (ii) the inaccuracy of any representation or warranty made by the Seller, the Company or the Seller Owner in this Agreement or any Collateral Agreement, (iii) termination of existing employment or contractor arrangements and release of Claims by and between the Company and each other person employed by or otherwise engaged by the Company (including but not limited to the terminations and releases contemplated by Section 4.1.9), (iv) the failure of any of the Company, the Seller Owner or the Seller to comply with any covenants or other commitments made by them in this Agreement or any Collateral Agreement, (v) any items listed on the Disclosure Schedules, (vi) the classification of the CRNAs and physicians as independent contractors; (vii) the Company’s Indebtedness arising at or prior to Closing; or (viii) any Lien (including, without limitation, those Liens disclosed on Schedule 3.1.8.2) or purported Lien on or with respect to the Purchased Interests.

6.3 Buyer’s Indemnity for Act or Omissions. Subject to the limitations and procedures set forth in this Section 6, Buyer and CRH hereby agree that they shall jointly and severally indemnify and save harmless the Seller and the Seller Owner and their representatives from and against any Claims which may be brought against the Seller and the Seller Owner and their representatives and/or which any of them may suffer or incur as a result of, in respect of, or arising out of (i) the acts, omissions, or other conduct of Buyer or its employees, contractors or representatives, or other circumstance or event occurring or arising following Closing, with respect to the operation of the Business, and/or ownership of the Purchased Assets by Buyer, (ii) the inaccuracy of any representation or warranty made by Buyer in this Agreement or any Collateral Agreement, (iii) the failure of Buyer or CRH to comply with any covenants or other commitments made by them in this Agreement or any Collateral Agreement, or (iv) the Purchased Assets.

6.4 Procedure for Indemnity. For purposes of this Section 6, a Party making a claim for indemnity is referred to as the “Indemnified Party” and the Party against whom such claim is asserted is referred to as the “Indemnifying Party.”

6.4.1 If any claim or demand for which an Indemnifying Party would be liable to an Indemnified Party is asserted against or sought to be collected from such Indemnified Party by a third party, including any taxing Authority, said Indemnified Party shall with

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reasonable promptness notify in writing the Indemnifying Party of such claim or demand stating with reasonable specificity the circumstances of the Indemnified Party’s claim for indemnification; provided, however, that any failure to give such notice shall not constitute a waiver of any rights of the Indemnified Party except to the extent the rights of the Indemnifying Party are actually prejudiced as a result of such failure.

6.4.2 After receipt by the Indemnifying Party of such notice, the Indemnifying Party shall, at its cost and expense, defend, manage and conduct any proceedings, negotiations or communications involving any claimant whose claim is the subject of the Indemnified Party’s notice to the Indemnifying Party as set forth above, and shall take all actions necessary, including but not limited to the retention of counsel reasonably satisfactory to the Indemnified Party, and the posting of such bond or other security as may be required by any Authority, so as to enable the claim to be defended against or resolved without expense or other action by the Indemnified Party, provided, however, that the Indemnifying Party shall not settle any such claim without the prior written consent of the Indemnified Party unless such settlement fully releases the Indemnified Party from all liabilities subject to such dispute and does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of the Indemnified Party. In the event that the Indemnifying Party shall fail to initiate a defense of such claim within ten (10) days of the date of the notice to the Indemnifying Party using counsel reasonably satisfactory to the Indemnified Party, or in the reasonable judgment of the Indemnified Party (i) the Indemnifying Party is not adequately defending such claim, or (ii) any applicable insurance coverage is at risk of denial or may be impaired by reason of such defense by the Indemnifying Party, then the Indemnified Party, after five (5) days written notice to the Indemnifying Party, may retain counsel and conduct the defense of such claim as it may in its discretion deem proper, at the cost and expense of the Indemnifying Party. Upon request of the Indemnifying Party, the Indemnified Party shall, to the extent it is compensated in advance for any expenses thereby incurred:

6.4.2.1 take such action as the Indemnifying Party may reasonably request in connection with such action,

6.4.2.2 allow the Indemnifying Party to dispute such action in the name of the Indemnified Party and to conduct a defense to such action on behalf of the Indemnified Party, and

6.4.2.3 render to the Indemnifying Party all such assistance as the Indemnifying Party may reasonably request in connection with such dispute and defense; provided, however, that the Indemnifying Party shall pay any out-of-pocket costs the Indemnified Party incurs in connection with taking such actions.

6.4.3 Notwithstanding the foregoing, the Indemnified Party shall not be obligated to take any action or assert any claim that it reasonably believes would be materially adverse to its reputation or that would threaten or restrict its ability to conduct business in the future. The Parties agree there is no intent for any insurance coverage of any of the Parties or the Representatives to be adversely impacted or superseded by the contractual indemnity claims set forth in this Agreement.

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6.4.4 If the Indemnified Party is requested or required to pay any Taxes, and sue for a refund, the Indemnifying Party shall advance to the Indemnified Party, on an interest free basis, the amount of such claim. If, after actual receipt by the Indemnified Party of an amount advanced by the Indemnifying Party pursuant to this Section 6.5.4, the extent of the liability of the Indemnified Party with respect to the indemnified matter shall be established by the final judgment or decree of a court or a final or binding settlement with an administrative agency having jurisdiction thereof, the Indemnified Party shall promptly pay to the Indemnifying Party any refund received by or credited to the Indemnified Party with respect to the indemnified matter (together with any interest paid or credited thereon by the taxing Authority or any recovery of legal fees from such taxing Authority). Notwithstanding the foregoing, the Indemnified Party shall not be required to make any payment hereunder before such time as the Indemnifying Parties shall have made all payments or indemnities then due with respect to Indemnified Party pursuant to this Section 6.

6.5 Limitation on Liability.

6.5.1 The representations, warranties and agreements of the Seller, the Company and the Seller Owner and Buyer set forth in this Agreement or in connection with the transactions contemplated hereby shall survive the Closing, subject to the limitation periods set forth in Section 6.5.2, as applicable. Such representations, warranties, covenants and agreements shall not be affected or diminished in any way by the knowledge of a Party or any investigation (or the failure to investigate) at any time by or on behalf of the Party for whose benefit such representations, warranties or agreements were made.

6.5.2 Other than as provided in this Section 6.5.2, or as specifically provided in any representation, warranty or agreement, all representations and warranties of the Seller, the Company and the Seller Owner and Buyer contained in this Agreement shall expire, terminate and be of no force and effect and no Party shall have any obligation to indemnify therefor unless written notice of any claim resulting from any breach thereof is received prior to the second (2nd) anniversary of the Closing Date; provided, however, that, with respect to the Seller and the Seller Owner, (a) with respect to claims resulting from a breach of any representation or warranty contained in Section 3.1.11 and/or of the obligations contained in Section 5.5 and claims for indemnity for Taxes pursuant to the indemnification obligations set forth in Section 6.1 (each, a “Tax Claim”), the time period for written notice of any such Tax Claim shall extend until ninety (90) days following the expiration of the statutory period during which any taxing Authority may bring a claim against the Seller, Buyer or any of its affiliates (including the Company post closing) for Taxes which are the subject of any such Tax Claim or, such longer statutory period if requested by the taxing Authority, (b) with respect to claims against the Seller or the Company arising out of services provided prior to the Closing Date (including malpractice claims), the time period for written notice of any such claim shall extend until ninety (90) days following the expiration of the applicable statute of limitations, and (c) with respect to (i) any claim of fraud against the Seller, the Company or the Seller Owner, (ii) any claim of fraud or other violation against the Seller or the Company that relates to state or federal government payor programs, including but not limited to Medicare, or (iii) a claim relating to a breach of any representation or warranty in Sections 3.1.2, 3.1.4, 3.1.5, 3.1.6, 3.1.8, 3.1.16, 3.1.17, 3.1.20, 3.1.23 and 3.1.28 (each, a “Fundamental Representation”), (iv) a claim resulting from a breach of any covenant for indemnity pursuant to Section 6.2, or (v) any Lien

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(including, without limitation, those Liens disclosed on Schedule 3.1.8.2) or purported Lien on or with respect to the Membership Interests, no such time limitation shall be applicable.

6.5.3 Except as set forth below, the Buyer Indemnified Parties shall have no claim for indemnification hereunder unless and until the total amount of all Claims of the Buyer Indemnified Parties incurred under this Agreement or under the Other Acquisition Agreement which would otherwise be subject to indemnification hereunder exceed Fifty Thousand Dollars ($50,000) (the “Basket Amount”); at which time the Buyer Indemnified Parties shall be entitled to recover the amount of all Claims including the Basket Amount. The limitations on liability in this Section 6.5.3 shall not apply to (i) any claim of fraud against the Seller, the Company or the Seller Owner by the Buyer Indemnified Party, (ii) any claim arising from an intentional misrepresentation by the Seller, the Company or the Seller Owner, (iii) any claim of fraud or other violation against the Company or the Seller that relates to any state or federal government payor programs, including but not limited to Medicare and Medicaid, (iv) any lawsuits or actions pending as of the Closing Date, including without limitation those claims listed on Schedule 3.1.19, (v) any other lawsuits, actions or claims relating to events arising prior to the Closing Date whether presently known or unknown, (vi) any Tax Claim, (vii) any claim relating to a breach of a the representations and warranties in Sections 3.1.2, 3.1.4, 3.1.5, 3.1.6, 3.1.8 and 3.1.23, or (vii) any claim relating to a breach of the covenants in Section 5.5. Furthermore, the Basket Amount also shall not apply to any obligations with respect to any Indebtedness, trade and accounts payable and other operating expenses incurred or accrued for the period prior to the Closing or with respect to any matters addressed in the Plavin Release.

6.5.4 Notwithstanding anything to the contrary contained herein, in no event shall the aggregate liability of the Guarantors pursuant to this Section 6 exceed the sum of (i) the amount of the Acquisition Consideration paid by Buyer and (ii) the amount of the Acquisition Consideration actually paid by the buyer under the Other Acquisition Agreement.

6.6 Nature of Payments. Any indemnity payments made under this Agreement shall be treated for Tax purposes as an adjustment to the total consideration paid for the Purchased Interests under this Agreement to the extent such characterization is proper or permissible according to relevant taxing Authorities. In the event of such an adjustment to the consideration paid for the Purchased Interest, the parties shall prepare and file a supplemental asset acquisition statement on IRS Form 8594 in accordance with the rules under Section 1060 of the Code and the Treasury regulations promulgated thereunder.

6.7 Intentionally Omitted.

6.8 Adjustments for Insurance. Any payment made by the Indemnifying Party to a Buyer Indemnified Party pursuant to this Section 6 shall be reduced by an amount equal to any insurance payments with respect to such Claim actually received by or for the benefit of the Buyer Indemnified Party, provided that time for payment of any indemnification claim hereunder shall not be delayed by the recovery of any such insurance proceeds.

6.9 Indemnification Provisions Survive Closing. The provisions of this Section 6 shall survive the Closing.

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6.10 CRH Guaranty. CRH hereby agrees that it shall be jointly and severally liable for Buyer’s obligations pursuant to this Section 6.

6.11 Guarantors Guaranty. Guarantors hereby agree that they shall be jointly and severally liable for Seller’s obligations pursuant to this Section 6.

7. TERMINATION

7.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date, as follows:

7.1.1 by mutual written agreement of the Seller and Buyer; or

7.1.2 by Buyer if any of the conditions set forth in Section 4.1 of this Agreement shall not have been fulfilled by the Closing Date; or

7.1.3 by the Seller if any of the conditions set forth in Section 4.2 of this Agreement shall not have been fulfilled by the Closing Date; or

7.1.4 by Buyer or the Seller for any reason or no reason if the Closing has not occurred on or before December 31, 2014 and the terminating party is not then in breach of this Agreement; or

7.1.5 by Buyer, if Buyer is not then in material breach of this Agreement and the Seller is then in material breach of this Agreement, and such breach remains uncured for ten (10) days after receipt of written notice thereof from Buyer; or

7.1.6 by the Seller, if the Seller is not then in material breach of this Agreement and Buyer is then in material breach of this Agreement, and such breach remains uncured for ten (10) days after receipt of written notice thereof from the Seller; or

7.1.7 by Buyer or the Seller for any reason or no reason if the Other Acquisition Agreement is terminated and the terminating party is not then in breach of such agreement.

7.2 Rights on Termination. If this Agreement is terminated pursuant to Section 7.1 above, then except as otherwise provided herein, all further obligations of the parties under or pursuant to this Agreement shall immediately terminate without further liability of any party to the others unless the termination is as a result of a material breach hereof (or in the event the termination itself is a material breach of this Agreement), in which case the terminating (non breaching) party shall be entitled to pursue all legal and equitable claims against the breaching party. Notwithstanding the foregoing, Buyer shall be entitled to pursue specific performance against the Seller if all conditions precedent to the Seller’s obligation to close have been satisfied or waived and Buyer is not then in breach of this Agreement and the Seller thereafter fails to close (the Seller hereby acknowledging that Buyer has no adequate remedy at law in such instance).

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8. CONFIDENTIALITY

8.1 Confidential Information. In connection with entering into this Agreement, the Seller and the Seller Owner are fully aware of all terms, conditions and covenants of this Agreement and in connection with their performance of their respective obligations hereunder, the Seller and/or the Seller Owner may become aware of or come into possession of confidential, proprietary, or trade secret information, whether disclosed, directly or indirectly, verbally, in writing or by any other means in tangible or intangible form, applicable to or in any way related to: (i) the present or future business of Buyer and its affiliates (including the Company after the Closing); or (ii) the research and development of Buyer and its affiliates (“Confidential Information”). Without limiting the generality of the foregoing, Confidential Information shall include: (a) the development and operation of Buyer’s and its affiliates’ programs to provide services within their businesses, including information relating to budgeting, staffing needs, marketing, research, hospital relationships, surgery center relationships, physician office relationships, equipment capabilities, and other information concerning such facilities and operations and specifically including the procedures and business plans developed by Buyer and its affiliates; (b) contractual arrangements between Buyer or its affiliates and insurers or managed care associations or other payors; (c) the databases of Buyer and its affiliates; and (d) other confidential information of Buyer and its affiliates that is not generally known to the public that gives Buyer and its affiliates the opportunity to obtain an advantage over competitors who do not know or use it, including the names, addresses, telephone numbers or special needs of any of their patients, their patient lists, their marketing methods and related data, lists or other written records used in Buyer’s or its affiliates’ business, compensation paid to employees and other terms of employment, accounting ledgers and financial statements, contracts and licenses, business systems, business plans and projections, and computer programs. The Parties agree that, as between them, the Confidential Information constitutes important, material, and confidential trade secrets that affect the successful conduct of Buyer’s and its affiliates’ business and their goodwill. Notwithstanding the foregoing, Confidential Information shall not include any information that (i) was known by the Seller or the Seller Owner from a third party source before disclosure by or on behalf of Buyer, (ii) becomes available to the Seller, the Company and the Seller Owner from a source other than Buyer that is not bound by a duty of confidentiality to Buyer, or (iii) becomes generally available or known in the industry other than as a result of its disclosure by any of the Seller, Company or Seller Owner. From and after the Closing, Confidential Information shall include each of the foregoing types of information that relate to the Company or the Business.

8.1.1 The Seller and the Seller Owner agree that the terms of this Agreement shall be deemed Confidential Information for purposes of this Section 8. The Seller and the Seller Owner shall keep the terms of this Agreement strictly confidential and shall not, without the prior written consent of Buyer, disclose the details of this Agreement to any third party in any manner whatsoever in whole or in part, with the exception of the Seller’s or the Seller Owner’s representatives (such as tax advisors and attorneys) who need to know such information.

8.2 Maintenance of Confidentiality by the Seller and the Seller Owner. The Seller and the Seller Owner jointly and severally acknowledge that (i) Buyer and its affiliates possess and will continue to possess Confidential Information as defined in this Agreement, (ii)

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Buyer and its affiliates will disclose such Confidential Information to the Seller, the Company and the Seller Owner in connection with the transactions contemplated by this Agreement, and (iii) such Confidential Information is of substantial value to Buyer and its affiliates and gives Buyer and its affiliates an advantage over competitors who do not know or use it. The Seller and the Seller Owner jointly and severally agree that neither the Seller nor the Seller Owner will, at any time, in any fashion, form or manner, unless specifically consented to in writing by Buyer, either directly or indirectly, use (except for the benefit of the Business of Buyer and its affiliates after the Closing) or divulge, disclose, or communicate to any person, firm or corporation, in any manner whatsoever, any Confidential Information of any kind, nature, or description concerning any matters affecting or relating to the business of Buyer or its affiliates, except as reasonably necessary to provide patient care, subject to applicable law. The Parties agree that any breach or threatened breach by the Seller or the Seller Owner of any term of this Section 8 is a material breach of this Agreement. Buyer shall be entitled to temporary and permanent injunctive or other equitable relief in order to prevent or restrain any such breach or threatened breach by the Seller or the Seller Owner, or any of the Seller’s or the Seller Owner’s partners, agents, representatives, servants, independent contractors, or any and all persons or entities directly or indirectly acting for or with the Seller or the Seller Owner. The rights and remedies of Buyer under this Section 8 shall be in addition to, and not in limitation of, any rights, remedies or damages available to it at law or equity or under any other agreement between Buyer or its affiliates on the one hand, and the Seller or the Seller Owner on the other. In the event that the Seller or the Seller Owner is ordered to disclose any Confidential Information, whether in a legal or a regulatory proceeding or otherwise, such Seller or Seller Owner shall provide Buyer with prompt written notice of such request or order so that Buyer may seek to prevent disclosure or, if that cannot be achieved, the entry of a protective order or other appropriate protective device or procedure in order to assure, to the extent practicable, compliance with the provisions of this Agreement. In the case of any such required disclosure, the Seller or the Seller Owner shall disclose only that portion of the Confidential Information that any such party is ordered to disclose.

8.3 Provisions Survive Closing. The provisions of this Section 8 shall survive the Closing.

9. MISCELLANEOUS

9.1 Public Notice. Except as required by applicable law or any stock exchange, all public notices to third parties and all other publicity concerning the transactions contemplated by this Agreement shall require the prior written approval of Buyer and the Seller.

9.2 Expenses. The Seller and the Seller Owner shall be jointly and severally responsible for the fees and expenses of their (including the Company’s) respective counsel, accountants and other experts incident to the negotiation, drafting and execution of this Agreement and consummation of the transactions contemplated hereby and any and all expenses incurred by the Seller, the Company and the Seller Owner prior to the Closing. Buyer shall be responsible for the fees and expenses of its counsel, accountants and other experts incident to the negotiation, drafting and execution of this Agreement and consummation of the transactions contemplated hereby.

9.3 Time. Time shall be of the essence hereof.

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9.4 Notices. All notices, requests, offers, demands or other communications (collectively, “Notice”) given to or by the Parties under this Agreement shall be in writing, sent in one or more of the following methods and shall be deemed to have been duly given and received (i) if personally served on the Party to whom Notice is to be given, then on the date of service, (ii) if sent by telephonic facsimile transmission (with receipt personally confirmed by telephone), then on the date sent by facsimile if sent on a Business Day before 5:00 p.m. local time of the recipient, and if not then on the next Business Day immediately following, (iii) if sent by reputable overnight delivery service, addressed to the Party to whom Notice is to be given, then one Business Day after being properly deposited for delivery by such service, or (iv) if sent by United States mail first class, registered or certified mail, postage prepaid, addressed to the Party to whom Notice is to be given, then four (4) Business Days after being properly deposited therewith; in each case, at such Party’s address set forth as follows or to any other address or facsimile number of which Notice of the change is given to the Parties hereunder:

To Buyer:	[REDACTED]
With a copy to:	Greenberg Traurig, LLP
	Terminus 200 3333 Piedmont Road NE
	Suite 2500
	Atlanta, Georgia 30305
	Attn: Gary E. Snyder, Esq.
	Fax: (678) 553-2120
To Seller/Seller Owner:	[REDACTED]
With a copy to:	Blalock Walters, P.A.
	2 N. Tamiami Trail, Suite 408
	Sarasota, Florida 34236
	Attn: Robert S. Stroud, Esq.
	Fax: (941) 745-2093

9.5 Assignment. Neither this Agreement nor any rights or obligations hereunder may be assigned by any Party hereto without the prior written consent of all other Parties, provided that Buyer may assign its rights to an affiliate of Buyer without prior written consent of the Seller, the Company or the Seller Owner or may make a collateral assignment thereof to any lender providing financing to Buyer in connection with the transactions contemplated hereby.

Any such assignee of Buyer (other than a lender taking a collateral assignment) shall fully assume the obligations of Buyer hereunder; provided, however, in the event of any assignment (including without limitation a collateral assignment) neither Buyer nor CRH shall be released from their obligations under this Agreement or any Collateral Agreement.

9.6 Further Assurances. The Parties hereto shall, with reasonable diligence, do all such things, provide all such reasonable assurances, and execute such additional documents or instruments as may be required by any other Party and as may be reasonably necessary or

40

desirable to effect the purpose of this Agreement and carry out its provisions, whether before or after the Closing. This Section 9.6 shall survive the Closing of the transactions set forth herein.

9.7 Headings. The descriptive headings of the several paragraphs of this Agreement are inserted for convenience only, are not part of this Agreement and do not in any way limit or amplify the terms or provisions of this Agreement.

9.8 Integration. This Agreement and any Exhibits and Schedules referenced herein (all of which are incorporated by reference as integral elements hereof) and the Collateral Agreements constitute the entire agreement between the Parties with respect to the subject matter contained herein and supersedes all agreements, representations and understandings of the Parties with respect to the subject matter hereof and thereof. Notwithstanding the foregoing, the Seller Owner may have multiple agreements with Buyer or its affiliates containing restrictive covenants and all such restrictive covenants shall remain in full force and effect.

9.9 No Third Party Beneficiaries. This Agreement is entered into solely for the benefit of the Parties hereto and no term, provision or covenant hereunder shall confer or be deemed to confer a benefit on any other Person, other than as may be set forth herein. No third party (other than a lender to Buyer) is entitled to rely on any of the representations, warranties and agreements of Buyer or the Seller, the Company or the Seller Owner contained in this Agreement.

9.10 Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by all Parties hereto. No waiver of any provision of this Agreement shall constitute, or be deemed to constitute, a waiver of any other provision, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the Party granting the waiver.

9.11 Governing Law. This Agreement shall be governed by and interpreted under Georgia law, without regard to the conflict of law principles thereof.

9.12 Attorneys’ Fees; Remedies. In the event any action at law or in equity or other proceeding (including arbitration) is brought to interpret or enforce this Agreement, or in connection with any provision of this Agreement, the prevailing party shall be entitled to its reasonable attorneys’ fees and other costs reasonably incurred in such action or proceeding. The grant of any specific remedy hereunder shall be in addition to any other remedies that would be available to a Party arising in equity or at law or under this Agreement.

9.13 Number; Gender. Unless the context otherwise requires, the singular includes the plural and vice versa, and the masculine, feminine and neuter include each other.

9.14 Severability. Each article, section, subsection and lesser section of this Agreement constitutes a separate and distinct undertaking, covenant or provision hereof. Subject to Section 5.1.7, in the event that any provision of this Agreement shall finally be determined to be unlawful, such provision shall be deemed severed from this Agreement, but every other provision of this Agreement shall remain in full force and effect.

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9.15 Exhibits and Schedules. Notwithstanding anything to the contrary herein, disclosure of a specific item in any one schedule or exhibit shall be deemed restricted only to the section of this Agreement to which such disclosure relates, except where, and to the extent that, there is an explicit cross-reference in such schedule or exhibit to another schedule or exhibit.

9.16 Recitals. Each Party hereto acknowledges and agrees that the recitals set forth at the beginning of this Agreement are true and correct in all respects and are incorporated herein by reference.

9.17 No Party Deemed Drafter. Each Party to this Agreement acknowledges that such Party has been represented by legal counsel in preparation of this Agreement. If this Agreement or any provision hereof is interpreted by a court of law, no provision hereof shall be construed more harshly against any Party as drafter.

9.18 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall together constitute one and the same instrument. Facsimile and electronic (.PDF) signatures shall be treated as if they are original signatures for all intents and purposes.

9.19 Rules of Construction. The use in this Agreement of the term “including” means “including, without limitation.” The words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole, including the schedules and exhibits, as the same may from time to time be amended, modified, supplemented or restated, and not to any particular section, subsection, paragraph, subparagraph or clause contained in this Agreement. All references to sections, schedules and exhibits mean the sections of this Agreement and the schedules and exhibits attached to this Agreement, except where otherwise stated. The use herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case the context may require or permit. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates.

9.20 Saturdays, Sundays and Legal Holidays. If the time period by which any acts or payments required hereunder must be performed or paid expires on a Saturday, Sunday or a non-Business Day, then such time period shall be automatically extended to the close of business on the next regularly scheduled Business Day.

9.21 CRH Guaranty. CRH hereby guarantees any and all obligations owed or owing by Buyer under this Agreement, including, but not limited to, the obligations of Buyer set forth in Section 5.9 and Section 6.

9.22 Guarantors’ Guaranty. Guarantors hereby, jointly and severally, guarantee any and all obligations owed or owing by Seller under this Agreement, including, but not limited to, the obligations of Seller set forth in Section 6.

[Remainder of Page Intentionally Left Blank.]

[Signature Pages Follow.]

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IN WITNESS WHEREOF, the parties have executed this Membership Interest Purchase Agreement as of the date first set forth above.

COMPANY:	[REDACTED]
	By:	(signed) [REDACTED]
		[REDACTED], Its Manager
SELLER:	[REDACTED]
	By:	(signed) [REDACTED]
		[REDACTED], Its President
BUYER:	[REDACTED]
	By:	(signed) [REDACTED]
		[REDACTED], Its President
CRH:	CRH MEDICAL CORPORATION
	By:	(signed) “Richard Bear”
		Richard Bear, Its Chief Financial Officer
SELLER OWNER:
	(signed) [REDACTED]
	[REDACTED]

GUARANTORS:	[REDACTED]
	By:	(signed) [REDACTED]
		[REDACTED], Its Manager
	[REDACTED]
	By:	(signed) [REDACTED]
		[REDACTED], Its Manager
	(signed) [REDACTED]
	[REDACTED]

EX-10.9

Exhibit 10.9

AGREEMENT FOR PURCHASE AND SALE OF ASSETS

AMONG

GASTROENTEROLOGY ANESTHESIA ASSOCIATES, LLC,

[REDACTED],

[REDACTED]

and the

OWNER MEMBER

December 1, 2014

TABLE OF CONTENTS

			Page
1.	DEFINITIONS			2
2.	ACQUISITION TRANSACTIONS			6
	2.1	Purchase and Sale of Assets of Seller		6
	2.2	Purchased Assets and Assumed Liabilities		6
	2.3	Acquisition Consideration		8
	2.4	Closing		8
	2.5	Deliveries by the Seller		8
	2.6	Deliveries by Buyer		9
	2.7	Delivery of Other Documents		9
	2.8	Taxes		9
	2.9	Risk of Loss		9
	2.10	Intentionally Omitted		9
	2.11	Adjustment to Acquisition Consideration		9
	2.12	Acquisition Consideration Allocation		11
3.	REPRESENTATIONS AND WARRANTIES			11
	3.1	Representations and Warranties of the Seller, the Owner and the Owner Member		11
	3.2	Representations and Warranties of Buyer		23
	3.3	No Broker		23
	3.4	Non-Waiver		24
4.	CONDITIONS PRECEDENT TO THE PERFORMANCE OF THE OBLIGATIONS OF BUYER, THE SELLER, THE OWNER AND OWNER MEMBER			24
	4.1	Buyer’s Conditions		24
	4.2	The Seller’s, the Owner’s and the Owner Member’s Conditions		25
5.	OTHER COVENANTS OF THE PARTIES			26
	5.1	Restrictive Covenants		26
	5.2	Post-Closing Access for Records Review		28
	5.3	Assumed Obligations		29
	5.4	Tax Matters		29
	5.5	Employee Benefit Matters		29
	5.6	Certain Matters Pending Closing		30
	5.7	Exclusivity		31
	5.8	Collection of Accounts Receivable		31
6.	INDEMNIFICATION			32
	6.1	Tax Indemnity		32
	6.2	Seller’s Indemnity for Acts or Omissions		33
	6.3	Buyer’s Indemnity for Acts or Omissions		33
	6.4	Procedure for Indemnity		33
	6.5	Limitation on Liability		35
	6.6	Nature of Payments		36

	6.7	Adjustments for Insurance	36
	6.8	Indemnification Provisions Survive Closing	36
	6.9	CRH Guaranty	36
7.	TERMINATION		36
	7.1	Termination	36
	7.2	Rights on Termination	37
8.	CONFIDENTIALITY		37
	8.1	Confidential Information	37
	8.2	Maintenance of Confidentiality by the Seller, the Owner and the Owner Member	38
	8.3	Provisions Survive Closing	39
9.	MISCELLANEOUS		39
	9.1	Public Notice	39
	9.2	Expenses	39
	9.3	Time	39
	9.4	Notices	39
	9.5	Assignment	40
	9.6	Further Assurances	40
	9.7	Headings	41
	9.8	Integration	41
	9.9	No Third Party Beneficiaries	41
	9.10	Modification and Waiver	41
	9.11	Governing Law	41
	9.12	Attorneys’ Fees; Remedies	41
	9.13	Number; Gender	41
	9.14	Severability	41
	9.15	Exhibits and Schedules	42
	9.16	Recitals	42
	9.17	No Party Deemed Drafter	42
	9.18	Counterparts	42
	9.19	Rules of Construction	42
	9.20	Saturdays, Sundays and Legal Holidays	42
	9.21	CRH Guaranty	42

SCHEDULES

Schedule 1.28	Excluded Assets
Schedule 2.2.1.2	Material Contracts
Schedule 2.2.1.4	Licenses of Seller
Schedule 2.2.2	Assumed Obligations
Schedule 2.12	Acquisition Consideration Allocation
Schedule 2.3.1	Seller Wire Instructions
Schedule 3.1.3	No Conflict
Schedule 3.1.6	Properties

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Schedule 3.1.6.3	Leases
Schedule 3.1.8.1	Liabilities or Obligations Not Reflected in Financial Statements
Schedule 3.1.8.2	Outstanding Indebtedness, Liens and Defaults
Schedule 3.1.9	Real Property
Schedule 3.1.10	Licensing Information
Schedule 3.1.12	Absence of Certain Changes
Schedule 3.1.13	Absence of Unusual Transactions
Schedule 3.1.15.1	Contracts
Schedule 3.1.17	Other Employee Benefit Matters
Schedule 3.1.20	Employees; Independent Contractors
Schedule 3.1.21	Insurance
Schedule 3.1.24	Dealing with Affiliates
Schedule 5.1.1	Permitted Activities

EXHIBITS

Exhibit A —	Buyer Closing Certificate
Exhibit B —	Financial Statements
Exhibit C —	Seller’s Closing Certificate
Exhibit D —	Form of Bill of Sale and Assignment
Exhibit E —	Interim Financial Statements
Exhibit F —	Accounts Receivable Worksheet

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AGREEMENT FOR PURCHASE AND SALE OF ASSETS

This Agreement for Purchase and Sale of Assets (“Agreement”) is entered into and executed as of December 1, 2014, by and among (i) Gastroenterology Anesthesia Associates, LLC, a Georgia limited liability company (“Buyer”), (ii) [REDACTED] (the “Seller”), (iii) [REDACTED] (the “Owner”), and (iv) [REDACTED], the sole Member of the Owner (the “Owner Member”). CRH Medical Corporation, a Canadian corporation (“CRH”), is entering into this Agreement solely for the purposes of guaranteeing the obligations of Buyer hereunder.

RECITALS

A. The Seller is engaged in the business of providing management services (the “Business”) to providers of medical services, including Buyer, owning and operating a medical practice specializing in anesthesiology (the “Specialty”) and providing medical services pursuant to certain Agreements for Professional Anesthesia Services.

B. The Seller was converted (the “Conversion”) from being a Georgia limited liability company into a Florida limited liability company, the Certificate of Conversion of a Limited Liability Company having been filed with the Secretary of State of the State of Florida on March 10, 2014.

C. The Owner owns one hundred percent (100%) of the issued and outstanding membership interests of the Seller (and owned one hundred percent (100%) of the issued and outstanding membership interests of the Seller prior to the Conversion).

D. The Owner Member owns one hundred percent (100%) of the issued and outstanding membership interests of the Owner.

E. The Seller desires to sell, and Buyer desires to acquire, certain of the assets used or usable by the Seller in the operation of the Business (the “Acquisition”), all in accordance with the terms of this Agreement.

F. Pursuant to a Membership Interest Purchase Agreement dated as of even date herewith (the “Other Acquisition Agreement”), [REDACTED] is acquiring one hundred percent (100%) of the outstanding membership interests of GAA (the “Other Acquisition”) effective immediately prior to the Closing.

G. A significant inducement to Buyer entering into this Agreement and [REDACTED] entering into the Other Acquisition Agreement, and consummating the transactions contemplated hereby and thereby are the Sellers, Owner’s and Owner Member’s agreement to be bound by the covenants not to compete and other restrictive covenants set forth herein and the Seller, Owner and Owner Member agreeing to guarantee the obligations of the seller under the Other Acquisition Agreement.

H. CRH, as parent of CRH Medical Corporation, a Delaware corporation, will derive substantial benefits as a result of the transactions contemplated by this Agreement.

NOW, THEREFORE, in consideration of the mutual benefits to be derived hereby and the representations, warranties and covenants contained herein and other consideration, the receipt and sufficiency of which is hereby mutually acknowledged by the Parties, the Parties hereto agree as follows:

1. DEFINITIONS

In addition to terms defined in the body of this Agreement, each of the following capitalized terms has the meaning hereinafter provided, for purposes of this Agreement, the words and terms listed below shall have the following respective meanings:

1.1 “Acquisition” has the meaning set forth in the Recitals.

1.2 “Acquisition Consideration” means that amount of purchase price to be paid to Seller in exchange for the Purchased Assets as set forth in Section 2.3 below.

1.3 “Acquisition Consideration Allocation” has the meaning set forth in Section 2.12.

1.4 “Agreement” means this Agreement for Purchase and Sale of Assets together with all exhibits and schedules referenced herein or attached hereto, as the same shall be amended from time to time in accordance with the terms hereof.

1.5 “Accounts Receivable” means all accounts receivable of Seller related to the Business immediately prior to the Closing.

1.6 “AGA” means AGA, LLC d/b/a Atlanta Gastroenterology Associates.

1.7 “Assumed Obligations” has the meaning set forth in Section 2.2.2.

1.8 “Authority” means any United States or foreign, national, federal, state, municipal or local or other government, governmental, regulatory or administrative authority, agency or commission, or any court, tribunal, or judicial or arbitral body.

1.9 “Billing and Management Services Agreement” means the mutually agreed upon billing services agreement between CRH Management and IPS, to be effective as of the Closing.

1.10 “Business” means the management services business presently being conducted by the Seller.

1.11 “Buyer” has the meaning set forth in the Preamble.

1.12 “Buyer Closing Certificate” means the certificate of Buyer in the form of Exhibit A attached hereto.

1.13 “CRH Management” means CRH Anesthesia Management, LLC, a Delaware limited liability company.

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1.14 “Charter Documents” means, with respect to any Party, the respective Articles of Incorporation, Articles of Organization, Bylaws, Operating Agreement or other applicable governance documents, as amended to date, of such Party.

1.15 “Claims” has the meaning set forth in Section 6.2.

1.16 “Closing” means the consummation of the Acquisition by, among other things, the delivery of the purchase and transfer documents and the payment of the Acquisition Consideration all in accordance with this Agreement.

1.17 “Closing Date” means (i) December 1, 2014 (subject to the satisfaction of all conditions to Closing set forth in Section 4); or (ii) such other date as the Parties may mutually agree. Unless the Parties otherwise agree in writing, the Closing shall be deemed effective as of the Effective Time.

1.18 “Code” means the U.S. Internal Revenue Code of 1986, as amended, collectively with any successor law, rules or regulations issued by the United States Treasury pursuant to the Code or any successor law.

1.19 “Collateral Agreements” means any and all of the exhibits to this Agreement and any and all other agreements, instruments or documents required or expressly provided under this Agreement to be executed and delivered in connection with the transactions contemplated by this Agreement.

1.20 “Contracts” means all written or oral contracts, agreements, evidences of indebtedness, guarantees, leases and executory commitments to which the Seller, or the Owner with respect to the Business, is a party or by which any of the Seller’s assets are bound, or otherwise related to the Business, including, without limitation, the Management Contract.

1.21 “Disclosure Schedules” has the meaning set forth in Section 3.1.

1.22 “EBITDA Payment Amount” means the aggregate sum of (U.S.) Fourteen Million, Six Hundred Fifty-Five Thousand Six Hundred Dollars ($14,655,600), which may be payable to Seller, in whole or in part, pursuant to Section 2.11.

1.23 “Effective Time” means 12:01 a.m. Eastern Time on the Closing Date.

1.24 “Employee Plan” has the meaning set forth in Section 3.1.16.1.

1.25 “Employees” has the meaning set forth in Section 3.1.20.

1.26 “ERISA” has the meaning set forth in Section 3.1.16.1.

1.27 “Event of Loss” means any loss, taking, condemnation, damage or destruction of or to any of the Purchased Assets.

1.28 “Excluded Assets” means, with respect to the Seller, (i) all cash and bank accounts of the Seller, (ii) all Accounts Receivables relating to services rendered by the Seller

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pursuant to the operation of the Business, during the periods prior to the Closing Date, (iii) all insurance policies of the Seller, (iv) the IPS Contract, (v) the interests of the Seller in the Contracts which are not Assumed Obligations, (vi) the books and records related to the organization and membership interest ownership of the Seller, including tax returns of the Seller and all bank account records (other than bank account records related to bank accounts belonging to Buyer); (vii) all rights of the Seller arising under this Agreement or the transactions contemplated hereby; (viii) the items described in Schedule 1.28 hereto; and (ix) the trade name “GAA Management LLC”.

1.29 “Excluded Liabilities” has the meaning, with respect to the Seller, set forth in Section 2.2.2.

1.30 “Financial Statements” means the unaudited financial statements of the Seller for the year ended December 31, 2013, consisting of a balance sheet and income statement, copies of which are attached hereto as Exhibit B.

1.31 “Fundamental Representations” has the meaning set forth in Section 6.5.2.

1.32 “GAA” means Gastroenterology Anesthesia Associates, LLC, immediately prior to the consummation of the Other Acquisition.

1.33 “GAAP” means generally accepted accounting principles in the United States of America, which includes the cash basis of accounting and other comprehensive bases of accounting.

1.34 “HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as amended and regulations adopted by the U.S. Department of Health and Human Services pursuant thereto.

1.35 “HITECH” means the Health Information Technology for Economic and Clinical Health Act of 2009 and regulations adopted pursuant thereto.

1.36 “IPS” means [REDACTED].

1.37 “IPS Contract” means the Seller’s agreement with IPS, dated as of November 1, 2012, regarding the provision of billing and collection services on behalf of the Seller with respect to medical services provided by GAA.

1.38 “Indebtedness” means all obligations, contingent or otherwise, whether current or long-term (including, without limitation, the Seller Note Payable), and also includes capitalized lease obligations, guarantees, endorsements (other than for collection in the ordinary course of business) or other arrangements whereby responsibility is assumed for the obligations of others, including any agreement to purchase or otherwise acquire the obligations of others or any agreement, contingent or otherwise, to furnish funds for the purchase of goods, supplies or services for the purpose of payment of the obligations of others, other than accounts or trade payables in the ordinary course of business.

1.39 “Independent Contractors” has the meaning set forth in Section 3.1.20.

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1.40 “Knowledge of the Seller” means the actual knowledge of the Owner Member, [REDACTED] or [REDACTED], with respect to the matter in question, and such knowledge as any of the foregoing reasonably should have obtained upon diligent investigation and inquiry into the matter in question.

1.41 “Law” means all federal, state, local, municipal, foreign, international or other laws, statutes, constitutions, rules, regulations, ordinances, decrees, treaties, principle of common law, court decisions, and other pronouncements having the effect of law of any governmental body or agency.

1.42 “Lien” means any mortgage, deed of trust, pledge, hypothecation, security interest, encumbrance, claim, lien, option, lease (including any capitalized lease) or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, affecting any of the Purchased Assets, including any agreement to give or grant any of the foregoing, and the filing of or agreement to give any financing statement with respect to any of the Purchased Assets under the Uniform Commercial Code of the State of Florida or the State of Georgia or the comparable Law of any jurisdiction.

1.43 “Management Contract” means the Management Services Agreement dated as of November 1, 2012 between Seller and GAA, as amended from time to time.

1.44 “Other Acquisition” has the meaning set forth in the Recitals.

1.45 “Other Acquisition Agreement” has the meaning set forth in the Recitals.

1.46 “Owner Member” has the meaning set forth in the Preamble.

1.47 “Parties” means the Owner, the Seller, the Owner Member and Buyer, collectively, and “Party” means any one of them.

1.48 “Person” means any individual, corporation, association, limited liability company, partnership (general or limited), trustee or trust, unincorporated association, or other entity.

1.49 “Plavin Release” means the Settlement Agreement and Release dated as of October 13, 2014, entered into by Stanford Plavin, M.D., Technical Anesthesia Strategies & Solutions, LLC and the other parties thereto.

1.50 “Purchased Assets” means the assets of the Seller being purchased by Buyer hereunder, as specifically identified in Section 2.1.

1.51 “Representatives” has the meaning set forth in Section 6.1.

1.52 “Restricted Period” has the meaning set forth in Section 5.1.1.

1.53 “Seller” has the meaning set forth in the Preamble.

1.54 “Seller Taxes” has the meaning set forth in Section 2.2.2.

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1.55 “Seller’s Closing Certificate” means the certificate of Seller in the form of Exhibit C attached hereto.

1.56 “Seller Note Payable” means that certain Promissory Note dated January 2, 2014, by the Seller in the original principal amount of $17,000,000 in favor of [REDACTED].

1.57 “Specialty” has the meaning set forth in the Recitals.

1.58 “Tax(es)” means any and all taxes, fees, levies, tariffs, imposts, and other charges of any kind (together with any and all interest, penalties, fines, and additions to tax with respect thereto) imposed by any government or taxing Authority, including, without limitation (i) taxes or other charges on or with respect to income, franchises, concessions, windfall or other profits, gross receipts, escheat or unclaimed property, property, sales, use, capital, gains, capital stock or shares, membership interests or units, payroll, employment, social security, workers’ compensation, unemployment compensation, or net worth; (ii) taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; and (iii) any liability for payment of amounts described in clauses (i) and (ii) whether as a result of transferee liability or otherwise through operation of law, or as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to indemnify any other Person.

1.59 “Tax Return” means all returns, declarations, reports, statements, information statements, forms or other documents filed or required to be filed with respect to any Tax, including all amendments thereto.

1.60 “Work Product” has the meaning set forth in Section 3.1.26.

2. ACQUISITION TRANSACTIONS

2.1 Purchase and Sale of Assets of Seller. Other than the Excluded Assets, the Seller hereby agrees to sell, assign, convey and transfer to Buyer, and Buyer agrees to purchase and acquire from the Seller, at the Closing and on the terms and subject to the conditions set forth in this Agreement, the assets used or usable by the Seller in the operation of the Business including all of the Seller’s right, title and interest therein (hereinafter collectively referred to as the “Purchased Assets”) as more particularly described in Section 2.2.1.

2.2 Purchased Assets and Assumed Liabilities.

2.2.1 Purchased Assets. For purposes of this Agreement, the Purchased Assets, include, but are not limited to:

2.2.1.1 Goodwill. All intangible assets of the Seller presently used in the Business, including all business relationships and other goodwill currently maintained by the Seller relating to the Business and such other intangible assets as have been developed by the Seller relating to the Business;

2.2.1.2 Material Contracts. Seller’s interest in the Contracts that comprise the Assumed Obligations, all of which are described on Schedule 2.2.1.2;

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2.2.1.3 Books and Records. All books and records and other documents and information relating to the Purchased Assets and/or used in the operation of the Business, including, without limitation, data, databases, literature, purchase orders and invoices, correspondence, employee payroll and personnel records, and educational and promotional literature of every kind and nature, but specifically excluding any information relating to the Accounts Receivable of the Business, the Excluded Assets, and any information protected by the attorney-client privilege or the attorney work product doctrine, which information shall be retained by Seller;

2.2.1.4 Licenses. All permits, licenses and other approvals necessary for the operation of the Business, which items are listed on Schedule 2.2.1.4 to this Agreement; and

2.2.1.5 Work Product. All Work Product.

2.2.2 Assumed Obligations. At the Closing, Buyer shall assume, and shall agree to satisfy and discharge as the same shall become due, the Seller’s obligations and liabilities first arising subsequent to the Closing (excluding any obligations or liabilities that relate to the period preceding the Closing, including, without limitation, obligations or liabilities arising or accruing with respect to any default or breach by the Seller prior to the Closing) under such of the Contracts as are set forth on Schedule 2.2.2 (collectively, the “Assumed Obligations”). Except for the Assumed Obligations, Buyer shall not assume or be responsible at any time for any liability, obligation, Indebtedness or commitment of the Seller, the Owner or the Owner Member, whether absolute or contingent, accrued or unaccrued, asserted or unasserted, or otherwise (such liabilities, obligations, Indebtedness and commitments, other than the Assumed Obligations, collectively, the “Excluded Liabilities”), including but not limited to any liabilities, obligations, debts or commitments of the Seller, the Owner or the Owner Member incident to, arising out of or incurred with respect to, this Agreement and the transactions contemplated hereby or the Other Acquisition (including any and all sales or use, income or other Taxes arising out of the transactions contemplated hereby or thereby). The Seller, the Owner and the Owner Member expressly acknowledge and agree that, except for the Assumed Obligations, the Seller, the Owner and the Owner Member shall retain, as applicable, and Buyer shall not assume or otherwise be obligated to pay, perform, defend or discharge, (i) any liability of the Seller and/or the Owner for Taxes, including without limitation, (A) any and all liabilities for Taxes relating to the Purchased Assets or the Assumed Obligations with respect to all periods prior to and including the Closing Date (including any Taxes that are the liability of the Seller pursuant to Section 5.4), (B) any and all liabilities for Taxes of the Seller and/or the Owner for any period, and (C) any and all Tax liabilities that are incurred or become payable as a result of the transactions contemplated by this Agreement (including but not limited to any transfer, documentary, sales, use, and other Taxes assessed upon or with respect to the transfer of the Purchased Assets to Buyer, and any recording or filing fees with respect thereto) (collectively, “Seller Taxes”), (ii) any liability of the Seller and/or the Owner in connection with any employee benefits, (iii) any liability of the Seller and/or the Owner under any federal, state or local law, rule, regulation, ordinance, program, permit, or other legal requirement relating to health, safety, hazardous substances and environmental matters applicable to the Business and/or the facilities used by the Seller (whether or not owned by the Seller), (iv) any liability pertaining to services provided by the Seller prior to the Closing Date, or insurance related matters, (v) any liabilities

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and obligations of the Seller with respect to the Excluded Assets, (vi) any liabilities arising under or in connection with an Employee Plan, or (vii) any other liabilities arising prior to the Closing Date (including, without limitation, the Seller Note Payable), regardless of whether such liabilities are disclosed on the Schedules to this Agreement. The Seller and the Owner further agree to satisfy and discharge, as the same shall become due, all Excluded Liabilities. Buyer’s assumption of the Assumed Obligations shall in no way expand the rights or remedies of third parties against Buyer as compared to the rights and remedies which such parties would have had against the Seller or the Owner had this Agreement not been consummated.

2.3 Acquisition Consideration.

2.3.1 The aggregate Acquisition Consideration for the Purchased Assets, subject to any additional amounts that may be payable pursuant to Section 2.11, shall be (U.S.) $69,236,788.26 which amount, less the full EBITDA Payment Amount (i.e., $14,655,600), shall be paid to the Seller at the Closing in immediately available federal funds, to the account hereby designated by the Seller (including the wiring instructions therefor) as set forth on Schedule 2.3.1.

2.4 Closing. The Closing shall take place on the Closing Date and shall be held at the offices of Greenberg Traurig, LLP in Atlanta, Georgia or remotely by the exchange of signed documents by PDF or other electronic means. At the Closing, all transactions contemplated by this Agreement shall take place contemporaneously and no such transaction shall be deemed completed or consummated until all such transactions are completed or consummated.

2.5 Deliveries by the Seller. At and upon the Closing, the Seller shall deliver or shall cause to be delivered to Buyer the following:

2.5.1 A Bill of Sale, Assignment and Assumption duly executed by the Seller transferring the Purchased Assets to Buyer. Such Bill of Sale, Assignment and Assumption shall be in the form of Exhibit D, attached hereto;

2.5.2 The Seller’s Closing Certificate duly executed by the Seller’s Manager;

2.5.3 The other agreements, documents and instruments to be delivered to Buyer in accordance with Section 4.1 hereof;

2.5.4 The books and records of the Seller described in Section 2.2.1.3;

2.5.5 Evidence, satisfactory to Buyer, that upon payment at the Closing of all Indebtedness of the Seller (including, without limitation, the Seller Note Payable), all Liens filed against the Seller or Seller’s properties will be terminated;

2.5.6 Evidence, satisfactory to Buyer, that the Other Acquisition has closed or is closing contemporaneously with but effective immediately preceding the Closing;

2.5.7 The Seller shall also deliver, or cause to be delivered, to Buyer, possession of the Purchased Assets; and

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2.5.8 A certificate, satisfactory to the Buyer, that no withholding is required pursuant to Section 1445 of the Code.

2.6 Deliveries by Buyer. At and upon the Closing, Buyer shall deliver or cause to be delivered (i) immediately available funds in the aggregate amount of the Acquisition Consideration as described in Section 2.3 above, and (ii) the agreements, documents and instruments to be delivered by Buyer in accordance with Section 4.2 hereof, including, without limitation, Buyer’s Closing Certificate. Buyer shall also provide to Seller evidence, reasonably satisfactory to Seller, of Buyer’s ability to pay such portion (or all) of the EBITDA Payment Amount that becomes payable to Seller under Section 2.11.

2.7 Delivery of Other Documents. Such documents as evidence the satisfaction of any condition precedent shall have been delivered prior to or at the Closing. Each Party shall, at the Closing, deliver to the other Parties an acknowledgment of receipt of such documents upon request by any Party.

2.8 Taxes. All federal, state, local and other transfer, sales and use Taxes applicable to, imposed upon or arising out of the transfer by the Seller to Buyer of the Purchased Assets as contemplated by this Agreement shall be paid by the Seller.

2.9 Risk of Loss. The risk of all Events of Loss prior to the Closing shall be upon the Seller.

2.10 Intentionally Omitted.

2.11 Adjustment to Acquisition Consideration.

2.11.1 Buyer will calculate its cumulative earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the first four and one-half (4.5) years after Closing (the “Applicable Cumulative EBITDA”). EBITDA will be calculated by Buyer on an accrual basis and shall be equal to the amount of net patient revenues for all AGA affiliated endoscopy centers (which shall equal gross revenues minus contractual adjustments, write-offs, refunds and uncollectible amounts) (“Net Revenues”) and less the aggregate of the following: (i) the cost of CRNAs and physician labor under staffing ratios based on AGA’s requirements for their endoscopy centers (provided, however, the cost of employing any physicians in addition to the number of physicians engaged by GAA as of the date hereof shall not be included in such calculation); (ii) anesthesia drugs and supplies (including carts) and personnel scrubs; (iii) a billing and collection expense equal to six percent (6%) of Buyer’s Net Revenues; (iv) insurance costs for professional liability insurance for Buyer and general commercial insurance for Buyer (and not including the cost of professional liability insurance for any CRNAs and/or physicians employed or contracted with Buyer in addition to the number of physicians employed by GAA as of the date hereof); (v) bank fees charged to Buyer for operating bank accounts and merchant services (and not including any bank fees charged to Buyer in connection with any financing or otherwise); (vi) business license fees: (vii) printing expenses; (viii) payroll expenses; and (ix) legal and professional fees directly related to the business of Buyer; and (x) other similar or related expenses required by Buyer to provide anesthesia services pursuant to the PSA Contracts (as defined in the Other Acquisition Agreement), as mutually agreed upon by Buyer and Seller.

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For purposes of determining the amount of payments to be made pursuant to this Section 2.11, EBITDA will not include any allocated overhead from CRH. To the extent that Buyer receives an indemnification payment under Section 6 hereof with respect to an expense that would otherwise be deducted from EBITDA for purposes of determining the payments to be made to the Seller pursuant to this Section 2.11, such amount shall not be taken into account in performing such EBTIDA calculation. Such calculation will be made within forty-five (45) days after the expiration of such first four and one-half (4.5) year period after the Closing; provided, however, Buyer shall provide the Seller with monthly calculations of EBITDA following the Closing with reasonable detail and with specificity regarding the basis for such calculation and, in the event the Applicable Cumulative EBITDA equals or exceeds Seventy-Three Million Two Hundred Seventy-Eight Thousand Dollars ($73,278,000) prior to the end of the first four and one-half (4.5) years after Closing, the provisions of Sections 2.11.2 through 2.11.10 shall immediately apply. Buyer shall grant the Seller, the Owner, the Owner Member and their Representatives reasonable access to Buyer’s books and records for purposes reasonably related to the determination of the Applicable Cumulative EBITDA and the resulting payments, if any, due to the Seller hereunder.

2.11.2 Buyer shall provide the Seller with a copy of such calculation (the “EBITDA Adjustment Calculation”) within such forty-five (45) day period setting forth in reasonable detail regarding the basis for such calculation. Following the Seller’s receipt of such EBITDA Adjustment Calculation, if the Seller disputes the EBITDA Adjustment Calculation, Seller shall, within thirty (30) days after its receipt of the EBITDA Adjustment Calculation (any dispute not so timely noticed shall be deemed waived), notify Buyer, in writing in reasonable detail and with specificity (the “EBITDA Dispute Notice”) of such dispute(s). Seller and Buyer shall attempt to negotiate in good faith to resolve such dispute. In the event that Seller and Buyer fail to agree on any of the Seller’s proposed adjustments set forth in the EBITDA Dispute Notice within twenty (20) days after Buyer receives the EBITDA Dispute Notice, Seller and Buyer agree that Smith & Howard, P.C. in Atlanta, Georgia (the “Accountants”) shall, within the 40-day period immediately following such failure to agree, make the final determination of the Applicable Cumulative EBITDA in accordance with the terms of this Agreement. Buyer and Seller each shall provide the Accountants with their respective determinations of the Applicable Cumulative EBITDA. Such determination shall be made in writing, shall set forth the Applicable Cumulative EBITDA as determined by the Accountants and shall be final and binding on Seller and Buyer. The fees, costs and expenses of the Accountants shall be paid by the party whose Applicable Cumulative EBITDA calculation was different by the greater amount from that of the Accountants.

2.11.3 If Buyer’s Applicable Cumulative EBITDA (as finally determined) for such period equals or exceeds Seventy-Three Million Two Hundred Seventy-Eight Thousand Dollars ($73,278,000), then the entire EBITDA Payment Amount will be paid to Seller within ten (10) days after the final Applicable Cumulative EBITDA is determined.

2.11.4 Subject to Section 2.11.5, if Buyer’s Applicable Cumulative EBITDA for such period is less than Seventy-Three Million Two Hundred Seventy-Eight Thousand Dollars ($73,278,000), then the positive difference between (a) Fourteen Million Six Hundred Fifty Five Thousand Six Hundred Dollars ($14,655,600) minus (b) the difference between Seventy-Three Million Two Hundred Seventy-Eight Thousand Dollars ($73,278,000) minus the Applicable

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Cumulative EBITDA for such period, will be paid to the Seller within ten (10) days after the final Applicable Cumulative EBITDA is determined (and the EBITDA Payment Amount will thereafter be such positive difference between (a) and (b) and Buyer shall not owe any additional portion (above such amount) of the EBITDA Payment Amount to Seller).

2.11.5 If Buyer’s Applicable Cumulative EBITDA for such period is less than or equal to Fifty-Eight Million Six Hundred Twenty-Two Thousand Four Hundred Dollars ($58,622,400), then Buyer shall owe no portion of the EBITDA Payment Amount to Seller.

2.11.6 Any payments to the Seller made under this Section 2.11 shall be treated for Tax purposes as an adjustment to the total consideration paid for the Purchased Assets under this Agreement to the extent such characterization is proper or permissible according to relevant Tax Authorities.

2.11.7 The Seller may direct Buyer, in writing, to make any payments due pursuant to this Section 2.11 to the Owner, the Owner Member or any other Person in accordance with instructions provided to Buyer.

2.11.8 Except as provided in Section 6.6, Buyer’s obligation to pay the EBITDA Payment Amount to the Seller in accordance with this Section 2.11 is an independent obligation of Buyer and is not otherwise conditioned or contingent upon the satisfaction of any conditions other those set forth in this Section 2.11.

2.11.9 CRH hereby agrees that it shall be jointly and severally liable for Buyer’s obligations pursuant to this Section 2.11.

2.12 Acquisition Consideration Allocation. Each party hereto agrees (i) that the Acquisition Consideration will be allocated for all federal and state tax purposes (including but not limited to, income, excise, sales, use, personal property and transfer taxes, and otherwise) among the Purchased Assets in accordance with Schedule 2.12 which is in accordance with Section 1060 of the Internal Revenue Code, (ii) to file separately a Federal Form 8594 with its Federal Income Tax Return consistent with such allocation for the tax year in which the Closing Date occurs, and (iii) that no party will take a position on any tax returns or filings with any governmental or regulatory authority charged with the collection of taxes or having jurisdiction over the transaction contemplated hereunder or in any judicial proceeding, that is in any manner inconsistent with the terms of the allocation set forth on Schedule 2.12.

3. REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Seller, the Owner and the Owner Member. The Seller, the Owner and the Owner Member hereby, jointly and severally, represent and warrant to Buyer that each of the following representations and warranties, as supplemented by the disclosure schedules attached hereto (the “Disclosure Schedules”), are true as of the date of this Agreement, and unless otherwise expressly set forth herein, as of the Closing. For purposes of these representations and warranties, the term “the Seller” shall include [REDACTED], a Georgia limited liability company, the predecessor to the Seller prior to the Conversion.

3.1.1 Organization and Valid Existence.

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3.1.1.1 The Seller, a successor by conversion from [REDACTED], a Georgia limited liability company, is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Florida. The Seller has all necessary power, authority and capacity to enter into this Agreement and the Collateral Agreements and carry out its obligations hereunder and thereunder, to own, manage and lease its property and assets and to carry on the Business as presently conducted by it. True, correct and complete copies of the Seller’s Charter Documents have been delivered to Buyer, as well as true, correct and complete copies of the Seller’s minute books and membership interest transfer records or books, if any. Neither the character of the Seller’s assets nor the nature of the Seller’s business as presently conducted requires the Seller to be qualified to transact business as a foreign entity in any other state or jurisdiction, other than the State of Georgia with respect to which it is qualified to transact business as a foreign entity.

3.1.1.2 The Owner is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Florida. The Owner has all necessary power, authority and capacity to enter into this Agreement and the Collateral Agreements and carry out its obligations hereunder.

3.1.2 Authority, Approval and Enforceability. This Agreement has been duly executed and delivered by the Seller, the Owner and the Owner Member and each such Party has all requisite power and legal capacity to execute, deliver and perform this Agreement and all Collateral Agreements (to which it is a party) executed and delivered or to be executed and delivered in connection with the transactions provided for hereby, to consummate the transactions contemplated hereby and by the Collateral Agreements, and to perform his, her, or its obligations hereunder and under the Collateral Agreements. The execution, delivery and performance by the Seller and the Owner of this Agreement and the Collateral Agreements have been duly and validly approved and authorized by proper limited liability company action (including all necessary member approval). This Agreement and each Collateral Agreement to which the Seller, the Owner or the Owner Member is a party constitutes, or upon execution and delivery will constitute, the legal, valid and binding obligation of such Party, enforceable in accordance with its terms, except as such enforcement may be limited by general equitable principles or by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the rights of creditors generally.

3.1.3 No Conflict. The execution, delivery and performance of this Agreement and the Collateral Agreements by the Seller, the Owner and the Owner Member do not, and the consummation by the Seller, the Owner and the Owner Member of the transactions contemplated hereby will not: (i) conflict with or violate the Charter Documents of the Seller or the Owner; (ii) conflict with or violate any Laws applicable to the Seller or the Owner or by which any of their respective properties is bound or affected, or give any Authority or other Person the right to challenge the Acquisition or any of the transactions contemplated hereunder; (iii) except as set forth on Schedule 3.1.3, result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any Lien on any of the properties or assets of the Seller or the Business pursuant to any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Seller, the Owner or the Owner Member is a party, or by which the Seller or the

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Owner or any of their respective properties are bound or affected; or (iv) except as set forth on Schedule 3.1.3, require any consent, approval, authorization or permit of, or filing with or notification to, any Authority or other third party. No Person (other than Buyer) has any agreement, option or any rights capable of becoming an agreement or option for the acquisition of the Purchased Assets.

3.1.4 Capitalization and Ownership of the Seller. The Owner owns one hundred percent (100%) of the issued and outstanding membership interests of the Seller, free and clear of any and all Liens. All such membership interests are duly authorized, validly issued, fully paid and nonassessable and were not issued in violation of any preemptive or other rights of any Person to acquire securities of the Seller. There are no outstanding subscriptions, options, convertible securities, rights (preemptive or other), warrants, calls or agreements relating to any membership interests or other equity interests of the Seller.

3.1.5 Ownership of the Owner. The Owner Member owns one hundred percent (100%) of the issued and outstanding membership interests of the Owner free and clear of any and all Liens. All such membership interests of the Owner are duly authorized, validly issued, fully paid and nonassessable and were not issued in violation of any preemptive or other rights of any Person to acquire securities of the Owner.

3.1.6 Properties. The Seller has good and marketable title to, or valid leasehold interests in or other valid right to use, all its assets (real and personal) including, without limitation, the Purchased Assets and all other assets reflected in the Financial Statements or acquired thereafter. All such assets are free and clear of all Liens, except as set forth in Schedule 3.1.6.

3.1.6.1 The Purchased Assets constitute all of the material assets necessary for the continued operation by Buyer of the Business as currently conducted.

3.1.6.2 The Seller has complied with the terms of any leases to which it is a party and any such lease is in full force and effect.

3.1.6.3 Schedule 3.1.6.3 sets forth a true and complete list of all real property and interests in real property leased by the Seller and the lease agreements with respect thereto and a true and complete list of all personal property, equipment and fixtures (other than items having a book value of less than $500 individually) owned by the Seller, all of which personal property, equipment and fixtures are in good condition and repair, normal wear and tear excepted.

3.1.7 Financial Statements. The Financial Statements present a true, accurate and complete statement of the financial condition and assets and liabilities of the Seller, and the results of operations as of the dates shown thereon and have been prepared in accordance with the cash basis of accounting. The balance sheets included in the Financial Statements have been prepared on a consistent basis and fairly present the financial condition of the Seller, as of the dates reflected therein and the statements of revenues and expenses and income statements, have been prepared on a consistent basis and fairly present the results of operations for the periods

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reflected therein and fairly present the financial condition of the Seller, as of the date and for the period specified therein.

3.1.7.1 Attached as Exhibit E are true and complete copies of the unaudited balance sheets of the Seller as of September 30, 2014, and the related income statement for the month then ended (the “Interim Financial Statements”). The Interim Financial Statements are in accordance with the books and records of the Seller, have been prepared on a basis consistent with the Financial Statements and present fairly in all material respects the financial condition of the Seller as at the date indicated and the results of its operations and changes in financial position for the period then ended.

3.1.7.2 The financial books and records of the Seller, with respect to the Business are accurate and complete in all material respects and are maintained on a basis consistent with preceding years and fairly represent in all material respects the financial condition of the Seller.

3.1.8 Absence of Undisclosed Liabilities; Indebtedness.

3.1.8.1 Except as set forth in Schedule 3.1.8.1, the Seller does not have any debts, liabilities or obligations (absolute, accrued, contingent or otherwise) including, without limitation, any liability or obligation on account of Taxes or any governmental charges or penalty, interest or fines which are not fully reflected or reserved against in the Financial Statements, and the reserves reflected in the Financial Statements are adequate, appropriate and reasonable.

3.1.8.2 Schedule 3.1.8.2 sets forth (i) the amount of all outstanding Indebtedness of the Seller, (ii) any Lien with respect to such Indebtedness, and (iii) a list of each instrument or agreement governing such Indebtedness (true and correct copies of which have been provided to Buyer). No default exists with respect to or under any such Indebtedness or any instrument or agreement relating thereto.

3.1.8.3 None of the Owner nor the Owner Member (nor any affiliate thereof) has any claim (direct or indirect) against the Seller for which Buyer could have any liability or which might adversely affect Buyer’s title to or use of the Purchased Assets, whether arising under any contract or agreement (regardless of whether written or oral), Law, tort or otherwise.

3.1.9 Real Property. Except as set forth on Schedule 3.1.9, the Seller does not own or lease any real property and none of the Owner nor the Owner Member owns, directly or indirectly, any real property or interest therein that is used in connection with the operation of the Business.

3.1.10 Licensing Information. Schedule 3.1.10 contains a complete and accurate list of all licenses, permits, registrations and approvals (collectively, “Licenses”) held by the Seller. The Seller has furnished for review or delivered complete and accurate copies of all such Licenses to Buyer. The Seller has all Licenses necessary for the Seller to own, operate, use and/or maintain its assets and to conduct the Business and operations as presently conducted and as expected to be conducted in the future. All such Licenses are in full force and effect, no

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proceeding is pending or, to the Knowledge of the Seller, threatened to modify, suspend or revoke, withdraw, terminate, or otherwise limit any such Licenses, and no administrative or governmental actions have been taken or, to the Knowledge of the Seller, threatened in connection with the expiration or renewal of such Licenses which could adversely affect the ability of the Seller to own, operate, use or maintain any of its assets or to conduct the Business as presently conducted and as expected to be conducted in the future. With respect to such Licenses, (i) no violations have occurred that remain uncured, unwaived, or otherwise unresolved, or are occurring in respect of any such Licenses, and (ii) no circumstances exist that would prevent or delay the obtaining of any requisite consent, approval, waiver or other authorization of the transactions contemplated hereby with respect to such Licenses that by their terms or under applicable Law may be obtained only after Closing.

3.1.11 Tax Matters. The Seller and Owner has each duly and timely filed with the appropriate taxing Authorities all Tax Returns required to be filed by it, and such Tax Returns are complete and accurate in all material respects. All Taxes due and payable by the Seller and the Owner have been paid (whether or not shown on any Tax Return and whether or not any Tax Return was required), when due, to the applicable Authorities.

3.1.11.1 The 2012 and 2013 federal, state and local Tax Returns of the Seller and the Owner provided to Buyer are true and accurate copies of those filed with the applicable Authorities, including all amendments thereto, and none of such Tax Returns have been amended. The Seller is not the beneficiary of any extension of time within which to file any Tax Return or pay any Tax.

3.1.11.2 Neither the Seller nor the Owner with respect to the Business has received from any federal, state, or local taxing Authority any assessment, reassessment or notice of underpayment of any Taxes and no such notice is reasonably expected, and no consents extending or waiving the limitation of time for reassessment of any Taxes or any statute of limitations related thereto have been filed for any fiscal year. No Tax Return of the Seller or Owner has been audited or is currently being audited and there are no pending or, to the Knowledge of the Seller, threatened audits, assessments or other actions for or relating to any liability in respect of Taxes of the Seller or the Owner.

3.1.11.3 The provision made for current and deferred Tax included in the Financial Statements, if any, is sufficient for the payment of all accrued and unpaid Taxes (whether or not disputed), for the period ended the date thereof and for all periods prior thereto. Since December 31, 2013, the Seller has not incurred any liability for Taxes outside the ordinary course of business consistent with past custom and practice.

3.1.11.4 The Seller has not (i) agreed, and is not required, to make any adjustment under Section 481(a) of the Code (or under any comparable state or local Tax provision) by reason of a change in accounting method or otherwise for any taxable period (or portion thereof) ending after the Closing Date; or (ii) made an election, and is not required, to treat any of its assets as owned by another Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect prior to amendment by the Tax Equity and Fiscal Responsibility Act of 1982; or (iii) made any of the foregoing elections and is

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not required to apply any of the foregoing rules under any comparable state or local Tax provision.

3.1.11.5 The Seller does not have any liability for Taxes of any Person as transferee or successor, by contract or otherwise, and is not a party to or bound by any tax indemnity, tax sharing, tax allocation agreement or similar arrangements.

3.1.11.6 The Seller has not been a member of an affiliated group filing a consolidated federal income Tax Return.

3.1.11.7 The Seller has withheld and paid and paid to a taxing Authority all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party.

3.1.11.8 No taxing Authority is asserting or, to the Knowledge of the Seller, threatening to assert a claim against the Seller under or as a result of Section 482 of the Code or any similar provision of any foreign, state or local Tax law.

3.1.11.9 The Seller has not entered into any transaction identified as a “reportable transaction” for purposes of Treasury Regulations Sections 1.301.6011-4(b).

3.1.11.10 The Seller will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion of any taxable period) after the Closing Date as a result of any (i) closing agreement as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax law); (ii) installment sale or open transaction disposition occurring on or prior to the Closing Date; (iii) the cash method of accounting or (iv) prepaid amount received on or prior to the Closing Date.

3.1.11.11 Buyer will not be required to deduct and withhold any amount pursuant to Section 1445(a) of the Code upon the transfer of any cash or property pursuant to this Agreement. The Seller does not have, and has not had, a permanent establishment in any foreign country and does not engage, and has not engaged, in a trade or business in any foreign country.

3.1.11.12 The Seller was since its formation through January 2, 2014, a partnership as defined in Treasury Regulation Section 301.7701-3(b) for federal and state income Tax purposes. The Seller has been, since January 3, 2014 to the date hereof, disregarded as an entity separate from its owner as defined in Treasury Regulation Section 301.7701-3(b) and has not made any election to be treated as an association taxable as a corporation.

3.1.12 Absence of Changes. Other than as disclosed on Schedule 3.1.12 since December 31, 2013, the Seller has conducted the Business only in the ordinary course, consistent with past practice, and there has not been:

3.1.12.1 any change in circumstances that had or might have an adverse effect on the condition (financial or otherwise), properties, assets, liabilities, rights, obligations, operations, business or prospects of the Seller;

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3.1.12.2 change in the Seller’s method of accounting; or

3.1.12.3 any damage, destruction, or loss, or other event, development or condition of any character (whether or not covered by insurance) that had or might have an adverse effect on the condition (financial or otherwise), properties, assets, liabilities, rights, obligations, operations, business or prospects of the Seller.

3.1.13 Absence of Unusual Transactions. Since December 31, 2013, except as contemplated by this Agreement or as set forth on Schedule 3.1.13, the Seller has not:

3.1.13.1 transferred, assigned, sold or otherwise disposed of any assets or canceled any debts or claims, except in each case in the ordinary and usual course of business consistent with past practices;

3.1.13.2 incurred or assumed any Indebtedness (other than the Seller Note Payable);

3.1.13.3 issued, sold, or transferred any of its membership interests, or issued, granted or delivered any right, option or other commitment for the issuance of any such membership interests;

3.1.13.4 discharged or satisfied any Lien, or paid any obligation or liability (fixed or contingent) other than in the ordinary and normal course of business consistent with past practices;

3.1.13.5 acquired any Person or the business or, except in the ordinary course of business consistent with past practices, the assets of any Person;

3.1.13.6 substantively amended or changed or taken any action to substantively amend or change its Charter Documents;

3.1.13.7 made any general wage or salary increases or paid any bonus, in respect of personnel which it employs, other than increases in the ordinary and normal course of business and consistent with past practices;

3.1.13.8 subjected to any Lien, granted a security interest in, or otherwise encumbered the assets of the Seller, or any of its other assets or property, whether tangible or intangible;

3.1.13.9 made any change in any existing election, or made any new election, with respect to any tax law in any jurisdiction which election could have an effect on the tax treatment of the Seller or the Business;

3.1.13.10 entered into, amended or terminated any material Contract;

3.1.13.11 settled any claim or litigation, or filed any motions, orders, briefs or settlement agreements in any proceeding before any governmental Authority or any arbitrator, other than in connection with the Plavin Release;

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3.1.13.12 maintained its books of account on a basis inconsistent with prior periods or made any change in any of its accounting methods or practices;

3.1.13.13 engaged in any one or more activities or transactions outside the ordinary course of business which could have an effect on the within transactions or the Business; or

3.1.13.14 authorized or agreed or otherwise become committed to do any of the foregoing.

3.1.14 Powers of Attorney. No Person holds any power of attorney from the Seller which would permit such Person to sell the Purchased Assets or take any other action which would adversely affect Buyer or Buyer’s title or use of the Purchased Assets following the Closing.

3.1.15 Contracts and Commitments.

3.1.15.1 Set forth in Schedule 3.1.15.1 is a true and complete list of each Contract with respect to the Seller or the Business including, without limitation (i) the Management Contract and the IPS Contract, (ii) each Contract which involves a financial relationship with the Owner or the Owner Member or any affiliate thereof (including IPS), (iii) each Contract which restricts in any manner the Seller’s or any affiliate’s right to compete with any Person, or (iv) each Contract which, if breached, terminated or allowed to expire could have a material adverse effect on the Buyer, Purchased Assets or the Business.

3.1.15.2 Each of the Contracts is (i) a legal, valid and binding obligation of the Seller and, to the Knowledge of the Seller, the other parties thereto, (ii) in full force and effect and is enforceable in accordance with its terms, and (iii) in compliance with 42 U.S.C § 1320a-7b and the regulations promulgated thereunder (i.e., the Federal Anti-Kickback Statute), 42 U.S.C. § 1395nn and the regulations promulgated thereunder (i.e., the Stark Law) and any equivalent state or local laws. The Seller has not been notified or advised by any party thereto of such party’s intention or desire to terminate or materially modify any such Contract in any respect. Nor has the Seller received any notice of default in regard to any of the Contracts and there exists no default or event that with notice or a lapse of time, or both, would constitute a default under any of the Contracts by Seller of, to the Knowledge of the Seller, the other parties thereto.

3.1.15.3 Neither the Seller nor, to the Knowledge of the Seller, any other party, is in breach of any of the material terms or covenants of any of the Contracts. Following the Closing, Buyer will be entitled to all of the benefits of the Seller under the Assumed Obligations. True, correct and complete copies of the Contracts, and any amendments or supplements thereto, have been delivered to Buyer.

3.1.15.4 The Seller is not a party to or bound by any Contract which contain payment obligations which compensate Persons for the volume or value of referrals for goods or services for which payment may be sought under federal or state health care programs.

3.1.16 Employee Plans.

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3.1.16.1 The Seller does not maintain or contribute to (and has not maintained or contributed to), and none of its employees or other personnel participates in or is a beneficiary of any plan, program or other arrangement providing for pension, profit sharing, employee pre-tax or after-tax contributions, retirement, health, disability, life insurance, cafeteria plan, medical expense reimbursement, dependent care reimbursement, adoption assistance, welfare benefit, incentive award, compensation, severance, termination pay, deferred compensation, performance awards, equity or equity-related awards, fringe benefits, transportation benefits, expense allowances or other employee benefits or remuneration of any kind (an “Employee Plan”), whether written or unwritten, funded or unfunded, including without limitation each “employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

3.1.16.2 Neither the Seller nor any person under common control with the Seller within the meaning of Section 414(b), (c) or (m) of the Code and the regulations thereunder (each an “ERISA Affiliate”) contributes to nor has contributed to or been required to contribute to any multiemployer plan (as defined in Section 3(37) of ERISA) or any other plan subject to Title IV of ERISA or any other Employee Plan. Neither the Seller nor any ERISA Affiliate has, or could have, any liability (including, without limitation, withdrawal liability) under any multiemployer plan or any plan subject to Title IV of ERISA.

3.1.16.3 The Seller does not maintain, and has not maintained, a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code)(a “Section 409A Plan”).

3.1.17 Other Employee Benefits Matters. Except as set forth on Schedule 3.1.17 hereto, the Seller is not a party to any employment agreements or contracts or other agreements or arrangements providing for employee remuneration or benefit. There is no agreement, policy or practice requiring the Seller to make a payment or provide any other form of compensation or benefit to any person performing services for the Seller upon termination of such services which would not be payable or provided in the absence of the consummation of this Agreement and no payment to any person will be characterized as a “parachute payment,” within the meaning of Section 280G(b)(2) of the Code due in whole or in part to the transactions contemplated by this Agreement.

3.1.18 Absence of Guarantees. The Seller has not given or agreed to give, or is not a party to or bound by, any guaranty of Indebtedness or other obligations of third parties, nor is the Seller otherwise responsible for, or contingently responsible for, any such Indebtedness or other obligation.

3.1.19 Litigation and Investigations. There is no suit, action, litigation, arbitration proceeding, governmental, administrative hearing, or other proceedings (including disciplinary proceedings) including appeals and applications for review, pending or, to the Knowledge of the Seller, threatened against or relating to the Seller or the Business or affecting the Seller’s properties or Business or the assets of the Seller. There is not presently outstanding against the Seller any adverse judgment, decrees, injunction, rule or order of any court, governmental department, commission, agency, instrumentality, arbitrator or other Authority. There is not

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currently, and there has not been, any pending or, to the Knowledge of the Seller, threatened investigation with respect to the Seller or any of its affiliates.

3.1.20 Employees; Independent Contractors. Set forth on Schedule 3.1.20 are the names and titles of all personnel employed by the Seller (“Employees”), including rates of remuneration, positions held and date of commencement of employment. Except as set forth on Schedule 3.1.20, the Seller does not have any liability in respect of former employees (or their dependents). Buyer shall neither assume any liability under any employee benefits prior to the Closing, nor be construed as the sponsor or administrator of such employee benefits prior to the Closing. Also set forth on Schedule 3.1.20 hereto is a complete list of all independent contractors, subcontractors, and agents (“Independent Contractors”) which are presently engaged by the Seller and an indication of which, if any, of such Independent Contractors cannot be terminated by the Seller on thirty (30) days’ notice or less, without penalty. To the Knowledge of the Seller, no Employee or Independent Contractor has been in violation of any term of any employment contract, independent contractor agreement, non-disclosure agreement, non-competition agreement, or any restrictive covenant to a former employer relating to the right of any such Person to be employed or retained by the Seller because of the nature of the business conducted or presently proposed to be conducted by the Seller. To the Knowledge of the Seller, no other Employee or Independent Contractor is or has ever been in violation of any term of any employment contract, independent contractor agreement, non-disclosure agreement, non-competition agreement or restrictive covenant relating to the Business, except for such violations which have been cured prior to the date hereof.

3.1.20.1 As of the date hereof, no Employee or Independent Contractor working with respect to the Business has given notice to the Seller, nor does the Seller otherwise have any Knowledge, that any such Person intends to terminate his or her employment or independent contractor relationship with the Seller. The Seller is in compliance with all Laws concerning the classification of employees and independent contractors and has properly classified all such persons for all purposes and under all applicable Laws.

3.1.20.2 The Seller (i) is, and has at all times been, in compliance with all applicable Laws respecting employment, employment practices, terms and conditions of employment and wages and hours; (ii) has withheld and reported all amounts required by Law or by agreement to be withheld and reported from the wages, salaries and other payments to employees; (iii) is not liable for any arrears of wages or any taxes or any penalty for failure to comply with any of the foregoing; and (iv) is not liable for any payment to any trust or other fund or to any governmental or administrative Authority, with respect to unemployment compensation benefits, social security or other benefits for employees (other than routine payments to be made in the normal course of business and consistent with past practice). There are no pending, threatened or reasonably anticipated claims or actions against the Seller under any worker’s compensation policy or long-term disability policy.

3.1.20.3 No work stoppage or labor strike against the Seller is pending, threatened or reasonably anticipated. The Seller is not involved in or, to the Knowledge of the Seller, is not threatened with, any labor dispute, grievance, or litigation relating to labor, safety or discrimination matters involving any Employee, including, charges of unfair labor practices or discrimination complaints, which, if adversely determined, would, individually or in the

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aggregate, result in material liability to the Seller. The Seller has not engaged in any unfair labor practices within the meaning of the National Labor Relations Act. The Seller is not currently, nor has it been in the past, a party to, or bound by, any collective bargaining agreement or union contract with respect to its employees and no collective bargaining agreement or union contract is being negotiated by the Seller. The Seller has not incurred any material liability or material obligation under the Worker Adjustment and Retraining Notification Act or any similar state or local law which remains unsatisfied.

3.1.21 Insurance. The Seller currently has in force the policies of insurance relating to the Business and its assets set forth on Schedule 3.1.21. All such policies of insurance are in full force and effect and the Seller is not in default, whether as to the payment of premium or otherwise, under the terms of any such policy. Such policies (i) constitute insurance for all risks normally insured against by businesses, entities, and persons in the same line of Business as the Seller, (ii) can be canceled without penalty, and (iii) are sufficient for compliance with all agreements to which the Seller is a party. No notice of cancellation or indication of an intention not to renew any insurance policy has been received by the Seller. Schedule 3.1.21 attached hereto also contains a true and complete description of (a) all current and open or known claims related to the Business under any of the policies listed on Schedule 3.1.21; and (b) all written claims ever made against the Seller or known events which are reasonably likely to give rise to a claim against the Seller, whether or not covered by insurance.

3.1.22 Compliance with Environmental Laws. The Seller and the Business are in compliance with all applicable Environmental Laws. The Seller is not required to obtain any permits, licenses and other authorizations for the conduct of the Business under any federal, state and local laws and the regulations promulgated thereunder relating to pollution or protection of the environment, including laws relating to emissions, discharges, releases or threatened releases of hazardous substances, materials or wastes (collectively, “Hazardous Wastes”) into the environment (including, without limitation, ambient air, surface water, ground water, or land), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of Hazardous Wastes (collectively, “Environmental Laws”). There are no pending or, to the Knowledge of the Seller, threatened investigations, actions or proceedings of any nature involving the Seller or the Business or the properties leased by it or otherwise arising under any Environmental Laws.

3.1.23 Compliance. The Seller is not in violation of any Laws, decrees or ordinances applicable to the Business, the Seller or the Purchased Assets, including, without limitation, any Laws, decrees or ordinances pertaining to Medicare, Medicaid, Tricare, HIPAA or HI-TECH. None of the Seller, Owner or the Owner Member has received or entered into any citations, complaints, consent orders, compliance schedules, or other similar enforcement orders or received any written notice from any governmental Authority or any other written notice that would indicate that there is not currently compliance with all such legal requirements with respect to the Business, the Seller or the Purchased Assets. No event has occurred which, with either the giving of notice, the passage of time, or both, would constitute grounds for a violation, order or deficiency with respect to any of the foregoing. The Seller and any affiliate have not engaged in any activities which are prohibited under 42 U.S.C. § 1320a-7b, 42 U.S.C. § 1395nn or 31 U.S.C. § 3729-3733 (or other federal or state statutes related to false or fraudulent claims)

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or the regulations promulgated thereunder pursuant to such statutes, or related state or local statutes or regulations.

3.1.24 Dealing with Affiliates. None of the Owner, the Owner Member or any other affiliate of the Seller or the Owner has any interest in any property (whether real, personal or mixed and whether tangible or intangible) currently used in or pertaining to the Business. Schedule 3.1.24 sets forth a complete list, including the parties, of all oral or written agreements and arrangements to which the Seller is or has been a party, at any time and to which any one or more of the Owner, the Owner Member or any other affiliate of the Seller or the Owner or the Owner Member is also a party.

3.1.25 No Subsidiaries. Other than a seventy-five percent (75%) membership interest in IPS Consulting Services, LLC, a Georgia limited liability company, there is no corporation, general partnership, limited partnership, limited liability company, joint venture, association, trust or other entity or organization which the Seller controls, or has controlled, or in which the Seller owns or owned equity interest or any other interests. There are no outstanding contractual obligations of the Seller to acquire any outstanding shares of capital stock or other ownership interests of any corporation, partnership or other entity.

3.1.26 Intellectual Property. All copyrights, patents, trade secrets, trademarks, service marks, or other intellectual property or proprietary rights associated with any ideas, concepts, techniques, inventions, processes or works of authorship developed or created by any employee or independent contractor during the course of their performing work for the Seller, and any other work product conceived, created, designed, developed or contributed to by each such person during the course of his or her employment or engagement with the Seller that relates in any way to the Business (collectively, the “Work Product”) belongs exclusively to the Seller, and such Work Product shall be transferred to Buyer as of the Closing.

3.1.27 Release of Claims. Each of the Owner and the Owner Member represents and warrants that, as of the Closing, he or it has no claims (direct or indirect) against the Seller (either individually or as a member of the Seller or the Owner), arising under any contract or agreement (regardless of whether written or oral), Law, tort or otherwise, that could in any manner, whatsoever, adversely affect Buyer or Buyer’s title to, or use of, the Purchased Assets.

3.1.28 Full Disclosure. No representation or warranty of the Seller, the Owner or the Owner Member contained herein, or information with respect to the Seller, the Owner and the Owner Member contained herein, or in any statement, certificate or other schedule furnished to Buyer by the Seller, the Owner and the Owner Member pursuant hereto or in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not false or misleading.

3.1.29 Other Acquisition. The Seller, the Owner and the Owner Member acknowledge and confirm that the purchase price to be paid with respect to the Other Acquisition pursuant to the Other Acquisition Agreement has been separately negotiated with the selling party therein. The Seller, the Owner and the Owner Member further acknowledge and confirm that no representations or warranties have been made by Buyer or any of its affiliates or representatives to any of the Seller, the Owner or the Owner Member with respect to any

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purchase price or other amounts to be paid in connection with the Other Acquisition Agreement and all decisions of the Seller, the Owner and the Owner Member to enter into this Agreement and the Collateral Agreements, and to sell the Purchased Assets pursuant to the terms hereof, have been made based on the terms hereof and thereof and without regard to any expectation or understanding by any of them as to the amounts being paid pursuant to the Other Acquisition Agreement.

3.2 Representations and Warranties of Buyer. Buyer hereby represents and warrants to the Seller, the Owner and the Owner Member that each of the following representations and warranties are true as of the date of this Agreement, and unless otherwise expressly set forth herein, as of Closing.

3.2.1 Organization and Valid Existence. Buyer is a [limited liability company] duly organized, validly existing and in good standing under the laws of the State of Georgia and has all necessary power, authority and capacity to enter into this Agreement and carry out its obligations hereunder, to own, manage and lease its property and assets, and to carry on its business as presently conducted by it.

3.2.2 Authority, Approval and Enforceability. This Agreement has been duly executed and delivered by Buyer and Buyer has all requisite corporate power to execute and deliver this Agreement and all Collateral Agreements executed and delivered or to be executed and delivered by it in connection with the transactions provided for hereby, to consummate the transactions contemplated hereby and by the Collateral Agreements, and to perform its obligations hereunder and under the Collateral Agreements. The execution, delivery and performance by Buyer of this Agreement and the Collateral Agreements have been duly and validly authorized by proper corporate action (including all necessary shareholder approval). This Agreement and each Collateral Agreement to which Buyer is a party constitutes, or upon execution and delivery will constitute, the legal, valid and binding obligation of Buyer enforceable in accordance with its terms, except as such enforcement may be limited by general equitable principles or by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the rights of creditors in general.

3.2.3 Absence of Conflicting Agreements. Buyer is not a party to, bound or affected by or subject to any indenture, mortgage, lease, agreement, instrument, charter or bylaw provision, statute, regulation, order, judgment, decree or law which would be violated, contravened or breached by, or under which any default would occur, as a result of the execution and delivery of this Agreement by Buyer or the consummation of any of the transactions described herein.

3.3 No Broker. Each of the Parties represents and warrants to each of the other Parties that all negotiations relating to this Agreement and the transactions contemplated hereby have been carried on among them directly and without the intervention of any other Person in such manner as to give rise to any valid claims against any of the Parties for a brokerage commission, finder’s fee or other like payment.

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3.4 Non-Waiver. No investigations made by or on behalf of Buyer at any time shall have the effect of waiving, diminishing the scope of or otherwise affecting any representation or warranty made by the Seller, the Owner or the Owner Member herein or pursuant hereto.

Nature and Survival of Representations, Warranties and Covenants. All statements contained in any certificate or other instrument executed and delivered by or on behalf of a Party pursuant to or in connection with the transactions described in this Agreement shall be deemed to be made by such Party hereunder. All representations, warranties, covenants and agreements contained herein on the part of each of the Parties shall survive the Closing, the execution and delivery hereunder of transfer instruments and other documents and payment of all consideration therefor, subject to Section 6.5.2.

4. CONDITIONS PRECEDENT TO THE PERFORMANCE OF THE OBLIGATIONS OF BUYER, THE SELLER, THE OWNER AND OWNER MEMBER

4.1 Buyer’s Conditions. The obligation of Buyer to complete the Acquisition hereunder shall be subject to the satisfaction of or compliance with, at or before the Closing, each of the following conditions precedent (each of which is hereby acknowledged to be inserted for the exclusive benefit of Buyer or its affiliates and may be waived by Buyer or its affiliates in whole or in part).

4.1.1 Compliance with Agreement. The Seller, the Owner and the Owner Member shall have performed and complied in all material respects with each of its obligations under this Agreement which are to be performed or complied with by it prior to or at the Closing.

4.1.2 Receipt of Closing Documentation. All documentation relating to the due authorization and completion of the Acquisition and all actions and proceedings taken on or prior to the Closing in connection with the performance by the Seller, the Owner or the Owner Member of their obligations under this Agreement shall be satisfactory to Buyer and Buyer’s legal counsel, and Buyer shall have received copies of all such documentation or other evidence as it may reasonably request in order to establish the consummation of the transactions described herein and the taking of all appropriate proceedings in connection therewith in compliance with these conditions, in form (as to certification and otherwise) and substance satisfactory to Buyer and Buyer’s legal counsel.

4.1.3 Representations and Warranties. The representations and warranties made by the Seller, the Owner and the Owner Member in this Agreement (disregarding any qualifiers and materiality exceptions) shall be true and correct as of the Closing Date with the same force and effect as though such representations and warranties had been made on the Closing Date, except for changes permitted or contemplated by this Agreement and except where the failure to be true and correct, individually or in the aggregate, have not resulted in and would not reasonably be expected to result in a material adverse effect on the Business or the Purchased Assets.

4.1.4 Consents, Authorizations and Registrations. All consents, approvals, orders and authorizations of any Persons or Authorities (or registrations, declarations, filings or

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recordings with any such authorities) required in connection with (i) the completion of any of the transactions described in this Agreement, (ii) the execution of this Agreement, (iii) the Closing or (iv) the performance of any of the terms and conditions hereof, as set forth on Schedule 4.1.4, shall have been obtained on or before the Closing.

4.1.5 Other Agreements and Documents. The agreements and documents set forth in Section 2.5 shall have been executed, certified and/or approved, as applicable, and originals thereof delivered to Buyer on or before the Closing, and the Seller, the Owner and the Owner Member shall have otherwise complied with Section 2.5.

4.1.6 Outstanding Indebtedness. The Seller and the Owner shall have provided payoff letters from the holders of the Seller’s outstanding Indebtedness (including, without limitation, the Seller Note Payable), other than the Assumed Obligations, providing that, upon payment of all the Seller’s outstanding Indebtedness at the Closing, all Liens filed against the Seller and the Seller’s properties shall be terminated.

4.1.7 Litigation. At and upon the Closing, there shall be no litigation, governmental investigation or proceeding pending or threatened (i) for the purpose of enjoining or preventing the consummation of any of the transactions described in this Agreement or otherwise claiming that such consummation is improper or (ii) which might adversely affect the Purchased Assets or the Business after the Closing Date.

4.1.8 Opinion of Counsel. Buyer shall have received an opinion of counsel to the Seller in a form satisfactory to Buyer’s counsel.

4.1.9 Termination of Certain Agreements. The Seller shall have delivered evidence reasonably satisfactory to Buyer that the IPS Contract has been terminated without any further liability thereunder of Buyer.

4.1.10 Other Acquisition Agreement and Consummation of the Other Acquisition. The Other Acquisition Agreement, together with the other documentation required thereunder, shall have been executed and delivered by the parties thereto and the Other Acquisition shall have been consummated and effective immediately preceding the consummation hereof.

4.1.11 Financing. Buyer shall have received third party financing in the amount sufficient to consummate the closing hereunder and under the Other Acquisition Agreement on terms acceptable to Buyer.

4.1.12 Due Diligence. Buyer shall have completed its due diligence review of the Seller with results reasonably satisfactory to Buyer.

4.1.13 Approval of Boards of Directors. The execution, delivery and performance of this Agreement and the Collateral Agreements shall have been approved by Buyer’s member(s) and/or manager(s) and the Board of Directors of CRH.

4.2 The Seller’s, the Owner’s and the Owner Member’s Conditions. The obligations of the Seller, the Owner and the Owner Member to complete the Acquisition hereunder shall be

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subject to the satisfaction of or compliance with, at or before the Closing, of each of the following conditions precedent (each of which is hereby acknowledged to be inserted for the exclusive benefit of the Owner and the Seller and may be waived by them in whole or in part).

4.2.1 Receipt of Closing Documentation. All documentation relating to the due authorization and completion of the Acquisition and all actions and proceedings taken on or prior to the Closing in connection with the performance by Buyer of its obligations under this Agreement shall be satisfactory to the Seller and the Seller’s legal counsel, and the Seller shall have received copies of all such documentation or other evidence as they may reasonably request in order to establish the consummation of the transactions described herein and the taking of all appropriate proceedings in connection therewith in compliance with these conditions, in form (as to certification and otherwise) and substance satisfactory to the Seller and the Seller’s legal counsel.

4.2.2 Other Acquisition Agreement and Consummation of the Other Acquisition. The Other Acquisition Agreements, together with the other documentation required thereunder, shall have been executed and delivered by the parties thereto and the Other Acquisition shall have been consummated and effective immediately preceding the consummation hereof.

4.2.3 Other Agreements and Documents. The agreements and documents set forth in Section 2.6 shall have been executed, certified and/or approved, as applicable, and originals thereof delivered to the Seller on or before the Closing.

5. OTHER COVENANTS OF THE PARTIES

5.1 Restrictive Covenants. As a material and valuable inducement for Buyer to enter into this Agreement, pay and deliver the Acquisition Consideration and consummate the transaction provided for herein, and in order to protect the goodwill acquired by Buyer, the Seller, the Owner and the Owner Member agree to the restrictions set forth in this Section 5.1.

5.1.1 Non-Competition. Each of the Seller, the Owner and the Owner Member agrees that during the Restricted Period the Seller, the Owner and the Owner Member will not, directly or indirectly, provide services similar to the management services being provided under the Management Contract to or for any Person who provides medical services in the Specialty to or for any ambulatory surgical center affiliated with a gastroenterology practice within the “Restricted Area” (being within thirty (30) miles of any health care facility or office at which GAA rendered services in the Specialty as of the Closing). Nor will the Seller, the Owner and the Owner Member during the Restricted Period directly or indirectly consult, own, invest in, finance, or assist any physician or group of physicians to directly or indirectly own, acquire, operate any anesthesia medical practice providing anesthesia services to or for any ambulatory surgical center affiliated with a gastroenterology practice in the Restricted Area. The “Restricted Period” shall mean and include a period of seven (7) years from the Closing Date. Nothing in this Section 5.1.1 shall prohibit the Seller, Owner and Owner Member from (a) performing management and billing services to those medical practices listed on Schedule 5.1.1, (b) owning those medical practices listed on Schedule 5.1.1 or (c) performing billing and collection services (as opposed to management services) within the Restricted Area. Each of the Seller, the Owner

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and the Owner Member agrees that they will not at any time, in any fashion, form or manner, unless specifically consented to in writing by Buyer, either directly or indirectly, use or divulge, disclose, or communicate to any person, firm or corporation, in any manner whatsoever, any confidential information of any kind, nature, or description, including that which is a part of the goodwill, concerning any matters affecting or relating to the Business, except as necessary to provide patient care and subject to applicable Law.

5.1.2 Non-Solicitation of Employees or Contractors. Each of the Seller, the Owner and the Owner Member agrees that during the Restricted Period, the Seller, the Owner and the Owner Member will not, without the prior written consent of Buyer, directly or indirectly, as an individual or on behalf of a firm, corporation, partnership or other legal entity, solicit for employment or engagement or endeavor in any way to entice or lure away from employment or engagement with Buyer or its affiliates, or hire or offer to hire, or engage any individual who within the prior six (6) months is or was an employee, officer, director or agent of Buyer or its affiliates. This Section 5.1.2 shall not apply to the employment or engagement of [REDACTED].

5.1.3 Specific Performance. It is recognized and hereby acknowledged by the Parties hereto that a breach or violation by any of the Seller, the Owner or the Owner Member or any of their affiliates of any or all of the covenants and agreements contained in this Section 5.1 would cause irreparable harm and damage to Buyer or an affiliate of Buyer in a monetary amount which may be virtually impossible to ascertain. As a result, each of the Seller, the Owner and the Owner Member recognizes and hereby acknowledges that Buyer or an affiliate of Buyer shall be entitled to (a) a decree or order of specific performance to enforce the observance and performance of such covenant, obligation or other provision and (b) an injunction from any court of competent jurisdiction enjoining and restraining any breach or violation of any or all of the covenants and agreements contained in this Agreement by any of the Seller, the Owner or the Owner Member and/or their associates, affiliates, partners or agents, either directly or indirectly, (without the need to post bond), and that such rights shall be cumulative and in addition to whatever other rights or remedies Buyer or an affiliate of Buyer may possess hereunder, at law or in equity. THE RESTRICTIVE COVENANTS IN THIS SECTION HAVE BEEN NARROWLY TAILORED TO PROHIBIT THE SELLER, THE OWNER AND THE OWNER MEMBER FROM WORKING IN COMPETITION WITH BUYER WITHIN THE LIMITED GEOGRAPHIC AREA DESCRIBED ABOVE.

5.1.4 Tolling. The foregoing Restricted Period shall be tolled and extended for any period(s) of time during which any of the Owner, the Owner Member or the Seller are in breach of their obligations under this Section 5.1 and the enforcement of the covenants is being litigated or arbitrated, including any appeal or confirmation proceedings, provided that either the outcome of such litigation or arbitration is to enforce, in whole or in part, such covenants or the Owner Member, the Owner or the Seller in question voluntarily cease the breaching activity following the commencement of such enforcement filing.

5.1.5 Survival; Beneficiaries; Assistance. The provisions of this Section 5.1 shall survive the termination of this Agreement and are expressly intended to benefit and be enforceable by Buyer and other affiliated entities of Buyer, which are made express third party

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beneficiaries hereof. In addition, none of the Owner, the Owner Member or the Seller may assist others in engaging in any of the foregoing restrictive activities.

5.1.6 Review. The Seller, the Owner and the Owner Member has each carefully read and considered the provisions of this Section 5.1, and having done so, agrees that the restrictions set forth in this Section 5.1 (including the time period of the restrictions and the geographical areas of restrictions set forth herein) are fair and reasonable and are reasonably required for the protection of the interests of Buyer or an affiliate of Buyer. In the event that, notwithstanding the foregoing, any part of the covenants set forth in this Section 5.1 shall be held to be invalid or unenforceable by a court of competent jurisdiction, the Parties hereto agree that such invalid or unenforceable provision(s) shall be construed in a manner that renders such provisions enforceable to the maximum extent possible and, if such construction is not possible, such invalid or unenforceable provision(s) may be severed from this Agreement without, in any manner, affecting the remaining portions hereof (all of which shall remain in full force and effect). In the event that any provision of this Section 5.1 related to time period or areas of restriction shall be declared by a court of competent jurisdiction to exceed the maximum time period, area or activities such court deems reasonable and enforceable, said time period or areas of restriction shall be deemed modified to the minimum extent necessary to make the geographic or temporal restrictions or activities reasonable and enforceable.

5.1.7 Independence. All covenants in this Section 5.1 shall be construed as an agreement independent of any other provision of this Agreement or any other Collateral Agreement or other transaction document, and the existence of any claim, cause of action or defense of any Owner, Owner Member or the Seller against Buyer or its affiliates, whether predicated on this Agreement or otherwise, shall not constitute a defense to enforcement by Buyer or any of its affiliates of such covenants.

5.2 Post-Closing Access for Records Review. With respect to post-Closing access, the Parties agree as follows:

5.2.1 Post-Closing Access to the Owner and Seller. In addition to the right of access pursuant to Section 2.11.1, until the date which is seven (7) years following the Closing Date, Buyer will give the Seller and the Owner access to (and the right to make copies thereof at such Owner’s or Seller’s own expense) the books, files and records of Buyer solely to the extent they relate to the events arising on or prior to the Closing Date with respect to the Purchased Assets and the Business. Any review or access permitted to the Owner and the Seller under this Section shall be conducted by the Owner or Seller in good faith, with a reasonable purpose and in a manner so as not to interfere unreasonably with the operations of Buyer following the Closing.

5.2.2 Post-Closing Access to Buyer. Until the date which is seven (7) years following the Closing Date, the Owner, the Owner Member and the Seller will give to Buyer free and unrestricted access to (and the right to make copies thereof at Buyer’s own expense) the books, files, records and tax returns of the Seller and the Owner as to events arising prior to the Closing Date with respect to the Purchased Assets and the Business (and shall cause IPS to give Buyer access to the books and records of IPS related to GAA); provided, however, nothing in this Section shall require the Seller, the Owner or the Owner to disclose or grant Buyer access to

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any information protected by the attorney-client privilege or the attorney work product doctrine. Each of the Owner, the Owner Member and the Seller covenant and agree that they will not destroy or dispose of such books, files, records or tax returns prior to the date which is seven (7) years following the Closing Date. Following expiration of such seven (7) year period, the Owner, the Owner Member and the Seller will provide Buyer with sixty (60) days advance notice of their intent to destroy or dispose of such materials, and during said sixty (60) day period, Buyer will have the right to take possession of said materials at its sole expense. Any review or access permitted to Buyer under this Section shall be conducted by Buyer in good faith, with a reasonable purpose and in a manner so as not to interfere unreasonably with the operations of the Owner and the Seller following the Closing.

5.3 Assumed Obligations. Prior to the Closing Date, the Seller shall obtain all consents, if any, required for the effective and valid assignment of the Assumed Obligations hereunder and shall take any other action necessary to facilitate the assumption and assignment of the Assumed Obligations. On or before the Closing Date, the Seller shall have paid all amounts owed by the Seller as of the Closing Date under the terms of the Assumed Obligations and otherwise cured any and all defaults thereunder.

5.4 Tax Matters. In connection with Tax matters, the Parties agree as follows:

5.4.1 All Taxes levied with respect to the Purchased Assets for a taxable period that includes (but does not end on) the Closing Date shall be apportioned between the Seller and Buyer as of the Closing Date based on the number of days of such taxable period included in the period through and including the Closing Date and the number of days of such taxable period included in the period commencing on the day after the Closing Date, respectively, with the Seller being liable for the proportionate amount of such Taxes that is attributable to the period through the Closing Date, and Buyer being liable for the proportionate amount of such Taxes that is attributable to the period after the Closing. Within a reasonable period after the Closing, the Seller and Buyer shall present a statement to the other setting forth the amount of reimbursement to which each is entitled under this Section 5.5.2, together with such supporting evidence as is reasonably necessary to calculate the proration amount. The proration amount shall be paid by the Party owing it to the other within ten (10) days after delivery of such statement. Any payment required under this Section 5.5.2 and not made within ten (10) days after delivery of the statement shall bear interest at the rate per annum determined from time to time under the provisions of Section 6621(a)(2) of the Code for each day until paid.

5.5 Employee Benefit Matters.

Without limiting Section 2.2.2, the Seller shall be responsible for all employee and Independent Contractor wages, benefits (including payments for accrued vacation or sick pay, unemployment compensation, employment taxes, health claims or similar payments), severance pay obligations, any liability and responsibility for fulfilling all federal and/or state COBRA and continuation of coverage requirements with respect to the Seller’s current and/or former employees and all other employee-related costs arising as a result of any events, acts (or failures to act) prior to Closing and as a result of any terminations contemplated hereby, whether or not disclosed on the Disclosure Schedules. In the event that Buyer incurs any liability or cost in respect of its obligation for fulfilling any federal and/or state COBRA and continuation of

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coverage requirements with respect to the Seller’s current or former employees (other than employees, if any, who continue employment with Buyer immediately following the Closing), the Seller, the Owner and the Owner Member shall reimburse Buyer for such liability or cost.

5.6 Certain Matters Pending Closing.

5.6.1 Buyer and its authorized agents, officers and representatives shall have reasonable access to the Seller and the Purchased Assets to conduct such examination and investigation of the Business and the Purchased Assets as they deem reasonably necessary, provided that such examinations shall be during normal business hours and shall not unreasonably interfere with the Seller’s normal business operations and activities. The Seller shall, and shall cause the Seller’s Representatives to (a) afford Buyer and its representatives access to properties, books, records, accounts and documents, (b) as reasonably requested by Buyer, furnish Buyer and its Representatives with copies of such properties, books, records, accounts and documents, (c) furnish Buyer and its Representatives with such additional financial, operating, and other data and information, all of or relating to the Business and its operations and Purchased Assets and all as Buyer may reasonably request and (d) afford Buyer and its Representatives access to IPS’s properties, books, records, accounts and documents and employees, in each case with respect to services provided on behalf of GAA; provided, however, nothing in this Section shall require the Seller, the Owner or the Owner to disclose or grant Buyer access to any information protected by the attorney-client privilege or the attorney work product doctrine.

5.6.2 Buyer and the Seller will cooperate in all reasonable respects in connection with giving notices to any governmental body, or securing the permission, approval, determination, consent or waiver of any governmental body, required by Law in connection with the transfer of the Purchased Assets from Seller to Buyer.

5.6.3 All Tax Returns required to be filed by the Seller with respect to the Business prior to the Closing Date or relating to periods prior to the Closing Date will be timely filed when due with the appropriate governmental agencies or extensions will have been properly requested and all Taxes pertaining to ownership of the Purchased Assets or operation of the Business prior to the Closing Date will be paid by the Seller when due and payable.

5.6.4 From and after the date hereof and prior to the Closing, the Seller shall (i) operate the Business in the ordinary course of business consistent with past practices; (ii) not take or agree to take any action inconsistent with the foregoing or inconsistent with the consummation of the Closing as contemplated by this Agreement; (iii) not, without Buyer’s prior written consent, enter into, or become obligated under, any agreement or commitment on behalf of the Seller with respect to the Business or the Purchased Assets; (iv) not incur any Indebtedness for borrow money; and (v) provide prompt written notice of the occurrence of any act, action, event or circumstance which would violate any representation and warranty contained in Section 3.1, would cause any representation and warranty in Section 3.1 to become incomplete or untrue in any respect; or could reasonably result in a material adverse effect with respect to the Business or the Purchased Assets.

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5.7 Exclusivity. The Seller, the Owner and the Owner Member agree and covenant that until Closing or this Agreement is terminated in accordance with its terms, none of the Seller, the Owner and the Owner Member nor anyone acting on behalf of the Seller or the Owner and the Owner Member, shall, directly or indirectly, solicit or initiate discussions concerning, or enter into negotiation with or furnish information that is not publicly available to, any Person concerning any proposal for a merger, sale of assets, sale of membership interests or other takeover or business combination transaction involving the Business or the Purchased Assets (a “Competing Sale”) and will notify Buyer immediately in writing if the Seller, the Owner or the Owner Member receives a written proposal with respect to any of the foregoing transactions. The Seller, the Owner and the Owner Member represent that none of the Seller, the Owner and the Owner Member is a party to, or bound by, any agreement with respect to such a Competing Sale.

5.8 Collection of Accounts Receivable. From and after the Closing, Seller shall pursuant to the Management Contract (subject to that certain Termination Agreement dated as of even date herewith pursuant to which such foregoing Management Contract is being terminated) and Buyer and Seller shall use their commercially reasonable efforts to cause IPS, pursuant to the IPS Contract (subject to that certain Termination Agreement dated as of November 30, 2014 pursuant to which the foregoing IPS Contract is being terminated), to bill for services provided by Seller to GAA prior to the Closing Date and to collect, in the ordinary course, the Accounts Receivable of Seller (determined pursuant to the Management Contract) attributable solely to services provided by Seller to GAA, pursuant to the Management Contract, prior to the Closing Date (collectively, the “Pre-Closing Seller Accounts Receivable”). Buyer shall have no obligation to file collection actions or lawsuits with respect to any such Pre-Closing Seller Accounts Receivable attributable to services provided by Seller to GAA prior to the Closing Date (or with respect to any “Pre-Closing Accounts Receivable” being accounts receivable attributable to services provided by GAA prior to the Closing Date); nor shall Buyer have any liability to Seller or Seller Owner for any failure by IPS to timely bill for services provided by GAA prior to the Closing Date or to collect any such Pre-Closing Accounts Receivable attributable to services provided by GAA prior to the Closing Date. This Section shall not apply with respect to any billing for services provided by Buyer on or after the Closing Date or any accounts receivable attributable to services provided by Buyer on or after the Closing Date (“Post-Closing GAA Accounts Receivable”).

5.8.1 Buyer shall pay to Seller, solely from Pre-Closing Accounts Receivable collections, by the tenth (10th) day of each calendar month, with respect to the immediately preceding calendar month (which calendar month begins after the Closing Date), an amount equal to the positive difference (if any) between (a) the aggregate of the Pre-Closing GAA Accounts Receivable collected under the Management Contract (subject to such applicable Termination Agreement) during such immediately preceding calendar month (net of the billing and collection expense equal to six percent (6%) of Buyer’s net revenues attributable to such Pre-Closing Accounts Receivable in accordance with the IPS Contract, subject to such applicable Termination Agreement, minus (b) the sum of (i) all of the amounts, if any, paid by GAA or Buyer on or after the Closing attributable to GAA’s obligations with respect to trade and accounts payable and other operating expenses incurred or accrued for all periods on or prior to the Closing Date (including compensation payable to physicians and CRNAs employed or engaged by GAA and all billing and collection and management fees payable to Seller), plus (ii) Buyer’s operating expenses after the Closing Date (including, without limitation, the cost of

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CRNAs, physician labor, anesthesia drugs and supplies, any billing and collection expense and management fee (without double counting of such amounts deducted in subsection (a)), insurance, bank fees, Taxes and other expenses required by GAA to provide anesthesia services pursuant to the PSA Contracts) for the applicable calendar months (such amounts in subsection (b)(ii), collectively, the “Advanced Expenses”). Notwithstanding the foregoing, the reduction described in subsection (b)(ii) shall not apply after the first two calendar months after the Closing Date and nothing in subsection (b)(ii) shall be construed to mean that such expenses are the responsibility of Buyer nor affect any indemnification rights Buyer may have under Section 6. An example of the intended application of this Section 5.8.1 in conjunction with the application of Section 5.9 of the Other Acquisition Agreement, relating to the collection of GAA’s Pre-Closing Accounts Receivable) is set forth in the Accounts Receivable Worksheet attached hereto as Exhibit F. For avoidance of doubt, in no event will GAA or Buyer owe any amounts to Seller under this Section 5.8 (or the Seller under the Other Acquisition Agreement pursuant to Section 5.9 thereof) other than from collections of any Accounts Receivable attributable to services provided by GAA before the Closing Date.

5.8.2 Beginning on March 10, 2015, Buyer shall begin to repay to Seller the Advanced Expenses (such payments to be made by the tenth (10th) day of each calendar month, with respect to the immediately preceding calendar month). The first payment hereunder will be due by March 10, 2015 and the tenth (10th) day of each calendar month thereafter until the Advanced Expenses are repaid to Seller in full; provided, however, all accrued and unpaid Advanced Expenses shall be immediately due and payable in full on or before June 10, 2015. The amount payable each month by Buyer with respect to the Advanced Expenses will equal the product of (a) twenty-five percent (25%) multiplied by (b) the positive difference, if any, between (i) the aggregate of the Post-Closing Accounts Receivable payable to Buyer during such immediately preceding calendar month (net of the billing and collection expense equal to six percent (6%) of GAA’s net revenues and management fee equal to four percent (4%) of the Buyer’s net revenues attributable to such Post-Closing Accounts Receivable, in each case attributable to such Post-Closing Accounts Receivable under the IPS Billing and Management Agreement as defined in the Other Acquisition Agreement), minus (b) all of the amounts paid by Buyer on or after the Closing attributable to Buyer’s obligations with respect to trade and accounts payable and all other operating expenses (of a nature described above in Section 5.8.1) incurred or accrued for all periods on or after the Closing Date, and other liabilities arising from Seller’s conduct of business for all periods on or before the Closing Date.

5.8.3 Each monthly payment shall include a breakdown showing, in reasonable detail, the determination of the amount payable such month by the Buyer to the Seller.

6. INDEMNIFICATION

6.1 Tax Indemnity. The Owner, the Owner Member and the Seller hereby agree that they shall jointly and severally indemnify and save harmless Buyer and its affiliates and their respective directors, managers, officers, employees, and agents (collectively, “Representatives”) from and against any and all Seller Taxes, and the Owner, the Seller and the Owner Member agree that they shall be responsible for any and all costs incurred by Buyer or any of its Representatives with respect to such Seller Taxes.

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6.2 Seller’s Indemnity for Acts or Omissions. Subject to the limitations and procedures set forth in this Section 6, the Owner, the Owner Member and the Seller hereby agree that they shall jointly and severally indemnify and save harmless Buyer and its Representatives from and against any claims, demands, actions, causes of action, damage, loss, costs, liability or expense (“Claims”) which may be brought against Buyer or its Representatives and/or which any of them may suffer or incur as a result of, in respect of, or arising out of (i) the acts, omissions, or other conduct of the Seller or its employees, contractors or Representatives, or other circumstance or event occurring or arising at or prior to Closing, with respect to the operation of the Business, and/or ownership of the assets of the Seller, (ii) the inaccuracy of any representation or warranty made by the Seller, the Owner and the Owner Member in this Agreement or any Collateral Agreement, (iii) termination of existing employment arrangements and release of Claims by and between the Seller and each other person employed by or otherwise engaged by the Seller, (iv) the failure of any of the Owner, the Owner Member or the Seller to comply with any covenants or other commitments made by them in this Agreement or any Collateral Agreement, (v) any items listed on the Disclosure Schedules unless expressly stated to be Assumed Obligation, (vi) the Excluded Assets or Excluded Liabilities of the Seller or (vii) any Lien or purported Lien on or with respect to the Purchased Assets.

6.3 Buyer’s Indemnity for Acts or Omissions. Subject to the limitations and procedures set forth in this Section 6, Buyer and CRH hereby agree that they shall jointly and severally indemnify and save harmless the Seller, the Owner and the Owner Member and their Representatives from and against any Claims which may be brought against the Seller, the Owner and the Owner Member and their Representatives and/or which any of them may suffer or incur as a result of, in respect of, or arising out of (i) the acts, omissions, or other conduct of Buyer or its employees, contractors or representatives, or other circumstance or event occurring or arising following Closing, with respect to the operation of the Business, and/or ownership of the Purchased Assets by Buyer, (ii) the inaccuracy of any representation or warranty made by Buyer in this Agreement or any Collateral Agreement, (iii) the failure of Buyer or CRH to comply with any covenants or other commitments made by them in this Agreement or any Collateral Agreement, or (iv) the Purchased Assets or Assumed Obligations.

6.4 Procedure for Indemnity. For purposes of this Section 6, a Party making a claim for indemnity is referred to as the “Indemnified Party” and the Party against whom such claim is asserted is referred to as the “Indemnifying Party.”

6.4.1 If any claim or demand for which an Indemnifying Party would be liable to an Indemnified Party is asserted against or sought to be collected from such Indemnified Party by a third party, including any taxing Authority, said Indemnified Party shall with reasonable promptness notify in writing the Indemnifying Party of such claim or demand stating with reasonable specificity the circumstances of the Indemnified Party’s claim for indemnification; provided, however, that any failure to give such notice shall not constitute a waiver of any rights of the Indemnified Party except to the extent the rights of the Indemnifying Party are actually prejudiced as a result of such failure.

6.4.2 After receipt by the Indemnifying Party of such notice, the Indemnifying Party shall, at its cost and expense, defend, manage and conduct any proceedings, negotiations or communications involving any claimant whose claim is the subject of the Indemnified Party’s

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notice to the Indemnifying Party as set forth above, and shall take all actions necessary, including but not limited to the retention of counsel reasonably satisfactory to the Indemnified Party, and the posting of such bond or other security as may be required by any Authority, so as to enable the claim to be defended against or resolved without expense or other action by the Indemnified Party, provided, however, that the Indemnifying Party shall not settle any such claim without the prior written consent of the Indemnified Party unless such settlement fully releases the Indemnified Party from all liabilities subject to such dispute and does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of the Indemnified Party. In the event that the Indemnifying Party shall fail to initiate a defense of such claim within ten (10) days of the date of the notice to the Indemnifying Party using counsel reasonably satisfactory to the Indemnified Party, or in the reasonable judgment of the Indemnified Party (i) the Indemnifying Party is not adequately defending such claim, or (ii) any applicable insurance coverage is at risk of denial or may be impaired by reason of such defense by the Indemnifying Party, then the Indemnified Party, after five (5) days written notice to the Indemnifying Party, may retain counsel and conduct the defense of such claim as it may in its discretion deem proper, at the cost and expense of the Indemnifying Party. Upon request of the Indemnifying Party, the Indemnified Party shall, to the extent it is compensated in advance for any expenses thereby incurred:

6.4.2.1 take such action as the Indemnifying Party may reasonably request in connection with such action,

6.4.2.2 allow the Indemnifying Party to dispute such action in the name of the Indemnified Party and to conduct a defense to such action on behalf of the Indemnified Party, and

6.4.2.3 render to the Indemnifying Party all such assistance as the Indemnifying Party may reasonably request in connection with such dispute and defense; provided, however, that the Indemnifying Party shall pay any out-of-pocket costs the Indemnified Party incurs in connection with taking such actions.

6.4.3 Notwithstanding the foregoing, the Indemnified Party shall not be obligated to take any action or assert any claim that it reasonably believes would be materially adverse to its reputation or that would threaten or restrict its ability to conduct business in the future. The Parties agree there is no intent for any insurance coverage of any of the Parties or the Representatives to be adversely impacted or superseded by the contractual indemnity claims set forth in this Agreement.

6.4.4 If the Indemnified Party is requested or required to pay any Taxes, and sue for a refund, the Indemnifying Party shall advance to the Indemnified Party, on an interest free basis, the amount of such claim. If, after actual receipt by the Indemnified Party of an amount advanced by the Indemnifying Party pursuant to this Section 6.3.4, the extent of the liability of the Indemnified Party with respect to the indemnified matter shall be established by the final judgment or decree of a court or a final or binding settlement with an administrative agency having jurisdiction thereof, the Indemnified Party shall promptly pay to the Indemnifying Party any refund received by or credited to the Indemnified Party with respect to the indemnified matter (together with any interest paid or credited thereon by the taxing Authority or any

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recovery of legal fees from such taxing Authority). Notwithstanding the foregoing, the Indemnified Party shall not be required to make any payment hereunder before such time as the Indemnifying Parties shall have made all payments or indemnities then due with respect to Indemnified Party pursuant to this Section 6.

6.5 Limitation on Liability.

6.5.1 The representations, warranties and agreements of the Seller, the Owner and the Owner Member and Buyer set forth in this Agreement or in connection with the transactions contemplated hereby shall survive the Closing, subject to the limitation periods set forth in Section 6.5.2, as applicable. Such representations, warranties and agreements shall not be affected or diminished in any way by the knowledge of a Party or any investigation (or the failure to investigate) at any time by or on behalf of the Party for whose benefit such representations, warranties or agreements were made.

6.5.2 Other than as provided in this Section 6.5.2, or as specifically provided in any representation, warranty or agreement, all representations and warranties of the Seller, the Owner and the Owner Member and Buyer contained in this Agreement shall expire, terminate and be of no force and effect (or provide the basis for any claim) and no Party shall have any obligation to indemnify therefor unless written notice of any claim resulting from any breach thereof is received prior to the second (2nd) anniversary of the Closing Date; provided, however, that, with respect to the Seller, the Owner and the Owner Member, (a) with respect to claims resulting from a breach of any representation or warranty contained in Section 3.1.11 and/or of the obligations contained in Section 5.5 and claims for indemnity for Taxes pursuant to the indemnification obligations set forth in Section 6.1 (each, a “Tax Claim”), the time period for written notice of any such Tax Claim shall extend until ninety (90) days following the expiration of the statutory period during which any taxing Authority may bring a claim against the Seller, Buyer or any of its affiliates for Taxes which are the subject of any such Tax Claim or, such longer statutory period if requested by the taxing Authority, (b) with respect to claims against the Seller or the Owner arising out of services provided prior to the Closing Date, the time period for written notice of any such claim shall extend until ninety (90) days following the expiration of the applicable statute of limitations, and (c) with respect to (i) any claim of fraud against the Seller, the Owner or the Owner Member, (ii) any claim of fraud or other violation against the Seller or the Owner that relates to state or federal government payor programs, including but not limited to Medicare or Medicaid, or (iii) a claim relating to a breach of any representation or warranty in Sections 3.1.2, 3.1.4, 3.1.5, 3.1.6, 3.1.8, 3.1.16, 3.1.17, 3.1.20, 3.1.23 and 3.1.27 (each a “Fundamental Representation”), or (iv) a claim resulting from a breach of any covenant for indemnity pursuant to Section 6.2, no such time limitation shall be applicable.

6.5.3 Except as set forth below, Buyer and its Representatives shall have no claim for indemnification hereunder unless and until the total amount of all Claims of Buyer and its Representatives incurred under this Agreement or under the Other Acquisition Agreement which would otherwise be subject to indemnification hereunder or thereunder exceed Fifty Thousand Dollars ($50,000) (the “Basket Amount”); at which time Buyer and its Representatives shall be entitled to recover the amount of all Claims hereunder including the Basket Amount. The limitations on liability in this Section 6.5.3 shall not apply to (i) any claim of fraud against the Seller, the Owner or the Owner Member by Buyer or its Representatives, (ii) any claim

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arising from an intentional misrepresentation by the Seller, the Owner or the Owner Member, (iii) any claim of fraud or other violation against the Seller that relates to state or federal government payor programs, including but not limited to Medicare and Medicaid, (iv) any lawsuits or actions pending as of the Closing Date, (v) any other lawsuits, actions or claims relating to events prior to the Closing Date whether presently known or unknown, (vi) any Tax Claim, (vii) any claim relating to a breach of the representations and warranties in Sections 3.1.2, 3.1.4, 3.1.5, 3.1.6, 3.1.8 and 3.1.23, or (viii) any claim relating to a breach of the covenants in Section 5.5. Furthermore, the Basket Amount also shall not apply to any obligations with respect to trade payables and other operating expenses incurred or accrued for the period prior to the Closing or any other Excluded Liabilities or with respect to any matters addressed in the Plavin Release.

6.5.4 Notwithstanding anything to the contrary contained herein, in no event shall the aggregate liability of the Seller, the Owner and the Owner Member pursuant to this Section 6 exceed the sum of (i) the amount of the Acquisition Consideration paid by Buyer hereunder and (ii) the amount of the Acquisition Consideration paid by the buyer under the Other Acquisition Agreement.

6.6 Nature of Payments. Any indemnity payments made under this Agreement shall be treated for Tax purposes as an adjustment to the total consideration paid for the Purchased Assets under this Agreement to the extent such characterization is proper or permissible according to relevant taxing Authorities. In the event of such an adjustment to the consideration paid for the Purchased Asset, the parties shall prepare and file a supplemental asset acquisition statement on IRS Form 8594 in accordance with the rules under Section 1060 of the Code and the Treasury regulations promulgated thereunder. To the extent Buyer has asserted indemnification claims hereunder or under the Other Acquisition Agreement that have not been satisfied or resolved (“Open Claims”) at the time that Buyer is obligated to pay any EBITDA Payment Amount hereunder, Buyer may offset the amount of such Open Claims against the EBTIDA Payment Amount.

6.7 Adjustments for Insurance. Any payment made by the Indemnifying Party to the Buyer or its Representative pursuant to this Section 6 shall be reduced by an amount equal to any insurance payments with respect to such Claim actually received by or for the benefit of the such Indemnified Party, provided that time for payment of any indemnification claim hereunder shall not be delayed by the recovery of any such insurance proceeds.

6.8 Indemnification Provisions Survive Closing. The provisions of this Section 6 shall survive the Closing.

6.9 CRH Guaranty. CRH hereby agrees that it shall be jointly and severally liable for Buyer’s obligations pursuant to this Section 6.

7. TERMINATION

7.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date, as follows:

7.1.1 by mutual written agreement of the Seller and Buyer; or

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7.1.2 by Buyer if any of the conditions set forth in Section 4.1 of this Agreement shall not have been fulfilled by the Closing Date; or

7.1.3 by the Seller if any of the conditions set forth in Section 4.2 of this Agreement shall not have been fulfilled by the Closing Date; or

7.1.4 by Buyer or the Seller for any reason or no reason if the Closing has not occurred on or before December 31, 2014, and the terminating party is not then in breach of this Agreement; or

7.1.5 by Buyer, if Buyer is not then in material breach of this Agreement and the Seller is then in material breach of this Agreement, and such breach remains uncured for ten (10) days after receipt of written notice thereof from Buyer;

7.1.6 by the Seller, if the Seller is not then in material breach of this Agreement and Buyer is then in material breach of this Agreement, and such breach remains uncured for ten (10) days after receipt of written notice thereof from the Seller; or

7.1.7 by Buyer or the Seller for any reason or no reason if the Other Acquisition Agreement is terminated and the terminating party is not then in breach of such agreement.

7.2 Rights on Termination. If this Agreement is terminated pursuant to Section 7.1 above, then except as otherwise provided herein, all further obligations of the Parties under or pursuant to this Agreement shall immediately terminate without further liability of any party to the others unless the termination is as a result of a material breach hereof (or in the event the termination itself is a material breach of this Agreement), in which case the terminating (non-breaching) party shall be entitled to pursue all legal and equitable claims against the breaching party. Notwithstanding the foregoing, Buyer shall be entitled to pursue specific performance against the Seller if all conditions precedent to the Seller’s obligation to close have been satisfied or waived and Buyer is not then in breach of this Agreement and the Seller thereafter fails to close (the Seller hereby acknowledging that Buyer has no adequate remedy at law in such instance). Without limiting the foregoing, and without duplication, in the event that this Agreement is terminated (a) by the Seller pursuant to Section 7.1.3 or Section 7.1.6; or (b) by either Buyer or the Seller pursuant to Section 7.1.4 or Section 7.1.7, Buyer shall immediately pay to the Seller the sum of Two Hundred Ten Thousand Dollars ($210,000.00) by wire transfer of immediately available U.S. funds.

8. CONFIDENTIALITY

8.1 Confidential Information. In connection with entering into this Agreement, the Seller, the Owner and the Owner Member are fully aware of all terms, conditions and covenants of this Agreement and in connection with their performance of their respective obligations hereunder, the Seller and/or the Owner may become aware of or come into possession of confidential, proprietary, or trade secret information, whether disclosed, directly or indirectly, verbally, in writing or by any other means in tangible or intangible form, applicable to or in any way related to: (i) patients with whom Buyer or its affiliates has a physician/patient relationship; (ii) the present or future business of Buyer and its affiliates; or (iii) the research and development of Buyer and its affiliates (“Confidential Information”). Without limiting the generality of the

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foregoing, Confidential Information shall include: (a) the development and operation of Buyer’s and its affiliates’ programs to provide services within their businesses, including information relating to budgeting, staffing needs, marketing, research, hospital relationships, surgery center relationships, physician office relationships, equipment capabilities, and other information concerning such facilities and operations and specifically including the procedures and business plans developed by Buyer and its affiliates; (b) contractual arrangements between Buyer or its affiliates and insurers or managed care associations or other payors; (c) the databases of Buyer and its affiliates; (d) the clinical and research protocols of Buyer and its affiliates, including coding guidelines; (e) the referral sources of Buyer and its affiliates; (f) other confidential information of Buyer and its affiliates that is not generally known to the public that gives Buyer and its affiliates the opportunity to obtain an advantage over competitors who do not know or use it, including the names, addresses, telephone numbers or special needs of any of their patients, their patient lists, their marketing methods and related data, lists or other written records used in Buyer’s or its affiliates’ business, compensation paid to employees and other terms of employment, accounting ledgers and financial statements, contracts and licenses, business systems, business plans and projections, and computer programs. The Parties agree that, as between them, the Confidential Information constitutes important, material, and confidential trade secrets that affect the successful conduct of Buyer’s and its affiliates’ business and their goodwill. Buyer acknowledges that the Confidential Information specifically enumerated above, but subject to the exclusions below, is special and unique information and is not information that would be considered a part of the general knowledge and skill that the Seller has or might otherwise obtain. Notwithstanding the foregoing, Confidential Information shall not include any information that (i) was known by the Seller from a third party source before disclosure by or on behalf of Buyer, (ii) becomes available to the Seller, the Owner and the Owner Member from a source other than Buyer that is not bound by a duty of confidentiality to Buyer, or (iii) becomes generally available or known in the industry other than as a result of its disclosure by any of the Seller, Owner or Owner Member. From and after the Closing, Confidential Information shall include each of the foregoing types of information that relate to the Business or the Purchased Assets.

8.1.1 The Seller, the Owner and the Owner Member agree that the terms of this Agreement shall be deemed Confidential Information for purposes of this Section 8. The Seller, the Owner and the Owner Member shall keep the terms of this Agreement strictly confidential and shall not, without the prior written consent of Buyer, disclose the details of this Agreement to any third party in any manner whatsoever in whole or in part, with the exception of the Seller’s or the Owner’s Representatives (such as tax advisors and attorneys) who need to know such information.

8.2 Maintenance of Confidentiality by the Seller, the Owner and the Owner Member. The Seller, the Owner and the Owner Member jointly and severally acknowledge that (i) Buyer and its affiliates possess and will continue to possess Confidential Information as defined in this Agreement, (ii) Buyer and its affiliates will disclose such Confidential Information to the Seller, the Owner and the Owner Member in connection with the transactions contemplated by this Agreement, and (iii) such Confidential Information is of substantial value to Buyer and its affiliates and gives Buyer and its affiliates an advantage over competitors who do not know or use it. The Seller, the Owner and the Owner Member jointly and severally agree that none of the Seller, the Owner nor the Owner Member will, at any time, in any fashion, form or manner,

38

unless specifically consented to in writing by Buyer, either directly or indirectly, use (except for the benefit of the Business of Buyer and its affiliates after the Closing) or divulge, disclose, or communicate to any person, firm or corporation, in any manner whatsoever, any Confidential Information of any kind, nature, or description concerning any matters affecting or relating to the business of Buyer or its affiliates, except as reasonably necessary to provide patient care, subject to applicable law. The Parties agree that any breach or threatened breach by the Seller, the Owner and the Owner Member of any term of this Section 8 is a material breach of this Agreement. Buyer shall be entitled to temporary and permanent injunctive or other equitable relief in order to prevent or restrain any such breach or threatened breach by the Seller, the Owner or the Owner Member, or any of the Seller’s, the Owner’s or the Owner Member’s partners, agents, representatives, servants, independent contractors, or any and all persons or entities directly or indirectly acting for or with the Seller, the Owner or the Owner Member. The rights and remedies of Buyer under this Section 8 shall be in addition to, and not in limitation of, any rights, remedies or damages available to it at law or equity or under any other agreement between Buyer or its affiliates on the one hand, and the Seller, the Owner or the Owner Member on the other. In the event that the Seller, the Owner or the Owner Member is ordered to disclose any Confidential Information, whether in a legal or a regulatory proceeding or otherwise, such Seller, Owner or Owner Member shall provide Buyer with prompt written notice of such request or order so that Buyer may seek to prevent disclosure or, if that cannot be achieved, the entry of a protective order or other appropriate protective device or procedure in order to assure, to the extent practicable, compliance with the provisions of this Agreement. In the case of any such required disclosure, the Seller, Owner and Owner Member shall disclose only that portion of the Confidential Information that any such party is ordered to disclose.

8.3 Provisions Survive Closing. The provisions of this Section 8 shall survive the Closing.

9. MISCELLANEOUS

9.1 Public Notice. Except as required by applicable law or any stock exchange, All public notices to third parties and all other publicity concerning the transactions contemplated by this Agreement shall require the prior written approval of Buyer and the Seller.

9.2 Expenses. The Seller, the Owner and the Owner Member shall be jointly and severally responsible for the fees and expenses of its respective counsel, accountants and other experts incident to the negotiation, drafting and execution of this Agreement and consummation of the transactions contemplated hereby and any and all expenses incurred by any of them prior to the Closing. Buyer shall be responsible for the fees and expenses of its counsel, accountants and other experts incident to the negotiation, drafting and execution of this Agreement and consummation of the transactions contemplated hereby.

9.3 Time. Time shall be of the essence hereof.

9.4 Notices. All notices, requests, offers, demands or other communications (collectively, “Notice”) given to or by the Parties under this Agreement shall be in writing, sent in one or more of the following methods and shall be deemed to have been duly given and received (i) if personally served on the Party to whom Notice is to be given, then on the date of

39

service, (ii) if sent by telephonic facsimile transmission (with receipt personally confirmed by telephone), then on the date sent by facsimile if sent on a Business Day before 5:00 p.m. local time of the recipient, and if not then on the next Business Day immediately following, (iii) if sent by reputable overnight delivery service, addressed to the Party to whom Notice is to be given, then one Business Day after being properly deposited for delivery by such service, or (iv) if sent by United States mail first class, registered or certified mail, postage prepaid, addressed to the Party to whom Notice is to be given, then four (4) Business Days after being properly deposited therewith; in each case, at such Party’s address set forth as follows or to any other address or facsimile number of which Notice of the change is given to the Parties hereunder:

To Buyer:	c/o CRH Medical Corp. 227 Bellevue Way, NE, #188 Bellevue, WA 98004
With a copy to:	Greenberg Traurig, LLP Terminus 200 3333 Piedmont Road NE Suite 2500 Atlanta, Georgia 30305 Attn: Gary E. Snyder, Esq. Fax: (678) 553-2120
To Owner and the Owner	[REDACTED]
With a copy to:	Blalock Walters, P.A. 2 N. Tamiami Trail, Suite 408 Sarasota, Florida 34236 Attn: Robert S. Stroud, Esq. Fax: (941) 745-2093

Notice to the Owner, the Owner Member or the Seller shall be sufficient if sent to the address for the Owner Member.

9.5 Assignment. Neither this Agreement nor any rights or obligations hereunder may be assigned by any Party hereto without the prior written consent of all other Parties, provided that Buyer may assign its rights to an affiliate of Buyer without prior written consent of the Seller, the Owner or the Owner Member or may make a collateral assignment thereof to any lender providing financing to Buyer in connection with the transactions contemplated hereby. Any such assignee of Buyer (other than a lender taking a collateral assignment) shall fully assume the obligations of Buyer hereunder; provided, however, in the event of any assignment (including without limitation a collateral assignment) neither Buyer nor CRH shall be released from their obligations under this Agreement or any Collateral Agreement.

9.6 Further Assurances. The Parties hereto shall, with reasonable diligence, do all such things, provide all such reasonable assurances, and execute such additional documents or instruments as may be required by any other Party and as may be reasonably necessary or

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desirable to effect the purpose of this Agreement and carry out its provisions, whether before or after the Closing. This Section 9.6 shall survive the Closing of the transactions set forth herein.

9.7 Headings. The descriptive headings of the several paragraphs of this Agreement are inserted for convenience only, are not part of this Agreement and do not in any way limit or amplify the terms or provisions of this Agreement.

9.8 Integration. This Agreement and any Exhibits and Schedules referenced herein (all of which are incorporated by reference as integral elements hereof) and the Collateral Agreements constitute the entire agreement between the Parties with respect to the subject matter contained herein and supersedes all agreements, representations and understandings of the Parties with respect to the subject matter hereof and thereof. Notwithstanding the foregoing, the Seller, Owner or Owner Member may have multiple agreements with Buyer or its affiliates containing restrictive covenants and all such restrictive covenants shall remain in full force and effect.

9.9 No Third Party Beneficiaries. This Agreement is entered into solely for the benefit of the Parties hereto and no term, provision or covenant hereunder shall confer or be deemed to confer a benefit on any other Person, other than as may be set forth herein. No third party is entitled to rely on any of the representations, warranties and agreements of Buyer or the Seller, Owner or Owner Member contained in this Agreement.

9.10 Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by all Parties hereto. No waiver of any provision of this Agreement shall constitute, or be deemed to constitute, a waiver of any other provision, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the Party granting the waiver.

9.11 Governing Law. This Agreement shall be governed by and interpreted under Georgia law, without regard to the conflict of law principles thereof.

9.12 Attorneys’ Fees; Remedies. In the event any action at law or in equity or other proceeding (including arbitration) is brought to interpret or enforce this Agreement, or in connection with any provision of this Agreement, the prevailing party shall be entitled to its reasonable attorneys’ fees and other costs reasonably incurred in such action or proceeding. The grant of any specific remedy hereunder shall be in addition to any other remedies that would be available to a Party arising in equity or at law or under this Agreement.

9.13 Number; Gender. Unless the context otherwise requires, the singular includes the plural and vice versa, and the masculine, feminine and neuter include each other.

9.14 Severability. Each article, section, subsection and lesser section of this Agreement constitutes a separate and distinct undertaking, covenant or provision hereof. Subject to Section 5.1.7, in the event that any provision of this Agreement shall finally be determined to be unlawful, such provision shall be deemed severed from this Agreement, but every other provision of this Agreement shall remain in full force and effect.

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9.15 Exhibits and Schedules. Notwithstanding anything to the contrary herein, disclosure of a specific item in any one schedule or exhibit shall be deemed restricted only to the section of this Agreement to which such disclosure relates, except where, and to the extent that, there is an explicit cross-reference in such schedule or exhibit to another schedule or exhibit.

9.16 Recitals. Each Party hereto acknowledges and agrees that the recitals set forth at the beginning of this Agreement are true and correct in all respects and are incorporated herein by reference.

9.17 No Party Deemed Drafter. Each Party to this Agreement acknowledges that such Party has been represented by legal counsel in preparation of this Agreement. If this Agreement or any provision hereof is interpreted by a court of law, no provision hereof shall be construed more harshly against any Party as drafter.

9.18 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall together constitute one and the same instrument. Facsimile and electronic (.PDF) signatures shall be treated as if they are original signatures for all intents and purposes.

9.19 Rules of Construction. The use in this Agreement of the term “including” means “including, without limitation.” The words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole, including the schedules and exhibits, as the same may from time to time be amended, modified, supplemented or restated, and not to any particular section, subsection, paragraph, subparagraph or clause contained in this Agreement. All references to sections, schedules and exhibits mean the sections of this Agreement and the schedules and exhibits attached to this Agreement, except where otherwise stated. The use herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case the context may require or permit. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates.

9.20 Saturdays, Sundays and Legal Holidays. If the time period by which any acts or payments required hereunder must be performed or paid expires on a Saturday, Sunday or a non-Business Day, then such time period shall be automatically extended to the close of business on the next regularly scheduled Business Day.

9.21 CRH Guaranty. CRH hereby guarantees any and all obligations owed or owing by Buyer under this Agreement, including, but not limited to, the obligations of Buyer set forth in Section 2.11, Section 5.8 and Section 6.

[Remainder of Page Intentionally Left Blank.]

[Signature Pages Follow.]

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IN WITNESS WHEREOF, the parties have executed this Agreement for Purchase and Sale of Assets as of the date first set forth above.

BUYER:	GASTROENTEROLOGY ANESTHESIA ASSOCIATES, LLC
	By:	(signed) “Richard Bear” Richard Bear, Its Vice President, Finance
SELLER:	[REDACTED]
	By:	(signed) [REDACTED] [REDACTED], Its Manager
CRH:	CRH MEDICAL CORPORATION
	By:	(signed) “Richard Bear” Richard Bear, Its Chief Financial Officer
OWNER:	[REDACTED]
	By:	(signed) [REDACTED] [REDACTED], Its Manager
OWNER MEMBER:
	(signed) [REDACTED] [REDACTED]

Signature Page to Agreement for Purchase and Sale of Assets

EX-10.10

Exhibit 10.10

CRH MEDICAL CORPORATION

as Borrower

and

CERTAIN AFFILIATES OF THE BORROWER

as Guarantors

and

THE LENDERS FROM TIME TO TIME

PARTY TO THIS AGREEMENT

as Lenders

and

THE BANK OF NOVA SCOTIA

as Administrative Agent

and

THE BANK OF NOVA SCOTIA

as Lead Arranger and Sole Bookrunner

US $100,000,000 CREDIT FACILITIES

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

DATED AS OF JUNE 26, 2017

TABLE OF CONTENTS

ARTICLE 1 INTERPRETATION		2
1.1	Definitions	2
1.2	Construction	29
1.3	Certain Rules of Interpretation	29
1.4	Knowledge	31
1.5	Performance on Banking Days	31
1.6	Accounting Terms	31
1.7	Permitted Liens	31
1.8	Amendment and Restatement	31
ARTICLE 2 THE CREDITS		32
2.1	Amounts and Availment Options	32
2.2	Re-borrowing	33
2.3	Use of the Credits	33
2.4	Term and Repayment	34
2.5	Interest Rates and Fees	34
2.6	Other Fees	35
2.7	Exchange Rate Fluctuations	35
ARTICLE 3 SECURITY		36
3.1	Security	36
3.2	Obligations Secured by the Security	38
ARTICLE 4 DISBURSEMENT CONDITIONS		40
4.1	Conditions Precedent for Amendment and Restatement and Initial Advance	40
4.2	Conditions Precedent to all Advances	43
ARTICLE 5 REPRESENTATIONS AND WARRANTIES		44
5.1	Representations and Warranties	44
5.2	Survival of Representations and Warranties	55
ARTICLE 6 COVENANTS		55
6.1	Financial Covenants	55
6.2	Positive Covenants	55
6.3	Financial Reporting and Notice Requirements	59
6.4	Negative Covenants	62
6.5	Use of Insurance Proceeds	67
6.6	Intragroup Obligations	67
ARTICLE 7 DEFAULT		68
7.1	Default	68
7.2	Acceleration and Termination of Rights	71
7.3	Payment of B/As	71
7.4	Remedies	72
7.5	Interest After Stay of Proceedings	72
7.6	Saving	72
7.7	Perform Obligations	73
7.8	Third Parties	73
7.9	Power of Attorney	73
7.10	Remedies Cumulative	73

- i -

7.11	Set-Off or Compensation	74
7.12	Direct Payments	74
ARTICLE 8 THE AGENT AND THE LENDERS		75
8.1	Authorization of Agent	75
8.2	Rights as a Lender	76
8.3	Exculpatory Provisions	76
8.4	Reliance by Agent	77
8.5	Delegation of Duties	78
8.6	Administration of the Credits	78
8.7	Acknowledgments, Representations and Covenants of Lenders	81
8.8	Collective Action of the Lenders	82
8.9	Authorization of Intercreditor Agreement	83
8.10	Defaulting Lenders	83
8.11	Reference Lenders	85
8.12	Successor Agent	85
8.13	No Other Duties, Etc.	86
8.14	Provisions Operative Between Lenders and Agent Only	86
8.15	Acknowledgment and Consent to Bail-In of EEA Financial Institutions	86
ARTICLE 9 DETAILS REGARDING ADVANCES, PAYMENTS, INTEREST AND FEES		87
9.1	Lenders’ Obligations Relating to Credit	87
9.2	Lenders’ Obligations Relating to Swingline Credit	87
9.3	Evidence of Indebtedness	88
9.4	Calculation and Other Matters Regarding Interest and Fees	88
9.5	Conversions, Rollovers, Renewals, Repayments and Reductions	90
9.6	Notice of Advances and Payments	91
9.7	Size and Term of Advances	92
9.8	Payment of B/As and LIBOR Advances	93
9.9	Co-ordination of Prime Rate, Base Rate, B/A and LIBOR Advances	93
9.10	Execution of B/As	94
9.11	Funding of B/As	95
9.12	Other B/A Provisions	95
9.13	Failure of Lender to Fund	96
9.14	Payments by the Borrower	97
9.15	Payments by Agent	98
9.16	Increased Costs, Etc.	99
9.17	Taxes	100
9.18	Mitigation Obligations; Replacement of Lenders	102
9.19	Illegality	103
9.20	Inability to Determine Rates, Etc.	104
ARTICLE 10 ADDITIONAL LENDERS, SUCCESSORS AND ASSIGNS		104
10.1	Successors and Assigns	104
10.2	Assignments by Lenders	105
10.3	Register	107
10.4	Participations	107
10.5	Certain Pledges	107

- ii -

ARTICLE 11 MISCELLANEOUS PROVISIONS		108
11.1	Severability, Etc.	108
11.2	Amendment, Supplement or Waiver	108
11.3	Governing Law and Agent for Service	108
11.4	Waiver of Jury Trial, Consequential Damages, Etc.	109
11.5	Expenses and Indemnity	110
11.6	Currency	111
11.7	Liability of Lenders	111
11.8	Currency Indemnity	111
11.9	Notices	112
11.10	Time of the Essence	113
11.11	Further Assurances	113
11.12	Term of Agreement	113
11.13	Counterparts, Facsimiles and Records	113
11.14	Treatment of Certain Information: Confidentiality	114
11.15	Entire Agreement	115
11.16	This Agreement to Govern	115
11.17	Language	115
11.18	Limitation Periods	116
11.19	Services Provided and Conflicts of Interest	116
11.20	Date of Agreement	117

- iii -

THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is dated as of June 26, 2017

BETWEEN:

CRH MEDICAL CORPORATION

as Borrower

- and -

CERTAIN AFFILIATES OF THE BORROWER

as Guarantors

- and -

THE LENDERS FROM TIME TO TIME PARTY

TO THIS AGREEMENT

as Lenders

- and -

THE BANK OF NOVA SCOTIA

as Administrative Agent

- and -

THE BANK OF NOVA SCOTIA

as Lead Arranger and Sole Bookruner

RECITALS:

A. The Lenders agreed to provide certain credit facilities in the maximum amount of US $55,000,000 or, the Equivalent amount in Canadian Dollars, to the Borrower and the Guarantors agreed to guarantee the obligations of the Borrower, in accordance with an amended and restated credit agreement dated as of June 15, 2016 between the Borrower, the Guarantors, the Agent and the Lenders (the “Existing Credit Agreement”).

B. By a term sheet accepted by the Borrower and Scotiabank (the “Term Sheet”), Scotiabank, as Lender and Swingline Lender, and Scotiabank as Lead Arranger, Sole Bookrunner, and Administrative Agent, agreed to establish in favour of the Borrower: (1) an increased revolving credit in the maximum amount of US $75,000,000 or, the Equivalent Amount in Canadian Dollars, (2) a new swingline sub-limit of the Revolving Credit in the maximum amount of US $5,000,000 or, the Equivalent Amount in Canadian Dollars, (3) an uncommitted accordion to increase the Revolving Credit by up to US $25,000,000 or, the Equivalent Amount in Canadian Dollars, and (4) a new non-revolving term credit in the maximum amount of US $25,000,000 or, the Equivalent Amount in Canadian Dollars, subject to certain conditions.

C. The Parties are entering into this Agreement to provide for the terms of the increased credit facilities, and the Existing Credit Agreement is superseded by this Agreement, it being the intent of the Parties that this Agreement is an amendment and restatement thereof.

THEREFORE, for value received, and intending to be legally bound by this Agreement, the Parties agree as follows:

ARTICLE 1

INTERPRETATION

1.1 Definitions

In this Agreement, unless the context otherwise requires, the following terms have the respective meanings specified or referred to. The following terms have the same meanings if used in another Loan Document unless they are otherwise defined in that Loan Document or the context otherwise requires.

“Acquisition” means (a) any investment in, or purchase or other acquisition of any Equity Interests of any Person, other than as contemplated in Section 6.4(7)(c), or (b) any purchase or other acquisition of a business or undertaking or division of any Person, including Property comprising the business, undertaking or division.

“Advance” means an availment of a Credit by the Borrower by way of Prime Rate Advance, Base Rate Advance, B/A, B/A Equivalent Loan or LIBOR Advance, including deemed advances and conversions, renewals and rollovers of existing Advances. Any reference to the amount of Advances is a reference to the sum of all outstanding Prime Rate Advances, Base Rate Advances and LIBOR Advances, the face amount of all outstanding B/As, the aggregate amount payable at the end of the term of all outstanding B/A Equivalent Loans, and the amount of any Advance for which the Borrower has failed to provide for payment under Section 9.8.

“Advance Date” means the date, which shall be a Banking Day, of any Advance.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

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“Agent” or “Administrative Agent” means Scotiabank in its capacity as administrative agent for the Lenders under this Agreement, and any successor administrative agent appointed in accordance with this Agreement.

“Agreement” means this Credit Agreement, including all Schedules to this Credit Agreement. In any other Loan Document, “Agreement” means the Loan Document in which the term is used.

“Anti-Corruption Laws” means all laws, rules and regulations of any jurisdiction applicable to the Borrower or any of its Subsidiaries from time to time concerning or relating to bribery or corruption.

“Applicable Law” means (a) any domestic or foreign statute, law (including common and civil law), treaty, code, ordinance, rule, regulation, restriction or by-law (zoning or otherwise); (b) any judgment, order, writ, injunction, decision, ruling, decree or award; (c) any regulatory policy, practice, request, guideline or directive; or (d) any franchise, licence, qualification, authorization, consent, exemption, waiver, right, permit or other approval of any Governmental Authority, binding on or affecting the Person referred to in the context in which the term is used or binding on or affecting the Property of that Person.

“Applicable Percentage” means with respect to any Lender, the percentage of the total Commitments represented by the Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentage shall be the percentage of the total outstanding Advances represented by that Lender’s outstanding Advances. Depending on the context, Applicable Percentage may refer to a Lender’s position either with respect to all Credits or any particular Credit. Each Lender’s Applicable Percentage as of the date of this Agreement is specified on Schedule A.

“Applicable Rate Table” means the following table:

Total Funded Debt Ratio	Prime Rate and Base Rate Advances (bps)		B/A/ / LIBOR / LC Advances (bps)		Standby Fee (bps)
< 1.00		50		175		35
> 1.00 < 1.50		75		200		40
> 1.50 < 2.00		100		225		45
> 2.00 < 2.50		125		250		50
> 2.50		150		275		55

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee and accepted by the Agent, in substantially the form of Schedule 0 or any other form approved by the Agent.

3

“Associate” has the meaning defined in the Canada Business Corporations Act as of the date of this Agreement.

“B/A” means a depository bill as defined in the Depository Bills and Notes Act (Canada) in Canadian Dollars that is in the form of an order signed by the Borrower and accepted by a Lender pursuant to this Agreement or, for Lenders not participating in clearing services contemplated in that Act, a draft or bill of exchange in Canadian Dollars that is drawn by the Borrower and accepted by a Lender pursuant to this Agreement. For this purpose, orders or drafts that become depository bills, drafts and bills of exchange are sometimes collectively referred to as “orders” in this Agreement.

“B/A Discount Proceeds” means, in respect of any B/A, the amount that is calculated on the applicable Advance Date in accordance with Section 9.4(5).

“B/A Discount Rate” means:

(a) with respect to any B/A accepted by a Lender named on Schedule Ito the Bank Act (Canada):

(i) the average rate that appears on the Reuters screen CDOR page (or any successor source as determined by the Agent from time to time) as of 10:00 a.m. on the applicable Advance Date, for bankers’ acceptances having an identical maturity date to the maturity date of that B/A. Notwithstanding the foregoing, if the bankers’ acceptance rate as quoted on the Reuters screen CDOR page is less than zero, the Discount Rate shall be deemed to be zero; or

(ii) if the Required Lenders determine from time to time that the rate referred to in item (i) does not adequately and fairly reflect their actual cost of funding B/A’s, or if that rate is not available, the rate determined by the Agent as being the arithmetic average (rounded upward to the nearest multiple of 0.01%) of the discount rates of the Schedule I Reference Lenders, determined in accordance with normal market practice at approximately 10:00 a.m. on the applicable Advance Date, for bankers’ acceptances having a comparable face amount and identical maturity date to the face amount and maturity date of that B/A; and

(b) with respect to any B/A accepted by any other Lender and for any B/A Equivalent Loan, the rate determined in accordance with item (a) above plus 0.10% per annum.

“B/A Equivalent Loan” is defined in Section 9.11(3).

“B/A Fee” means the fee payable with respect to a B/A that is calculated in accordance with Section 9.4(4).

4

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“Banking Day” means a day of the year, except a Saturday or a Sunday, on which the Agent is open for normal banking business at its principal offices in Vancouver, British Columbia, and Toronto, Ontario except that, if banks are open in some but not all of these locations on a particular day and the Agent determines that the closing of its offices on that day will not adversely affect completion of relevant transactions in accordance with customary banking market and trading practices, the Agent may, on reasonable notice to the Borrower and the Lenders, specify that particular day to be a Banking Day.

“Base Rate” means, on any day, the annual rate of interest established by the Agent as its reference rate for that day for commercial loans made by it in Canada in US Dollars.

“Base Rate Advance” means an Advance in US Dollars bearing interest based on the Base Rate, and includes availments that are deemed to be Base Rate Advances under this Agreement.

“Borrower” means CRH Medical Corporation, a corporation incorporated under the laws of British Columbia.

“Branch of Account” means the office of the Agent at 650 West Georgia Street, Vancouver, BC V6B 4P6, or another address that the Agent may designate by written notice to the Borrower from time to time.

“Canadian Dollar”, “C$”, “CAD” and “CADS” each mean the lawful currency of Canada.

“Capital Expenditure” means any expenditure for fixed or capital assets (including by way of capital lease) that is required to be classified as a capital expenditure in accordance with GAAP or is of a type that has previously been classified as a capital expenditure by the relevant Person.

“Cash Collateral” means a deposit of cash, Cash Equivalents or a letter of credit issued by a financial institution satisfactory to the Required Lenders, or to the beneficiaries of the letter of credit if it is not all Lenders, whose senior, unsecured, non-credit enhanced long term debt is rated A+ or the equivalent by at least two of DBRS, Moodys and S&P, all in a form satisfactory to the Required Lenders, or to the beneficiaries of the letter of credit if it is not all Lenders.

5

“Cash Equivalents” means instruments having the following characteristics:

(a) marketable direct obligations issued by, or unconditionally guaranteed by, the Canadian government or the United States government, as the case may be, or issued by any agency of either government and backed by the full faith and credit of Canada or the United States, as the case may be, in each case maturing within one year from the date of acquisition;

(b) certificates of deposit, time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any Lender or any bank with shareholders’ equity of not less than US $5,000,000,000 that is organized under the laws of Canada;

(c) commercial paper maturing within six months from the date of acquisition, that has at least two ratings of at least A-1+ by S&P, P-1 by Moody’s, and R-1 (middle) by DBRS;

(d) repurchase obligations of any Lender, any bank listed on Schedule I to the Bank Act (Canada) or any commercial bank satisfying the requirements of item (b) of this definition, having a term of not more than thirty (30) days, with respect to securities issued or fully guaranteed or insured by the Canadian government or the United States government;

(e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any province, state, commonwealth or territory of Canada or the United States, or by any political subdivision or taxing authority of any such province, state, commonwealth or territory, that has at least two ratings of at least A by S&P and DBRS and A-2 by Moody’s;

(f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Lender, any bank listed on Schedule I to the Bank Act (Canada) or any commercial bank satisfying the requirements of item (b) of this definition; and

(g) shares of money market mutual or similar funds offered by any Lender, any bank listed on Schedule I to the Bank Act (Canada) or any commercial bank satisfying the requirements of item (b) of this definition as long as the funds have the highest ratings for similar investments from at least two of S&P, DBRS and Moody’s.

“Cash Sweep” shall have the meaning set out in Section 6.2(13).

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the phase-in, adoption or taking effect of any Applicable Law, (b) any change in any Applicable Law or in its administration, interpretation, implementation or application by any Governmental Authority or (c) the making or issuance of any Applicable Law by any Governmental Authority, except that notwithstanding anything in this Agreement to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer

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Protection Act and all requests, rules, guidelines or directives under it or issued in connection with it and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or Canadian or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued.

“Change of Control” means the acquisition by any person, or by any group of persons acting in concert, of legal or beneficial ownership (whether by transfer, merger, amalgamation, conversion or exchange) of shares in the capital of the Borrower that carry more than 50% of the votes for the election of directors of the Borrower.

“Closing Date” means the date hereof, or such other date agreed, in writing, by the Borrower and the Lenders.

“Commitment” means, for each Lender from time to time, the agreement to make Advances to the Borrower and to purchase participations in Advances in accordance with Sections 9.1(1) and 9.1(2) in the Lender’s Applicable Percentage of the maximum amount of each Credit and, where the context requires, the maximum amount of Advances that the Lender has agreed to make. Each Lender’s Commitment may change from time to time or be cancelled in accordance with this Agreement.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

“Compliance Certificate” means a certificate in the form of Schedule L.

“Constating Documents” means, with respect to any Person, as applicable:

(a) its certificate and/or articles of incorporation, association, amalgamation or continuance, memorandum of association, charter, declaration of trust, trust deed, partnership agreement, limited liability company agreement or other similar document;

(b) its by-laws; and

(c) all unanimous shareholder agreements, other shareholder agreements, voting trust agreements and similar arrangements applicable to the Person’s Equity Interests;

all as in effect from time to time.

“Contract” means any agreement, contract, indenture, lease, deed of trust, licence, option, undertaking, promise or other commitment or obligation, whether oral or written, expressed or implied, other than a Permit.

“Contributing Lender” is defined in Section 9.13(2).

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“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by Contract or otherwise. “Controlling” and “Controlled” have corresponding meanings.

“Control Agreement” shall have the meaning given to such term in Section 6.2(10).

“Credits” means the Revolving Credit (which includes without duplication the Swingline Credit), the Term Credit, and any such other credit facilities as the Borrower may enter into with the Lenders pursuant to this Agreement or any amendment or restatement of this Agreement, and “Credit” means either of them.

“CRH Delaware” means CRH Medical Corporation, a Delaware corporation.

“DBRS” means DBRS Limited, or any successor to it.

“Debt” means, with respect to any Person, the following amounts, each calculated in accordance with GAAP unless the context otherwise requires and without regard to any interest component (whether actual or imputed) that is not due and payable, except as provided in item (c) below:

(a) any obligation (including by way of overdraft or draft or order accepted representing an extension of credit) that would be considered to be indebtedness for borrowed money;

(b) any obligation (whether or not with respect to the borrowing of money) that is evidenced by a bond, debenture, note or other similar instrument;

(c) the face amount of any bankers’ acceptance or similar instrument;

(d) any obligation on which interest is customarily paid by that Person;

(e) any Equity Interest of that Person (or of any Subsidiary of that Person) that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder), or on the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder of the Equity Interest, in whole or in part, on or before, or within one year after, the maturity date of the Credits, for cash or securities constituting Debt;

(f) the market value of any Derivative for which the market value is negative from that Person’s perspective (that is, the Person is “out of the money”), where the market value is the aggregate amount that would have to be paid by that Person to its counterparty under the Derivative so as to preserve the economic equivalent of all payments or deliveries (whether the underlying obligation was absolute or contingent) to be made by both parties in respect of the obligations under the Derivative; that amount may be reduced to the extent that the market value of another Derivative entered into by that Person with the same counterparty is

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positive from that Person’s perspective and a netting arrangement between that Person and its counterparty is in place;

(g) any capital lease obligation, synthetic lease obligation, obligation under sale and leaseback transaction or purchase money obligation;

(h) all indebtedness of any other Person secured by a Lien on any Property of the specified Person, whether or not the indebtedness is assumed by the specified Person, except that the amount of the resulting Debt shall be the lesser of (i) the fair market value of the Property at the date of determination, and (ii) the amount of the indebtedness of the other Person;

(i) the face amount of any letter of credit or letter of guarantee, performance bond, surety bond or similar instrument for which the Person has reimbursement obligations;

(j) the GAA Earn-Out payments;

(k) the amount of the contingent liability under any guarantee (except by endorsement of negotiable instruments for collection or deposit in the Ordinary Course) in any manner of any part or all of an obligation of another Person of the type included in items (a) through (i) above; and

(l) any other guarantee or other contingent liability of any part or all of an obligation of another Person, in each case only to the extent that the guarantee or other contingent liability is required by GAAP to be treated as a liability on a balance sheet of the guarantor or Person contingently liable;

except that current trade payables incurred in the Ordinary Course do not constitute Debt.

“Default” means any event or condition that constitutes an Event of Default or that would constitute an Event of Default except for satisfaction of any condition subsequent required to make the event or condition an Event of Default, including giving of any notice, passage of time, or both.

“Defaulting Lender” means, subject to Section 8.10(7), any Lender that:

(a) has failed to (i) fully fund its share of any Advance or fulfill its obligations under Section 9.1 within two (2) Banking Days of the date it is required to do so under this Agreement, unless the Lender notifies the Agent and the Borrower in writing that its failure is the result of its determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable Default, shall be specifically identified in its notice) has not been satisfied, or (ii) pay to the Agent or any Lender any other amount required to be paid by it under this Agreement (including under Section 9.1) within two (2) Banking Days of the date when due;

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(b) has notified the Borrower, the Agent or any other Lender in writing that it does not intend to comply with its funding obligations under this Agreement (including Section 9.1), or has made a public statement to that effect (unless its notice or public statement relates to its obligation to fund an Advance and states that the Lender’s position is based on its determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable Default, shall be specifically identified in its notice or public statement) cannot be satisfied);

(c) has failed, within three (3) Banking Days after written request by the Agent or Borrower, to confirm in writing to the Agent and Borrower that it will comply with its prospective funding obligations under this Agreement, including Section 9.1, (but the Lender will cease to be a Defaulting Lender pursuant to this Section 1.1(c) upon receipt of that written confirmation by the Agent and the Borrower);

(d) has itself or is Controlled by a Person that has (i) become the subject of a bankruptcy or insolvency proceeding, or (ii) had a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business appointed for it (except that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interests in that Lender or any Person that Controls it by a Governmental Authority as long as that does not result in or provide the Lender with immunity from the jurisdiction of courts within the Province of British Columbia or from the enforcement of judgments or writs of attachment on its Property, or permit the Lender or Governmental Authority to reject, repudiate, disavow or disaffirm any Contract made with the Lender); or

(e) has become subject to a Bail-in Action.

Any determination by the Agent that a Lender is a Defaulting Lender under any one or more of Sections 1.1(a) to 1.1(d) shall be conclusive and binding absent manifest error, and that Lender shall be deemed to be a Defaulting Lender (subject to Section 8.10(7)) upon delivery of written notice of the Agent’s determination to the Borrower and each Lender.

“Derivative” means any transaction or combination of transactions, including any related agreement, of a type commonly considered to be a derivative or hedging transaction, whether relating to one or more of interest rates, currencies, commodities, securities or any other matters, including (a) any cap, collar, floor or option, (b) any forward contract, and (c) any rate swap, basis swap, commodity swap, cross-currency swap or other swap or contract for differences.

“Dispute” means any suit, action, dispute, investigation, claim, arbitration, legal, insolvency or other proceeding, appeal or application for review, whether at law, in equity or before any Governmental Authority, or any industrial or labour dispute, and includes any claim by any Governmental Authority regarding payment, collection, withholding or remittance of Taxes.

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“EBITDA” means, for any relevant period, an amount equal to the Borrower’s net income or net loss for the period (before extraordinary and other non-recurring items as agreed to in writing by the Agent (including, without further agreement, stock based compensation, acquisition related expenses to a maximum of $2,000,000 per rolling four quarter period, asset impairment charges to a maximum of $2,000,000 per rolling four quarter period, unrealized foreign exchange gains or losses related to Debt)) calculated on a consolidated basis in accordance with GAAP unless otherwise expressly described below, plus amounts deducted, or minus amounts added, in calculating net income or net loss in respect of:

(a) Total Interest Expense;

(b) income taxes, whether or not deferred; and

(c) depreciation and amortization,

less the difference of:

all EBITDA from JV Subsidiaries minus all cash distributions received by the Borrower pursuant to the Cash Sweep per rolling four quarter covenant calculation period.

“EEA Financial Institution” means (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a Subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“Eligible Assignee” means any Person (other than a natural person, any Obligor or Affiliate of an Obligor, any Defaulting Lender or Affiliate of a Defaulting Lender, or any Person who would be a Defaulting Lender upon becoming a Lender), in respect of which any consent that is required by Section 10.2(1) has been obtained.

“Employee Plan” means a Pension Plan, a Welfare Plan or both.

“Equity Interests” means, with respect to any Person, any and all present and future shares, units, trust units, partnership, membership or other interests, participations or

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other equivalent rights in the Person’s equity or capital, however designated and whether voting or non-voting, and warrants, options or other rights to acquire any of the foregoing and Debt or other rights convertible into or exchangeable for any of the foregoing.

“Equivalent Amount” means, with respect to an amount in one currency, the amount in another currency that could be purchased by the amount in the first currency determined by reference to the Exchange Rate at the time of determination.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“Event of Default” means any event listed in Section 7.1.

“Exchange Rate” means the amount of one currency into which another currency may be converted using the Agent’s mid rate (i.e., the average of the Agent’s spot buying and selling rates) for converting the first currency to the other currency at the relevant time. For the purpose of calculating any standby fee, or if the Exchange Rate is being determined at any time in respect of a previous day, the noon spot rate of the Bank of Canada; provided that if such rate is no longer quoted at noon, at the spot rate of exchange for such conversion as quoted by the Bank of Canada at the close of business on the Banking Day that such conversion is to be made (or, if such conversion is to be made before close of business on such Banking Day, then at approximately close of business on the immediately preceding Banking Day).

“Excluded Swap Obligation” means with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient:

(a) Taxes imposed on or measured by its net income (however denominated), franchise Taxes and branch profits Taxes, in each case, (i) imposed as a result of that Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in the jurisdiction imposing the Tax (or any political subdivision of the jurisdiction) or (ii) that are Other Connection Taxes;

(b) any FATCA Withholding Tax;

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(c) in the case of a Foreign Lender, any withholding Tax (which includes any Tax that a Foreign Lender is required to pay pursuant to Part XIII of the Income Tax Act (Canada)) that is required by Applicable Law to be withheld or paid in respect of any amount payable under any Loan Document to that Foreign Lender at the time it becomes a Party (or designates a new lending office) or is attributable to the Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 9.17(6), except:

(i) withholding Tax applicable to an assignee pursuant to a request by the Borrower under Section 9.18(2);

(ii) withholding Tax applicable to an assignee pursuant to an Assignment and Assumption made when an Event of Default has occurred and is continuing;

(iii) withholding Tax applicable to any other assignee to the extent that the Borrower has expressly agreed that any withholding Taxes shall be an Indemnified Tax;

(iv) withholding Tax imposed or assessed in respect of an Advance that was made on the premise that an exemption from that withholding tax would be available where the exemption is subsequently determined, or alleged by a taxing authority, not to be available; and

(v) to the extent that the Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from an Obligor with respect to that withholding Tax pursuant to Section 9.17(1);

(d) Taxes payable by a Lender that does not deal at arm’s length with the Borrower (within the meaning of the Income Tax Act (Canada)) at the time of the payment; and

(e) Taxes payable by a Lender that is a “specified non-resident shareholder” of the Borrower, or is a Person not dealing at arm’s length with a “specified shareholder” of the Borrower for the purposes of the Income Tax Act (Canada).

“Executive Order” means Executive Order No. 13224 on Terrorist Financing, issued by President George W. Bush and effective 24 September 2001, as the same has been, or shall hereafter be, renewed, extended or replaced.

“FATCA Withholding Tax” means any United States federal withholding tax imposed or collected pursuant to sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (in this Section 1.1, the “Code”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of those sections of the Code.

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“Fee Letter” shall mean the fee letter in respect of the Credits, dated as of June 26, 2017, by and between the Borrower and Scotiabank.

“Fixed Charge Coverage Ratio” means, for any fiscal or rolling twelve (12) month period, the ratio of (a)(i) EBITDA, less (ii) cash taxes paid, less (iii) unfinanced Capital Expenditures, less (iv) dividends paid to (b)(i) Total Interest Expense, (ii) capital lease payments, (iii) scheduled debt repayments, (iv) GAA Earn-Out payments, (v) and any future earn-out payments related to an Acquisition, without duplication.

“Foreign Lender” means any Lender that is not organized under the laws of the jurisdiction in which the Borrower is resident for tax purposes and that is not otherwise considered or deemed in respect of any amount payable to it under any Loan Document executed by an Obligor to be resident for income tax or withholding tax purposes in the jurisdiction in which the Borrower is resident for tax purposes by application of the laws of that jurisdiction. For purposes of this definition Canada and each of its Provinces and Territories shall be deemed to constitute a single jurisdiction and the United States of America, each of its States and the District of Columbia shall be deemed to constitute a single jurisdiction.

“GAA” means Gastroenterology Anesthesia Associates, LLC, a corporation incorporated under the laws of the State of Georgia.

“GAA Earn-Out” means earn-out amounts payable by GAA to [REDACTED] in connection with the acquisition of the assets of [REDACTED], when such amounts are earned.

[REDACTED] Intercreditor Agreement” means the intercreditor agreement dated as of the date hereof by and between the Agent, the Borrower, GAA and [REDACTED].

“GAAP” means generally accepted accounting principles in effect from time to time in Canada as established or adopted by the Canadian Institute of Chartered Accountants or any successor body, including International Financial Reporting Standards, and “US GAAP” shall mean generally accepted accounting principles in effect from time to time in the United States of America, as established or adopted by Financial Accounting Standards Accounting Board and any successor body in effect from time to time, including any official interpretations thereof, consistently applied.

“Governmental Authority” means the government of Canada, the U.S. or any other nation, or of any of its political subdivisions, whether provincial, state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, including any supra-national bodies such as the European Union or the European Central Bank and including a Minister of the Crown, Superintendent of Financial Institutions or other comparable authority or agency.

“Governmental Obligor” means Medicare, Medicaid, any state health plan adopted pursuant to Title XIX of the United States Social Security Act, any other United States

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state or federal health care program and any other Governmental Authority which presently or in the future maintains a Reimbursement Program.

“Guarantors” means the parties that have executed this Credit Agreement as guarantors and any other Person who becomes a guarantor of the obligations of the Borrower hereunder, and “Guarantor” means any one of them.

“Hazardous Materials” means any pollutant, contaminant, or hazardous, toxic or dangerous waste, substance or material, as defined in any Applicable Law or regulated by any Governmental Authority from time to time.

“Health Care Laws” means all Applicable Laws relating to (a) fraud and abuse; (b) Medicare, Medicaid or other Reimbursement Programs; (c) the licensure or regulation of healthcare providers, suppliers, professionals, facilities or payors; (d) the provision of, or payment for, health care services, items or supplies; (e) patient health care; (f) quality, safety certification and accreditation standards and requirements; (g) the billing, coding or submission of claims or collection of accounts receivable or refund of overpayments; (h) HIPAA; (i) the practice of medicine and other health care professions or the organization of medical or professional entities; (j) fee-splitting prohibitions; (k) requirements for maintaining federal, state and local tax-exempt status of any Obligor or any Subsidiary of any Obligor; (1) charitable trusts or charitable solicitation laws; (m) health planning or rate-setting laws, including laws regarding certificates of need and certificates of exemption; (n) certificates of operations and authority; (o) laws regulating the provision of free or discounted care or services; and (p) any and all other applicable federal, state or local health care laws, rules, codes, statutes, regulations, manuals, orders, ordinances, statutes, policies, professional or ethical rules, administrative guidance and requirements, as the same may be amended, modified or supplemented from time to time, and any successor statute thereto.

“Health Care Permits” means any and all Permits issued or required under applicable Health Care Laws.

“HIPAA” means (a) the United States Health Insurance Portability and Accountability Act of 1996; (b) the United States Health Information Technology for Economic and Clinical Health Act (Title XIII of the United States American Recovery and Reinvestment Act of 2009); and (c) any state and local laws regulating the privacy and/or security of individually identifiable information, including state laws providing for notification of breach of privacy or security of individually identifiable information, in each case with respect to the laws described in clauses (a), (b) and (c) of this definition, as the same may be amended, modified or supplemented from time to time, any successor statutes thereto, any and all rules or regulations promulgated from time to time thereunder.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of an Obligor under any Loan Document, and (b) to the extent not otherwise described in (a), Other Taxes.

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“Intellectual Property” means patents, trademarks, service marks, trade names, copyrights, trade secrets, industrial designs and other similar rights.

“Interbank Reference Rate” means, in respect of any currency, the interest rate expressed as a percentage per annum that is determined by the Agent at any time in accordance with banking industry rules on interbank compensation for use when calculating interest due by it or owing to it arising from correction of errors in transactions in that currency between it and other banks.

“Intercreditor Agreement” means any intercreditor, priority, subordination or similar agreement , including any declaration of subordination by the Lenders for the benefit of a third party or by a third party for the benefit of the Lenders, that may be entered into from time to time and that provides for the terms of subordination, ranking or priority of any other Debt or Lien in relation to any of the Obligations, the Other Secured Obligations or the Security, including the [REDACTED] Intercreditor Agreement.

“Intragroup Debts” means all present and future debts, liabilities and obligations owing or remaining unpaid by any Obligor to another Obligor in respect of loans or advances made to the first Obligor by the other Obligor.

“Intragroup Obligations” means all present and future debts, liabilities and obligations of any kind owing or remaining unpaid by any Obligor to another Obligor, including Intragroup Debts.

“JV Permitted Debt” means:

(a) working capital loans used to finance the day-to-day operations of a JV Subsidiary, provided that the aggregate amount of such loans do not exceed US $200,000 per JV Subsidiary;

(b) Debt of a JV Subsidiary under or in connection with unsecured short term intercompany loans made available to a JV Subsidiary by an Obligor for initial working capital purposes following the Permitted Acquisition:

(i) with a maturity date of no more than the earlier of one hundred and twenty days (120) from the date of advance of such loan and the closing date of the Permitted Acquisition;

(ii) whereby payment obligations, when aggregated with any similar Debt of any other JV Subsidiary owing to the Obligors, do not exceed US $2,000,000 in any fiscal year of the Borrower; and

(iii) such Debt is not entered into when a Default has occurred and is continuing, or a Default would occur as a result of the same; and

(c) other Debt of a JV Subsidiary expressly consented to by the Required Lenders in writing.

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“JV Subsidiary” means a Subsidiary that is majority-owned and controlled by an Obligor but has not provided a guarantee as Security or acceded as Guarantor under this Agreement, including but not limited to Subsidiaries such as Knoxville Gastroenterology Anesthesia Associates (Tennessee) and Macon Georgia Anesthesia Associates, LLC (Georgia).

“Knoxville Anesthesia” means Knoxville Gastroenterology Anesthesia Associates, LLC, a limited liability company organized under the laws of the State of Tennessee.

“KYC Laws” means Applicable Law regarding anti-money laundering, anti-terrorist financing, government sanction and “know your client” matters, including the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), the Executive Order and the PATRIOT Act.

“Lead Arranger” shall mean Scotiabank.

“Lenders” means each of the Persons listed on Schedule A and other financial institutions or entities that from time to time become Lenders in accordance with Article 10. However, references to the Lenders in the context of the Agent or others holding Security or other rights or documents for the benefit or on behalf of the Lenders shall be interpreted as including other Persons to whom Other Secured Obligations are owed. For greater certainty, the term “Lenders” shall include the Swingline Lender.

“LIBOR” means, for any LIBOR Period and LIBOR Advance:

(a) the rate expressed as a percentage per annum for deposits in US Dollars in the London interbank market for a period equal to the LIBOR Period that appears on the Reuters LIBOR 01 Page (or any successor source as determined by the Agent from time to time) as of 11:00 a.m. (London time) two (2) Banking Days before the first day of the LIBOR Period. Notwithstanding the foregoing, if the rate on the Reuters LIBOR 01 Page is less than zero, the rate shall be deemed to be zero; or

(b) if the rate in item (a) is not available, the interest rate expressed as a percentage per annum determined by the Agent to be the arithmetic average (rounded upward to the nearest multiple of 1/16 of 1%) of the cost of funds of the Schedule I Reference Lenders in the London interbank market for US Dollars for delivery on the first day of the LIBOR Period, for a period equal to the LIBOR Period and in an amount approximately equal to the amount of the LIBOR Advance, at approximately 11:00 a.m. (London time) two (2) Banking Days before the first day of the LIBOR Period.

“LIBOR Advance” means an Advance in US Dollars bearing interest based on LIBOR.

“LIBOR Period” means the period selected by the Borrower for a LIBOR Advance.

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“Licensed Personnel” means any Person (including any physician) involved in the delivery of health care or medical items, services or supplies, employed or retained by any Obligor or any Subsidiary of any Obligor.

“Lien” means:

(a) with respect to any Property, any mortgage, debenture, deed of trust, lien, pledge, hypothec, hypothecation, encumbrance, charge, assignment by way of security, consignment, security interest, royalty interest, adverse claim, defect of title or right to set off in, on or of the Property;

(b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease (or financial lease) or title retention agreement having substantially the same economic effect as any of the foregoing, relating to any Property;

(c) with respect to securities, any purchase option, call or similar right of a third party, in respect of the securities;

(d) any netting or set-off arrangement (except one arising by operation of law in the Ordinary Course), defeasance arrangement or reciprocal fee arrangement; and

(e) any other arrangement having the effect of providing security.

“Loan Documents” means this Agreement, the Security, each Intercreditor Agreement, the Fee Letter and all other documents relating to the Credits, or either of them.

“Material” means (except when used as part of another term defined in a Loan Document), with reference to the matter described as Material, that it would reasonably be considered to be a factor by a prudent lender in its assessment of credit extended or to be extended to a borrower, and “Materially” has a corresponding meaning.

“Material Adverse Effect” means a material adverse effect on (a) the business, operations, Property, liabilities, business prospects, financial position or operating results of the Obligors, taken as a whole, (b) the ability of the Obligors, taken as a whole, to comply with the Loan Documents, or (c) the validity or enforceability of any Loan Document.

“Material Contract” means:

(a) any Contract that is listed on Schedule E; or

(b) any Contract to which any Obligor is a party that, if terminated, would impair the ability of the Obligor to carry on business in the Ordinary Course or would have a Material Adverse Effect.

“Material Permit” means any Permit issued to any Obligor that, if terminated, would impair the ability of the Obligor to carry on business in the Ordinary Course or would have a Material Adverse Effect.

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“Maturity Date” means June 26, 2020.

“Medicaid” means, collectively, the health care assistance program established by Title XIX of the United States Social Security Act (42 U.S.C. 1396 et seq.) and any statutes succeeding thereto, and all laws, rules, regulations, manuals, orders or requirements pertaining to such program, in each case as the same may be amended, supplemented or otherwise modified from time to time.

“Medicare” means, collectively, the health insurance program for the aged and disabled established by Title XVIII of the United States Social Security Act (42 U.S.C. 1395 et seq.) and any statutes succeeding thereto, and all laws, rules, regulations, manuals, orders or requirements pertaining to such program, in each case as the same may be amended, supplemented or otherwise modified from time to time.

“Moody’s” means Moody’s Investors Service, or any successor to it.

“Non-B/A Lender” is defined in Section 9.11(3).

“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all Lenders in accordance with Section 8.6(5) and (b) has been approved by the Required Lenders.

“Non-Defaulting Lender” means, at any time, each Lender that is not then a Defaulting Lender.

“Non-Funding Lender” is defined in Section 9.13(2).

“Norrep” means Norrep Credit Opportunities Fund II LP, together with Norrep Credit Opportunities Fund II (Parallel), LP.

“Norrep Debt” means the obligations owing by the Borrower to Norrep pursuant to the amended and restated credit agreement dated as of June 15, 2016 between Norrep, as lender, the Borrower, as borrower, and certain affiliates of the Borrower, as guarantors.

“Obligations” means all debts, liabilities and obligations of the Borrower to the Lenders under or in connection with this Agreement, whether present or future, direct or indirect, absolute or contingent, matured or not, at any time owing or remaining unpaid by the Borrower to the Lenders in any currency under or in connection with this Agreement, whether arising from dealings between the Lenders and the Borrower or from other dealings or proceedings by which the Lenders may be or become in any manner whatever creditors of the Borrower under or in connection with this Agreement, and wherever incurred, and whether incurred by the Borrower alone or with another or others and whether as principal or surety, and all interest, fees, commissions and legal and other costs, charges and expenses owing or remaining unpaid by the Borrower to the Lenders in any currency under or in connection with this Agreement. In this definition, “Lenders” means the Lenders, or any of them. For certainty, the Other Secured Obligations are not Obligations.

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“Obligors” means, collectively, the Borrower and each of the guarantors of the Obligations and/or Other Secured Obligations that are signatories to this Agreement or become Obligors in accordance with Section 3.1(2). References to “the Obligors” shall be interpreted to mean “the Obligors or any of them.” At the date of this Agreement, the Obligors are those Persons listed in Schedule B.

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.

“Ordinary Course” means, with respect to an action taken by a Person, that the action is consistent with the past practices of the Person and is taken in the usual course of the normal day-to-day operations of the Person, but dealing with new customers, suppliers or other third parties or adopting new business methods does not, in itself, constitute a departure from past practice.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between that Recipient and the jurisdiction imposing the Tax (other than connections arising from the Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Advance or Loan Document).

“Other Secured Obligations” is defined in Section 3.2(1)(b).

“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes (other than Taxes arising with respect to an assignment made pursuant to Section 9.18).

“Participant” is defined in Section 10.4(1).

“Parties” means collectively the Borrower, the other Obligors, the Lenders and the Agent.

“PATRIOT Act” means the United States PATRIOT Act (Title III of Pub. L. 107-56), signed into law on 26 October 2001.

“Pension Plan” means a “pension plan” or “plan” within the meaning of the applicable pension benefits legislation in any jurisdiction of Canada that is organized and administered to provide pensions, pension benefits or retirement benefits for employees and former employees of any Obligor.

“Permits” means franchises, licences, qualifications, authorizations, consents, certificates, registrations, exemptions, waivers, filings, grants, notifications, privileges, rights, orders, judgments, rulings, directives, permits and other approvals, obtained from or required by a Governmental Authority.

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“Permitted Acquisition” means an Acquisition by an Obligor (i) consented to in writing by the Required Lenders, or (ii) if all of the following conditions are satisfied:

(a) the total consideration payable in respect of all Acquisitions in any fiscal year does not exceed US $35,000,000;

(b) the total consideration payable in respect of any Acquisition does not exceed US $10,000,000;

(c) the Target is a wholly-owned Subsidiary of an Obligor or a JV Subsidiary, and within thirty (30) days of the Acquisition of the Target, the Target and the Obligor shall deliver all security documents required to comply with Section 3.1, which shall become part of the Security;

(d) if applicable, the Acquisition of the Target is non-hostile;

(e) the Acquisition of the Target or the Target Assets is accretive to cash flow of the Borrower;

(f) no Default has occurred and is continuing or would result from the Acquisition;

(g) the Target is (or if applicable, the Target Assets are) located in Canada or the United States of America and is in substantially the same line of business or a related business as the Borrower;

(h) the Borrower will be in pro forma compliance with the financial covenants in Section 6.1 both at closing of the Acquisition and immediately after such Acquisition has been effected as evidenced by pro forma financial statements, balance sheet, income statement, cash flow statement and compliance certificate confirming compliance with all covenants;

(i) any Property that is the subject of the Acquisition is free of all Liens except Permitted Liens or Liens that the Borrower (or another Obligor) is capable of discharging in full within thirty (30) days of effecting such Acquisition and does so discharge; and

(j) no Lender would be restricted from financing, supporting or otherwise being involved in or associated with activities in any jurisdiction relevant to the Acquisition;

(k) the Agent shall have received and be satisfied, acting reasonably, with:

(i) the applicable purchase agreement relating to the Target or the Target Assets;

(ii) upon reasonable request, the most recent financial statements of the Target or such supporting financial information used by the Borrower to prepare the Borrower’s projections, forecasts and budgets in respect of the Target

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or the acquisition of the Target Assets, as applicable, including, where appropriate, a Quality of Earnings Report on the proposed Target;

(iii) upon reasonable request, the quarterly break-down of EBITDA of the Target or the vendor of the Target Assets, as applicable, for the last twelve (12) months with anticipated normalizations;

(iv) upon reasonable request, the results of the Borrower’s business, legal, background checks on key personnel, accounting, pension and environmental due diligence regarding the Target (or as applicable, Target Assets), including litigation and judgment lien searches and other inquiries with Governmental Authorities;

(v) copies of operating agreements for the Target and confirmation that such agreements do not contain any sale or transfer restrictions that restrict the Agent’s rights to enforce any pledge of Equity Interests;

(vi) confirmation that, following completion of the Acquisition, the Target cannot incur any new debt without the consent of the Borrower; and

(vii) confirmation that, following completion of the Acquisition, the Borrower maintains sole authority over all deposit accounts of the Target;

as confirmed in a certificate, to also include confirmation of such standard representations and warranties as may be reasonably requested by the Agent from time to time, delivered by the Borrower to the Agent on or before completing the Acquisition together with such information as may be reasonably requested by the Agent.

“Permitted Debt” means:

(a) the Obligations;

(b) the Other Secured Obligations;

(c) Debt secured by Permitted Liens;

(d) Intragroup Debts, to the extent permitted under this Agreement;

(e) unsecured Debt (including any unsecured Equity Interest that constitutes Debt pursuant to subsection (e) of the definition of Debt) either in an aggregate principal amount outstanding at any time that does not exceed US $1,000,000 for all Obligors or, in respect of any such unsecured Debt of the Obligors that alone or in the aggregate exceeds such principal amount, which is postponed to the rights of the Lenders pursuant to an Intercreditor Agreement in a form acceptable to the Required Lenders and following the incurrence of which the Obligors will be in pro forma compliance with the financial covenants in Section 6.1;

(f) obligations under Derivatives that comply with Section 6.4(8);

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(g) guarantees and indemnities expressly permitted by this Agreement to the extent they constitute Debt;

(h) the GAA Earn-Out;

(i) the Borrower’s guarantee of the GAA Asset Purchase Agreement and the GAA Equity Purchase Agreement;

(j) any Debt of an Obligor under or in connection with one or more operating leases in respect of which the payment obligations (when aggregated with any similar Debt of any other Obligors) do not exceed US $1,000,000 in any fiscal year of the Borrower (and provided that such Debt is not entered into when a Default has occurred and is continuing or would occur as a result of the same);

(k) any Debt in respect of performance bonds, surety bonds, appeal bonds, completion guarantees or like instruments incurred in the Ordinary Course provided that such Debt does not exceed the aggregate amount of US $1,000,000; and

(1) other Debt expressly consented to by the Required Lenders in writing.

“Permitted Liens” means, with respect to any Person:

(a) Liens for Taxes (excluding any Lien imposed pursuant to the provisions of ERISA) not yet due, or for which instalments have been paid based on reasonable estimates pending final assessments, or if due, the validity of which is being contested diligently and in good faith by appropriate proceedings by that Person and for which that Person has made adequate provision for payment of the contested amount and provided evidence of the provision as may be requested by the Agent;

(b) undetermined or inchoate Liens, rights of distress and charges incidental to current operations that have not been filed or exercised and of which none of the Lenders has been given notice, or that relate to obligations not due or payable or if due, the validity of which is being contested diligently and in good faith by appropriate proceedings by that Person and for which that Person has made adequate provision for payment of the contested amount and provided evidence of the provision as may be requested by the Agent;

(c) reservations, limitations, provisos and conditions expressed in any original grants from the Crown or other grants of real or immovable property, or interests in real or immovable property, that do not Materially affect the use of the affected land for the purpose for which it is used by that Person;

(d) licences, easements, rights-of-way and rights in the nature of easements (including licences, easements, rights-of-way and rights in the nature of easements for sidewalks, public ways, sewers, drains, gas, steam and water mains or electric light and power, or telephone and telegraph conduits, poles, wires and cables) and zoning, land use and building restrictions, by-laws, regulations and

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ordinances of federal, provincial, municipal and other Governmental Authorities that do not Materially impair the use of the affected land for the purpose for which it is used by that Person;

(e) minor title defects, encroachments or irregularities that in the aggregate do not Materially impair the use of the affected property for the purpose for which it is used by that Person;

(f) customary rights of set-off or combination of accounts in favour of a financial institution with respect to deposits maintained by it;

(g) the right reserved to or vested in any municipality or Governmental Authority by the terms of any lease, license, franchise, grant or permit acquired by that person or by any statutory provision to terminate the lease, license, franchise, grant or permit, or to require annual or other payments as a condition to its continuance;

(h) the Lien resulting from the deposit of cash or securities in connection with contracts, tenders or expropriation proceedings, or to secure workers’ compensation, unemployment insurance, surety or appeal bonds, costs of litigation when required by law, liens and claims incidental to current construction, mechanics’, warehousemen’s, carriers’ and other similar liens, and public, statutory and other like obligations incurred in the Ordinary Course, up to a maximum aggregate amount deposited at any time of US $250,000 for all Obligors;

(i) security given to a public utility or any Governmental Authority when required by the utility or authority in connection with the operations of that Person in the Ordinary Course;

(j) the Lien created by a judgment of a court of competent jurisdiction, as long as the judgment is being contested diligently and in good faith by appropriate proceedings or is being satisfied by that Person and has not caused a Default and that Person has made adequate provision for payment of the contested amount and provided evidence of the provision as may be requested by the Agent;

(k) the Security;

(l) Liens on equipment and its proceeds created or assumed to finance or re-finance the acquisition or improvement or secure the unpaid purchase price of the equipment (including the principal amount of any capital lease) provided that the aggregate principal amount (or fair market value of the Property that is subject to a Lien if no principal amount is designated) secured by all such Liens outstanding for all Obligors at any time does not exceed US $250,000;

(m) Liens securing Debt comprising obligations to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet under GAAP, where the

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amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP, provided that the aggregate principal amount of such Debt for all Obligors at any time does not exceed US $250,000;

(n) Liens subordinated to the Security pursuant to an Intercreditor Agreement in a form acceptable to the Required Lenders;

(o) other Liens expressly agreed to in writing by the Required Lenders; and

(p) any Liens securing indebtedness the outstanding principal amount of which (when aggregated with the outstanding principal amount of any other secured indebtedness which has the benefit of security under this paragraph (p)) does not exceed US $250,000,

and any extension, renewal or replacement of any of the foregoing.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity, and “person” has the same meaning.

“Pledged Shares” means the Equity Interests of the Obligors and other Persons that are specifically pledged as part of the Security from time to time.

“Prime Rate” means, on any day, the annual rate of interest established by the Agent as its reference rate for that day for commercial loans made by it in Canada in Canadian Dollars,

“Prime Rate Advance” means an Advance in Canadian Dollars bearing interest based on the Prime Rate and includes availments that are deemed to be Prime Rate Advances under this Agreement.

“Property” means, with respect to any Person, any or all of its present and future undertaking, property and assets, whether tangible or intangible, real or personal, and includes rights under Contracts and Permits.

“Quality of Earnings Report” means a report by an independent third party acceptable to the Bank, acting reasonably, assessing the accuracy of a Target’s historical earnings and its projections.

“Recipient” means the Agent and any Lender, as applicable.

“Register” is defined in Section 10.3.

“Reimbursement Authorizations” means all participation agreements, provider or supplier agreements, enrollments, accreditations and billing numbers necessary to participate in and receive reimbursement from a Reimbursement Program, including all Medicare and Medicaid participation agreements.

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“Reimbursement Programs” means all payment or reimbursement programs, sponsored or maintained by any Third Party Obligor, in which any Obligor or any Subsidiary or an Obligor participates.

“Related Parties” means, with respect to any Person, its Affiliates and the directors, officers, employees, agents and advisors of the Person and of its Affiliates.

“Representatives” means, with respect to any Party, its Affiliates and, if applicable, its and their respective directors, officers, employees, agents and other representatives and advisors.

“Required Lenders” means all of the Lenders if there are two or fewer Lenders and otherwise means two or more Lenders holding, in the aggregate, a minimum of 66 2/3% of the outstanding amount of the Commitments. For the purpose of determining the number of Lenders, two or more Lenders that are Affiliates of each other shall be counted as one Lender. If any Lender is a Defaulting Lender at any time of determination, then that Lender and its Commitment shall be excluded in determining the Required Lenders.

“Revolving Credit” means the revolving credit of up to US $75,000,000 or the Equivalent Amount in Canadian Dollars in favour of the Borrower that is established pursuant to Section 2.1(1).

“Revolving Lenders” means the Lenders who have provided Commitments relating to the Revolving Credit as specified in Schedule A.

“S&P” means Standard & Poor’s Financial Services LLC, or any successor to it.

“Sanctioned Country” means, at any time, a country, region or territory that is, or whose government is, the subject or target of any Sanctions.

“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State, the United Nations Security Council, the European Union or any EU member state, (b) any Person located, organized, incorporated or resident in a Sanctioned Country or (c) any Person controlled by any such Person.

“Sanctions” means economic or financial sanctions or trade embargoes administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.

“Scotiabank” means The Bank of Nova Scotia.

“Schedule I Reference Lenders” means Lenders that are banks named on Schedule I of the Bank Act (Canada) and that have been designated as or deemed to be Schedule I Reference Lenders pursuant to Section 8.11.

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“Security” means all security documents and guarantees and indemnities made by the Obligors or other Persons in favour of or for the benefit of the Agent and the Lenders, securing or intended to secure or support the repayment of the Obligations and the Other Secured Obligations, including the security documents and guarantees and indemnities described in Section 3.1. All Security granted hereunder shall secure the obligations, indebtedness and liabilities of the Borrower under any capital markets agreements, including foreign exchange or interest rate swap hedging arrangements entered into with any Lender (or its Affiliates), and any credit card agreements entered into with Scotiabank or any other Lender.

“Segregated Government Deposit Account” means a deposit account of a Guarantor that contains no funds on deposit other than direct proceeds of Medicare and Medicaid payments made by the federal or state government unit or an intermediary for a federal or state government unit.

“Sole Bookrunner” shall mean Scotiabank.

“Statutory Plan” means any benefit plan that an Obligor is required by statute to participate in or contribute to in respect of any current or former employee, director, officer, shareholder, consultant or independent contractor of that Obligor, or any dependent of any of them, including the Canada Pension Plan, the Quebec Pension Plan and plans administered pursuant to applicable legislation regarding health, tax, workers’ compensation insurance and employment insurance.

“Subsidiary” of a Person means any Person Controlled by the first Person or by any Subsidiary of the first Person, provided that, solely for the purposes of Sections 5.1(4)(b), 5.1(31), 6.2(18), and 6.3(2)(g) any providers of anesthesia services or other health care services to which an Obligor provides principal management services shall constitute a Subsidiary of such Obligor.

[REDACTED] means [REDACTED] a professional corporation incorporated under the laws of the State of Georgia.

“Swap Obligation” means with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1 a(47) of the Commodity Exchange Act.

“Swingline Credit” is defined in Section 2.1(2).

“Swingline Lender” means Scotiabank, in its capacity as lender of the Swingline Credit.

“Target” means an entity located in Canada or the United States of America which the Borrower proposes to acquire pursuant to a Permitted Acquisition.

“Target Assets” means assets (including Contracts) located in Canada or the United States of America which the Borrower proposes to acquire pursuant to a Permitted Acquisition.

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“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable to them.

“Term Credit” means the non-revolving credit of up to US $25,000,000 or the Equivalent Amount in Canadian Dollars in favour of the Borrower that is established pursuant to Section 2.1(4).

“Term Lenders” means the Lenders who have provided Commitments relating to the Term Credit as specified in Schedule A.

“Third Party Obligor” means any Governmental Obligor, Blue Cross and/or Blue Shield, private insurers, managed care plans, and any other person or entity which presently or in the future maintains Reimbursement Programs.

“Total Funded Debt” means all short term and long term interest bearing debt, the GAA Earn-Out (when such amounts are earned and become payable), any future earn-out payments related to an Acquisition (when such amounts are earned and become payable), capital leases and other obligations as defined by the Agent (on the basis of information provided to it by the Borrower). Total Funded Debt shall include, but not be limited to, all amounts outstanding under the Credits, guarantees and amounts owing to any subordinated debt lender, but shall exclude trade payables.

“Total Funded Debt Ratio” means, at any time, the ratio calculated by dividing (a) the Total Funded Debt at that time by (b) EBITDA.

“Total Interest Expense” means, for any particular period, the aggregate expense incurred by the Borrower on a consolidated basis for interest and other costs of obtaining credit, including:

(a) B/A Fees and fees payable in respect of other bankers’ acceptances;

(b) discounts on B/As and other bankers’ acceptances;

(c) non-cash accretion expense related to Debt;

(d) the time value of money component of Debt;

(e) the interest portion of any capital lease; and

(f) all fees and other compensation paid to any Person that has extended credit to the Obligors;

in each case whether or not actually paid (unless paid by the issuance of securities constituting Debt) and calculated in accordance with GAAP.

“Transaction” means the acquisition by the Borrower or another Obligor of a Target or of any Target Assets pursuant to a Permitted Acquisition.

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“Tri-Party Agreement” shall have the meaning given to such term in Section 6.2(10).

“US Dollars”, “US $” and “USD” mean the lawful currency of the United States of America.

“U.S. Multiemployer Plan” shall have the meaning set forth in Section 4001(a)(3) of ERISA.

“U.S. Plan” means an employee pension benefit plan that is covered by Title W of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and that is either (a) maintained by an Obligor for employees or (b) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which an Obligor is then making or accruing an obligation to make contributions or has within the preceding 5 years made or accrued such contributions.

“Welfare Plan” means any deferred compensation, bonus, share option or purchase, savings, retirement savings, retirement benefit, profit sharing, medical, health, hospitalization, insurance or any other benefit, program, agreement or arrangement, funded or unfunded, formal or informal, written or unwritten, that is applicable to any current or former employee, director, officer, shareholder, consultant or independent contractor of any Obligor, or any dependent of any of them, except a Pension Plan or a Statutory Plan.

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

1.2 Construction

The Loan Documents have been negotiated by each Party with the benefit of legal representation, and any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not apply to the construction or interpretation of the Loan Documents.

1.3 Certain Rules of Interpretation

(1) In any Loan Document:

(a) the division into articles and sections and the insertion of headings and the Table of Contents are for convenience of reference only and shall not affect the construction or interpretation of the Loan Document;

(b) unless otherwise specified or the context otherwise requires:

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(i) “the aggregate of”, “the total of”, “the sum of”, or a phrase of similar meaning means “the aggregate (or total or sum), without duplication, of”;

(ii) all amounts expressed in this Agreement in terms of money shall refer to US Dollars, but any determination concerning any representation, covenant, Event of Default or other limit that refers to a minimum or maximum amount in Canadian Dollars will be made by taking into account the Equivalent Amounts in other currencies at the time of calculation;

(iii) any reference to a Person “directly or indirectly” owning, doing or having anything includes a Subsidiary of that Person owning, doing or having that thing; and

(iv) all references to specific times are references to Toronto time.

(2) The interpretation rules in this Section 1.3(2) apply to every Loan Document unless a particular Loan Document specifies otherwise or the context otherwise requires. The definitions of terms in any Loan Document shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document (including any definition of or reference to this Agreement) shall be construed as referring to that agreement, instrument or other document as from time to time amended, supplemented, restated or otherwise modified (subject to any restrictions on amendments, supplements, restatements or modifications in any Loan Document), (b) any reference to any Person shall be construed to include the Person’s successors and permitted assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to the Loan Document in which they appear in its entirety and not to any particular provision of the Loan Document, (d) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which the references appear, (e) any reference to any law or regulation shall, unless otherwise specified, refer to that law or regulation as amended, modified or supplemented from time to time and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all Property, including cash, securities, accounts and contract rights.

(3) If Section 7.1 specifies a grace period before an event or circumstance becomes an Event of Default (that is, the occurrence of the event or circumstance initially constitutes a Default but not an Event of Default), and if before the expiration of the grace period the Borrower provides evidence of having remedied the event or circumstance that is satisfactory to the Agent (after consulting the Lenders if the Agent considers it appropriate to do so), then any Default arising from the occurrence of that event or circumstance will be deemed not to be “continuing.” In any other case, any Default or

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Event of Default will be deemed to be “continuing” if it has not been waived by the Lenders in accordance with Section 11.2.

1.4 Knowledge

In any Loan Document, any reference to the knowledge of any Party means to the best of the knowledge, information and belief of the Party after reviewing all relevant records and making due inquiries regarding the relevant matter of all relevant Representatives of the Party.

1.5 Performance on Banking Days

If any action is required to be taken pursuant to any Loan Document on or by a specified date that is not a Banking Day, the action is valid if taken on or by the next Banking Day except that, in the case of a payment, if the next Banking Day is in a different calendar month then the payment shall be made on the preceding Banking Day.

1.6 Accounting Terms

In any Loan Document, unless specified otherwise, each accounting term has the meaning assigned to it under GAAP.

1.7 Permitted Liens

The designation of a Lien to be a Permitted Lien is not, and shall not be deemed to be, an acknowledgment by the Agent or any Lender that the Lien shall have priority over the Security.

1.8 Amendment and Restatement

(1) On the date on which all the conditions set forth in Article 4 have been satisfied (or waived by the Agent on behalf of the Lenders), the Existing Credit Agreement shall be and is hereby amended and restated in the form of this Agreement.

(2) References herein to the “date hereof” or similar expressions shall be and shall be deemed to be the date of execution of this Agreement, being June 26, 2017.

(3) Each Obligor that is party to the Security, confirms, acknowledges and agrees that the security interests created by an Obligor in favour of the Agent in the Security remain in full force and effect and are continuing security for the Obligations of each Obligor, as amended and restated by this Agreement.

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ARTICLE 2

THE CREDITS

2.1 Amounts and Availment Options

(1) Revolving Credit Subject to the terms and conditions of this Agreement, the Revolving Lenders shall provide, severally (not jointly and not jointly and severally), a revolving credit facility referred to as the Revolving Credit for the use of the Borrower in the aggregate amount of up to US $75,000,000 or the Equivalent Amount in Canadian Dollars. Each Revolving Lender’s obligation in respect of the Revolving Credit shall be limited to its respective Applicable Percentage of the Revolving Credit.

(2) Swingline Credit Subject to the terms and conditions of this Agreement, the Swingline Lender shall provide an overdraft credit facility referred to as the “Swingline Credit” for the use of the Borrower in the aggregate amount of up to US $5,000,000 or the Equivalent Amount in Canadian Dollars, which is a sub-limit of, and is not in addition to, the Revolving Credit.

(3) Accordion

(a) Subject to the terms and conditions of this Agreement and subject to formal credit approval from the Lenders, the Borrower may at any time and from time to time, request an increase to the maximum aggregate amount available under the Revolving Credit by up to an additional US $25,000,000 (the “Revolving Commitment Increase”), by providing written notice to the Agent not less than twenty (20) Banking Days prior to the proposed effective date of such an increase (an “Accordion Notice”).

(b) The Accordion Notice shall specify: (i) the amount of the proposed increase in the aggregate amount of the Revolving Credit, (ii) the amount of the proposed increase, (iii) and the proposed effective date of such increase. The Agent shall promptly provide a copy of the Accordion Notice to each Lender. On or prior to the date that is ten (10) Banking Days after receipt of the Accordion Notice by the Agent, each Lender shall submit to the Agent a notice indicating the maximum amount by which it is willing to increase its Commitment in the Revolving Credit in response to the Accordion Notice (the “Lender Increase Notice”). Any Lender which does not submit a Lender Increase Notice to the Agent prior to the expiration of such ten (10) Banking Day period shall be deemed to have refused any increase in its Commitments. To the extent that the Agent has not received binding Commitments from existing Lenders for the entire amount of a Revolving Commitment Increase at the expiry of such ten (10) Banking Day period, one or more new lenders acceptable to the Agent and the Borrower (which acceptance shall not be unreasonably withheld) may provide commitments for the Revolving Commitment Increase.

(c) The Revolving Commitment Increase is uncommitted and shall not be increased until such time as the Agent has notified the Borrower in writing that the Lenders

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have agreed to such increase. The effectiveness of any Revolving Commitment Increase shall, unless otherwise agreed to by the Lenders, be subject to the satisfaction on the date thereof of each of the conditions set forth in Section 4.2.

(4) Term Credit Subject to the terms and conditions of this Agreement, the Term Lenders shall provide, severally (not jointly and not jointly and severally), a non-revolving credit facility referred to as the Term Credit for the use of the Borrower in the aggregate amount of up to US $25,000,000 or the Equivalent Amount in Canadian Dollars. Each Term Lender’s obligation in respect of the Term Credit shall be limited to its respective Applicable Percentage of the Term Credit.

(5) At the option of the Borrower, the Revolving Credit (excluding the Swingline Credit) and Term Credit may be used by:

(a) requesting the Revolving Lenders or Term Lenders (as applicable) to make Prime Rate Advances, Base Rate Advances and/or LIBOR Advances; and/or

(b) presenting orders to the Revolving Lenders or Term Lenders (as applicable) for acceptance as B/As.

(6) Each Advance under the Swingline Credit shall be made in accordance with Section 9.6(2), and the Swingline Credit may be used by the Swingline Lender to cover any overdrafts incurred by the Borrower.

2.2 Re-borrowing

(1) The Revolving Credit (including the Swingline Credit) is a revolving credit and the principal amount of any Advance under the Revolving Credit that is repaid may be re-borrowed, if the Borrower is otherwise entitled to an Advance under the Revolving Credit.

(2) The Term Credit is a non-revolving credit and the principal amount of any Advance under the Term Credit that is repaid may not be re-borrowed.

2.3 Use of the Credits

(1) Advances under the Revolving Credit (including the Swingline Credit) may be used for general corporate purposes including refinancing existing indebtedness under the Existing Credit Agreement, earn-outs (including the GAA Earn-Out, up to a maximum amount of US $15,000,000), and to assist with financing Permitted Acquisitions of the Borrower as set out in this Credit Agreement.

(2) Advances under the Term Credit may be used for refinancing existing indebtedness under the Existing Credit Agreement and repaying the Norrep Debt in full.

(3) The Borrower will not request any advance under the Credits, and the Borrower and its Subsidiaries will not use, and its and their respective directors, officers, employees and agents will not use, the proceeds of any advance under the Revolving Credit (a) in the furtherance of an offer, payment, promise to pay, or authorization of the payment or

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giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (b) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, to the extent such activities, businesses or transaction would be prohibited by Sanctions if conducted by a corporation incorporated in the United States or in a European Union member state or (c) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

2.4 Term and Repayment

(1) Interest under the Credits is payable monthly at the applicable rates set out in the Applicable Rate Table.

(2) The Term Credit shall be repaid and permanently reduced by the Borrower in quarterly instalments of 2.5% of the initial principal amount, with a balloon payment to be made on the Maturity Date.

(3) In any event, all of the Credits shall be paid in full by the Borrower and cancelled on the Maturity Date.

2.5 Interest Rates and Fees

(1) Interest rates on Prime Rate Advances, Base Rate Advances and LIBOR Advances and the rates for calculation of B/A Fees and standby fees shall be determined and adjusted based on the Total Funded Debt Ratio as set out in the Applicable Rate Table and all figures in the Applicable Rate Table represent per cent per annum. Each of the amounts specified in the Applicable Rate Table, except the standby fee, shall be increased by 2% per annum if an Event of Default has occurred and is continuing, but the increased amounts shall not be secured by any mortgage of real property or hypothec on immovables forming part of the Security to the extent prohibited by Applicable Law. If an Event of Default is disclosed by a Compliance Certificate, any increase shall be applied beginning as of the end of the fiscal period to which the Compliance Certificate relates.

(2) Any increase or decrease in the interest rates and fees resulting from a change in the Total Funded Debt Ratio shall be effective as of the 45th day after the end of each of the Borrower’s fiscal quarters, except (a) that if a Compliance Certificate for a fiscal quarter is delivered late, any resulting decrease shall be effective only as of the date that a satisfactory Compliance Certificate is actually received by the Agent, or (b) if a Permitted Acquisition is completed that is funded, in whole or in part, from the Credits and that would result in a change to the Total Funded Debt Ratio that would increase the interest rates and fees payable hereunder, such increase shall, upon notice to the Borrower by the Agent, acting reasonably in its sole discretion, be effective on the date the Permitted Acquisition completes. Interest and fees shall initially be established based on the Compliance Certificate delivered under Section 6.3(1)(d). B/A Fees paid before the effective date of an increase or decrease will not be adjusted. If the Borrower becomes entitled to a pro rata refund of B/A Fees paid before the effective date of a decrease, the

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refund will be paid as a credit against the next interest or fee payment by the Borrower rather than being disbursed by the Lenders.

(3) Interest shall accrue and be payable on Prime Rate Advances and Base Rate Advances at the Prime Rate or the Base Rate, respectively, plus the relevant figure shown under “Prime Rate and Base Rate Advances” in the Applicable Rate Table. Interest shall accrue and be payable on LIBOR Advances at LIBOR plus the relevant figure shown under “B/A and LIBOR Advances” in the Applicable Rate Table. The rate for calculation of B/A Fees shall be the relevant figure shown under “B/A and LIBOR Advances” in the Applicable Rate Table.

(4) The Borrower shall pay interest and fees at the applicable rate specified in the Applicable Rate Table to the Agent at the Branch of Account on Advances outstanding from time to time, except that the B/A Fee for any B/A shall be paid by each Lender deducting the B/A Fee from the proceeds of the B/A remitted to the Agent pursuant to Section 9.9(2). The Borrower shall pay interest on Prime Rate Advances and Base Rate Advances on the 22nd day of each month. The Borrower shall pay interest on each LIBOR Advance on the last day of the applicable LIBOR Period and, if the LIBOR Period is longer than three months, every three months after the date of the relevant LIBOR Advance.

(5) The Borrower shall pay a standby fee on the daily unadvanced portions of the Revolving Credit at a rate that shall be adjusted based on the Total Funded Debt Ratio and that shall be as specified under “Standby Fee” in Applicable Rate Table. The standby fee shall be payable monthly in arrears on the tenth Banking Day after the end of each month, with the first payment to be made on July 17, 2017. On termination of all Commitments under the Credits, the Borrower shall also pay any accrued but unpaid standby fees.

(6) The Agent shall distribute interest and fees for the Revolving Credit to the Revolving Lenders based on their respective Applicable Percentages. Subject to Section 9.2, interest and standby fees for the Swingline Credit shall be paid by the Borrower to the Swingline Lender for its own account. The Agent shall distribute interest and fees for the Term Credit to the Term Lenders based on their respective Applicable Percentages.

2.6 Other Fees

The Borrower shall pay to the Lead Arranger, the Agent and the Lenders all fees payable under the Fee Letter on the closing of the transactions contemplated by this Agreement.

2.7 Exchange Rate Fluctuations

If fluctuations in Exchange Rates cause the amount of Advances (expressed in US Dollars) under a Credit to exceed the maximum amount of that Credit permitted in this Agreement by two percent or more at any time, the Borrower shall immediately pay the Lenders the amount by which the maximum amount of that Credit is exceeded. If the Borrower is unable to immediately pay any amount under this Section because LIBOR Periods have not ended or B/As have not matured, the Borrower shall immediately post Cash Collateral with the Agent in the amount of the excess, and that Cash Collateral shall form part of the Security and be held until the excess no longer exists. If, on the date of

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any Advance under a Credit (whether by rollover, renewal, conversion or otherwise), the amount of Advances (expressed in Canadian Dollars) under that Credit exceeds the maximum amount of that Credit because of fluctuations in Exchange Rates, the Borrower shall immediately pay the Lenders the excess and shall not be entitled to any Advance that would result in the amount of that Credit being exceeded.

ARTICLE 3

SECURITY

3.1 Security

(1) The Security includes the following documents and instruments in favour of the Agent for the benefit of the Lenders, all in form and substance satisfactory to the Lenders and subject only to Permitted Liens:

(a) security over all present and future Property of each Obligor having Property in Canada in the form of a general security agreement creating a first priority security interest in all Property of each Obligor and a floating charge on all other Property of each Obligor;

(b) security over all present and future Property of each Obligor having Property in the United States in the form of a UCC security agreement creating a first priority security interest in all Property of each Obligor and a floating charge on all other Property of each Obligator;

(c) pledges of all Equity Interests of Obligors that are owned by other Obligors from time to time, including all Equity Interests of JV Subsidiaries (to the extent held by the Borrower or a Guarantor);

(d) an assignment by CRH Delaware of all loans and security granted by GAA to CRH Delaware;

(e) an assignment by CRH Delaware of all loans and security granted by [REDACTED] to CRH Delaware;

(f) an assignment by CRH Delaware of [REDACTED] pledge of GAA’s equity interest;

(g) an assignment by CRH Delaware of [REDACTED]s pledge of [REDACTED]s equity interests;

(h) assignments by way of security of Material Contracts and Material Permits that are designated by the Agent from time to time, by the relevant Obligors;

(i) unlimited guarantees by each of the Obligors (excluding the Borrower) of the Obligations and Other Secured Obligations of the Borrower;

(j) the [REDACTED] Intercreditor Agreement;

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(k) deposit account control agreements with all deposit accounts and securities accounts of the Obligors, and on a commercially reasonable efforts basis, JV Subsidiaries, located in the United States of America other than Segregated Governmental Deposit Accounts, payroll and retirement accounts, and subject to any restrictions or consents required under operating agreements for JV Subsidiaries;

(l) International Swap Dealers Association (ISDA) Master Agreement and Schedule between the Borrower and Scotiabank;

(m) assignment of insurance by each Obligor and/or other documents appropriate for the type of Property and the jurisdictions in which Property is located, including extended coverage endorsement, in amounts and from an insurer acceptable to the Agent, on each Obligor’s real and personal property, showing loss payable to the Agent as its interest may appear, and including business interruption and public liability insurance; and

(n) confirmation and reaffirmation agreement executed by each Obligor in respect of the Security.

(2) Subject to Section 3.1(3), if at any time the Borrower owns, establishes or acquires Control of a Subsidiary directly or indirectly (and that is not a JV Subsidiary acquired pursuant to or established or created in connection with a Permitted Acquisition), the Borrower shall, within thirty (30) days of the establishment or acquisition thereof, cause such Subsidiary to become an Obligor, adopt this Agreement by delivering an agreement in the form of Schedule M so as to be bound by all of the terms applicable to Obligors as if it had executed this Agreement as an Obligor, deliver a guarantee and indemnity and other security documents required to comply with Section 3.1(1), which shall become part of the Security, deliver or cause the delivery of a pledge of all of the Equity Interests of the new Subsidiary as part of the Security, deliver any certificates representing the Equity Interests with endorsements executed in blank and take other steps that the Agent requires to perfect the Security relating to any Equity Interests;

(3) If at any time an Obligor owns, establishes or acquires Control of a JV Subsidiary directly or indirectly pursuant to or in connection with a Permitted Acquisition, and in respect of which the Agent has so requested acting reasonably and taking into account the nature and terms of the Transaction in respect of which such Subsidiary is established or acquired and the business and structure of the Borrower and its Subsidiaries generally (including the proportionality of such Subsidiary to the value, earnings and assets of the Borrower on a consolidated basis), the Obligor shall, within thirty (30) days of the establishment or acquisition of the W Subsidiary, deliver or cause the delivery of a pledge of all of the Equity Interests of the new W Subsidiary held directly or indirectly by the Obligor as part of the Security, obtain any consent from other shareholder(s) of the JV Subsidiary required pursuant to the JV Subsidiary’s operating agreement, deliver any certificates representing the Equity Interests with endorsements executed in blank and take other steps that the Agent requires to perfect the Security relating to the Equity Interests.

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(4) Each Obligor shall, immediately on receipt, deliver to the Agent for the benefit of the Lenders, certificates representing all Equity Interests of an Obligor or other Person in which it owns Equity Interests that it acquires after the date that it first delivers Equity Interests of the Obligor or other Person as part of the Security, together with any certificates representing the Equity Interests and endorsements executed in blank, and take other steps that the Agent requires to perfect the Security relating to the Equity Interests. If Equity Interests of an Obligor that have been pledged as part of the Security are subsequently transferred to another Obligor, the transferee shall immediately deliver a pledge of all of the transferred Equity Interests as part of the Security, deliver any certificates representing the Equity Interests with endorsements executed in blank and take other steps that the Agent requires to perfect the Security relating to the Equity Interests.

(5) In order to perfect the Security and in connection with the delivery of any Security, the Borrower shall, in consultation with the Agent, and as directed by the Agent in the case of any uncertainty:

(a) concurrently with the execution of any document forming part of the Security, arrange to register, file or record the document and/or, if applicable, financing statements or other prescribed statements in respect of the document, obtain agreements of other persons and take other actions, as may be necessary or desirable from time to time to perfect, preserve or protect the Security, wherever such registration, filing, recording, agreement or other action may be necessary or desirable;

(b) whenever necessary or desirable, including in the circumstances contemplated in Sections 6.4(13) and 6.4(14), arrange to renew or amend existing registrations, filings and recordings and make additional registrations, filings and recordings and take other actions as are necessary or desirable to maintain the Security as valid and effective security with the priority required by this Agreement; and

(c) cause documents, including title insurance policies, opinions of counsel and other supporting documents satisfactory to the Agent, to be delivered to the Agent evidencing the action taken and confirming that the provisions of this Section 3.1 have been complied with.

(6) Nothing in this Section 3.1 that contemplates the Obligors owning, establishing, acquiring or transferring Property, Equity Interests or Subsidiaries shall in any way modify any restriction on doing so elsewhere in this Agreement.

3.2 Obligations Secured by the Security

(1) Unless otherwise agreed by the Lenders among themselves, the documents constituting the Security shall secure the following obligations pari passu with each other:

(a) the Obligations;

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(b) the present and future debts, liabilities and obligations of the Obligors to any Lender or Affiliate of a Lender, other than Excluded Swap Obligations, (collectively, the “Other Secured Obligations”) (i) that are described in Schedule J, (ii) that arise under or in connection with Derivatives that are permitted under this Agreement, or (iii) that arise under or in connection with other transactions not made under this Agreement if it is agreed by the Borrower and the Agent acting on the instructions of the Required Lenders that those debts, liabilities and obligations shall be secured.

(2) The Parties confirm it is their intention that Affiliates of Lenders to whom Other Secured Obligations are owed shall benefit from the Security in accordance with this Section 3.2, notwithstanding that the Affiliates are not Parties. The Agent shall act as agent for those Affiliates as well as the Lenders in holding the Security and it is understood that the Lenders’ decisions concerning the Security referred to in Section 3.2(6) may reflect the interests of their respective Affiliates. In addition, the Obligors constitute the Lenders as trustees of the benefits of the Security for their respective Affiliates and the Lenders accept that trust.

(3) If Applicable Law restricts any particular document forming part of the Security from securing all of the obligations described in Section 3.2(1) and the Lenders accept the document subject to that restriction, any proceeds of realization of that document shall be distributed in payment of the obligations that are secured, and proceeds of realization of other Security shall be distributed disproportionately as necessary to adjust for proceeds that would have been distributed to Lenders and holders of Other Secured Obligations but for the restriction. If compliance with Applicable Law results in any particular document forming part of the Security being expressed to secure obligations in addition to those described in Section 3.2(1), the Lenders and holders of Other Secured Obligations shall nevertheless only be entitled to claim and recover the obligations described in Section 3.2(1) from any realization of that Security.

(4) As of the date of this Agreement, the Other Secured Obligations are those listed in Schedule J. If applicable, the Borrower shall include in each Compliance Certificate a revised Schedule J to reflect any changes in the Other Secured Obligations from Schedule J to this Agreement or any subsequent revision to Schedule J delivered pursuant to any Compliance Certificate. Neither the failure of the Borrower to update Schedule J nor any error contained in Schedule J shall affect the security for the Other Secured Obligations if it has been agreed in accordance with this Section 3.2 that they shall be secured by the Security.

(5) Other Secured Obligations listed on Schedule J, and (subject to Section 3.2(4)) any revision of it from time to time, shall be conclusively deemed to be secured by the Security (in the absence of manifest error) and shall not cease to be secured without the prior written consent of the respective Lenders to whom, or to whose Affiliates, the Other Secured Obligations are owed, except if the applicable Lender ceases to be a Lender by reason of assigning all of its rights and obligations under this Agreement or having the Obligations owing to it paid in full as a Non-Consenting Lender. If all Obligations have been indefeasibly paid in full and all Commitments have been cancelled, the Borrower

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may, and shall if requested by any Lender or Affiliate holding Other Secured Obligations, deliver Cash Collateral to secure the Other Secured Obligations, in an amount and form satisfactory to the respective Lenders and Affiliates to whom Other Secured Obligations are owed, acting reasonably, following which the respective Lenders and Affiliates shall release their interest in the Security.

(6) Notwithstanding the rights of Lenders and Affiliates to benefit from the Security in respect of the Other Secured Obligations, all decisions concerning the Security and its enforcement shall be made by the Lenders or the Required Lenders in accordance with this Agreement and no Lender or Affiliate to whom Other Secured Obligations are owed from time to time shall have any additional right to influence the Security or the enforcement of the Security as a result of holding Other Secured Obligations as long as this Agreement remains in force. Notwithstanding the termination of this Agreement because of payment of the Credits, or for any other reason, the Other Secured Obligations shall continue to be secured by the Security, except as expressly provided in Section 3.2(5). After the termination of this Agreement, decisions concerning the Security shall be made by those to whom Other Secured Obligations are owed as they may determine among themselves.

(7) In the event that any Security is required on real property located in the United States of America, the Borrower shall deliver a flood hazard determination certificate showing whether such real property is located in an area designated as a “special flood hazard area” by the Federal Emergency Management Agency. If any such real property is located in a special flood hazard area, then the Borrower shall deliver to the Agent and each Lender evidence of flood insurance in an amount reasonably determined by the Agent (together with such endorsements as the Agent or a Lender may require), and shall comply with the additional requirements of the Flood Disaster Protection Act of 1973, as amended.

ARTICLE 4

DISBURSEMENT CONDITIONS

4.1 Conditions Precedent for Amendment and Restatement and Initial Advance

This Agreement shall be effective, the Existing Credit Agreement shall be amended and restated in the form of this Agreement as herein provided, and the initial Advance will be available to be drawn, in each case, upon satisfaction of the conditions precedent set out in this Section 4.1, unless waived by all Lenders. Where delivery of documents is referred to, the documents must be delivered to the Agent, for and on behalf of the Lenders, the documents must be in form and substance satisfactory to the Lenders, duly executed by all parties and in full force and effect, and all matters disclosed by the documents must be satisfactory to the Lenders.

(1) Security and Other Principal Documents

(a) The Agent must have received duly executed copies of this Agreement.

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(b) The Agent must have received duly executed copies of the Security, with any limits on the amount of guarantees and indemnities being acceptable to the Lenders.

(c) The Security must have been duly registered and otherwise perfected as required by the Agent.

(d) The Agent must have received certificates representing the Pledged Shares, and endorsements executed in blank relating to those certificates and evidence of other arrangements being made as required by the Agent to perfect the Security relating to the Pledged Shares.

(2) Corporate and Other Information

(a) The Agent must have received a current copy of the corporate family chart of the Borrower including ownership percentages.

(b) The Agent must have received a certificate of each Obligor and issuer of Pledged Shares attaching (i) copies of its Constating Documents, (ii) a list of its officers and directors (or managers) with specimens of the signatures of those officers or directors who are executing Loan Documents on its behalf, (iii) copies of the corporate or analogous proceedings taken to authorize it to execute, deliver and perform its obligations under the Loan Documents and, if it is an issuer of Pledged Shares, consents that are required from its directors, shareholders, partners or members, in connection with the pledges of Pledged Shares or in connection with any disposition of the Pledged Shares upon enforcement of the Security, (iv) if applicable, a copy of the register of holders of Pledged Shares that it has issued with a notation of them being pledged as part of the Security, and (v) other corporate and “know your client” information that the Agent or any Lender may reasonably require.

(c) The Agent must have received a certificate of status, compliance, good standing or equivalent for each Obligor and issuer of Pledged Shares for its jurisdiction of incorporation or organization and for each jurisdiction where an Obligor is formally registered to carry on business or where registrations or filings in relation to the Security given by that Obligor have been effected, except for any jurisdiction where certificates of that kind are not customarily issued by a Governmental Authority.

(d) Each Obligor must have complied with Section 6.2(15).

(e) The Agent must have received one or more certificates of the Borrower attaching copies of all documents necessary to fully and fairly disclose all Material terms of all Material Contracts and all Material Permits.

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(3) Financial Information

(a) The Agent must have received a current pro forma balance sheet of the Borrower certified by the Chief Financial Officer of the Borrower.

(b) The Agent must have received a current pro forma Compliance Certificate from the Borrower certified by the Chief Financial Officer of the Borrower, attesting to covenant compliance before and after advances under the Credits.

(4) Due Diligence

(a) The Lenders must be satisfied with the results of their business, legal, background checks on key personnel, accounting, pension and environmental due diligence regarding the Obligors, including searches and other inquiries with Governmental Authorities, and completion of the Agent’s internal environmental checklist (management system) and customer questionnaire.

(5) Other Debt and Liens / Third Party Documents

(a) The Agent must have received evidence that all Debt of the Obligors not forming part of Permitted Debt has been paid and performed in full or will be concurrently with the initial Advance.

(b) The Agent must have received releases and discharges (in registrable form where appropriate) covering all Liens affecting any Property of each Obligor that are not Permitted Liens, or undertakings of the holders of the Liens to deliver releases and discharges promptly after the initial Advance.

(c) The Agent must have received all statements, postponements and acknowledgements that are required in respect of other Liens affecting the Property of the Obligors to confirm that those Liens are Permitted Liens.

(d) The Agent must have received written confirmation (acceptable to the Agent, acting reasonably) from the Borrower that all indebtedness, liabilities and obligations owing pursuant to the Norrep Debt have been paid and satisfied in full (or will be paid and satisfied in full with the proceeds of the initial Advance under this Agreement).

(e) The Agent must have received certificates of insurance or other evidence that the Obligors are complying with the covenants and conditions of the Loan Documents concerning insurance coverage.

(6) Opinions The Agent must have received the following opinions, addressed to the Agent and the Lenders:

(a) opinion of Borden Ladner Gervais LLP, as counsel to the Agent and Lenders;

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(b) opinion of Blake, Cassels & Graydon LLP, as principal counsel to the Obligors; and

(c) opinions of local counsel in New York, Delaware, Florida, Georgia, North Carolina, and Texas.

(7) Other Matters The following other conditions must be satisfied:

(a) The Agent must have received payment of all fees that are payable under or in connection with this Agreement to the Agent, the Lenders or any of them on or before the initial Advance, and reimbursement of all expenses incurred by any of them, including legal fees, as required by any Loan Document.

(b) The initial Advance must be made no later than June 26, 2017 and the Term Loan must be fully funded on the Closing Date.

(c) The Lenders must be satisfied that there has not occurred and does not exist any event or circumstance that has, or could have, a Material Adverse Effect.

(d) The Lenders must be satisfied that there has not been a Change of Control.

(e) The Agent must have received other documents that the Lenders may reasonably require.

4.2 Conditions Precedent to all Advances

In addition to the other conditions precedent specified in this Agreement, the obligation of the Lenders to make any Advance is subject to the following conditions precedent:

(1) The representations and warranties made in Section 5.1 of this Agreement, except those expressly stated to be made as of a specific date, must be true and correct on and as of the Advance Date with the same force and effect as if the representations and warranties had been made on and as of the Advance Date.

(2) No Default may have occurred and be continuing on the Advance Date, or result from making the Advance.

(3) The Agent must have received timely notice as required under Section 9.6.

(4) The Borrower must have no reasonable grounds to believe that it will not be in compliance with any financial covenants contained in Section 6.1 at the end of the current fiscal quarter or to believe that it was not in compliance with those covenants at the end of the immediately preceding fiscal quarter if it has not delivered its Compliance Certificate for that quarter.

(5) Neither the Agent nor any Lender may have received notice under subsection 224(1.1) of the Income Tax Act (Canada) or any successor provision or any comparable provision of any other taxing statute in respect of any Obligor.

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(6) All other terms and conditions of this Agreement on which an Advance may be obtained must be fulfilled.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES

5.1 Representations and Warranties

Each Obligor represents and warrants to the Lenders as specified in this Section 5.1.

(1) Organization It is duly incorporated or otherwise established and duly organized, validly existing and in good standing under the laws of its jurisdiction of formation. It is qualified to carry on business and in good standing in each jurisdiction where that is necessary or appropriate for such Obligor.

(2) Powers It has the corporate or analogous power and capacity to enter into and perform its obligations under any Loan Document to which it is or will be a party, to incur Obligations and Other Secured Obligations, to own its Property and to carry on the business in which it is engaged.

(3) Authorization All necessary corporate or analogous action has been taken by it or on its part to authorize its execution and delivery of the Loan Documents to which it is or will be a party, the incurrence of Obligations and Other Secured Obligations and the performance of its obligations under those Loan Documents.

(4) Absence of Conflict The execution, delivery and performance by it of the Loan Documents to which it is or will be a party and the incurrence of Obligations and Other Secured Obligations will not:

(a) result in a Material breach of any of the provisions of, constitute a default under, conflict with, or cause the acceleration of any of its obligations under:

(i) any Material Contract to which it is a party or by which any of its Property is bound or affected;

(ii) any Material Permit by which its business or any of its Property is bound or affected;

(iii) its Constating Documents or any resolution of its directors (or similar governing body) or holders of its Equity Interests; or

(iv) any Applicable Law;

(b) affect any Obligor’s or any Subsidiary of an Obligor’s right to receive, or reduce the amount of, payments and reimbursements from Third Party Obligors, or materially adversely affect any Health Care Permit;

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(c) result in or require the creation or imposition of any Lien on any of its Property, except Permitted Liens; or

(d) result in the forfeiture of any of its Property.

(5) No Consents Required Except as contemplated in Section 3.1(5), no Permit is required, nor is any authorization, consent, approval or notice required under any Contract to which it is a party, in connection with its execution, delivery and performance of the Loan Documents to which it is or will be a party or the incurrence of Obligations or Other Secured Obligations.

(6) No Restrictions on Borrowing Etc. Neither its power to borrow money, to give financial assistance by way of loan, guarantee or otherwise, or to create any Lien on any or all of its present and future Property to secure the Obligations and Other Secured Obligations, nor the power of its directors to authorize those actions, is restricted by its Constating Documents or Applicable Law.

(7) No Burdensome Restrictions It is not a party to any Contract, the holder of any Permit or subject to any Applicable Law, compliance with which has had or could reasonably be expected to have a Material Adverse Effect.

(8) Enforceability The Loan Documents to which it is or will be a party have been or will be duly executed and delivered by it, and when executed and delivered will constitute its legal, valid and binding obligations, enforceable against it in accordance with their respective terms, subject to bankruptcy, insolvency and other similar laws affecting the rights of creditors generally and to general principles of equity.

(9) No Default As of the date of this Agreement and as of the date of any Advance, no Default has occurred and is continuing.

(10) Compliance With Law It is in compliance with all Applicable Law affecting it or its Property.

(11) Debt It has no Debt other than Permitted Debt.

(12) Title It has good and marketable title in fee simple to all real property that it purports to own, it has valid leasehold interests pursuant to valid and enforceable leases in all real and personal property that it purports to hold as lessee, and it has valid and indefeasible title to all personal property that it purports to own, in each case free and clear of all Liens except Permitted Liens.

(13) Disputes Except as disclosed on Schedule G or as reported pursuant to Section 6.3(2)(d), there are no Material Disputes pending, outstanding or, to its knowledge, threatened against it. There is no factual or legal basis on which any Material Dispute might be commenced with any reasonable likelihood of success.

(14) Financial Statements Except to the extent that subsequent financial statements furnished to the Agent and Lenders have identified restatements, other adjustments or changes in

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accounting policies, all of its financial statements furnished to the Agent, the Lenders or any of them in connection with this Agreement:

(a) are complete and fairly present its assets, liabilities (whether accrued, absolute, contingent or otherwise) and financial position as of the dates referred to in the financial statements and its revenues, expenses and results of operation for the periods they cover, in each case on a consolidated basis where specified; and

(b) have been prepared in accordance with GAAP, consistently applied, except, in the case of quarterly financial statements, notes to the statements and normal year-end audit adjustments required by GAAP are not included.

(15) Projections Its most recent projections provided to the Agent, the Lenders, or any of them, including forecasts, budgets, pro formas and business plans, were prepared in good faith based on assumptions that were believed to be reasonable and (except to the extent it has notified the Agent) are believed to be reasonable estimates of the prospects of the businesses referred to in the projections.

(16) Accuracy of Information Taken as a whole, all information (including information in financial statements, but excluding projections) pertaining to the Obligors that it has provided to the Agent, the Lenders, or any of them, is complete and accurate in all Material respects and does not contain any untrue statement of a Material fact or omit to state a Material fact necessary in order to make the statements contained in the information not Materially misleading in light of the circumstances in which the statements are made. There is no fact that it has not disclosed to the Agent and the Lenders in writing that has had or could reasonably be expected to have a Material Adverse Effect.

(17) No Material Adverse Effect Since the date of its most recent audited financial statements provided to the Agent, there has been no event or circumstance that has had or could reasonably be expected to have a Material Adverse Effect.

(18) Permitted Liens It is not in Material default under any Permitted Lien.

(19) Intragroup Debts As of the date of this Agreement or the most recently delivered Compliance Certificate, it has no Intragroup Debts except as disclosed in Schedule H as updated from time to time by each Compliance Certificate.

(20) Property, Equity Interests, Etc. As of the date of this Agreement or the most recently delivered Compliance Certificate, Schedule C, as updated from time to time by each Compliance Certificate, contains a complete and accurate organizational chart for the Obligors and is a complete and accurate description of its name (including any French or combined French and English form of its name), its jurisdiction of incorporation or organization, the ownership of all of its issued and outstanding Equity Interests, the locations of its registered office (and chief executive office, if different), the Equity Interests in Obligors and other Persons that it owns, the location of its freehold and leasehold real property, the jurisdictions in which its other Property valued over US $100,000 is located and its bank accounts and securities accounts.

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(21) Pledged Shares The Pledged Shares are validly issued as fully paid and non-assessable shares or other equity interest of the respective issuers. The consents of the directors, shareholders, partners or members of the respective issuers of Pledged Shares that will, if applicable, be delivered at or before the time that the Pledged Shares become part of the Security are the only consents that are necessary or desirable in connection with the pledges of the Pledged Shares as part of the Security (including the enforcement of the pledges), and will be kept in full force and effect as long as they remain necessary or desirable.

(22) Intellectual Property It owns or is licensed or otherwise has the right to use all Intellectual Property that is necessary for the operation of its business, to its knowledge without Material conflict with the rights of any other Person, except as specified on Schedule D. As at the date of this Agreement or the most recently delivered Compliance Certificate, all Intellectual Property in which its interest is registered in any public office is listed on Schedule D, as updated from time to time by each Compliance Certificate. If it is not the owner of any Intellectual Property used in its business, its right of use is not subject to arbitrary termination unless the consequences of such termination would not be Material.

(23) Permits All Permits required to carry on its business as currently conducted are in full force and effect, except for omissions that individually and in the aggregate are not Material.

(24) Environmental Matters

(a) Its business and Property (including underlying groundwater) have been and are being owned, occupied and operated in compliance with Applicable Law relating to pollution, protection or enhancement of the environment, preservation or reclamation of natural resources, Hazardous Materials, or health and safety matters. To its knowledge there are no breaches of that Applicable Law, no enforcement actions are outstanding, threatened or pending in respect of that Applicable Law and it has not received any communication alleging that it is in breach of that Applicable Law or claiming that it has any liability in respect of Hazardous Materials.

(b) (i) There are no active or abandoned underground storage tanks located on any land that it occupies or controls, except those that comply with Applicable Law, (ii) there are no Hazardous Materials located on, above or below the surface of any land that it occupies or controls or contained in the soil or water constituting that land, except those being stored, used and otherwise handled and existing in compliance with Applicable Law, (iii) no release, spill, leak, emission, discharge, leaching, dumping or disposal of Hazardous Materials has occurred on or from the land, except those that are not Material and do not violate Applicable Law, (iv) no land that it occupies or controls has been used as a landfill or waste disposal site, (v) Hazardous Materials generated on any land that it occupies or controls have been transported, treated and disposed of in accordance with Applicable Law, and (vi) no other circumstance exists that would give rise to liability on its part

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under the Applicable Law referred to in Section 5.1(24)(a) except in each case as disclosed on Schedule I.

(c) It has made available to the Lenders all environmental data and studies (including any environmental audit) that it has regarding any land that it occupies or controls.

(d) Its representations in this Section 5.1(24) regarding land that it presently occupies or controls would have been accurate with respect to land that it previously occupied or controlled if made immediately before the time when it ceased to occupy or control that land.

(25) Taxes and Withholdings

(a) It has correctly and completely filed on a timely basis all Material returns, elections and reports required to be filed by it regarding its Taxes under Applicable Laws. It has paid all Material Taxes due and payable by it, unless they are being contested diligently, in good faith and by appropriate proceedings, it has made adequate provisions or reserves for payment of the contested amount and it has provided evidence of the provisions or reserves for the contested amount that the Agent requires. It has made adequate provision for Material Taxes payable by it for the current period and any previous period for which tax returns are not yet required to be filed. It is not subject to any audit by any Governmental Authority relating to Taxes.

(b) It has deducted or withheld from any amount paid or credited, or deemed to be paid or credited, by it to or for the account or benefit of any Person, including past or present employees, officers or directors and any non-resident of the country in which it is resident, the amount of all Material Taxes and other amounts required to be deducted or withheld from those payments under Applicable Laws, has remitted the amounts deducted or withheld to the proper tax authorities within the time required under any Applicable Law and has correctly and completely filed on a timely basis all Material returns and reports required to be filed by it regarding amounts deducted or withheld.

(c) It has collected and remitted to the appropriate tax authority in accordance with Applicable Laws all Material amounts required to be collected and remitted in respect of sales tax, goods and services tax and similar Taxes, and has correctly and completely filed on a timely basis all Material returns and Material reports required to be filed by it regarding amounts collected.

(26) Pension and Other Plans

With respect to the Borrower:

(a) It does not maintain or contribute to, is not required to maintain or contribute to, is not a party to or bound by, and has no liability or contingent liability under, any Employee Plan.

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(b) It does not maintain or contribute to, is not required to maintain or contribute to, is not a party to or bound by, and has no liability or contingent liability under, any program, agreement or arrangement outside Canada that is similar to an Employee Plan.

(c) Except as disclosed in the financial statements required to be provided pursuant to this Agreement or as otherwise disclosed in writing from time to time to the Agent, it has no liability or contingent liability under a Welfare Plan to provide for benefits after termination of employment or retirement.

(d) (i) each Employee Plan is, and has been, established, registered, qualified, administered and invested in compliance in all respects with its terms and all Applicable Law, (ii) all employer and employee payments, contributions and premiums required to be remitted or paid to or in respect of any Employee Plan or Statutory Plan have been remitted or paid in a timely fashion to or in respect of the Employee Plan or the Statutory Plan in accordance with their respective terms and all Applicable Law, (iii) all of its obligations that are due under each applicable Employee Plan and Statutory Plan have been satisfied, (iv) there is no claim by any Governmental Authority or by any Person pending or, to its knowledge, threatened in respect of any Employee Plan (except routine claims for payment of benefits), (v) no event has occurred that has given rise to or could reasonably be expected to give rise to any liability on its part under any Employee Plan except those disclosed in the financial statements required to be provided pursuant to this Agreement, (vi) with respect to any Employee Plan that is registered under any Applicable Law, no event has occurred and no condition exists that has resulted or could reasonably be expected to result in that Employee Plan having its registration revoked, or entitle any Person (except the Obligor) to terminate or wind up that Employee Plan (in whole or in part), or result in that Employee Plan being placed under the administration of any Governmental Authority, or result in it being required to pay any taxes or penalties under any Applicable Law, (vii) no change has occurred in respect of the funding or financial condition of any Pension Plan since the date of its most recent financial statements, accounting statements, actuarial reports and other materials required to be provided pursuant to this Agreement, and (viii) each Pension Plan is fully funded, on a going concern basis and a solvency basis, in accordance with the terms of the Pension Plan and the requirements of Applicable Law.

(e) During the last twelve consecutive months, (i) no steps have been taken by it or by a Governmental Authority to terminate or wind up an Employee Plan (wholly or in part) that could result in it being required to make additional contributions to the Employee Plan, and (ii) no condition exists and no event has occurred with respect to any Employee Plan or Statutory Plan that might result in an increase in the amount of its liability over, or the incurrence by it of any liability in addition to, its liability before the existence of the condition or the occurrence of the event, or that might result in it incurring any fine or penalty.

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With respect to the Obligors (other than the Borrower), except as otherwise set forth in Schedule I:

(f) No Obligor has any U.S. Plan.

(g) No U.S. Plan established or maintained by an Obligor (including any U.S. Multiemployer Plan to which an Obligor contributes) which is subject to Part 3 of Subtitle B or Title I of ERISA had a material accumulated funding deficiency (as such term is defined in Section 302 of ERISA) as of the last day of the most recent fiscal year of such U.S. Plan ended prior to the date hereof, or would have had an accumulated funding deficiency (as so defined) on such day if such year were the first year of such U.S. Plan to which Part 3 of Subtitle B of Title I of ERISA applied, and no material liability to the Pension Benefit Guaranty Corporation, has been or is expected by an Obligor to be, incurred with respect to any such U.S. Plan by an Obligor.

(h) No Obligor is required to contribute to or is contributing to a U.S. Multiemployer Plan.

(i) No Obligor has withdrawal liability to any U.S. Multiemployer Plan, nor has any reportable event referred to in Section 4043(b) of ERISA occurred that has resulted or could result in liability of any Obligor; and Obligors do not have any reason to believe that any other event has occurred that has resulted or could result in liability of any Obligor as set forth above.

(27) Solvency

(a) The aggregate of its Property is, at a fair valuation, sufficient, and, if disposed of at a fairly conducted sale under legal process, would be sufficient, to enable payment of all of its obligations and liabilities (including contingent liabilities), due and accruing due.

(b) It is able to meet its obligations as they generally become due and it has not ceased paying its current obligations in the Ordinary Course as they generally become due.

(c) It does not intend to, and does not believe that it will, incur debts or liabilities beyond its ability to pay as they come due.

(d) It is not engaged, and is not about to engage, in business or a transaction for which its Property would constitute an unreasonably small capital.

(e) It is otherwise solvent under Applicable Law.

(28) Charitable Status It is not a charity registered with the Canada Revenue Agency and does not solicit charitable financial donations from the public.

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(29) Use of Proceeds Except as expressly specified in this Agreement, no Advance and no product or service giving rise to Other Secured Obligations will be used by, on behalf of or for the benefit of any Person except the Obligors.

(30) KYC Laws Neither it nor any of its Affiliates is:

(a) a Person referred to in section 5 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada);

(b) a Person that is on the list of names subject to the Regulations Establishing a List of Entities made under subsection 83.05(1) of the Criminal Code (Canada), the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism (RIUNRST) and/or the United Nations Al-Qaida and Taliban Regulations (UNAQTR) as published by the Office of the Superintendent of Financial Institutions Canada;

(c) a Person that is subject to sanctions under the Special Economic Measures Act (Canada);

(d) a Person that is subject to an order or regulation affecting its Property under the Freezing Assets of Corrupt Foreign Officials Act (Canada); or

(e) a Person with which any Lender is restricted from dealing or otherwise engaging in any transaction by any KYC Law including one named as a “specially designated national and blocked person” on the most current list published by the US Treasury Department’s Office of Foreign Assets Control, listed in the annex to the Executive Order or with which dealing is restricted under the provisions of 31 CFR Chapter V or any legal restriction administered by the US Treasury Department’s Office of Foreign Assets Control.

The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, the other Obligors and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Borrower, the other Obligors and their respective directors, officers and employees and, to the knowledge of the Borrower, their agents, are in compliance with Anti-Corruption Laws and applicable Sanctions. None of (a) the Borrower, any other Obligor or any of their respective directors, officers or employees, or (b) to the knowledge of the Borrower, any agent of the Borrower or any other Obligor that will act in any capacity in connection with or benefit from the credit facilities established hereby, is a Sanctioned Person. No borrowing, use of proceeds or other transactions contemplated herein will violate Anti-Corruption Laws or applicable Sanctions. No Obligor or any of its Affiliates is in violation of any KYC Law; engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any KYC Law; or is a Sanctioned Person. No Obligor or any of its Affiliates conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Sanctioned Person or deals in, or

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otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to Executive Order.

(31) Healthcare Matters.

(a) Compliance, Accreditation and Licensing. Each Obligor and each of their respective Subsidiaries is, and at all times during the three calendar years immediately preceding the Closing Date has been, in material compliance with all Health Care Laws and requirements of Reimbursement Programs applicable to it, its assets, business or operations. No circumstance exists or event has occurred which could reasonably be expected to result in a material violation of any Health Care Law or any requirement of any Reimbursement Program. To each Obligor’s knowledge, the Licensed Personnel have complied and currently are in compliance in all material respects with all applicable Health Care Laws, and hold and, at all times that such Persons have been Licensed Personnel of any Obligor or any Subsidiary of any Obligor, have held, all professional licenses and other Health Care Permits and all Reimbursement Authorizations required in the performance of such Licensed Personnel’s duties for such Obligor or such Subsidiary, and, each such Health Care Permit and Reimbursement Authorization is in full force and effect and, to the knowledge of each Obligor, no suspension, revocation, termination, impairment, modification or non-renewal of any such Permit or Reimbursement Authorization is pending or threatened. Each Obligor and each of their respective Subsidiaries has obtained and maintains accreditation in good standing and without limitation or impairment by all applicable accrediting organizations, to the extent prudent and customary in the industry in which it is engaged or required by law (including any foreign law or equivalent regulation), except where the failure to have or maintain such accreditation in good standing or imposition of limitation or impairment would not reasonably be expected to have, in the aggregate, a Material Adverse Effect. No Obligor and no Subsidiary of any Obligor, nor to each Obligor’s knowledge, any officer, affiliate, employee or agent of any Obligor or any Subsidiary of any Obligor, has made an untrue statement of a material fact or fraudulent statement to any Governmental Authority, failed to disclose a material fact that must be disclosed to any Governmental Authority, or committed an act, made a statement or failed to make a statement that, at the time such statement, disclosure or failure to disclose occurred, would reasonably be expected to constitute a violation of any Health Care Law.

(b) Health Care Permits. Each Obligor and each of their respective Subsidiaries holds, and at all times during the three calendar years immediately preceding the Closing Date has held, all Health Care Permits necessary for it to own, lease, sublease or operate its assets or to conduct its business or operations as presently conducted. All such Health Care Permits are, and at all times during the three calendar years immediately preceding the Closing Date have been, in full force and effect and there is and has been no default under, violation of, or other noncompliance in any material respect with the terms and conditions of any such Health Care Permit. No condition exists or event has occurred which, in itself or with the giving of notice

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or lapse of time or both, has resulted or would reasonably be expected to result in the suspension, revocation, termination, restriction, limitation, modification or non-renewal of any Health Care Permit. No Governmental Authority has taken, or to the knowledge of any Obligor intends to take, action to suspend, revoke, terminate, place on probation, restrict, limit, modify or not renew any Health Care Permit of any Obligor or any Subsidiary of any Obligor.

(c) Reimbursement Authorizations. Each Obligor and each of their respective Subsidiaries holds, and at all times during the three calendar years immediately preceding the Closing Date has held, in full force and effect, all Reimbursement Authorizations necessary to participate in and be reimbursed by all Reimbursement Programs in which any Obligor or any Subsidiary of any Obligor participates. There is no investigation, audit, claim review, or other action pending, or to the knowledge of any Obligor, threatened, which could result in a suspension, revocation, termination, restriction, limitation, modification or non-renewal of any Reimbursement Authorization or result in any Obligor’s or any of their Subsidiaries’ exclusion from any Reimbursement Program.

(d) Proceedings; Audits. There are no pending (or, to the knowledge of any Obligor, threatened) investigation, inquiry, litigation, review, hearing, suit, claim, audit, arbitration, proceeding or action against or affecting any Obligor or any Subsidiary of any Obligor or, to the knowledge of any Obligor, any Licensed Personnel, relating to any actual or alleged non-compliance with any Health Care Law or requirement of any Reimbursement Program. There are no facts, circumstances or conditions that would reasonably be expected to form the basis for any such investigation, inquiry, litigation, review, hearing, suit, claim, audit, arbitration, proceeding or action against or affecting any Obligor or any Subsidiary of any Obligor or, to the knowledge of any Obligor, any Licensed Personnel. There currently exist no restrictions, deficiencies, required plans of correction or other such remedial measures with respect to any Health Care Permit of any Obligor or any Subsidiary of any Obligor, or any of their participation in any Reimbursement Program. Without limiting the foregoing, no validation review, program integrity review, audit or other investigation related to any Obligor or any Subsidiary of any Obligor or their respective operations, or the consummation of the transactions contemplated in the Loan Documents or related to the Collateral (i) has been conducted by or on behalf of any Governmental Authority, or (ii) is scheduled, pending or, to the knowledge of any Obligor, threatened.

(e) Overpayments. No Obligor and no Subsidiary of any Obligor (i) has retained an overpayment received from, or failed to refund any amount due to, any Third Party Obligor in violation of any Health Care Law or contract; and (ii) has received written notice of, or has knowledge of, any overpayment or refunds due to any Third Party Obligor.

(f) Prohibited Transactions. No Obligor and no Subsidiary of any Obligor, nor to each Obligor’s knowledge, any officer, affiliate, employee or agent of any Obligor

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or any Subsidiary of any Obligor, directly or indirectly, has (i) offered or paid or solicited or received any remuneration, in cash or in kind, or made any financial arrangements, in violation of any Health Care Law; (ii) given or agreed to give, or is aware that there has been made or that there is any agreement to make, any gift or gratuitous payment of any kind, nature or description (whether in money, property or services) in violation of any Health Care Law; (iii) made or agreed to make, or is aware that there has been made or that there is any agreement to make, any contribution, payment or gift of funds or property to, or for the private use of, any governmental official, employee or agent where either the contribution, payment or gift or the purpose of such contribution, payment or gift is or was illegal under the laws of any Governmental Authority having jurisdiction over such payment, contribution or gift; (iv) established or maintained any unrecorded fund or asset for any purpose or made any misleading, false or artificial entries on any of its books or records for any reason; or (v) made, or agreed to make, or is aware that there has been made or that there is any agreement to make, any payment to any person with the intention or understanding that any part of such payment would be in violation of any Health Care Law or used or was given for any purpose other than that described in the documents supporting such payment. To the knowledge of each Obligor, no person has filed or has threatened to file against any Obligor or any of their Affiliates an action under any federal or state whistleblower statute.

(g) Exclusion. No Obligor and no Subsidiary of any Obligor, nor to the knowledge of each Obligor, any owner, officer, director, partner, agent, managing employee or Person with a direct or indirect ownership interest in any Obligor or any Subsidiary of any Obligor, nor, to the knowledge of each Obligor, any Licensed Personnel of any Obligor or any Subsidiary of any Obligor, has been (or, has been threatened to be) (i) excluded from any Reimbursement Program pursuant to 42 U.S.C. § 1320a-7 and related regulations, (ii) “suspended” or “debarred” from selling products to the United States government or its agencies pursuant to any Applicable Law, (iii) debarred, disqualified, suspended or excluded from participation in any Reimbursement Program or is listed on the United States General Services Administration list of excluded parties, nor is any such debarment, disqualification, suspension or exclusion threatened or pending, or (iv) made a party to any other action by any Governmental Authority that may prohibit it from selling products or providing services to any governmental or other purchaser pursuant to any federal, state or local laws or regulations.

(h) Corporate Integrity Agreement. No Obligor and no Subsidiary of any Obligor, nor, to the knowledge of each Obligor, any owner, officer, director, partner, agent, managing employee or Person with a direct or indirect ownership interest in any Obligor or any Subsidiary of any Obligor is a party to, or bound by, any order, individual integrity agreement, corporate integrity agreement, corporate compliance agreement, deferred prosecution agreement, or other formal or informal agreement with any Governmental Authority concerning compliance with Health Care Laws.

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(32) EEA Financial Institution. No Obligor is an EEA Financial Institution.

5.2 Survival of Representations and Warranties

The representations and warranties made in this Agreement or any other Loan Document shall survive the execution of this Agreement and all other Loan Documents. No investigation by or on behalf of the Agent or Lenders at any time shall have the effect of waiving, diminishing the scope or otherwise affecting any representation or warranty made in any Loan Document. Unless expressly stated to be made as of a specific date, they shall be deemed to be repeated as of the date of each Advance and as of the date of delivery of each Compliance Certificate. The Lenders shall be deemed to have relied upon all representations and warranties at each time they make an Advance as a condition of making an Advance and continuing to extend the Credits.

ARTICLE 6

COVENANTS

6.1 Financial Covenants

(1) The Borrower shall at all times maintain a Total Funded Debt Ratio of not greater than 2.75:1.00 tested quarterly based on the consolidated financial statements of the Borrower on a rolling four quarter basis.

(2) The Borrower shall at all times maintain a Fixed Charge Coverage Ratio of not less than 1.15:1.00 tested quarterly based on the consolidated financial statements of the Borrower on a rolling four quarter basis.

6.2 Positive Covenants

Each Obligor shall perform the covenants specified in this Section 6.2.

(1) Payment of Obligations It shall duly and punctually pay the Obligations, either as Borrower or in accordance with any guarantee or indemnity made by it, at the times and places and in the manner required by the terms of this Agreement or the guarantee and indemnity, as applicable.

(2) Use of Proceeds of Credits In the case of the Borrower, it shall use proceeds of Advances solely for the purposes set out in Section 2.3.

(3) Maintenance of Existence and Status Subject to Section 6.4(12), it shall maintain its existence and maintain its qualification to do business in all jurisdictions where it carries on business as is necessary or appropriate.

(4) Operation of Business

(a) It shall keep proper books of accounts and record.

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(b) It shall operate its business in accordance with sound business practices and in Material compliance with all Applicable Laws (including those regarding ownership of Persons carrying on the type of business that it carries on), Material Contracts, Material Permits and the terms of Permitted Liens.

(c) It shall maintain in good standing and shall obtain, as and when required, all Permits and Contracts that it requires to permit it to acquire, own, operate and maintain its business and Property and perform its obligations under the Loan Documents to which it is or will be a party.

(d) It shall maintain in good standing all Material Contracts.

(5) Inspection It shall, subject to prior written notice from the Lender, from time to time during normal business hours permit Representatives of the Lenders to inspect any of its Property and to examine and take extracts from its financial books, accounts and records, including accounts and records stored in computer data banks and computer software systems, and to discuss its financial condition with its senior officers and (in the presence of those of its Representatives as it may designate) its auditors, the reasonable expense of which shall be paid by the Borrower in respect of one such inspection per calendar year (unless a Default has occurred and is continuing).

(6) Insurance It shall maintain or cause to be maintained, with financially sound and reputable insurers, insurance with respect to its business and assets, in such amounts and against such liabilities, casualties, risks and contingencies existing from time to time as is customary for owners and operators of similar businesses and similar property in accordance with good industry practices. All property and business interruption policies of insurance must name the Agent, for and on behalf of the Lenders, as first mortgagee and loss payee, and liability insurance policies must name the Agent, for and on behalf of the Lenders, as additional insured. Upon the reasonable request of the Agent, the Borrower shall deliver to the Agent a report by an insurance consultant acceptable to the Agent, acting reasonably, reviewing all insurance-related matters relating to the Obligors and the Borrower shall reasonably address any deficiencies identified in accordance with the recommendations in such report.

(7) Taxes and Withholdings

(a) It shall pay all Taxes as they become due and payable unless they are being contested in good faith by appropriate proceedings and it has made adequate provision for payment of the contested amount and it shall provide evidence of the provision for the contested amount that the Agent requires.

(b) It shall withhold from each payment made to any of its past or present employees, officers or directors, and to any non-resident of the country in which it is resident, the amount of all Taxes and other deductions required to be withheld and pay the amount withheld to the proper tax or other receiving officers within the time required under any Applicable Law.

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(c) It shall collect from all Persons the amount of all Taxes required to be collected from them and remit the amount collected to the proper tax or other receiving officers within the time required under any Applicable Law.

(8) Pension and Other Plans

(a) The Borrower shall perform all of its obligations under and in respect of each Employee Plan and Statutory Plan and shall remit or pay all payments, contributions and premiums that it is required to remit or pay to or in respect of each Employee Plan and Statutory Plan, all in a timely way in accordance with the terms of the applicable plan and all Applicable Law.

(b) Each Obligor shall comply in all material respects with ERISA.

(9) Hazardous Materials It shall observe and comply at all times and in all Material respects with the provisions of all Applicable Laws relating to Hazardous Materials and shall provide evidence of ongoing compliance with those Applicable Laws that the Required Lenders require from time to time including, if so requested by the Required Lenders acting reasonably upon reasonable cause, having one or more environmental site assessment and/or compliance audits (each consisting of a non-intrusive phase one site assessment and recommendations with respect to the findings of the compliance audit, and other audits or investigations recommended in each phase one site assessment, including an intrusive phase two assessment) conducted and reported upon by an independent consultant engaged by the Obligors and acceptable to the Required Lenders, acting reasonably. It shall also remove, clean up or otherwise remedy the matters referred to in Section 6.3(2)(e).

(10) Control Agreements Each Obligor shall promptly notify the Agent of any securities account or deposit account located in the United States of America that it maintains from time to time. Each Obligor shall enter into one or more securities account control agreements and deposit account control agreements in form and substance satisfactory to the Agent, acting reasonably, that provide the Agent with “control” under the UCC (each such agreement being referred to herein as a “Control Agreement”) with respect to each such securities account and deposit account of such Obligor that is not a Segregated Government Deposit Account or a payroll account. Without the prior approval of the Agent, no Obligor shall open or maintain any securities account or deposit account (other than Segregated Government Deposit Accounts and payroll accounts) that is not subject to a Control Agreement and no securities account or deposit account (other than a Segregated Government Deposit Account) shall receive any Medicare or Medicaid payments made by a federal or state governmental unit or an intermediary for a federal or state government unit. At any time following the occurrence of an Event of Default, each Guarantor shall, if requested by the Agent, enter into one or more tri-party agreements (each such agreement being referred to herein as a “Tri-Party Agreement”) with the Agent and each applicable depository bank with respect to each Segregated Government Deposit Account, pursuant to which such Obligor shall agree to provide such instructions as the Agent shall from time to time request with respect to the applicable depository bank regarding the manner and frequency with which funds shall be transferred from

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such Segregated Government Deposit Account to another deposit account of such Obligor that is subject to a Control Agreement. No Obligor shall change any instruction set forth in a Tri-Party Agreement without providing the Agent with ten (10) days prior written notice thereof.

(11) Agreements re Material Contracts and Material Permits If reasonably requested by the Agent, it shall use commercially reasonable efforts to obtain agreements satisfactory to the Agent for the benefit of the Agent and the Lenders from its counterparties to Material Contracts and from issuers of Material Permits, and shall keep the Agent regularly informed of its progress in obtaining those agreements.

(12) Accounts It shall maintain all of its Canadian domiciled bank accounts with the Agent.

(13) JV Subsidiary Accounts It shall maintain sole signing authority over all JV Subsidiary deposit accounts and shall cause each JV Subsidiary within forty-five (45) days of such JV Subsidiary’s fiscal quarter end, to distribute the Borrower’s or other Obligors’ proportionate share (as applicable) of no less than 75% of all net cash proceeds, profits and earnings held in such JV Subsidiary’s deposit accounts to the Borrower’s deposit accounts held with the Agent (the “Cash Sweep”).

(14) Waiver of Immunity To the extent that it may be or become entitled, in any jurisdiction in which judicial proceedings may at any time be commenced with respect to any Loan Document, to claim for itself or its Property any immunity from legal proceedings, court jurisdiction, attachment before judgment, attachment in aid of execution of judgment, execution of a judgment, or any other legal process or remedy relating to its obligations under any Loan Document, and to the extent that such an immunity (whether or not claimed) may be attributed in any jurisdiction, it hereby irrevocably agrees not to claim immunity and hereby irrevocably waives immunity, in each case to the fullest extent permitted by Applicable Law.

(15) Know Your Client Matters It shall promptly provide all information, including, to the extent possible and available to it, information concerning its direct and indirect holders of Equity Interests and other Persons exercising Control over it, and its and their respective directors and officers, and including supporting documentation and other evidence, as may reasonably be requested by the Agent, any Lender, or any prospective assignee or participant of a Lender, in order to comply with the requesting person’s policies and procedures relating to KYC Laws.

(16) Additional Security Within thirty (30) days of the acquisition of a Target or any Target Assets, it shall promptly deliver or cause the delivery of all agreements and security documents required by the Agent in accordance with Section 3.1(2).

(17) New Subsidiaries If at any time the Borrower owns, establishes or acquires directly or indirectly a Subsidiary (either wholly-owned or otherwise) and in respect of which the Agent has so requested acting reasonably and taking into account the nature and terms of the Transaction in respect of which such Subsidiary is established or acquired and the business and structure of the Borrower and its Subsidiaries generally (including the

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proportionality of such Subsidiary to the value, earnings and assets of the Borrower on a consolidated basis), the Borrower shall within thirty (30) days promptly cause that Subsidiary to become an Obligor, adopt this Agreement by delivering an agreement in the form of Schedule M so as to be bound by all of the terms applicable to Obligors as if it had executed this Agreement as an Obligor, and deliver a guarantee and indemnity and other security documents required to comply with Section 3.1(2), which shall become part of the Security.

(18) Health Care Compliance. Without limiting or qualifying any other provision of this Agreement, each Obligor and each of their respective Subsidiaries will comply in all material respects with all applicable Health Care Laws relating to the operation of such Person’s business, and shall maintain a corporate and health care regulatory compliance program as required by law and allows the Agent and/or any consultants from time to time to review such compliance program. Each Obligor and each of their respective Subsidiaries shall modify such compliance programs from time to time, as may be necessary to ensure continuing compliance with all applicable Health Care Laws. Upon request, the Agent (and/or its consultants) shall be permitted to review such compliance programs. Each Obligor and each of their respective Subsidiaries shall (a) obtain, maintain and preserve, and cause each of its Subsidiaries to obtain, maintain and preserve, and take all necessary action to timely renew, all material Health Care Permits which are necessary or required in the proper conduct of its business; (b) be and remain in material compliance with all requirements for participation in, and for licensure required to provide the goods or services that are reimbursable under, Medicare, Medicaid and other Reimbursement Programs; (c) use commercially reasonable efforts to cause all Licensed Personnel to comply in all material respects with all applicable Health Care Laws in the performance of their duties to or for any Obligor or any Subsidiary of any Obligor, and to maintain in full force and effect all professional licenses and other Health Care Permits required to perform such duties; and (d) keep and maintain all records required to be maintained by any Governmental Authority under any Health Care Law.

6.3 Financial Reporting and Notice Requirements

(1) Periodic Financial Reports The Borrower shall deliver or cause the delivery of the following reports to the Agent. Any report shall be considered to have been delivered if the Borrower has posted it on the www.sedar.com website or other website generally used in Canada for public filings by reporting issuers, and notifies the Agent that it has done so. All financial statements shall be prepared in accordance with GAAP and other reports shall be in a form satisfactory to the Lenders.

(a) As soon as practicable and in any event within forty-five (45) days of the end of each of its fiscal quarters (including the fourth quarter), the Borrower shall deliver its interim unaudited consolidated financial statements as at the end of the quarter, including balance sheet, statement of income and retained earnings, statement of changes in financial position and management discussion and analysis.

(b) As soon as practicable and in any event within one hundred and twenty (120) days after the end of each of its fiscal years, the Borrower shall deliver its consolidated

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annual financial statements (and the annual financial statements of other Obligors where prepared separately), including balance sheet, statement of income and retained earnings, statement of changes in financial position and management discussion and analysis. The financial statements shall, in the case of the Borrower, be audited by an internationally recognized accounting firm and shall include a copy of the auditor’s letter to the Borrower, and shall otherwise be prepared by an internationally recognized accounting firm based on a review engagement.

(c) As soon as practicable and in any event within one hundred and twenty (120) days after the end of each of its fiscal years, the Borrower shall deliver its unconsolidated annual financial statements (and the annual financial statements of other Obligors where prepared separately), including balance sheet, statement of income and retained earnings, statement of changes in financial position and management discussion and analysis.

(d) The Borrower shall deliver, within forty-five (45) days of the end of each of its fiscal quarters, a Compliance Certificate.

(e) As soon as practicable and in any event not later than one hundred and twenty (120) days after the first day of each of its fiscal years, the Borrower shall deliver (i) an annual business plan, and (ii) financial forecasts for the immediately following three fiscal years, in each case with financial projections for the Borrower on a consolidated basis, which shall include a projected income statement and projected balance sheet, projected statement of changes in funds, all broken down quarterly for the first fiscal year of the budget, and otherwise in detail acceptable to the Lenders, acting reasonably.

(f) The Borrower shall promptly provide all other information reasonably requested by a Lender from time to time concerning the business, financial condition and Property of the Obligors.

(2) Requirements for Notice

(a) The Borrower shall promptly notify the Agent on learning of any Default and shall from time to time provide the Agent with all information requested by any Lender concerning the status of the Default.

(b) The Borrower shall promptly provide the Agent from time to time with certificates attaching copies of all documents necessary to fully and fairly disclose all Material terms of all Material Contracts and all Material Permits entered into or obtained after the date of this Agreement.

(c) The Borrower shall promptly notify the Agent on learning of any Material default under any Material Contract or Material Permit (either by an Obligor or by any other party), or of any event that, with or without the giving of notice, lapse of time or any other condition subsequent, would be a Material default or would otherwise allow the termination of any Material Contract or Material Permit, and

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shall from time to time provide the Agent with all information reasonably requested by any Lender concerning the status of such default. All proceeds payable to an Obligor resulting from any foregoing default of any Material Contract or Material Permit, shall be paid to the Agent to be applied by it to the Revolving Credit, provided that such pay down of the Revolving Credit will not be a permanent reduction of the Revolving Credit and the Borrower may re-draw on the maximum aggregate amount available under the Revolving Credit pursuant to this Agreement.

(d) The Borrower shall promptly notify the Agent on learning of any Dispute that is Material affecting any Obligor, and of any other circumstance affecting any Obligor, the result of which has had or could reasonably be expected to have a Material Adverse Effect, and shall from time to time provide the Agent with all information reasonably requested by any Lender concerning the status of such Dispute or circumstance.

(e) The Borrower shall promptly notify the Agent on (i) learning of Hazardous Materials located on, above or below the surface of any land that any Obligor occupies or controls (except those being stored, used and otherwise handled and existing in compliance with Applicable Laws), or contained in the soil or water constituting that land (in excess of levels prescribed under Applicable Laws, or that would constitute an actual or potential breach of or non-compliance with any Applicable Law), and (ii) the occurrence of any reportable release, spill, leak, emission, discharge, leaching, dumping or disposal of Hazardous Materials that has occurred on or from the land. The Borrower shall provide the Agent with details, including cost, of the work required to remove, clean up or otherwise remedy the matters referred to in such notice.

(f) The Borrower shall promptly notify the Agent and provide copies of all relevant documentation on learning of (i) the taking of any steps by an Obligor or any Governmental Authority to terminate any Employee Plan (wholly or in part) that could result in any Obligor being required to make an additional contribution to the Employee Plan in a Material amount, or (ii) the taking of any action by any Person or the occurrence of any event with respect to any Employee Plan or Statutory Plan that could reasonably be expected to (w) give rise to a Lien under any Applicable Law, (x) result in an increase in the liability of an Obligor over, or the incurrence by an Obligor of any liability in addition to, the liability of the Obligor before the action was taken or the event occurred, in either case in a Material amount, (y) result in a fine, a penalty or any increase in the contingent liability of any Obligor under any Welfare Plan with respect to any benefit after termination of employment or retirement, in any case in a Material amount or (z) have a Material Adverse Effect.

(g) Upon learning thereof, the Borrower shall promptly notify the Agent of any allegation by a Governmental Authority of potential or actual violations of any Health Care Law by any Obligor or any Subsidiary of any Obligor or any of its Licensed Personnel.

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(h) Promptly after the sending or filing thereof, upon request from the Agent, each Obligor shall also provide to the Agent copies of any annual report to be filed in accordance with ERISA in connection with each U.S. Plan.

6.4 Negative Covenants

No Obligor shall do any of the things specified in this Section 6.4.

(1) Liens

(a) No Obligor shall create, incur, assume, cause or permit any Lien upon or in respect of any of its Property, except for Permitted Liens.

(b) No Obligor shall do or permit anything to adversely affect the ranking or validity of the Security except by incurring a Permitted Lien.

(2) Debt and Payments of Debt

(a) No Obligor shall create, incur, assume or permit the existence of any Debt except Permitted Debt.

(b) No Obligor shall prepay, redeem, defease, repurchase or otherwise acquire any of its Debt, or make other payments in respect of any of its Debt, except for:

(i) the Obligations;

(ii) the Other Secured Obligations, to the extent they constitute Debt;

(iii) the purchase money and other obligations contemplated in subsection (k) of the definition of Permitted Liens;

(iv) Intragroup Debts, if no Default has occurred and is continuing or would result from payment being made;

(v) to the extent not otherwise permitted under this Section 6.4(2)(b), payments under any Permitted Debt contemplated in subsections (c), (d), (e) (subject, in all cases, to the terms of any relevant Intercreditor Agreement), (f), (j) and (k) of the definition of Permitted Debt;

(vi) any amounts owing under the GAA Earn-Out; and

(vii) any amounts owing under any earn-out arrangements or any other deferred consideration, in each case to the extent that they constitute Debt, in respect of a Transaction that is a Permitted Acquisition.

(c) The Borrower shall not consent to the incurrence of Debt by any JV Subsidiary (other than JV Permitted Debt) without the prior written consent of the Required Lenders.

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(3) Payments of Dividends and Fees

(a) No Obligor shall declare or pay any dividend, return of capital or other distribution (in cash, securities or other Property) of, on or in respect of, any Equity Interests of any Obligor except for payments to another Obligor.

(b) No Obligor shall retire, redeem, retract, purchase, or otherwise acquire its Equity Interests except from another Obligor, reduce its stated capital or make any payment of any kind whatsoever to effect any of the foregoing except to another Obligor and except for pursuant to the option to Purchase Stock dated December 1, 2014 between CRH Delaware, [REDACTED]and [REDACTED].

(c) No Obligor shall pay any management or similar fees unless they reflect the fair market value of services actually performed by the payees and no Default has occurred and is continuing, or would result from payment.

(4) Financial Assistance No Obligor shall make any loan to or acquire Debt of any other Person, guarantee, provide an indemnity in respect of, endorse or otherwise become liable for any debt, liability or obligation of any other Person, or give other financial assistance of any kind to any other Person, except for:

(a) guarantees and indemnities given as part of the Security;

(b) loans and advances resulting in Intragroup Debts;

(c) guarantees of debts, liabilities and obligations of other Obligors that are Permitted Debt;

(d) financial assistance by way of extending trade credit to its customers in the Ordinary Course;

(e) endorsement of negotiable instruments for collection or deposit in the Ordinary Course; and

(f) any indemnity given in connection with documenting a Transaction that is a Permitted Acquisition and which indemnity is in customary form and subject to customary limitations;

and no Obligor shall make any loan or provide financial assistance of any kind to a JV Subsidiary (other than loans or other financial assistance of any kind that constitutes JV Permitted Debt), without the prior written consent of the Required Lenders.

(5) Capital Expenditures No Obligor shall incur Capital Expenditures in excess of an aggregate of US $1,500,000 for all Obligors in any fiscal year of the Borrower, other than as part of Permitted Acquisitions.

(6) Acquisition of Property No Obligor shall acquire any Property of any Person (including any Equity Interests), or agree to do so except for:

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(a) Property acquired in connection with a Permitted Acquisition;

(b) Subsidiaries and Equity Interests permitted under Section 6.4(7);

(c) Property acquired through Capital Expenditures that are permitted under this Agreement;

(d) Property acquired through transactions contemplated in the definition of Permitted Liens;

(e) Property which comprises Cash Equivalents and which, upon its acquisition, becomes subject to the Security;

(f) acquisitions of inventory in the Ordinary Course; and

(g) other Property having an aggregate value of less than US $1,000,000 for all Obligors in any fiscal year of the Borrower.

(7) Subsidiaries and Equity Interests No Obligor shall have any Subsidiaries or hold or acquire Equity Interests of any other Person except:

(a) other Obligors as specified on Schedule C as at the date of this Agreement, subject to changes permitted under Sections 6.4(12) and 6.4(17);

(b) the Equity Interests in any other Person that it owns as at the date of this Agreement as specified in Schedule C;

(c) Equity Interests of a Subsidiary that is wholly-owned by the Borrower, directly or indirectly, that is newly established after the date of this Agreement and has no Material Property at the time it is established or which becomes an Obligor pursuant to Section 3.1(2); and

(d) any Equity Interest or Subsidiary acquired through a Permitted Acquisition or resulting from any merger, amalgamation, consolidation, corporate reorganization or other transaction among Obligors permitted under Section 6.4(12).

(8) Derivative Transactions

(a) No Obligor shall enter into any Derivative except for the purposes of prudent management of its interest rate, foreign currency and commodity price exposure and not for speculative purposes.

(b) No Obligor shall enter into any Derivative with any Person except a Lender or an Affiliate of a Lender.

(9) Dispositions of Property No Obligor shall sell, lease, sell and lease-back or otherwise dispose of any of its Property or any rights or interests in its Property or agree to do so except for:

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(a) sales of inventory and of obsolete or redundant equipment in the Ordinary Course;

(b) sales of Cash Equivalents for cash or in exchange for other Cash Equivalents;

(c) sales of fixed assets, where the proceeds of disposal are used within three months of such sale to purchase replacement fixed assets comparable or superior as to type, value and quality;

(d) leases and other dispositions that would constitute a Permitted Lien;

(e) sales, leases and other dispositions between Obligors; and

(f) any other sales of assets (other than Equity Interests) for cash where the net consideration of such sale does not (when aggregated with the net consideration of any other similar sales of the Obligors) exceed US $500,000 in any fiscal year of the Borrower.

(10) Business No Obligor shall carry on any business except the business carried on by the Obligors at the date of this Agreement as described in Schedule C or business of a similar or related nature.

(11) Arm’s Length Transactions No Obligor shall enter into any transaction of any kind with an Affiliate, Associate, or Person of which it is an Associate, except on a commercially reasonable basis as if it were dealing with the Person on an arm’s length basis.

(12) Mergers and Dissolutions No Obligor shall consolidate, amalgamate or merge with any other Person, enter into any corporate reorganization or other transaction intended to effect or otherwise permit a change in its existing Constating Documents, liquidate, wind-up or dissolve itself, or permit any liquidation, winding-up or dissolution, except in each case for a transaction involving one or more Obligors if the Borrower gives the Agent reasonable advance notice of the transaction and immediately takes whatever steps and delivers whatever documents (including opinions of counsel satisfactory to the Agent) reasonably required to ensure that the Lenders’ position is not adversely affected as a result. Notwithstanding the foregoing, the Borrower may not liquidate, wind-up or dissolve itself, or permit itself to be liquidated, wound-up or dissolved.

(13) Changes of Name No Obligor shall change its name without providing the Agent with reasonable advance notice of the change and promptly taking other steps, if any, as the Agent reasonably requests to maintain the Security and the other Loan Documents so that the Lenders’ position is not adversely affected.

(14) Changes of Location No Obligor shall permit its chief executive office or any of its tangible Property to be relocated out of the respective jurisdictions specified on Schedule C as of the date of this Agreement (or such other relevant jurisdictions specified to the Agent in respect of any Property acquired after the date of this Agreement pursuant to an acquisition permitted under this Agreement), except for goods in transit and goods that are normally used in more than one jurisdiction if the latter goods are equipment or are inventory leased or held for lease by it, in all cases without providing the Agent with

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reasonable advance notice of the change and promptly taking other steps, if any, as the Agent reasonably requests to maintain the Security and the other Loan Documents so that the Lenders’ position is not adversely affected.

(15) Change of Year End No Obligor shall change its fiscal year end (being December 31 for the Borrower), except that Obligors that have a different fiscal year end may change it to December 31.

(16) Change of Auditors No Obligor shall change its auditors, unless an internationally recognized accounting firm is appointed.

(17) Change of Control The Borrower shall not enter into, or agree to enter into, any transaction that would result in, nor shall otherwise cause or permit, a Change of Control or any change in Control of the Borrower.

(18) Material Contracts

(a) No Obligor shall assign (except to another Obligor or as part of the Security) or terminate any Material Contract (except at the expiry of its term by lapse of time) or accept the surrender of any Material Contract to which it is a party.

(b) No Obligor shall cause or permit any Material amendment or Material modification to, grant any Material waiver of any Material term of, or grant any Material consent or Material concession under, any Material Contract to which it is a party, nor shall any Obligor cause or permit any amendment or modification to any Material Contract, in each case which adversely affects the Lenders’ position without notifying the Agent of the amendment or modification.

(19) Restrictive Agreements No Obligor shall enter into any Contract (other than the Loan Documents) restricting (a) the ability of any Obligor to comply with the Loan Documents, including by creating or causing the creation of Liens to secure payment of the Obligations and Other Secured Obligations, (b) the ability of any Obligor to amend, supplement, restate or replace any Loan Document, or (c) the ability of any Obligor to make payments of any kind to any other Obligor.

(20) KYC Laws No Obligor shall, nor shall any broker or other agent acting for an Obligor in any capacity in connection with a Credit, (i) conduct any business or engage in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in Section 5.1(30), or (ii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any prohibition in any KYC Law, or (iii) deal in, or otherwise engage in any transaction relating to, any Property or interests in Property blocked pursuant to the Executive Order.

(21) U.S. Plans No Obligor shall withdraw from participation in, permit the termination or partial termination of, or permit the occurrence of any other event with respect to any U.S. Plan maintained for the benefit of any Obligor’s employees under circumstances that could result in liability to the Pension Benefit Guaranty Corporation, or any of its successors or assigns, or to any entity which provides funds for such U.S. Plan; or

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withdraw from any U.S. Multiemployer Plan described in Section 4001(a)(3) of ERISA which covers any Obligor’s employees.

6.5 Use of Insurance Proceeds

(1) Unless otherwise specified in this Section 6.5, all proceeds of insurance required to be maintained by the Obligors under the terms of this Agreement shall be paid to the Agent to be applied by it on account of the Obligations.

(2) Proceeds of liability insurance shall be paid to the Person to whom the affected Obligor is liable. Proceeds of insurance covering loss of or damage to Property in an amount of less than US $1,000,000 per claim may be paid by the insurer directly to the affected Obligor unless, if an Event of Default has occurred and is continuing, the Agent requires that payment be made to the Agent to be applied by it on account of the Obligations. Subject to the rights of any holder of a Permitted Lien that has priority over the Security, proceeds paid to an Obligor shall be used to fully repair or replace the property for which the insurance proceeds are payable or, if that is not prudent, shall be paid by the affected Obligor to the Agent to reduce the principal amount of the Obligations.

(3) If an Event of Default has occurred, the proceeds of any business interruption insurance shall, upon its requirement that payment be made to it, be paid to the Agent to be applied by it on account of the Obligations as they fall due from time to time (including as a result of any demand for payment of the Obligations) and, to the extent of any surplus, shall be used to repay the Revolving Credit, without prejudice to the Borrower’s rights to further Advances under that Credit; provided that if the Revolving Credit is repaid in full at any such time, the proceeds may be used to carry on the business of the Obligors as long as the Required Lenders are satisfied, acting reasonably, that adequate provision has been made for payment of the Obligations.

(4) All insurance proceeds held by the Agent shall, unless and until the proceeds are applied to payment of the Obligations or released to the affected Obligor, be held as part of the Security. The Agent shall place all proceeds in an interest-bearing account with the interest accruing to the benefit of the affected Obligor.

6.6 Intragroup Obligations

(1) If and for as long as an Event of Default has occurred and is continuing, or if a Default would result from payment of Intragroup Obligations by one Obligor to another, payment of Intragroup Obligations is hereby postponed to the indefeasible payment in full in cash of the Obligations and the Other Secured Obligations and the termination of all Commitments, and:

(a) any Obligor that is indebted to another Obligor shall neither make nor be entitled to make and any Obligor to whom the Intragroup Obligations are owed shall not receive or be entitled to receive any payment, prepayment or other compensation in respect of the Intragroup Obligations, and if an Obligor to whom the Intragroup Obligations are owed receives any payment, prepayment or other compensation in respect of the Intragroup Obligations contrary to this Section 6.6, the payment,

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prepayment or compensation shall be held by the recipient Obligor in trust for the Lenders and holders of Other Secured Obligations, separate and apart from its own property, and shall be immediately paid over to the Agent for application to the Obligations and Other Secured Obligations; and

(b) no Obligor to whom Intragroup Obligations are owed shall be entitled to accelerate the time for payment of the Intragroup Obligations, petition the indebted Obligor into bankruptcy or participate in any bankruptcy proceeding of the indebted Obligor, initiate or participate in any similar proceeding (including a proceeding in respect of the indebted Obligor under the Companies’ Creditors Arrangement Act (Canada)), or initiate or participate in any proceeding claiming judgment for payment or performance of any of those Intragroup Obligations.

(2) Each Obligor acknowledges that, under the terms of the Security it has given, all Intragroup Obligations owing to it are assigned as security to the Agent. Upon any Obligations becoming due and payable under Section 7.2, the Agent may with the consent of the Required Lenders terminate the postponement in Section 6.6(1) as to any or all Intragroup Obligations, in which case those Intragroup Obligations shall be paid to the Agent or as it directs free of any set off, counterclaim, defence or other right that the Obligors, or any of them, owing Intragroup Obligations may assert against the Obligors, or any of them, to whom Intragroup Obligations are owed.

ARTICLE 7

DEFAULT

7.1 Default

Each of the following events shall constitute an Event of Default under this Agreement:

(a) the Borrower fails to pay or provide for any amount of principal (including the amount of a B/A on its maturity in accordance with Section 9.8), interest or fees hereunder when due, unless such failure is the result of a technical or administrative error beyond the control of the Borrower and such failure is remedied within two (2) Banking Days;

(b) the Borrower fails to pay any other Obligations within three (3) Banking Days of when due;

(c) an Obligor or any other Person providing Security makes any representation, warranty or certification under any of the Loan Documents that is incorrect, incomplete or misleading when made or deemed to be made;

(d) there is a Change of Control or a breach of Section 6.1;

(e) there is a breach of Section 6.3(1) that is not corrected or otherwise satisfied within seven (7) days after the Agent gives written notice of the breach;

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(f) there is a breach of Sections 6.3(2)(a) or 6.4 that is not corrected or otherwise satisfied within seven (7) days after the Borrower conclusively learns of such breach or the Agent gives written notice of the breach, whichever is earlier;

(g) a default or other event or circumstance occurs in connection with Debt of any Obligor other than the Obligations, if the effect is to cause or permit the acceleration of the due date of that Debt (whether or not acceleration actually occurs) or to require the prepayment, repurchase, redemption or defeasance of that Debt before its scheduled maturity, or an Obligor fails to pay any such Debt when due, in all cases in respect of Debt in the aggregate amount of at least US $500,000;

(h) an Obligor or any other party to a Loan Document denies its obligations under any Loan Document or claims any Loan Document to be invalid, unenforceable or withdrawn in whole or in part, including by purporting to terminate any guarantee or indemnity forming part of the Security;

(i) the performance of any Loan Document becomes unlawful, any Loan Document is invalidated or made unenforceable by any Applicable Law, or any Loan Document is determined to be invalid or unenforceable by any Governmental Authority, in each case in whole or in any Material part;

(j) any Lien purported to be created by the Security ceases to be, or is claimed by any Obligor or any other Person providing Security not to be, a valid, perfected Lien in the collateral described in the relevant document, having first priority but for Permitted Liens, except as a result of being released by the Agent in accordance with this Agreement;

(k) an Obligor does not, is unable to, or admits its inability to meet or pay its obligations as they generally become due, ceases or threatens to cease to carry on its business (except as expressly permitted in this Agreement), declares any moratorium on its obligations, proposes a compromise or arrangement between it and any creditor, or otherwise becomes insolvent;

(l) an Obligor or any other Person providing Security makes an assignment in bankruptcy, makes a proposal to its creditors or files notice of its intention to do so, institutes any other proceeding under Applicable Law seeking to adjudicate it a bankrupt or an insolvent, or seeking liquidation, dissolution, winding-up, reorganization, compromise, arrangement, adjustment, protection, moratorium, relief, stay of proceedings of creditors, composition of it or its debts or any other similar relief;

(m) an Obligor or any other Person providing Security applies for the appointment of, or the taking of possession by, a receiver, interim receiver, receiver/manager, sequestrator, conservator, custodian, administrator, trustee, liquidator or other similar official for it or a substantial part of its Property;

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(n) any petition is filed, application made or other proceeding instituted against or in respect of any Obligor or any other Person providing Security in any jurisdiction seeking any of the results described in Sections 7.1(1) and 7.1(m), and the Obligor or other Person files an answer admitting the material allegations made against it or fails to defend the proceeding diligently and in good faith by appropriate proceedings, or the relief sought in the proceeding is granted (whether or not subject to appeal), or the proceeding is not dismissed or stayed within thirty (30) days of being instituted;

(o) one or more final judgments, writs of execution, garnishments or attachments or similar processes representing claims in an aggregate of US $500,000 or more for all Obligors at any time are issued or levied against any of their Property and are not released, bonded, satisfied, discharged, vacated, stayed or accepted for payment by an insurer within ten (10) days after their entry, commencement or levy;

(p) possession of Property of an Obligor having an aggregate value of US $250,000 or more is taken by or at the instance of the holder of a Lien, whether by seizure, appointment of a receiver or receiver and manager, or otherwise;

(q) an event or circumstance occurs that has a Material Adverse Effect, as determined by the Required Lenders;

(r) any Material Permit expires or is withdrawn, cancelled, terminated, or modified to the Material detriment of the Obligors or their Property or businesses taken as a whole, and is not reinstated or replaced within twenty (20) days afterwards without Material impairment to the Obligors or their Property or businesses taken as a whole;

(s) a default by an Obligor or any other party to any Material Contract occurs, or any other event occurs under any Material Contract, and continues without being waived after any applicable grace period specified in the Material Contract, if the effect of the default or other event (if not waived) is to terminate, or permit the termination of, the Material Contract or if the default or other event results in a declaration of non-performance being issued or similar step being taken with respect to an Obligor and, where the default is not by an Obligor, the termination or similar step would have a Material Adverse Effect;

(t) the audited annual financial statements of the Borrower are qualified by the Borrower’s auditors with a “going concern” or similar qualification or exception or contain a qualification or exception as to the scope of the audit;

(u) there is a breach of any other provision of any Loan Document that is not corrected or otherwise satisfied within fifteen (15) days after the Borrower conclusively learns of the breach or the Agent gives written notice of the breach, whichever is earlier;

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(v) there is a breach or failure to comply with any material regulatory requirement of an Obligor and such breach or failure is not cured within ten (10) days of such breach or failure;

(w) any default arising from non-payment of any amount owing occurs (and continues following any grace period) under any agreement under which any Other Secured Obligation arises, unless such non-payment is the result of a technical or administrative error and is remedied within three (3) Banking Days (or such longer period as permitted under the applicable agreement under which such Other Secured Obligation arises);

(x) there shall occur any revocation, suspension, termination, rescission, non-renewal or forfeiture or any similar final administrative action with respect to one or more Health Care Permits, Reimbursement Programs or Reimbursement Authorizations that would reasonably be expected to have a Material Adverse Effect; or

(y) A reportable event (consisting of any of the events set forth in Section 4043(b) of ERISA) shall occur which Agent, in its reasonable discretion, shall determine constitutes grounds for the termination by the Pension Benefit Guaranty Corporation of any U.S. Plan or the appointment by the appropriate United States district court of a trustee for any U.S. Plan, or if any U.S. Plan shall be terminated or any such trustee shall be requested or appointed, or if the Borrower or any other Obligor is in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a U.S. Multiemployer Plan resulting from the Borrower’s, or such other Obligor’s complete or partial withdrawal from such U.S. Multiemployer Plan that would reasonably be expected to have a Material Adverse Effect.

7.2 Acceleration and Termination of Rights

(1) If any Event of Default occurs, the Lenders shall be under no further obligation to make Advances and the Agent, on the instructions of the Required Lenders, may give notice to the Borrower (a) declaring the Lenders’ obligations to make Advances to be terminated, in which case they shall terminate immediately, and/or (b) declaring the Obligations or any of them to be due and payable, in which case they shall be immediately due and payable without presentment, demand, protest or further notice of any kind, all of which are expressly waived by the Borrower.

(2) Notwithstanding Section 7.2(1), upon the occurrence of an Event of Default in Sections 7.1(1), 7.1(m) or 7.1(n), then without prejudice to the other rights of the Lenders, without any notice or action of any kind by the Agent or the Lenders, and without presentment, demand or protest, the Lenders’ obligation to make Advances shall immediately terminate and the Obligations shall immediately become due and payable.

7.3 Payment of B/As

(1) Immediately upon any Obligations becoming due and payable under Section 7.2, the Borrower shall, without necessity of further act or evidence, be unconditionally obligated

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to immediately deposit with the Agent for the Lenders’ benefit Cash Collateral equal to the full face amount of all B/As then outstanding for its account and the Borrower hereby unconditionally promises and agrees to do so. The amounts required to be deposited as Cash Collateral form part of the Security. The Borrower authorizes the Lenders, or any of them, to debit its accounts with the amount required to pay outstanding B/As including any that are held by the Lenders, or any of them, in their own right at maturity. Amounts paid to the Agent in respect of B/As shall be applied against, and shall reduce, pro rata among the Lenders, to the extent of the amounts paid to the Agent in respect of B/As, the obligations of the Borrower to pay amounts then or subsequently payable under B/As, at the times amounts become payable.

7.4 Remedies

On the occurrence of any event by which any of the Obligations become due and payable under Section 7.2, the Required Lenders may instruct the Agent to take any action or proceedings on behalf of the Lenders and in compliance with Applicable Law that the Required Lenders in their sole discretion deem expedient to enforce the Security, all without any additional notice, presentment, demand, protest or other formality, all of which are expressly waived by the Obligors.

7.5 Interest After Stay of Proceedings

If a stay of proceedings is obtained or ordered in respect of the Borrower under the provisions of the Bankruptcy and Insolvency Act (Canada) or the Companies’ Creditors Arrangement Act (Canada), then without prejudice to the Lenders’ rights to contest the stay, the Borrower agrees to continue to pay interest and fees on all amounts due to the Lenders in accordance with this Agreement. The Borrower acknowledges that permitting the Borrower to continue to use the proceeds of Advances after a stay is obtained or ordered constitutes valuable consideration in the same way that permitting the Borrower to use leased premises constitutes valuable consideration.

7.6 Saving

Neither the Agent nor any Lender shall be under any obligation to the Obligors or any other Person to realize any collateral that is subject to the Security or enforce all or any part of the Security or to allow any of the collateral to be sold, dealt with or otherwise disposed of. Neither the Agent nor any Lender shall be responsible or liable to the Obligors or any other Person for any loss or damage upon the realization or enforcement of, the failure to realize or enforce the Security or any part of it, the failure to allow any of the collateral to be sold, dealt with or otherwise disposed of or any act or omission on their respective parts or on the part of any director, officer, agent, servant or adviser in connection with any of the foregoing, except that the Agent or a Lender may be responsible or liable for any loss or damage arising from its wilful misconduct or gross negligence.

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7.7 Perform Obligations

If an Event of Default has occurred and is continuing and if any Obligor has failed to perform any of its covenants or agreements in the Loan Documents, the Required Lenders may, but shall be under no obligation to, instruct the Agent on behalf of the Lenders to perform any of those covenants or agreements in any manner deemed fit by the Required Lenders without waiving any rights to enforce the Loan Documents as a result. The reasonable expenses (including any legal costs) paid by the Agent and/or the Lenders in respect of the foregoing shall be secured by the Security.

7.8 Third Parties

No Person dealing with any Lender, the Agent or any other Representative of the Lenders is required to determine (a) whether the Security has become enforceable, the powers that the Lenders, the Agent or the other Representative are purporting to exercise have become exercisable, or any Obligations remain outstanding, (b) as to the necessity or expediency of the stipulations and conditions subject to which any sale shall be made, (c) otherwise as to the propriety or regularity of any sale or other disposition or any other dealing with the collateral charged by the Security or any part of it, or (d) how any payment to the Lenders, the Agent or any other Representative has been or will be applied. Any Person who acquires collateral charged by the Security from the Lenders, the Agent or any other Representative in good faith will acquire it free from any interest of the Obligors.

7.9 Power of Attorney

Effective upon occurrence of an Event of Default, each Obligor irrevocably constitutes and appoints any Vice-President, Managing Director or more senior officer of the Agent its due and lawful attorney with full power of substitution in its name and on its behalf, during the continuance of an Event of Default, to enforce any right, title or interest of the Lenders in, to or under all or any part of the Security or any obligation to that Obligor or remedy available to that Obligor. This appointment is irrevocable to the maximum extent permitted by Applicable Law.

7.10 Remedies Cumulative

The rights and remedies of the Lenders under the Loan Documents are cumulative and are in addition to and not in substitution for any rights or remedies provided by Applicable Law. Any single or partial exercise by the Lenders of any right or remedy for a default or breach of any agreement, term, covenant or condition in this Agreement shall not be deemed to be a waiver of or to alter, affect, or prejudice any other right or remedy or other rights or remedies to which the Lenders may be lawfully entitled for the same default or breach. Any waiver by the Lenders of the strict observance, performance or compliance with any agreement, term, covenant or condition in this Agreement and any indulgence granted by the Lenders shall be deemed not to be a waiver of any subsequent default.

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7.11 Set-Off or Compensation

If an Event of Default has occurred and is continuing, each Lender and each of its Affiliates is authorized at any time and from time to time to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by that Lender or any of its Affiliates to or for the credit or the account of any Obligor against any and all of the Obligations to that Lender, irrespective of whether or not the Lender has made any demand under this Agreement or any other Loan Document and although the obligations of the Obligor may be contingent or unmatured or are owed to a branch or office of the Lender different from the branch or office holding the deposit or obligated to an Obligor. If a Defaulting Lender or its Affiliate exercises any such right of set off, (a) all amounts so set off shall be paid over immediately to the Agent for further application in accordance with the provisions of Section 8.10 and, pending payment, shall be segregated by the Defaulting Lender or its Affiliate from its other funds and deemed to be held in trust for the benefit of the Agent and the Lenders, and (b) the Defaulting Lender shall promptly provide the Agent with a statement describing in reasonable detail the Obligations owing to the Defaulting Lender as to which the right of set off was exercised. The rights of each Lender and its Affiliates under this Section are in addition to other rights and remedies (including other rights of set-off, consolidation of accounts and bankers’ lien) that the Lenders or their respective Affiliates may have. Each Lender agrees to promptly notify the Borrower and the Agent after any such set-off and application, but the failure to give notice shall not affect the validity of the set-off and application. If any Affiliate of a Lender exercises any rights under this Section 7.11, it shall share the benefit received in accordance with Section 7.12 as if the benefit had been received by the Lender of which it is an Affiliate.

7.12 Direct Payments

(1) If any Lender, by exercising any right of set-off or counterclaim or otherwise, obtains any payment or other reduction that might result in that Lender receiving payment or other reduction of a proportion of the aggregate amount of its Advances and accrued interest on them or other Obligations and Other Secured Obligations greater than its pro rata share of them as provided in this Agreement, then the Lender receiving the payment or other reduction shall (x) notify the Agent of that fact, and (y) purchase (for cash at face value) participations in the Advances and other Obligations and Other Secured Obligations owing to the other Lenders, or make other adjustments as shall be equitable, so that the benefit of all those payments shall be shared by the Lenders and others to whom Other Secured Obligations are owed rateably in accordance with the aggregate amount of Obligations and Other Secured Obligations owing to them, provided that:

(a) if any participation is purchased and all or any portion of the payment giving rise to it is recovered, the participation shall be rescinded and the purchase price restored to the extent of the recovery, without interest;

(b) the provisions of this Section shall not be construed to apply to (i) any payment made by any Obligor pursuant to and in accordance with the express terms of this

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Agreement (including the application of funds arising from the existence of a Defaulting Lender) or (ii) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Advances to any assignee or participant, other than to any Obligor or any Affiliate of an Obligor (as to which the provisions of this Section shall apply); and

(c) the provisions of this Section shall not be construed to apply to (i) any payment (including a payment in respect of Other Secured Obligations) made while no Event of Default has occurred and is continuing in respect of obligations of the Borrower to a Lender that do not arise under or in connection with the Loan Documents, (ii) any payment made in respect of an obligation that is secured by a Permitted Lien (other than the Security) or that is otherwise entitled to priority over the Borrower’s obligations under or in connection with the Loan Documents, (iii) any reduction arising from an amount owing to an Obligor upon the termination of Derivatives entered into between the Obligor and a Lender except for a net amount available after the termination of all Derivatives entered into between the Obligors and that Lender and the set-off of resulting amounts owing by the Obligors and to the Obligors, or (iv) any payment to which a Lender is entitled as a result of any form of credit protection obtained by that Lender.

(2) The Obligors consent to the foregoing and agree, to the extent they may effectively do so under Applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Obligor rights of set-off and counterclaim and similar rights of Lenders with respect to that participation as fully as if the Lender were a direct creditor of each Obligor in the amount of the participation.

ARTICLE 8

THE AGENT AND THE LENDERS

8.1 Authorization of Agent

(1) Each of the Lenders hereby irrevocably appoints Scotiabank as the Agent to act on its behalf as the Agent under the Loan Documents and authorizes the Agent to take the actions on its behalf and to exercise the powers that are delegated to the Agent by the terms of the Loan Documents, together with actions and powers that are reasonably incidental to them. The use of the term “agent” in any Loan Document with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligation arising under agency doctrine of any Applicable Law. Instead, the term is used as a matter of market custom and is intended to create or reflect only an administrative relationship between contracting parties.

(2) Without limiting Section 8.1(1), each Lender grants to the Agent:

(a) a power of attorney for the purposes of Applicable Laws in respect of the Security, to sign documents comprising the Security from time to time as the party accepting the grant of the Security; and

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(b) the right to delegate its authority as attorney to any other Person, whether or not an officer or employee of the Agent.

(3) Without limiting the powers of the Agent under this Agreement and the Security, each Lender and the Agent acknowledges and agrees that the Agent shall, for the purposes of holding any security granted under the Security pursuant to the laws of the Province of Québec to secure payment of bonds or any similar instruments (collectively, the “Bonds”), be the holder of an irrevocable power of attorney (fondé de pouvoir), within the meaning of Article 2692 of the Civil Code of Québec, for all present and future Lenders as well as holders and depositaries of the Bonds. Each Lender constitutes, to the extent necessary, the Agent as the holder of the irrevocable power of attorney (fondé de pouvoir) in order to hold security granted under the Security in the Province of Quebec to secure payment of the Bonds. Each successor Lender and successor to the Agent shall be deemed to have confirmed and ratified the constitution of the Agent as the holder of the irrevocable power of attorney (fondé de pouvoir). Furthermore, the Agent agrees to act in the capacity of the holder and depositary of the Bonds for the benefit of all present and future Lenders. Notwithstanding the provisions of Section 32 of the Special Powers of Legal Persons Act (Québec), the Agent may acquire and be the holder of a Bond. The Borrower and each Obligor acknowledges that any Bond executed by it constitutes a title of indebtedness as that term is used in Article 2692 of the Civil Code of Québec. Notwithstanding Section 11.3, the provisions of this Section 8.1(3) shall be governed by the laws of the Province of Québec and the federal laws of Canada applicable in Québec.

8.2 Rights as a Lender

The Person serving as the Agent shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Agent in its individual capacity. That Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with any Obligor or any Affiliate of an Obligor as if the Person were not the Agent and without any duty to account to the Lenders.

8.3 Exculpatory Provisions

(1) The Agent shall not have any duties or obligations except those expressly specified in the Loan Documents. Without limiting the generality of the foregoing, the Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that the Agent is required to exercise as directed in writing by the Required Lenders (or another number or percentage of the Lenders that is expressly provided for in the Loan Documents), but the Agent

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shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any Loan Document or Applicable Law; and

(c) shall not, except as expressly specified in the Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the person serving as the Agent or any of its Affiliates in any capacity.

(2) The Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or another number or percentage of the Lenders that is necessary, or that the Agent believes in good faith is necessary, under the provisions of the Loan Documents) or (ii) in the absence of its own gross negligence or wilful misconduct. The Agent shall be deemed not to have knowledge of any Default unless and until notice describing the Default is given to the Agent by the Borrower or a Lender.

(3) Except as otherwise expressly specified in this Agreement, the Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered under or in connection with any Loan Document, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions in any Loan Document or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition specified in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Agent.

8.4 Reliance by Agent

The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying on it. In determining compliance with any condition to the making of an Advance, that by its terms must be fulfilled to the satisfaction of a Lender, the Agent may presume that the condition is satisfactory to the Lender unless the Agent has received notice to the contrary from the Lender before the making of the Advance. The Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with their advice.

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8.5 Delegation of Duties

The Agent may perform any and all of its duties and exercise its rights and powers under any Loan Document by or through any one or more sub-agents appointed by the Agent from among the Lenders (including the Person serving as Agent) and their respective Affiliates. The Agent and any sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The provisions of this Article and other provisions of this Agreement for the benefit of the Agent shall apply to any sub-agent and to the Related Parties of the Agent and any sub-agent, and shall apply to their respective activities in connection with the syndication of the Credits as well as activities as Agent.

8.6 Administration of the Credits

(1) Any reference in this Agreement to the Agent means, where the Agent is also a Lender, the agency department of that Lender specifically responsible for acting as Agent under and in connection with this Agreement. In acting as Agent, the agency department will be treated as a separate entity from any other department or division of the Lender in question. Without limiting the foregoing, the Agent shall not be deemed to have notice of a document or information received by any other department or division of that Lender, nor will that Lender be deemed to have notice of a document or information received by the Agent.

(2) Unless otherwise specified in this Agreement, the Agent shall perform the following duties:

(a) Subject to Section 8.4, the Agent shall ensure that all conditions precedent to any Advance have been fulfilled in accordance with the terms of this Agreement, unless waived in accordance with this Agreement.

(b) The Agent shall take delivery of each Lender’s share of an Advance and disburse all Advances in accordance with Article 9.

(c) The Agent shall use reasonable efforts to promptly collect all sums due and payable by the Borrower pursuant to this Agreement and shall remit all payments to the Lenders in accordance with this Agreement.

(d) The Agent shall hold the Security and all other Loan Documents on behalf of the Lenders, maintain records showing all Advances made by the Lenders, all payments made by the Borrower to the Agent, all remittances made by the Agent to the Lenders and all fees and other sums received by the Agent and, allow each Lender and its advisors to examine those records and documents at its own expense. The Agent shall provide each Lender with copies of this Agreement, the Security and other Loan Documents in customary record books and/or CD’s, which shall be provided at the expense of the Borrower. Otherwise, the Agent shall provide any Lender, upon reasonable notice and at the Lender’s expense, with copies of records and documents held by the Agent in connection with this Agreement that the Lender may reasonably require from time to time.

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(e) The Agent shall, promptly following receipt of any written notice or other written communication from an Obligor pursuant to this Agreement, deliver that notice or other communication to each Lender.

(f) The Agent shall promptly forward to each Lender, on request, an up-to-date loan status report.

(g) The Agent shall promptly notify each Lender on learning of the occurrence of a Default or the occurrence of any event or circumstance that would have a Material Adverse Effect. The Agent shall have no other duty or obligation whatsoever to provide any notice to the Lenders concerning the creditworthiness of any Obligor. Each Lender shall notify the Agent of any Default of which it becomes aware.

(3) The Agent may, notwithstanding and without limiting Section 3.1(5), take all necessary steps to comply with registration requirements so that the Security remains perfected under Applicable Laws, but each Lender shall notify the Agent of any circumstance that might affect the perfection of the Security of which the Lender becomes aware.

(4) The Agent may take the following actions only with the prior consent of the Required Lenders, subject to Sections 8.6(5), 8.6(6) and 8.6(7) or unless otherwise expressly specified in this Agreement:

(a) amend, modify or waive any term of this Agreement or any other Loan Document, including waiver of a Default if the subject matter of the waiver does not fall within the matters covered by Section 8.6(5), or exercise any right of approval conferred on the Lenders by this Agreement;

(b) notify any Obligor of any matter of which notice may be required or desirable under or in connection with the Loan Documents, except that the Agent shall, without direction from the Lenders, immediately give the Borrower notice of any payment that is due or overdue under the terms of this Agreement unless the Agent considers that it should request the direction of the Required Lenders, in which case the Agent shall promptly request that direction;

(c) declare an Event of Default, declare the Obligations to be immediately due and payable, take action to enforce performance of the Obligations or to realize on the Security including by appointment of a receiver, the exercise of powers of sale given by the Security or by Applicable Law or foreclosure proceedings, and/or pursue any other legal remedy;

(d) pay insurance premiums, Taxes and any other sum reasonably required to protect the interests of the Lenders; or

(e) enter into or amend, modify or waive any term of any Intercreditor Agreement unless Section 8.6(5)(i) applies.

(5) The Agent may take the following actions only with the unanimous consent of the Lenders, unless otherwise specified in this Agreement:

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(a) reduce the rate or amount of any interest or fee payable under this Agreement, or postpone payment of any interest or fee, except to the extent that waiver of a Default may in effect result in waiver of any post-Default increase in interest or fees or that an amendment relating to a financial covenant that determines which of various specified interest or fee rates applies may in effect cause a reduction, postponement or waiver of interest or fees;

(b) increase the amount of a Credit or change the several liability of the Lenders;

(c) waive payment of any part of the Obligations, or postpone the date for or reduce the amount of any payment under Section 9.8 or any scheduled repayment (including the maturity date) or mandatory prepayment or reduction of any Credit;

(d) change the currency in which Advances are made by the Lenders or payments are made by the Borrower;

(e) subject to Section 8.6(7), discharge any Property from the Lien of any Security, release any obligation to provide or perfect Security or release any Obligor generally from its obligations as an Obligor;

(f) amend the definition of “Required Lenders,” this Section 8.6(5)(f) or any other provision of this Agreement that specifies the number or percentage of Lenders required to make any decision under or in connection with this Agreement;

(g) amend any aspect of this Agreement that would affect the sharing of payments specified in this Agreement;

(h) waive an Event of Default under Sections 7.1(1), 7.1(m) or 7.1(n); or

(i) enter into any Intercreditor Agreement or amend, modify or waive any term of any Intercreditor Agreement if doing so would adversely affect the priority of any Lien arising under the Security or the priority of any payment obligation of the Obligors under the Loan Documents.

(6) Except as expressly contemplated in this Agreement, no Lender’s Commitment or Applicable Percentage may be amended without the consent of that Lender. In addition, no amendment, modification or waiver affecting the rights or obligations of the Agent may be made without its consent and no amendment, modification or waiver affecting rights or obligations under the Loan Documents relating to Other Secured Obligations may be made without the consent of the Lenders who are or whose Affiliates are affected as holders of Other Secured Obligations. No amendment to the definition of “Defaulting Lender” or Section 8.10 may be made without the consent of the Agent.

(7) Notwithstanding Sections 8.6(4), 8.6(5) and 8.6(6), the Agent may, without the consent of any Lender, make amendments to the Loan Documents that are for the sole purpose of curing any ambiguity, defect or inconsistency that is clerical or not Material, but shall promptly notify the Lenders if it does so. The Agent may also, without the consent of any Lender, discharge any Security and/or release any Obligor other than the Borrower to the

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extent necessary to allow completion of any sale or other disposition of Property (including Equity Interests of an Obligor) or any corporate reorganization permitted by this Agreement or in respect of which the Lenders or Required Lenders have, as applicable, consented or waived the requirements of this Agreement.

(8) As between the Obligors, on the one hand, and the Agent and the Lenders, on the other hand:

(a) all statements, certificates, consents and other documents that the Agent purports to deliver on behalf of the Lenders or the Required Lenders shall be binding on each Lender, and the Obligors shall not be required to ascertain or confirm the authority of the Agent in delivering the documents;

(b) all certificates, statements, notices and other documents that are delivered by the Obligors to the Agent in accordance with this Agreement shall be deemed to have been duly delivered to each Lender; and

(c) all payments that are delivered by the Borrower to the Agent in accordance with this Agreement shall be deemed to have been received by each Lender entitled to payment.

(9) Except in its own right as a Lender, the Agent shall not be required to advance its own funds for any purpose, and in particular, shall not be required to pay with its own funds insurance premiums, taxes or public utility charges or the cost of repairs or maintenance with respect to the Property that is the subject matter of the Security, nor shall it be required to pay with its own funds the fees of solicitors, counsel, auditors, experts or agents engaged by it as permitted by the Loan Documents.

8.7 Acknowledgments, Representations and Covenants of Lenders

(1) (1) Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on documents and information that it from time to time deems appropriate, continue to make its own decisions in taking or not taking action under or based upon any Loan Document or any related agreement or any document furnished under any Loan Document.

(2) Each Lender represents and warrants that it has full power and authority, and has taken all action necessary, to execute and deliver this Agreement, to consummate the transactions contemplated by this Agreement and to be a Lender.

(3) Each Lender agrees to indemnify the Agent and hold it harmless (to the extent not reimbursed by the Borrower), rateably according to its Applicable Percentage (and not jointly or jointly and severally) from and against any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any

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counsel, which may be incurred by or asserted against the Agent in any way relating to or arising out of the Loan Documents or the transactions contemplated in them. However, no Lender shall be liable for any portion of those losses, claims, damages, liabilities and related expenses that results from the Agent’s gross negligence or wilful misconduct. The Agent shall not be required to take or continue any action unless the Agent has received sufficient funds or arrangements satisfactory to it for indemnification to cover the cost of the proposed action.

(4) To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under Sections 11.5(1) and 11.5(2) to be paid by it to the Agent (or any sub-agent or Related Party of the Agent), each Lender severally agrees to pay to the Agent (or any sub-agent or Related Party) that Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of the unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Agent (or any sub-agent) in its capacity as such, or against any Related Party of any of the foregoing acting for the Agent (or any sub-agent) in connection with that capacity. The obligations of the Lenders under this Section are subject to the other provisions of this Agreement concerning several liability of the Lenders.

(5) Each Lender acknowledges and confirms that if the Agent does not receive payment in accordance with this Agreement, it shall not be the Agent’s obligation to maintain the Credits in good standing, nor shall any Lender have recourse to the Agent in respect of any amounts owing to the Lender under this Agreement.

(6) Each Lender acknowledges and agrees that its obligation to advance its Applicable Percentage of Advances in accordance with the terms of this Agreement is independent and in no way related to the obligation of any other Lender.

(7) Each Lender acknowledges receipt of a copy of this Agreement, the Security (to the extent that the Security has been delivered) and each Intercreditor Agreement that exists at the date of this Agreement, and acknowledges that it is satisfied with the form and content of those documents.

(8) Each Revolving Lender that is a “foreign bank” as defined in the Bank Act (Canada) represents and warrants that it is an “authorized foreign bank” as defined in that Act and that it is acting through a branch in Canada.

8.8 Collective Action of the Lenders

Each Lender acknowledges that to the extent permitted by Applicable Law, the Security and the remedies provided under the Loan Documents to the Lenders are for the benefit of the Lenders collectively and acting together and not severally, and also acknowledges that its rights under the Loan Documents are to be exercised not severally, but by the Agent upon the decision of the Required Lenders (or another number or percentage of the Lenders as is expressly provided for in the Loan Documents). Accordingly, notwithstanding any other provision contained in any Loan Document, each Lender

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agrees that it shall not be entitled to take any action, including any declaration of Default, but that any such action shall be taken only by the Agent with the prior written agreement of the Required Lenders (or another number or percentage of the Lenders that is expressly provided for in the Loan Documents). Each Lender also agrees that, upon any such written agreement being given, it shall co-operate fully with the Agent to the extent requested by the Agent. Notwithstanding the foregoing, in the absence of instructions from the Lenders and where in the sole opinion of the Agent, acting reasonably and in good faith, the exigencies of the situation warrant such action, the Agent may without notice to or consent of the Lenders take any action on behalf of the Lenders that it deems appropriate or desirable in the interest of the Lenders.

8.9 Authorization of Intercreditor Agreement

Each Lender hereby authorizes and directs the Agent to execute and deliver on its behalf each Intercreditor Agreement to which the Agent is a party and that is approved in accordance with this Agreement, and agrees that any such Intercreditor Agreement shall be binding on the Lender as if it was a signatory.

8.10 Defaulting Lenders

(1) Notwithstanding any other provision of this Agreement, if any Lender becomes a Defaulting Lender, then the provisions of Sections 8.10(2) to 8.10(7) shall apply to the extent permitted by Applicable Law until the Lender is no longer a Defaulting Lender.

(2) The Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as specified in the definition of “Required Lenders.”

(3) The Defaulting Lender shall be deemed to be a Non-B/A Lender. Any outstanding Advance by the Defaulting Lender by way of B/A shall be deemed to have been made as a B/A Equivalent Loan and, provided that on the maturity of each such B/A Equivalent Loan the Borrower pays the Agent the difference between the amount that it would otherwise have to pay the Defaulting Lender as a Non-B/A Lender in accordance with Section 9.11(3) and the proceeds of a B/A Equivalent Loan that the Defaulting Lender would be required to make if requested to rollover the maturing B/A Equivalent Loan, the B/A Equivalent Loan shall be deemed to have been rolled over.

(4) Any payment of principal, interest, fees or other amounts received by the Agent for the account of the Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article 7 or otherwise) or received by the Agent from a Defaulting Lender pursuant to Section 7.11 shall be applied at such time or times as may be determined by the Agent as follows: first, to the payment of any amounts owing by the Defaulting Lender to the Agent under this Agreement; second, as the Borrower may request (so long as no Default exists), to the funding of any Advance in respect of which the Defaulting Lender has failed to fund its portion as required by this Agreement, as determined by the Agent; third, if so determined by the Agent and the Borrower, to be held in a deposit account and released pro rata in order to satisfy the Defaulting Lender’s potential future funding

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obligations with respect to Advances under this Agreement; fourth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against the Defaulting Lender as a result of the Defaulting Lender’s breach of its obligations under this Agreement; fifth, so long as no Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against the Defaulting Lender as a result of the Defaulting Lender’s breach of its obligations under this Agreement; and sixth, to the Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) the payment is a payment of the principal amount of any Advance in respect of which the Defaulting Lender has not fully funded its appropriate share (including pursuant to Section 9.1), and (y) the Advances were made at a time when the conditions in Section 4.2 were satisfied or waived, the payment shall be applied solely to pay the Advances by and other amounts owing to all Non-Defaulting Lenders (including pursuant to Section 9.1) on a pro rata basis before being applied to the payment of any Advances or other amounts owing to the Defaulting Lender, until all Advances and all unfunded or contingent obligations pursuant to Section 9.1 are held by the Lenders pro rata in accordance with their respective Commitments without giving effect to Section 8.10(6). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender (including any amount paid by the Borrower to the Agent for the account of the Defaulting Lender) that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 8.10(3) shall be deemed paid to and redirected by the Defaulting Lender, and each Lender irrevocably consents to that.

(5) No Defaulting Lender shall be entitled to receive any standby fee for any period during which that Lender is a Defaulting Lender, and the Borrower shall not be required to pay any standby fee that otherwise would have been required to be paid to that Defaulting Lender. With respect to any standby fee not required to be paid to any Defaulting Lender pursuant to the immediately preceding sentence, the Borrower shall (i) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to the Defaulting Lender with respect to the Defaulting Lender’s obligations pursuant to Section 9.1 that has been reallocated to that Non-Defaulting Lender pursuant to Section 8.10(6), and (ii) not be required to pay the remaining amount of any such fee.

(6) All or any part of the Defaulting Lender’s obligations pursuant to Section 9 1 shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without regard to the Defaulting Lender’s Commitment) but only to the extent that reallocation does not cause the aggregate of the Advances made by, and obligations pursuant to Section 9.1 of, any Non-Defaulting Lender to exceed its Commitment. No reallocation shall constitute a waiver or release of any claim of any party to this Agreement against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of the Non-Defaulting Lender’s increased exposure following reallocation.

(7) If the Borrower and the Agent agree in writing that a Lender is no longer a Defaulting Lender, the Agent will so notify the Parties, whereupon as of the effective date specified

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in that notice and subject to any conditions specified in it (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Advances of the other Lenders or take such other actions as the Agent may determine to be necessary to cause the Advances and obligations pursuant to Section 9.1 to be held pro rata by the Lenders in accordance with their respective Commitments (without giving effect to Section 8.10(6)), whereupon the Lender will cease to be a Defaulting Lender. No adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender and, except to the extent otherwise expressly agreed by the affected Parties, no change from Defaulting Lender to Lender will constitute a waiver or release of any claim of any Party arising from that Lender having been a Defaulting Lender.

8.11 Reference Lenders

(1) If more than one Lender is a bank named on Schedule I of the Bank Act (Canada), the Agent shall be a Schedule I Reference Lender and the Borrower shall designate a different Lender named on Schedule I of the Bank Act (Canada) to be a Schedule I Reference Lender for the purpose of providing quotations to the Agent to be used in determining rates as required by this Agreement.

(2) If any Schedule I Reference Lender ceases to be a Lender, the person that originally designated that Schedule I Reference Lender shall have the right to designate in a timely manner another Lender that is a named on Schedule I of the Bank Act (Canada) as a replacement Schedule I Reference Lender, failing which the applicable rate shall be determined on the basis of the quotation provided by the notice from the remaining Schedule I Reference Lender.

(3) If only one Lender is a bank named on Schedule I of the Bank Act (Canada), that Lender shall be deemed to be the Schedule I Reference Lender and any applicable rate shall be determined on the basis of the quotation provided by that Lender.

8.12 Successor Agent

(1) The Agent may at any time give notice of its resignation to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, if no Default has occurred and is continuing, to appoint a successor, which shall be a Revolving Lender having an office in Vancouver, British Columbia or Toronto, Ontario, or an Affiliate of any such Lender with an office in Vancouver or Toronto. The Agent may also be removed at any time by the Required Lenders upon thirty (30) days’ notice to the Agent and the Borrower as long as the Required Lenders, in consultation with the Borrower, if no Default has occurred and is continuing, appoint and obtain the acceptance of a successor within those thirty (30) days, which shall be a Revolving Lender having an office in Vancouver or Toronto or an Affiliate of any such Lender with an office in Vancouver or Toronto.

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(2) If no successor has been appointed by the Required Lenders and has accepted the appointment within thirty (30) days after the retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of the Lenders, appoint a successor Agent that meets the qualifications specified in Section 8.12(1) and that is not a Defaulting Lender, provided that if the Agent notifies the Borrower and the Lenders that no qualifying Person has accepted that appointment, then the resignation shall nonetheless become effective in accordance with the retiring Agent’s notice and (a) the retiring Agent shall be discharged from its duties and obligations under the Loan Documents (except that the retiring Agent shall continue to hold the Security on behalf of the Lenders until such time as a successor Agent is appointed) and (b) all payments, communications and determinations provided to be made by, to or through the Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Agent as provided for in Section 8.12(1).

(3) Upon a successor’s appointment as Agent, the successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the former Agent, and the former Agent shall be discharged from all of its duties and obligations under the Loan Documents (if not already discharged from them as provided in Section 8.12(2)). The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and the successor. After the termination of the service of the former Agent, the provisions of this Article 8 and of Section 11.5 shall continue in effect for the benefit of the former Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the former Agent was acting as Agent.

8.13 No Other Duties, Etc.

Notwithstanding anything in this Agreement to the contrary, no Bookrunner, Arranger or holder of a similar title specified in this Agreement shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Agent or a Lender.

8.14 Provisions Operative Between Lenders and Agent Only

Except for Sections 8.6(8), 8.7(2), 8.7(6), 8.9 to 8.13 inclusive and this Section 8.14, the provisions of this Article relating to the rights and obligations of the Lenders and the Agent inter se shall be operative as between the Lenders and the Agent only, and the Obligors shall not have any rights under or be entitled to rely for any purpose on those provisions.

8.15 Acknowledgment and Consent to Bail-In of EEA Financial Institutions

Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document may be subject to the Write-Down and Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be

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bound by: (a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and (b) the effects of any Bail-In Action on any such liability, including, if applicable: (i) a reduction in full or in part or cancellation of any such liability; (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or (iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any EEA Resolution Authority.

ARTICLE 9

DETAILS REGARDING ADVANCES, PAYMENTS, INTEREST AND FEES

9.1 Lenders’ Obligations Relating to Credit

(1) It is the intention of the Parties that the ultimate credit risk and exposure of any Lender be in accordance with its overall Applicable Percentage of the Revolving Credit and the Term Credit.

(2) Accordingly, upon the Obligations becoming due and payable under Section 7.2, each Lender shall do all things, including purchases of participations in Advances made by other Lenders, that are necessary to ensure that result. Any such action on the part of the Lenders shall be binding on the Borrower.

(3) Each Lender acknowledges and agrees that its obligations under this Section 9.1 are absolute, unconditional and irrevocable and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or the reduction or termination of its Commitment, and that any payment it is required to make pursuant to its obligations shall be made without any offset, abatement, withholding or reduction whatsoever.

9.2 Lenders’ Obligations Relating to Swingline Credit

(1) The Swingline Lender shall, on no less frequently than once per calendar month (but more frequently in its sole discretion) by written notice given to the Agent not later than 10:00 a.m. on any Banking Day request that the Agent notify the Lenders of the requirement for an Advance to be made available by each of them under the Revolving Credit in an amount equal to that Lender’s Applicable Percentage of the advances under the Swingline Credit then outstanding. The proceeds of such Advance shall be paid by the Agent to the Swingline Lender to be applied against the outstanding Swingline Credit. Each Lender acknowledges and agrees that its obligation to acquire participations in the Swingline Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of an Event of Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each

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Lender shall comply with its obligation by wire transfer of immediately available funds with respect to Commitments made by such Lender, and the Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Lenders. Any amounts received by the Swingline Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Credit after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Agent. Any such amounts received by the Agent shall be promptly remitted by the Agent to the Lenders that shall have made their payments pursuant to this Section 9.2(1) and to the Swingline Lender, as their interests may appear. The purchase of participations in a Swingline Credit pursuant to this Section 9.2(1) shall not relieve the Borrower of any default in the payment thereof.

9.3 Evidence of Indebtedness

The Agent shall maintain records concerning the Obligations and each Lender shall maintain records concerning those Advances it has made. The failure of the Agent or any Lender to correctly record any detail relating to an Advance shall not, however, adversely affect the obligation of the Borrower to pay any of the Obligations in accordance with this Agreement.

9.4 Calculation and Other Matters Regarding Interest and Fees

(1) All interest on Prime Rate Advances, Base Rate Advances and LIBOR Advances shall accrue from day to day and shall be payable in arrears, calculated on the actual number of days elapsed from and including the date of Advance or the previous date on which interest was due in accordance with Section 2.5, as the case may be, to but excluding the date on which interest is due. If interest is not paid on the date it is due, the principal amount shall continue to bear interest at the rate that is applicable to the particular type of Advance from time to time in accordance with Section 2.5(1), both before and after maturity, default and judgment, and overdue interest shall bear interest at the same rate, compounded monthly, and be payable on demand. Notwithstanding the immediately preceding sentence, upon the expiry of the LIBOR Period applicable to any LIBOR Advance, the principal amount and any overdue interest with respect to that LIBOR Advance shall bear interest calculated at the rates applicable to Base Rate Advances.

(2) Interest and fees shall be calculated on the basis of a calendar year unless otherwise specified. Interest calculated with reference to LIBOR shall be calculated on the basis of a year of 360 days and the B/A Discount Rate shall be calculated on the basis of a year of 365 days. Any rate that is calculated with reference to a period (the “deemed interest period”) that is less than the actual number of days in the calendar year of calculation is, for the purposes of the Interest Act (Canada), equivalent to a rate based on a calendar year calculated by multiplying that rate of interest by the actual number of days in the calendar year of calculation and dividing by the number of days in the deemed interest period. All calculations of interest and fees under the Loan Documents shall be made on the basis of the nominal rates described in this Agreement and not on the basis of effective yearly rates or on any other basis that gives effect to the principle of deemed reinvestment. The Parties acknowledge that there is a material difference between the

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stated nominal rates and effective yearly rates taking into account reinvestment, and that they are capable of making the calculations required to determine effective yearly rates.

(3) In this Section 9.4, any reference to a “calendar year” means the calendar year in which the period for which the calculation in question falls. If the period falls in two calendar years, one of which is a leap year, the calculation shall be done separately for the parts of the period that fall in each calendar year and the calculated amounts for each period shall be added.

(4) The B/A Fee for a B/A is calculated by multiplying the face amount of the B/A by the rate for calculation of the B/A Fee specified in Section 2.5, and multiplying the result by a fraction, the numerator of which is the term of the B/A and the denominator of which is the number of days in the calendar year.

(5) The B/A Discount Proceeds for a B/A are equal to the face amount of that B/A multiplied by the price and shall be rounded to the nearest full cent, with one-half of one cent being rounded up. The price is calculated by dividing one by the sum of one plus the product of (i) the B/A Discount Rate applicable to that B/A expressed as a decimal fraction, multiplied by (ii) a fraction, the numerator of which is the term in days of that B/A and the denominator of which is 365. The price shall be rounded to the nearest multiple of 0.001%.

(6) The standby fee shall be calculated daily on the undrawn amount of the applicable Credit at the rate for calculation of the standby fee specified in Section 2.5, beginning on the date of this Agreement, and each payment shall cover the period from and including the date of this Agreement or the previous date on which the standby fee was due in accordance with Section 2.5, as the case may be, to but excluding the date on which the standby fee is due.

(7) If an Obligor fails to pay when due any amount payable under any Loan Document for which interest is not otherwise provided in this Agreement or another relevant Loan Document, that Obligor shall, on demand, pay interest on the overdue amount to the Agent from and including the due date up to but excluding the date of actual payment, both before and after demand, default or judgment, at the rate of interest determined from time to time in accordance with Section 2.5(1) that is applicable to Prime Rate Advances (if the amount is denominated in Canadian Dollars) or Base Rate Advances (if the amount is denominated in US Dollars), in each case compounded monthly.

(8) The Parties intend to comply with Applicable Law relating to usury. Notwithstanding any other provision of this Agreement or any other Loan Document, in no event shall any Loan Document require the payment or permit the collection of interest or other amounts in an amount or at a rate in excess of the amount or rate that is permitted by Applicable Law or in an amount or at a rate that would result in the receipt by the Lenders or the Agent of interest at a criminal rate, as the terms “interest” and “criminal rate” are defined under the Criminal Code (Canada). Where more than one Applicable Law applies to any Obligor, that Obligor shall not be obliged to make payment in an amount or at a rate higher than the lowest permitted amount or rate. If from any circumstance whatever,

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fulfilment of any provision of any Loan Document would result in exceeding the highest rate or amount permitted by Applicable Law for the collection or charging of interest, the obligation to be fulfilled shall be reduced to reflect the highest permitted rate or amount. If from any circumstance the Agent or the Lenders shall ever receive anything of value as interest or deemed interest under any Loan Document that would result in exceeding the highest lawful rate or amount of interest permitted by Applicable Law, the amount that would be excessive interest shall be applied to the reduction of the principal amount of the relevant Credit, and not to the payment of interest, or if the excessive interest exceeds the unpaid principal balance of the relevant Credit, the amount exceeding the unpaid balance shall be refunded to the Borrower. In determining whether or not the interest paid or payable under any specified contingency exceeds the highest lawful rate, the Obligors, the Agent and the Lenders shall, to the maximum extent permitted by Applicable Law, (i) characterize any non-principal payment as an expense, fee or premium rather than as interest, (ii) exclude voluntary prepayments and their effects, (iii) amortize, prorate, allocate and spread the total amount of interest throughout the term of the applicable Credit so that interest does not exceed the maximum amount permitted by Applicable Law, and/or (iv) allocate interest between portions of the Obligations to the end that no portion shall bear interest at a rate greater than that permitted by Applicable Law. For the purposes of the Criminal Code (Canada), the effective annual rate of interest shall be determined in accordance with generally accepted actuarial practices and principles and if there is any dispute, the determination of a Fellow of the Canadian Institute of Actuaries appointed by the Agent shall be conclusive.

9.5 Conversions, Rollovers, Renewals, Repayments and Reductions

(1) Subject to the other terms of this Agreement, the Borrower may from time to time:

(a) convert all or any part of the outstanding amount of any LIBOR Advance into a Base Rate Advance in the same principal amount, or vice versa;

(b) convert all or any part of the outstanding amount of any Advance by way of B/As into a Prime Rate Advance in the same principal amount, or vice versa;

(c) rollover all or any part of the outstanding amount of any LIBOR Advance at the end of the LIBOR Period as a new LIBOR Advance or rollover all or any part of the outstanding amount of any Advance by way of B/As as a new Advance by way of B/As;

(d) in circumstances not mentioned in items (a) to (d) immediately above, concurrently repay one Advance and obtain a different type of Advance.

(2) Subject to giving notice required by Section 9.6, the Borrower may from time to time repay Advances outstanding under a Credit without penalty, except that:

(a) the Borrower must prepay all Lenders under the applicable Credit pro rata and must prepay the same Advance made by each applicable Lender.

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(b) LIBOR Advances may not be paid before the end of the applicable LIBOR Periods unless the Borrower indemnifies the relevant Lenders for any loss or expense that the Lenders incur as a result, including any breakage costs.

(c) No B/A may be paid before its maturity date. The Borrower may provide Cash Collateral to the Lenders that have accepted B/As in an amount equal to the face amount of any or all outstanding B/As if the Borrower concurrently repays all corresponding B/A Equivalent Loans.

No voluntary payment by the Borrower shall affect the Borrower’s obligation to make all other principal payments required by this Agreement in full when due, until the applicable Credit is repaid in full and cancelled.

(3) The Borrower may from time to time cancel a Credit, or permanently reduce the committed amount of a Credit by an amount that must be a minimum of US $1,000,000 and a whole multiple of US $100,000. The Borrower shall do so by giving not less than three Banking Days’ irrevocable notice to the Agent and paying all accrued and unpaid standby fees on the amount cancelled or reduced to the effective date of cancellation or reduction. Any reduction must be applied pro rata to the respective Commitments of the Lenders under the Credit that is reduced and must be applied pro rata to the overall Commitment of each Lender for all Credits if the Applicable Percentage of each Lender is not the same for each Credit. The Borrower shall have no right to any reinstatement of any previously committed amount of that Credit after any cancellation or reduction.

9.6 Notice of Advances and Payments

(1) The Borrower shall give the Agent irrevocable notice, in the form attached as Schedule K, of any request for any Advance to it (excluding Advances under the Swingline Credit which are made in accordance with Section 9.6(2)). The Borrower shall also give the Agent irrevocable notice in the same form of any payment by it of any Advance under the Credits (whether resulting from repayment, prepayment, rollover or conversion), other than payment of an Advance under the Swingline Credit, which for greater certainty, requires no repayment notice.

(2) To request an Advance under the Swingline Credit, the Borrower shall notify the Agent of such request by telephone (to be confirmed in writing), not later than 11:00a.m., on the day of a proposed Advance. Each such notice shall be irrevocable and shall specify the requested date, which shall be a Banking Day, and amount of the requested Advance. The Agent shall promptly advise the Swingline Lender of any such notice received from the Borrower. The Swingline Lender shall make each Advance available to the Borrower by means of a credit to the disbursement account of the Borrower with the Swingline Lender by 3:00 p.m., on the requested date of such Advance. Advances under the Swingline Credit shall bear interest at a rate per annum equal to the rate applicable to a Prime Rate Advance (if in Canadian Dollars) or at a rate per annum equal to the rate applicable to a Base Rate Advance (if in US Dollars). Interest shall be payable on such dates, not more frequent than monthly, as may be specified by the Swingline Lender and in any event on the earlier of the Maturity Date and the date that the Credits are terminated pursuant to

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Section 2.4(3) or Section 7.1. The interest payable on the Swingline Credit is solely for the account of the Swingline Lender (subject to Section 9.2(1) above).

(3) Notice for B/As or LIBOR Advances shall be given not later than the third Banking Day before the Advance Date or date of payment. Notice for a Prime Rate Advance or Base Rate Advance shall be given on or before the Banking Day before the Advance Date or date of payment.

(4) Notices shall be given not later than 11:00 a.m. on the date for notice. Payments (except those being made solely from the proceeds of rollovers and conversions) must be made before 1 p.m. on the date for payment. If a notice or payment is not given or made by those times, it shall be deemed to have been given or made on the next Banking Day, unless all Lenders affected by the late notice or payment agree, in their sole discretion, to accept a notice or payment at a later time as being effective on the date it is given or made.

(5) Without limiting Section 11.5, the Borrower shall indemnify the Lead Arranger, the Agent and the Lenders for all costs that they incur if the Borrower gives notice requesting an Advance or notice of a payment and subsequently fails to complete the Advance or payment or the conditions of the Advance are not satisfied before the time specified in Section 9.9(5) on the proposed Advance Date.

9.7 Size and Term of Advances

(1) Each Prime Rate Advance or Base Rate Advance (including an Advance under the Swingline Credit) shall be in an aggregate minimum amount of CAD $1,000,000 or US $1,000,000, respectively and in a whole multiple of CAD $100,000 or US $100,000, respectively.

(2) Each Advance of B/As shall be in an aggregate minimum amount of CAD $1,000,000 and in a whole multiple of CAD $1,000. In its notice requesting an Advance of B/As, the Borrower shall select a term of one, two, three or six months to apply to the Advance.

(3) Each LIBOR Advance shall be in a minimum amount of US $1,000,000 and a whole multiple of US $100,000. In its notice requesting a LIBOR Advance, the Borrower shall select a LIBOR Period of one, two, three or six months to apply to any particular LIBOR Advance.

(4) Terms of B/As and LIBOR Periods of lengths shall also be available at the discretion of the Lenders from time to time and the Agent may, in circumstances of market disruption or illiquidity, restrict the term or maturity dates of B/As and/or LIBOR Advances. There shall not at any time be B/As and/or LIBOR Advances outstanding with more than six different maturity dates. No B/A may mature and no LIBOR Period may end on a date that is not a Banking Day, after the maturity date of the applicable Credit, or after a date on which the applicable Credit is required to be reduced if that would adversely affect the Borrower’s ability to make the reduction.

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9.8 Payment of B/As and LIBOR Advances

(1) The Borrower shall provide for the following by giving notice under Section 9.6 requesting a rollover or conversion if the Borrower is otherwise entitled to an Advance, or by delivery of payment:

(a) payment to the Agent at the Branch of Account of the full face amount of each B/A for value on the date of its maturity

(b) payment to the Agent at the Branch of Account of the amount of each LIBOR Advance for value on the last day of the applicable LIBOR Period; and

(2) If the Borrower fails to provide for payment in accordance with Section 9.8(1), and if the Borrower is otherwise entitled to an Advance but for failing to give notice under Section 9.6 due to inadvertence, the Agent may deem a Prime Rate Advance to have been made in the case of failure to provide for a B/A or a Base Rate Advance to have been made in the case of failure to provide for a LIBOR Advance under the Credit under which the B/A or LIBOR Advance was originally advanced. If the Agent deems an Advance to have been made, the Agent shall immediately give notice to the Borrower and the Lenders.

(3) If the Borrower fails to provide for payment in accordance with Section 9.8(1) and if the Agent does not deem an Advance to have been made under Section 9.8(2), then without limiting the Lenders’ other rights, the Borrower shall pay interest on the amount for which it has not provided for payment at a rate of interest per annum equal to the rate applicable to Prime Rate Advances (in the case of a B/A) or Base Rate Advances (in the case of a LIBOR Advance) as determined in accordance with Section 2.5(1), compounded monthly. Interest shall be calculated from and including the date on which payment was to have been provided for, up to but excluding the date the payment and all interest, both before and after demand, default and judgment, is provided for by the Borrower.

9.9 Co-ordination of Prime Rate, Base Rate, B/A and LIBOR Advances

(1) The Agent shall advise each Lender of its receipt of a notice pursuant to Section 9.6 requesting a Prime Rate, Base Rate, LIBOR Advance or Advance of B/As on the day that notice is received from the Borrower and shall, as soon as possible, advise each Lender of that Lender’s share of the Advance. Each Lender’s share shall be based on its Applicable Percentage, but if the Agent determines that a Lender’s Applicable Percentage would result in its share of an Advance not being a whole multiple of $1,000 or US $1,000, as the case may be, the Agent may increase or reduce the amount to be advanced by that Lender in the Agent’s sole discretion to the extent necessary to make the amount a whole multiple.

(2) In advising a Lender of the amount it is to deliver to the Agent in respect of any Advance, the Agent shall allow for deduction by each Lender of the applicable B/A Fee in connection with an Advance by way of B/As and may also net other amounts payable in the same currency by the Borrower to the Agent for the account of that Lender on the Advance Date.

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(3) The LIBOR Period applicable to a LIBOR Advance and the maturity date for an Advance of B/As shall be identical for each Lender.

(4) Each Lender shall deliver its share of the Advance to the Agent not later than 11:00 a.m. on the Advance Date, for value on that date.

(5) If the Agent determines that all the conditions precedent to an Advance specified in this Agreement have been met, it shall advance to the Borrower before 2:00 p.m. on the Advance Date the amount delivered by each Lender, by crediting an account maintained by the Borrower with the Agent or initiating a wire transfer in accordance with instructions received from the Borrower. If the conditions precedent to the Advance are not met by 2:00 p.m. on the Advance Date, the Agent shall return the funds to the Lenders or invest them in an overnight investment as orally instructed by each Lender until the Advance is made. The Agent is not required to advance any amount to the Borrower that the Agent has not actually received from a Lender.

(6) Any difference between the actual proceeds of a newly issued B/A and the amount required to pay a maturing B/A that is being rolled over or the amount required to pay a Prime Rate Advance that is being converted to B/As, any difference between the actual proceeds of an Advance and the amount required to repay any Advance that is concurrently being repaid and any difference between the actual proceeds of an Advance and the amount required to fulfill any specific use of the proceeds that the Borrower has directed the Agent to make, shall be paid by the Borrower to the Agent from its own resources by 11:00 a.m. on the Advance Date or may be advanced as a Prime Rate Advance or Base Rate Advance under the Swingline Credit if the Borrower is otherwise entitled to an Advance under the Swingline Credit.

9.10 Execution of B/As

(1) To facilitate the acceptance of B/As under this Agreement, the Borrower appoints each Lender as its attorney to sign and endorse on its behalf, as and when considered necessary by the Lender, an appropriate number of orders in the form prescribed by that Lender.

(2) Each Lender may, at its option, execute any order in handwriting or by the facsimile or mechanical signature of any of its authorized officers, and the Lenders are authorized to accept or pay, as the case may be, any order of the Borrower that purports to bear such a signature notwithstanding that the signatory has ceased to be an authorized officer of the Lender. Any such order or B/A shall be as valid as if the individual were an authorized officer at the date of issue of the order or B/A.

(3) Any order or B/A signed by a Lender as attorney for the Borrower, whether signed in handwriting or by facsimile or mechanical signature may be dealt with by the Agent or any Lender to all intents and purposes and shall bind the Borrower as if duly signed and issued by the Borrower.

(4) The receipt by the Agent of a notice requesting an Advance by way of B/As shall be each Lender’s sufficient authority to execute, and each Lender shall, subject to the terms and conditions of this Agreement, execute orders in accordance with that request and the

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advice of the Agent given pursuant to Section 9.9. The executed orders shall be deemed to have been presented for acceptance.

9.11 Funding of B/As

(1) Subject to Section 9.20(1), it shall be the responsibility of each Lender to arrange, in accordance with normal market practice, for the sale on each Advance Date of the B/As issued by the Borrower and to be accepted by that Lender, failing which the provisions of this Agreement relating to Non-B/A Lenders shall apply.

(2) Notwithstanding any other provision of this Agreement, the amount to be transferred by a Lender to the Agent in connection with any B/A accepted by that Lender shall be determined by the B/A Discount Proceeds calculated with respect to the B/A rather than the actual proceeds of any sale of that B/A. Accordingly, in respect of any particular B/A accepted by it, a Lender (a) shall be entitled to retain for its own account the amount, if any, by which any actual proceeds of sale exceed the calculated B/A Discount Proceeds with respect to the B/A, and (b) shall be required to pay out of its own funds the amount, if any, by which the actual proceeds of sale are less than the calculated B/A Discount Proceeds.

(3) Whenever the Borrower requests an Advance that includes B/As, each Lender that is not permitted by Applicable Law or by customary market practice to accept B/As or for any other reason elects by notice to the Agent from time to time not to do so (a “Non-B/A Lender”) shall, in lieu of accepting its pro rata amount of B/As, make available to the Borrower on the Advance Date a loan (a “B/A Equivalent Loan”) in Canadian Dollars and in an amount equal to the B/A Discount Proceeds of the B/As that the Non-B/A Lender would otherwise have accepted, less the B/A Fee that would otherwise have been applicable. The B/A Equivalent Loan shall have a term equal to the term of the B/As that the Non-B/A Lender would otherwise have accepted and the Borrower shall, at the end of that term, be obligated to pay the Non-B/A Lender an amount equal to the aggregate face amount of the B/As that it would otherwise have accepted. All provisions of this Agreement applicable to B/As and Lenders that accept B/As shall apply mutatis mutandis to B/A Equivalent Loans and Non-B/A Lenders.

9.12 Other B/A Provisions

(1) The Borrower shall not claim from a Lender any days of grace for the payment at maturity of any B/A accepted by the Lender pursuant to this Agreement. The Borrower waives any defence to payment that might otherwise exist if for any reason a B/A is held at maturity by a Lender in its own right, and the doctrine of merger shall not apply to any B/A that is at any time held by a Lender in its own right.

(2) Any executed orders to be used as B/As shall be held by a Lender in safekeeping with the same degree of care as if they were the Lender’s own Property, and shall be kept at the place at which executed orders are ordinarily held by the Lender.

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(3) The obligations of the Borrower with respect to B/As under this Agreement shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following circumstances:

(a) any lack of validity or enforceability of any order accepted by a Lender as a B/A; or

(b) the existence of any claim, set-off, defence or other right that the Borrower may have at any time against the holder of a B/A, a Lender or any other Person or entity, whether in connection with this Agreement or otherwise.

(4) The Borrower shall not enter into any agreement or arrangement of any kind with any Person to whom B/As have been delivered by which the Borrower undertakes to replace the B/As on a continuing basis with other B/As, nor shall the Borrower directly or indirectly take, use or provide B/As as security for loans or advances from any other Person.

9.13 Failure of Lender to Fund

(1) Unless the Agent has received notice from a Lender before the proposed date of any Advance that the Lender will not make available to the Agent its share of the Advance, the Agent may assume that the Lender has made its share available on that date in accordance with the provisions of this Agreement concerning funding by Lenders and may, in reliance upon that assumption, make available to the Borrower a corresponding amount. In that event, if a Lender has not in fact made its share of the applicable Advance available to the Agent, then the applicable Lender shall pay to the Agent immediately on demand that corresponding amount, with interest for each day from and including the date the amount is made available to the Borrower to but excluding the date of payment to the Agent, at a rate determined by the Agent in accordance with prevailing banking industry practice on interbank compensation. If the Lender pays that amount to the Agent, then the amount shall constitute the Lender’s Advance. If the Lender does not do so immediately, the Borrower shall pay to the Agent immediately on demand the corresponding amount with interest at the interest rate applicable to the Advance in question. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that has failed to make its payment to the Agent.

(2) Notwithstanding Section 9.13(1), if any Lender fails to deliver its share of any Advance to the Agent (that Lender being the “Non-Funding Lender”) and no steps have been taken to address the failure through provisions of this Agreement relating to Defaulting Lenders, the Agent shall immediately give notice of that failure by the Non-Funding Lender to the Borrower and the other Lenders and indicate to the other Lenders that any Lender (individually a “Contributing Lender” and collectively the “Contributing Lenders”) may make available to the Agent all or any portion of the Non-Funding Lender’s share of that Advance in place of the Non-Funding Lender, but in no way shall any other Lender or the Agent be obliged to do so. A Contributing Lender shall make funds available to the Agent as soon as possible for delivery by the Agent to the Borrower. If more than one Contributing Lender gives notice that it is prepared to make

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funds available and the aggregate of the funds that the Contributing Lenders are prepared to make available exceeds the amount of the Advance that the Non-Funding Lender failed to make, then each Contributing Lender shall make available a portion of that Advance based on the Contributing Lenders’ relative Commitments to the applicable Credit. If a Contributing Lender makes funds available in the place of a Non-Funding Lender, then the Non-Funding Lender shall pay the Contributing Lender, immediately on demand, the amount advanced on its behalf together with interest at the rate applicable to that Advance from the date of advance to the date of payment, and the Non-Funding Lender shall then be entitled to receive all interest paid in respect of the Advance by the Borrower. The failure of any Lender to deliver its Applicable Percentage of any Advance to the Agent as required shall not relieve any other Lender of its obligation to deliver its Applicable Percentage of any Advance as required.

9.14 Payments by the Borrower

(1) Except as otherwise specified in this Agreement, all payments made by or on behalf of the Borrower shall be made to and received by the Agent and shall be distributed by the Agent to the Lenders promptly upon receipt by the Agent. Except as otherwise provided in this Agreement (including Sections 3.2(3) and 9.15), the Agent shall distribute:

(a) payments of interest in accordance with each Lender’s Applicable Percentage of the relevant Credit;

(b) repayments of principal in accordance with each Lender’s Applicable Percentage of the relevant Credit; and

(c) all other payments received by the Agent, including amounts received on the realization of Security, in accordance with each Lender’s Applicable Percentage of the relevant Credit, except that no Lender shall receive proceeds of realization in excess of the Obligations owing to it.

(2) Notwithstanding Section 9.14(1), before the Agent distributes amounts to Lenders received from the Borrower following the occurrence of an Event of Default or upon on the realization of Security, the Agent shall deduct from the amounts received the pari passu share to which Persons to whom the Other Secured Obligations are owed are entitled in accordance with Section 3.2(1) and distribute the amount deducted to those Persons in accordance with their respective entitlements, concurrently with distributing the balance to the Lenders in accordance with Section 9.14(1).

(3) If the Agent does not distribute a Lender’s share of a payment made by the Borrower to that Lender for value on the day that payment is made or deemed to have been made to the Agent, the Agent shall pay to the Lender on demand an amount equal to the product of (a) the Interbank Reference Rate per annum multiplied by (b) the Lender’s share of the amount received by the Agent from the Borrower and not distributed to the Lender, multiplied by (c) a fraction, the numerator of which is the number of days that have elapsed from and including the date of receipt of the payment by the Agent to but excluding the date on which the payment is made by the Agent to the Lender and the

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denominator of which is 365. The Agent shall be entitled to withhold any Tax applicable to any payment as required by Applicable Law.

(4) The Agent may debit accounts, credits and other balances maintained by the Borrower from time to time with the Agent or its Affiliates to facilitate or otherwise obtain payment of interest, fees and other Obligations owing by the Borrower.

9.15 Payments by Agent

(1) For certainty, the following provisions shall apply to payments made by the Agent to the Lenders:

(a) The Agent shall be under no obligation to make any payment to any Lender (whether in respect of principal, interest, fees or otherwise) until an amount in respect of that payment has been received by the Agent from the Borrower.

(b) If the Agent receives less than the full amount of any payment of principal, interest, fees or other amount owing by the Borrower under this Agreement, the Agent shall have no obligation to remit to each Lender any amount except that Lender’s Applicable Percentage of the amount actually received by the Agent.

(c) If any Lender advances more or less than its Applicable Percentage of a Credit, that Lender’s entitlement to that payment shall be increased or reduced, as the case may be, in proportion to the amount actually advanced by that Lender.

(d) Except as specified in any applicable Assignment and Assumption, if a Lender’s share of an Advance has been advanced, or a Lender’s Commitment has been outstanding, for less than the full period to which any payment (except a payment of principal) by the Borrower relates, that Lender’s entitlement to that payment shall be reduced in proportion to the length of time the Lender’s share of the relevant Advance or the Lender’s Commitment, as the case may be, has actually been outstanding.

(e) The Agent acting reasonably and in good faith shall, after consultation with the Lenders in the case of any dispute, determine in all cases the amount of all payments to which each Lender is entitled and that determination shall, in the absence of manifest error, be binding and conclusive.

On request, the Agent shall deliver a statement detailing any of the payments to the Lenders.

(2) Unless the Agent has received notice from the Borrower before the date on which any payment is due to the Agent for the account of any Lender that the Borrower will not make that payment, the Agent may assume that the Borrower has made the payment on that date in accordance with this Agreement and may, in reliance upon that assumption, distribute the amount due to the Lenders. In that event, if the Borrower has not in fact made the payment, then each Lender severally agrees to repay to the Agent immediately on demand the amount distributed to that Lender, with interest for each day from and

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including the date the amount is distributed to it to but excluding the date of payment to the Agent, at a rate determined by the Agent in accordance with prevailing banking industry practice on interbank compensation.

9.16 Increased Costs, Etc.

(1) If any Change in Law from time to time shall:

(a) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender;

(b) subject any Lender to any Tax of any kind whatsoever with respect to this Agreement or any Advance made by it, or change the basis of taxation of payments to the Lender in respect of this Agreement or any Advance, except for Indemnified Taxes or Other Taxes covered by Section 9.17 and the imposition, or any change in the rate, of any Excluded Tax payable by that Lender; or

(c) impose on any Lender or any applicable interbank market any other condition, cost or expense affecting this Agreement or any Advance made by that Lender;

and the result of any of the foregoing shall be to increase the cost to the Lender of making or maintaining any Advance (or of maintaining its obligation to make any Advance), or to reduce the amount of any sum received or receivable by the Lender under this Agreement (whether of principal, interest or any other amount), then upon request of the Lender from time to time the Borrower will pay to that Lender an additional amount or amounts that will compensate the Lender for the additional costs incurred or reduction suffered.

(2) If any Lender determines in its sole and absolute discretion that any Change in Law affecting the Lender or any lending office of the Lender or its holding company (or other Controlling Person), if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on the Lender’s capital or on the capital of its holding company (or other Controlling Person), if any, as a consequence of this Agreement, the Commitments of the Lender or any Advance made by the Lender, to a level below that which the Lender or its holding company (or other Controlling Person) could have achieved but for that Change in Law (taking into consideration the Lender’s policies and the policies of its holding company (or other Controlling Person) with respect to capital adequacy, each from time to time), then from time to time the Borrower will pay to that Lender an additional amount or amounts that will compensate that Lender or its holding company (or other Controlling Person) for the reduction suffered.

(3) A certificate of a Lender specifying the amount or amounts necessary to compensate the Lender or its holding company (or other Controlling Person), as the case may be, as specified in this Section, including reasonable detail of the basis of calculation of the amount or amounts determined based on methods of averaging and attribution in its sole and absolute discretion, and delivered to the Borrower shall be conclusive absent

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manifest error. The Borrower shall pay the Lender the amount shown as due on any such certificate within ten (10) days after receipt of the certificate.

(4) Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of the Lender’s right to demand compensation, except that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs incurred or reductions suffered more than nine months before the date that the Lender notifies the Borrower of the Change in Law giving rise to the increased costs or reductions and of the Lender’s intention to claim compensation, unless the Change in Law giving rise to the increased costs or reductions is retroactive, in which case the nine month period referred to above shall be extended to include the period of retroactive effect.

9.17 Taxes

(1) Any and all payments by or on account of any obligation of an Obligor under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law requires the deduction or withholding of any Tax from any such payment by an Obligor or the Agent (as determined in the good faith discretion of the Obligor or Agent, respectively), then the applicable Obligor or the Agent shall be entitled to make the deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the Obligor shall be increased as necessary so that after the deduction or withholding has been made (including deductions and withholdings applicable to additional sums payable under this Section) the Agent or applicable Lender receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(2) The Obligors shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with Applicable Law or, at the option of the Agent, promptly reimburse the Agent for the payment of any Other Taxes.

(3) The Obligors shall jointly and severally indemnify the Lead Arranger, Agent and each Lender, within ten (10) days after demand, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by the Agent or that Lender or required to be withheld or deducted from a payment to the Agent or that Lender and any reasonable expenses arising from or with respect to the Indemnified Taxes, whether or not they were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of the payment or liability delivered to the Borrower by a Lender (with a copy to the Agent), or by the Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(4) Each Lender shall severally indemnify the Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Obligors have not already indemnified the Agent for such Indemnified Taxes and

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without limiting the obligation of the Obligors to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the maintenance of the Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Agent to the Lender from any other source against any amount due to the Agent under this Section 9.17(4).

(5) As soon as practicable after any payment of Taxes by an Obligor to a Governmental Authority pursuant to this Section 9.17, the Obligor shall deliver to the Agent the original or a certified copy of a receipt issued by the Governmental Authority evidencing payment, a copy of the return reporting the payment or other evidence of the payment reasonably satisfactory to the Agent.

(6) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is resident for tax purposes, or any treaty to which that jurisdiction is a party, with respect to payments under any Loan Document shall, at the request of the Borrower, deliver to the Borrower (with a copy to the Agent), at the time or times prescribed by Applicable Law or reasonably requested by the Borrower or the Agent, all properly completed and executed documentation prescribed by Applicable Law that will permit the payments to be made without withholding or at a reduced rate of withholding. In addition, (a) any Lender, if requested by the Borrower or the Agent, shall deliver other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Agent that will enable the Borrower or the Agent to determine whether or not that Lender is subject to withholding or information reporting requirements, and (b) any Lender shall notify the Borrower and the Agent in writing within five (5) Banking Days of ceasing to be, or to be deemed to be, resident in Canada for purposes of Part XIII of the Income Tax Act (Canada) or any successor provision.

(7) If a payment made to a Lender under any Loan Document would be subject to FATCA Withholding Tax if that Lender were to fail to comply with the applicable reporting requirements (including those contained in section 1471(b) or 1472(b) of the Internal Revenue Code of the United States, as applicable), the Lender shall deliver to the Borrower and the Agent at the time or times prescribed by Applicable Law or reasonably requested by the Borrower or the Agent, documentation prescribed by Applicable Law (including as prescribed by section 1471(b)(3)(C)(i) of the Internal Revenue Code of the United States) and additional documentation reasonably requested by the Borrower or the Agent as may be necessary for the Borrower and the Agent to comply with their obligations relating to FATCA Withholding Tax and to determine that the Lender has complied with its obligations relating to FATCA Withholding Tax or to determine the amount to deduct and withhold from the payment.

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(8) If any Party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 9.17 (including by the payment of additional amounts pursuant to this Section), or that, because of the indemnification, it has benefited from a reduction in Excluded Taxes otherwise payable by it, it shall pay to the indemnifying Party an amount equal to the refund or reduction (but only to the extent of indemnification), net of all out-of-pocket expenses of the Agent or Lender, as the case may be, and without interest (other than any net after Tax interest paid by the relevant Governmental Authority with respect to any such refund). The indemnifying Party, upon the request of the indemnified Party, shall repay to the indemnified Party the amount paid over pursuant to this Section 9.17(8) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) if the indemnified Party is required to repay the refund or reduction to the Governmental Authority. Notwithstanding anything to the contrary in this Section 9.17(8), in no event will the indemnified Party be required to pay any amount to an indemnifying Party pursuant to this Section 9.17(8) the payment of which would place the indemnified Party in a less favorable net after-Tax position than the indemnified Party would have been in if the Tax subject to indemnification and giving rise to such refund or reduction had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This Section shall not be construed to require any indemnified Party to make available its tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying Party or any other Person, to arrange its affairs in any particular manner or to claim any available refund or reduction.

9.18 Mitigation Obligations; Replacement of Lenders

(1) If any Lender requests compensation under Section 9.16, or requires the Borrower to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 9.17, or it is unlawful for the Lender to make or maintain an Advance pursuant to Section 9.19, then the Lender shall use reasonable efforts to designate a different lending office for funding or booking its Advances or to assign its rights and obligations under this Agreement to another of its offices, branches or Affiliates, if, in the judgment of the Lender, doing so (i) would eliminate or reduce amounts payable pursuant to Section 9.16 or 9.17, as the case may be, in the future and (ii) would not subject the Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to the Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(2) If any Lender requests compensation under Section 9.16 or the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 9.17 and in each case the Lender has declined or is unable to comply with Section 9.18(1), if any FATCA Withholding Tax is imposed on any payment to a Lender under or in connection with this Agreement (whether the payment is made directly or through another financial institution), if any Lender’s obligations are suspended pursuant to Section 9.19 or if any Lender becomes a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and

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effort, upon ten (10) days’ notice to that Lender and the Agent, require the Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.2), all of its interests, rights (other than its existing rights under Sections 9.16, 9.17 and 11.5) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that will assume those obligations (which assignee may be another Lender, if a Lender accepts the assignment), provided that:

(a) the Borrower pays the Agent the assignment fee specified in Section 10.2(1)(e);

(b) the Lender receives payment of an amount equal to the outstanding principal of its Advances, accrued interest, accrued fees and all other amounts payable to it under the Loan Documents (including any breakage costs and amounts required to be paid under this Agreement as a result of prepayment to a Lender) from any assignee and/or the Borrower;

(c) in the case of any assignment resulting from a claim for compensation under Section 9.16 or payments required to be made pursuant to Section 9.17, the assignment will result in a reduction in future compensation or payments;

(d) any assignment does not conflict with Applicable Law; and

(e) in the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the assignee consents to the applicable waiver, amendment or consent.

(3) A Lender shall not be required to make any such assignment or delegation or accept repayment if, before completion, as a result of a waiver by the Lender or otherwise, the circumstances entitling the Borrower to require the assignment and delegation or repayment cease to apply.

9.19 Illegality

If any Lender determines that any Applicable Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable lending office to make or maintain any Advance (or to maintain its obligation to make any Advance), or to determine or charge interest rates based upon any particular rate, then, on notice by that Lender to the Borrower through the Agent, any obligation of the Lender with respect to the activity that is unlawful shall be suspended until the Lender notifies the Agent and the Borrower that the circumstances giving rise to that determination no longer exist. Upon receipt of that notice, the Borrower shall, upon demand from that Lender (with a copy to the Agent), prepay or, if conversion would avoid the activity that is unlawful, convert any Advances. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted. Each Lender agrees to designate a different lending office if doing so will avoid the need for that notice and will not, in the good faith judgment of the Lender, otherwise be materially disadvantageous to the Lender.

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9.20 Inability to Determine Rates, Etc.

(1) Notwithstanding Section 9.11(1), if the Required Lenders determine that (a) for any reason a market for B/As does not exist at any time, (b) Lenders cannot for other reasons, after reasonable efforts, readily sell B/As or perform their other obligations under this Agreement with respect to B/As, (c) adequate and reasonable means do not exist for determining the B/A Discount Rate applicable to an Advance by way of B/As, or (d) the B/A Discount Rate does not adequately and fairly reflect the cost to those Lenders of making or maintaining an Advance by way of B/As, then the Agent will promptly notify the Borrower and each Lender. Thereafter, the Borrower’s right to request acceptance of B/As shall be and remain suspended until the Required Lenders determine and the Agent notifies the Borrower and each Lender that any condition causing the original determination no longer exists.

(2) If the Required Lenders determine that for any reason adequate and reasonable means do not exist for determining LIBOR for any requested LIBOR Period with respect to a proposed LIBOR Advance, or that LIBOR for any requested LIBOR Period with respect to a proposed LIBOR Advance does not adequately and fairly reflect the cost to those Lenders of funding that Advance, then the Agent will promptly notify the Borrower and each Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Advances shall be suspended until the Agent (upon the instruction of the Required Lenders) revokes the notice. Upon receipt of that notice, the Borrower may revoke any pending request for a borrowing, conversion or continuation of LIBOR Advances or, failing that, will be deemed to have converted its request into a request for a borrowing of Base Rate Advances in the amount specified in the request.

ARTICLE 10

ADDITIONAL LENDERS, SUCCESSORS AND ASSIGNS

10.1 Successors and Assigns

The provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns permitted by this Agreement, except that no Obligor may assign or otherwise transfer any of its rights or obligations under any Loan Document without the prior written consent of the Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations under this Agreement except (i) to an Eligible Assignee in accordance with the provisions of Section 10.2, (ii) by way of participation in accordance with the provisions of Section 10.4, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 10.5 (and any other attempted assignment or transfer by any Party shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the Parties, their respective successors and permitted assigns, sub-agents contemplated by this Agreement, Participants to the extent provided in Section 10.4 and, to the extent expressly contemplated by this Agreement, the Related Parties of each of the Agent, any sub-agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

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10.2 Assignments by Lenders

(1) Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Advances at the time owing to it), provided that:

(a) except (i) if an Event of Default has occurred and is continuing, (ii) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Advances at the time owing to it or (iii) in the case of an assignment to a Lender or an Affiliate of a Lender, in each case, the aggregate amount of the Commitment being assigned (which for this purpose includes Advances outstanding under the Commitment) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Advances of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to the assignment is delivered to the Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than US $5,000,000, in the case of any assignment in respect of the Revolving Credit, unless each of the Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consent to a lower amount (each consent not to be unreasonably withheld or delayed);

(b) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Advance or the Commitment assigned;

(c) any assignment must be approved by the Agent (which is not to be unreasonably withheld or delayed) unless:

(i) in the case of an assignment of a Commitment relating to the Revolving Credit, the proposed assignee is itself already a Revolving Lender; or

(ii) the proposed assignee is a bank whose senior, unsecured, non-credit enhanced, long term debt is rated at least A3, A- or A low by at least two of Moody’s Investor Services Inc., Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. and Dominion Bond Rating Service Limited, respectively;

(d) any assignment must be approved by the Borrower (which is not to be unreasonably withheld or delayed) unless:

(i) the proposed assignee is itself already a Lender with the same type of Commitment; or

(ii) an Event of Default has occurred and is continuing; or

(iii) the Agent has provided a request for approval of an assignment by registered mail to the Borrower and the Borrower has not responded

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within ten (10) Banking Days of receipt of such a request, in which case, approval by the Borrower will be deemed to have been granted for the assignment;

(e) the parties to each assignment shall execute and deliver to the Agent an Assignment and Assumption, together with a processing and recordation fee of US $3,000 and the Eligible Assignee, if it is not a Lender, shall deliver any administrative questionnaire required by the Agent.

(2) In addition to the other conditions specified in this Agreement, no assignment of rights and obligations of a Defaulting Lender shall be effective until the parties to the assignment have made additional payments to the Agent in an amount sufficient, upon distribution of the payments as appropriate to (a) pay and satisfy in full all payment liabilities then owed by the Defaulting Lender to the Agent and each Lender, with accrued interest, and (b) acquire (and fund as appropriate) its full pro rata share of all Advances, including obligations under Section 9.1, in accordance with its Applicable Percentage. Distribution of payments may be by outright payment, purchases by the assignee of participations or sub-participations, or other compensating actions, including funding, with the consent of the Borrower and the Agent, the applicable pro rata share of Advances previously requested but not funded by the Defaulting Lender, to each of which the applicable assignor and assignee hereby irrevocably consent. If, notwithstanding the foregoing, any assignment of the rights and obligations of a Defaulting Lender becomes effective under Applicable Law without compliance with this Section 10.2(2), then the assignee shall be deemed to be a Defaulting Lender for all purposes of this Agreement until compliance occurs.

(3) Subject to acceptance and recording by the Agent pursuant to Section 10.3, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee shall be a Party and, to the extent of the interest assigned by the Assignment and Assumption, have the rights and obligations of a Lender under this Agreement and the other Loan Documents, including the Security, and the assigning Lender shall, to the extent of the interest assigned by the Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, it shall cease to be a Party) but shall continue to be entitled to the benefits of Sections 9.16, 9.20 and 11.5, and shall continue to be liable for any breach by it of this Agreement and any other liability by reason of having been a Defaulting Lender, with respect to facts and circumstances occurring before the effective date of the assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 10.2 shall be treated for purposes of this Agreement as a sale by that Lender of a participation in those rights and obligations in accordance with Section 10.4. Any payment by an assignee to an assigning Lender in connection with an assignment or transfer shall not be or be deemed to be a repayment by the Borrower or a new Advance to the Borrower.

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10.3 Register

The Agent shall maintain at one of its offices in Vancouver, British Columbia or Toronto, Ontario a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Advances owing to, each Lender from time to time (the “Register”). The entries in the Register shall be conclusive, absent manifest error, and the Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

10.4 Participations

(1) Any Lender may at any time, without the consent of, or notice to, the Borrower or the Agent, sell participations to any Person (other than a natural person, an Obligor or any Affiliate of an Obligor) (each, a “Participant”) in all or a portion of that Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Advances owing to it). However, (i) the Lender’s obligations under this Agreement shall remain unchanged, (ii) the Lender shall remain solely responsible to the other Parties for the performance of its obligations and (iii) the Borrower, the Agent and the other Lenders shall continue to deal solely and directly with that Lender in connection with its rights and obligations under this Agreement. Any payment by a Participant to a Lender in connection with a sale of a participation shall not be or be deemed to be a repayment by the Borrower or a new Advance to the Borrower. Each Lender shall be responsible for any repayment to the Agent required under Section 9.15(2) with respect to any payment made by the Lender to its Participant(s).

(2) Subject to Section 10.4(3), the Borrower agrees that each Participant shall be entitled to the benefits of Sections 9.16 and 9.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.2. To the extent permitted by Applicable Law, each Participant also shall be entitled to the benefits of Section 7.11 as though it were a Lender, provided the Participant agrees to be subject to Section 7.12 as though it were a Lender.

(3) A Participant shall not be entitled to receive any greater payment under Sections 9.16 and 9.20 than the applicable Lender would have been entitled to receive with respect to the participation sold to that Participant, unless the sale of the participation to the Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 9.17 unless the Borrower is notified of the participation sold to that Participant and the Participant agrees, for the benefit of the Borrower, to comply with that Section as though it were a Lender.

10.5 Certain Pledges

Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of that Lender, but no pledge or

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assignment shall release the Lender from any of its obligations under any Loan Document or substitute any pledgee or assignee for the Lender as a Party.

ARTICLE 11

MISCELLANEOUS PROVISIONS

11.1 Severability, Etc.

If, in any jurisdiction, any provision of any Loan Document or its application to any circumstance is restricted, prohibited or unenforceable, that provision shall, as to that jurisdiction, be ineffective only to the extent of that restriction, prohibition or unenforceability without invalidating the remaining provisions of the affected Loan Document, without affecting the validity or enforceability of that provision in any other jurisdiction and, if applicable, without affecting its application to other circumstances.

11.2 Amendment, Supplement or Waiver

No amendment, supplement or waiver of any provision of any Loan Document, nor any consent to any departure by an Obligor from any provision, shall in any event be effective unless it is in writing, makes express reference to the affected provision and is signed by the Agent and the applicable Lenders, or by the Agent with any approval of any applicable Lenders, all as required by Sections 8.6(4), 8.6(5), 8.6(6) and 8.6(7), as applicable. It shall be effective only in the specific instance and for the specific purpose for which it is given. No waiver or act or omission of the Agent or any Lender shall extend to or be taken in any way to affect any subsequent Default or other matter or their resulting rights.

11.3 Governing Law and Agent for Service

(1) Each of the Loan Documents, except for those that expressly provide otherwise, and any Dispute (whether in contract, tort or otherwise) based upon, arising out of or relating to any Loan Document, except for those that expressly provide otherwise, shall for all purposes be governed by and construed in accordance with, the laws of the Province of British Columbia and the laws of Canada applicable in British Columbia. Each Obligor irrevocably and unconditionally (a) agrees that it will not commence any litigation or other proceeding against the Agent, any Lender or their respective Related Parties relating to any Dispute (whether in contract, tort or otherwise) based upon, arising out of or relating to any Loan Document in any forum other than the courts of the Province of British Columbia, and (b) submits, for itself and its Property, to the exclusive jurisdiction of the courts of the Province of British Columbia, and any appellate court from any of those courts, in any litigation or other proceeding based upon, arising out of or relating to this Agreement or any other Loan Document, or for recognition or enforcement of any judgment, and each Party irrevocably and unconditionally agrees that all claims in respect of any such litigation or other proceeding may be heard and determined in those courts. Each Party agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any

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other manner provided by Applicable Law. Nothing in this Agreement or in any other Loan Document shall affect any right that the Agent or any Lender may otherwise have to bring any litigation or other proceeding relating to this Agreement or any other Loan Document against any Obligor or its Property in the courts of any jurisdiction. Each Obligor irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, any objection that it may now or in the future have to the laying of venue of any litigation or other proceeding arising out of or relating to this Agreement or any other Loan Document in any court of the Province of British Columbia. Each Party hereby irrevocably waives, to the fullest extent permitted by Applicable Law, the defence of an inconvenient forum to the maintenance of litigation or other proceedings in any such court.

(2) Each Obligor other than the Borrower hereby nominates, constitutes and appoints the Borrower as its agent for service, to act as such and as such to sue and be sued, plead and be impleaded in any court in British Columbia. This appointment shall be irrevocable without the written appointment of a substitute agent in British Columbia acceptable to the Required Lenders. Service on the Borrower (or a substitute agent) of process or of papers and notices relating to proceedings in any court in British Columbia shall be sufficient service on all Obligors.

11.4 Waiver of Jury Trial, Consequential Damages, Etc.

(1) Each Party hereby irrevocably waives, to the fullest extent permitted by Applicable Law, any right it may have to a trial by jury in any legal proceeding directly or indirectly arising out of or relating to any Loan Document or the transactions contemplated by it (whether based on contract, tort or any other theory).

(2) To the fullest extent permitted by Applicable Law, the Obligors shall not assert, and hereby waive, any claim against any Indemnitee, on any theory of liability, for indirect, consequential, punitive, aggravated or exemplary damages (as opposed to direct damages) arising out of, in connection with, or as a result of, any Loan Document or any agreement or instrument contemplated by it (or any breach of it), the transactions contemplated by the Loan Documents, any Advance or the use of its proceeds. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with the Loan Documents or the transactions contemplated by them.

(3) Each Obligor agrees that none of the Agent or the Lenders shall have any liability to it in relation to any due diligence investigations conducted by any of them in connection with the transactions contemplated by the Loan Documents or be under any obligation whatsoever to disclose to it any information received or facts disclosed by any investigations. Each Obligor also agrees that it is not relying, will not rely, and will not be deemed, in any respect whatsoever, to have relied upon the facts received by and information disclosed to any of the Agent or the Lenders under or in connection with due diligence investigations.

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(4) Each Party (a) certifies that no Representative of any other person has represented, expressly or otherwise, that the other person would not, in the event of litigation, seek to enforce the foregoing waivers and (b) acknowledges that it and the other Parties have been induced to enter into the Loan Documents by, among other things, the waivers and certifications in this Section.

11.5 Expenses and Indemnity

(1) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Agent, in connection with the syndication of the Credits, the preparation, negotiation, execution, delivery and administration of the Loan Documents or any amendments, modifications or waivers of their provisions (whether or not the transactions contemplated by them are consummated), (ii) all reasonable out-of-pocket expenses incurred by the Agent or any Lender, including the reasonable fees, charges and disbursements of counsel, in connection with the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section, or in connection with Advances, including those incurred during any workout, restructuring or negotiations in respect of the Obligations. Without limiting the foregoing, the Borrower shall promptly pay all invoices issued by legal counsel to the Agent and/or any Lender, as applicable, and any of them may (with the express prior consent of the Borrower) debit any account maintained by the Borrower with them to pay invoices.

(2) The Borrower shall indemnify the Agent (and its sub-agents), each Lender and each Related Party of any of the foregoing Persons (each of whom is called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any Obligor or other Person (except an Indemnitee) arising out of, in connection with, or as a result of (i) the execution or delivery of any Loan Document or any agreement or instrument contemplated by it, the performance or non-performance by the Parties of their respective obligations under any Loan Document or the consummation or non-consummation of the transactions contemplated by the Loan Documents, (ii) any Advance or the use or proposed use of its proceeds, (iii) any actual or alleged presence or release, spill, leakage, emission, deposit, discharge, leaching, migration or disposition of any Hazardous Material on or from any Property owned or operated by any Obligor, or any related remedial action taken by the Agent or Lender or any breach of Applicable Law with respect thereto that is related in any way to any Obligor (including the assertion of any Lien under Applicable Law), or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by an Obligor and regardless of whether any Indemnitee is a party to it, provided that the indemnity shall not, as to any Indemnitee, be available to the extent that its losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from its gross negligence or wilful misconduct or (y) result from a claim brought by the Borrower or any other Obligor against an Indemnitee for breach in bad faith of that Indemnitee’s obligations under any Loan Document, if the

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Obligor has obtained a final and non-appealable judgment in its favour on that claim as determined by a court of competent jurisdiction, nor shall it be available in respect of matters specifically addressed in Sections 9.16, 9.17 and 11.5(1).

(3) All amounts due under this Section 11.5 shall be payable promptly after demand. A certificate of the Agent or a Lender specifying the amount or amounts owing to the Agent, Lender or a sub-agent or Related Party, as the case may be, as specified in this Section, including reasonable detail of the basis of calculation of the amount or amounts, and delivered to the Borrower shall be conclusive absent manifest error.

11.6 Currency

All payments made under this Agreement shall be made in the currency in which the obligation requiring payment arose. Except as otherwise expressly provided in this Agreement, wherever this Agreement contemplates or requires the calculation of the equivalent in one currency of an amount expressed in another currency for a purpose that does not involve the actual purchase of currency, the calculation shall be made on the basis of the Exchange Rate at the effective time of the calculation.

11.7 Liability of Lenders

The liability of the Lenders in respect of all matters relating to this Agreement and the other Loan Documents is several and not joint or joint and several. Without limiting that statement, the obligations of the Lenders to make Advances are limited to their respective Applicable Percentages of any Advance that is requested, and, in the aggregate, to their respective Applicable Percentages of the total amount of each Credit.

11.8 Currency Indemnity

If a judgment or order is rendered by any court or tribunal for the payment of any amount owing to the Agent or any Lender under any Loan Document or for the payment of damages in respect of any breach of any Loan Document, or under or in respect of a judgment or order of another court or tribunal for the payment of those amounts or damages, and the judgment or order is expressed in a currency (“the Judgment Currency”) other than the currency payable under the relevant Loan Document (“the Agreed Currency”), the party against whom the judgment or order is made shall indemnify and hold the Agent and the Lenders harmless against any deficiency in terms of the Agreed Currency in the amounts received by the Agent and the Lenders arising or resulting from any variation as between (a) the actual rate of exchange at which the Agreed Currency is converted into the Judgment Currency for the purposes of the judgment or order, and (b) the actual rate of exchange at which the Agent or Lender is able to purchase the Agreed Currency with the amount of the Judgment Currency actually received by the Agent or Lender on the date of receipt. The indemnity in this Section shall constitute a separate and independent obligation from the other obligations of the Obligors under the Loan Documents, shall apply irrespective of any indulgence granted by the Agent or any Lender and shall be secured by the Security.

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11.9 Notices

(1) Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in Section 11.9(3)), all notices and other communications provided for in this Agreement shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier, email or other electronic communication to the email addresses or telecopier numbers specified on Schedule N or, if to a Lender, to it at its address or telecopier number specified in the Register or, if to an Obligor other than the Borrower, in care of the Borrower. Those addresses shall apply to notices under all Loan Documents, unless otherwise expressly provided.

(2) Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given on a Banking Day before 5:00 p.m. local time where the recipient is located, shall be deemed to have been given at 9:00 a.m. on the next Banking Day for the recipient). Notices delivered through electronic communications to the extent provided in Section 11.9(3), shall be effective as provided in that Section.

(3) Notices and other communications to the Lenders may be delivered or furnished by electronic communication (including Debtdomain, Intralinks, Syndtrak or a substantially similar electronic transmission system, e-mail and internet or intranet websites) pursuant to procedures approved by the Agent, except that the foregoing shall not apply to notices to any Lender of Advances to be made if the Lender has notified the Agent that it is incapable of receiving notices relating to Advances by electronic communication. The Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it by electronic communications pursuant to procedures approved by it, but approval of those procedures may be limited to particular notices or communications.

(4) Unless the Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), except that if a notice or other communication is not sent before 5:00 p.m. on a Banking Day in the city where the recipient is located, the notice or communication shall be deemed to have been sent at the opening of business on the next Banking Day for the recipient, and (ii) notices or communications posted to an internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that the notice or communication is available and identifying the website address.

(5) Any Party may change its address or telecopier number for notices and other communications by notice to the other Parties.

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(6) Any method of communication contemplated in Section 11.9(3) (the “Platform”) is provided “as is” and “as available.” The Agent does not warrant the adequacy of the Platform and expressly disclaims liability for errors or omissions in information that is distributed through the Platform. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by the Agent in connection with the Platform or information distributed through it. In no event shall the Agent or any of its Related Parties have any liability to any Obligor, any Lender or any other Person for damages of any kind, including direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the transmission of information through the Platform.

11.10 Time of the Essence

Time is of the essence of this Agreement.

11.11 Further Assurances

The Obligors shall, at the request of the Agent, promptly do, execute, deliver or cause to be done, executed or delivered all further acts, documents and matters that may, in the reasonable opinion of the Agent (or the Required Lenders or Lenders, as applicable), be necessary or desirable in order to fully perform and carry out the purpose and intent of the Loan Documents.

11.12 Term of Agreement

Except as otherwise provided in this Agreement, it shall remain in full force and effect until the indefeasible payment and performance in full in cash of all of the Obligations and the termination of all Commitments. The obligations of the Obligors in Sections 9.16, 9.17, 11.5 and 11.8 and the obligations of the Lenders in Section 8.7(3) shall continue for the benefit of those to whom the obligations are owed notwithstanding the termination of this Agreement, the Commitments or any particular person’s role as Obligor, Agent or Lender.

11.13 Counterparts, Facsimiles and Records

(1) Any Loan Document may be executed in counterparts (and by different Parties in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Except as provided in Article 4, this Agreement shall become effective when it has been executed by the Agent and when the Agent has received counterparts of this Agreement that, when taken together, bear the signatures of each of the other Parties. Delivery of an executed counterpart of a signature page of any Loan Document by telecopy or by sending a scanned or other copy by electronic mail or similar means shall be effective as delivery of a manually executed counterpart of that Loan Document.

(2) The words “execution,” “signed,” “signature,” and words of similar meaning in any Assignment and Assumption shall be deemed to include electronic signatures or the

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keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper based recordkeeping system, as the case may be, to the extent and as provided for in any Applicable Law, including Parts 2 and 3 of the Personal Information Protection and Electronic Documents Act (Canada), the Electronic Commerce Act, 2000 (Ontario) and other similar federal or provincial laws based on the Uniform Electronic Commerce Act of the Uniform Law Conference of Canada or its Uniform Electronic Evidence Act, as the case may be.

(3) The Agent and Lenders may create and store copies of Loan Documents in any form as part of their business records, including by microfilm, photocopy and electronic image. Copies may be held in place of original documents and substituted for original documents for any purpose.

11.14 Treatment of Certain Information: Confidentiality

(1) Each of the Agent and the Lenders agrees to maintain the confidentiality of Information, except that Information may be disclosed (a) to it, its Affiliates and its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom disclosure is made will be informed of the confidential nature of the Information and instructed to keep the Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority), (c) to the extent required by Applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other Party, (e) in connection with the exercise of any remedies under any Loan Document or any action or proceeding relating to any Loan Document or the enforcement of rights under the Loan Documents, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any Derivative, credit-linked note or similar transaction relating to the Borrower and the Obligations, (g) with the consent of the Borrower or (h) to the extent Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Agent or any Lender on a non-confidential basis from a source other than an Obligor.

(2) For purposes of this Section, “Information” means all information received in connection with any Loan Document from any Obligor relating to any Obligor or any of its Subsidiaries or any of their respective businesses, other than any such information that was available to the Agent or any Lender on a non-confidential basis before such receipt. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if the Person has exercised the same degree of care to maintain the confidentiality of the Information as the Person would accord to its own confidential information. In addition, the Agent may disclose to any agency or organization that assigns standard identification numbers to loan facilities such basic information describing the Credits as is necessary to assign unique identifiers (and, if requested, supply a copy of this Agreement), it being

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understood that the Person to whom disclosure is made will be informed of the confidential nature of the Information and instructed to make available to the public only such Information as the Person normally makes available in the course of its business of assigning identification numbers.

(3) In addition, and notwithstanding anything in this Agreement to the contrary, the Agent may provide customary information including details of the Obligors, the amount, term, purpose, pricing and repayment requirements of the Credits and the principal covenants contained in this Agreement to Loan Pricing Corporation and/or other recognized trade publishers of information for general circulation in the loan market.

(4) Each Obligor also consents to:

(a) the holder of any Lien on any Property of the Obligor providing the Agent with a statement of the amount required to obtain a release of the Lien and the Agent providing the holder with a redacted copy or details of the Obligor’s consent; and

(b) the Agent providing any judgment creditor or person who has an interest in Property of an Obligor that is subject to the Security with a statement of the amount required to obtain a release of the Security.

11.15 Entire Agreement

This Agreement and the other Loan Documents constitute the entire agreement between the Parties pertaining to the subject matter of this Agreement and supersede all prior correspondence, agreements, negotiations, discussions and understandings, whether written or oral. Except as expressly specified in this Agreement and the other Loan Documents, there are no representations, warranties, conditions or other agreements or acknowledgments, whether direct or collateral, express or implied, written or oral, statutory or otherwise, that form part of or affect the Loan Documents or the agreements referred to in them, that induced any Party to enter into the Loan Documents or the agreements referred to in them, or on which reliance is placed by any Party. Without limiting the foregoing, the term sheet accepted by the Borrower and Scotiabank on May 13, 2016 is cancelled and superseded.

11.16 This Agreement to Govern

If there is any conflict or inconsistency between the terms of this Agreement and the terms of any other Loan Document (except any Intercreditor Agreement, which shall prevail as against this Agreement), the provisions of this Agreement shall govern to the extent necessary to remove the conflict or inconsistency.

11.17 Language

The Parties have required that the Loan Documents be in the English language, but without prejudice to documents that may from time to time be drawn up in French only, or in both French and English. Les Parties ont exigé que cette convention et tout document de sûreté, hypothèque, contrat, document ou avis y afférent soient rédigés en

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langue anglaise, mais sans que cette disposition n’affecte toutefois la validité de tout tel document qui pourrait à l’occasion être rédigé en français seulement ou à la fois en français et en anglais.

11.18 Limitation Periods

To the extent that any limitation period applies to any claim for payment of obligations or remedy for enforcement of obligations under any Loan Document, the Obligors agree that:

(a) any limitation period is expressly excluded and waived entirely if permitted by Applicable Law;

(b) if a complete exclusion and waiver of any limitation period is not permitted by Applicable Law, any limitation period is extended to the maximum length permitted by Applicable Law;

(c) any limitation period applying to a Loan Document expressed to be payable on demand shall not begin before an express demand for payment of the relevant obligations is made in writing by the Agent to the relevant Obligor;

(d) any applicable limitation period shall begin afresh upon any payment or other acknowledgment by any Obligor of its relevant obligations; and

(e) each Loan Document is a “business agreement” as defined in the Limitations Act, 2002 (Ontario) if that Act applies to it.

11.19 Services Provided and Conflicts of Interest

(1) The Lenders and Agent shall not be responsible for providing or arranging services to the Obligors except providing and administering the Credits, respectively. The services of the Agent and Lenders do not include the provision of general corporate finance advisory services. The responsibility of the Agent and Lenders is solely contractual in nature and they do not owe the Obligors any fiduciary duty as a result of the Loan Documents.

(2) The Obligors acknowledge that the Agent, the Lenders and/or one or more of their respective Affiliates may now and in the future provide debt financing, equity capital or other services (including financial advisory services) to other Persons with whom the Obligors may have conflicting interests. Subject to the provisions of this Agreement, the Agent, the Lenders and their respective Affiliates will not disclose confidential information obtained from the Obligors in connection with the performance of services for others. Similarly, the Agent, the Lenders and their respective Affiliates have no obligation to disclose the existence of or use for the Obligors’ benefit confidential information that they have obtained or may obtain from any other Person.

(3) The Obligors also acknowledge that the Agent, the Lenders and their respective Affiliates engage in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, the Agent, the

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Lenders and their respective Affiliates may provide investment banking and other financial services to other Persons with which the Obligors may have commercial or other relationships, and/or acquire, hold or sell, for their own accounts and the accounts of customers, the Obligors’ equity, debt and other securities and financial instruments (including bank loans and other obligations) and those of other Persons with which the Obligors may have commercial or other relationships. All rights in respect of securities and financial instruments held by the Agent, the Lenders and their respective Affiliates or their respective customers, including any voting rights, will be exercised by the holder of the rights in its sole discretion.

(4) The Agent, the Lenders and their respective Affiliates are not responsible to provide the Obligors with advice relating to legal, regulatory, accounting or tax matters. The Obligors acknowledge that (a) they have relied and will continue to rely on the advice of their own legal, regulatory, accounting and tax advisors for all matters relating to the Credits and otherwise and (b) they have not received or relied upon advice from the Agent, the Lenders and their respective Affiliates or advisors regarding legal, regulatory, accounting or tax matters.

(5) The Obligors acknowledge that no client or near-client relationship has been or will be established between the Obligors and any legal counsel to the Agent or Lenders as a result of their representation of the Agent or Lenders, including by reason of any confidential information regarding any Obligor being provided to legal counsel to the Agent or Lenders or by reason of any Obligor paying or reimbursing the Agent or Lenders for fees, charges or disbursements of legal counsel to the Agent or Lenders. The Obligors also acknowledge that legal counsel to the Agent or Lenders shall not be prevented from (a) continuing to act for the Agent and Lenders in connection with the Credits and the Loan Documents, including any enforcement of the Security, for any reason including any client or near-client relationship that may exist now or in the future between legal counsel to the Agent or Lenders and any Obligor, or (b) acting for any other Person whose interests conflict with the interests of any Obligor unless the Obligors establish, without the benefit of any presumption, that counsel has provided the other Person, to the detriment of the Obligors, with confidential information regarding the Obligors that they have received as a result of acting as legal counsel to the Agent or Lenders.

(6) Nothing in this Section 11.19 affects the rights of any Obligor under or in connection with agreements or arrangements other than the Loan Documents to which any Obligor or any of the Agent, the Lenders and/or one or more of their respective Affiliates or legal counsel are parties.

11.20 Date of Agreement

This Agreement may be referred to as being dated June 26, 2017 or as of June 26, 2017, notwithstanding the actual date of execution.

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[SIGNATURE PAGES FOLLOW]

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IN WITNESS OF WHICH, the Parties have duly executed this Agreement.

CRH MEDICAL CORPORATION
By:	/s/ Richard Bear
	Name: Richard Bear
	Title:  Chief Financial Officer
By:	/s/ Edward Wright
	Name: Edward Wright
	Title:  Chief Executive Officer

CRH MEDICAL CORPORATION (Delaware)
By:	/s/ Richard Bear
	Name: Richard Bear
	Title:  Chief Financial Officer
By:	/s/ Edward Wright
	Name: Edward Wright
	Title:  Chief Executive Officer

GASTROENTEROLOGY ANESTHESIA ASSOCIATES, LLC
By:	/s/ Richard Bear
	Name: Richard Bear
	Title:  Chief Financial Officer
By:	/s/ Edward Wright
	Name: Edward Wright
	Title:  Chief Executive Officer
[REDACTED]
By:	/s/ [REDACTED]
	Name: [REDACTED]
	Title:  [REDACTED]
CRH ANESTHESIA MANAGEMENT, LLC
By:	/s/ Richard Bear
	Name: Richard Bear
	Title: Chief Financial Officer
By:	/s/ Edward Wright
	Name: Edward Wright
	Title:  Chief Executive Officer
CRH ANESTHESIA OF GAINESVILLE, LLC
By:	/s/ Richard Bear
	Name: Richard Bear
	Title:  Chief Financial Officer
By:	/s/ Edward Wright
	Name: Edward Wright
	Title:  CEO

CRH ANESTHESIA OF FLORIDA, LLC
By:	/s/ Richard Bear
	Name: Richard Bear
	Title:  Chief Financial Officer
By:	/s/ Edward Wright
	Name: Edward Wright
	Title:  CEO
NC GAA, P.C.
By:	/s/ Richard Bear
	Name: Richard Bear
	Title:  Chief Financial Officer
By:	/s/ Edward Wright
	Name: Edward Wright
	Title:  CEO
CRH ANESTHESIA OF CAPE CORAL, LLC
By:	/s/ Richard Bear
	Name: Richard Bear
	Title:  Chief Financial Officer
By:	/s/ Edward Wright
	Name: Edward Wright
	Title:  CEO

CRH ANESTHESIA OF KNOXVILLE, LLC
By:	/s/ Richard Bear
	Name: Richard Bear
	Title:  Chief Financial Officer
By:	/s/ Edward Wright
	Name: Edward Wright
	Title:  CEO
CRH GAA, PLLC
By:	/s/ Richard Bear
	Name: Richard Bear
	Title: Chief Financial Officer
By:	/s/ Edward Wright
	Name: Edward Wright
CRH ANESTHESIA OF ARAPAHOE, LLC
By:	/s/ Richard Bear
	Name: Richard Bear
	Title: Chief Financial Officer
By:	/s/ Edward Wright
	Name: Edward Wright
	Title:  CEO

THE BANK OF NOVA SCOTIA
By:	/s/ Edwin Ho
	Name: Edwin Ho
	Title:  Direct, Credit Solutions
By:	/s/ Mike Dunnigan
	Name: Mike Dunnigan
	Title:  Director, Commercial Banking
U.S. BANK NATIONAL ASSOCIATION, as Lender
By:	/s/ Brian F. Miner
	Name: Brian F. Miner
	Title:  Vice President
By:	/s/ M. Tyler Burklaod
	Name: M. Tyler Burklaod
	Title:  SVP
JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as Lender
By:	/s/ Sebastian Boulanger
	Name: Sebastian Boulanger
	Title:  Executive Director
THE BANK OF NOVA SCOTIA, as Agent
By:	/s/ Adam R. Kennel
	Name: Adam R. Kennel
	Title:  Associate Director
By:	/s/ Clement Yu
	Name: Clement Yu
	Title:  Director

[signature page for Credit Agreement relating to CRH Medical Corporation et al.]

THE BANK OF NOVA SCOTIA, as Lead Arranger and Sole Bookrunner
By:	/s/ Adam R. Kennel
	Name: Adam R. Kennel
	Title:  Associate Director
By:	/s/ Clement Yu
	Name: Clement Yu
	Title: Director

[signature page for Credit Agreement relating to CRH Medical Corporation et al.]

EX-14.1

Exhibit 14.1

CODE OF BUSINESS CONDUCT AND ETHICS

A. Scope

This Code of Business Conduct and Ethics (the “Code”) applies to all directors, officers and employees of CRH Medical Corporation (the “Company”), as well as to directors, officers and employees of each of the Company’s subsidiaries. The Company and its subsidiaries are referred to herein collectively as “CRH”. Other individuals representing CRH (such as consultants or contractors) are also expected to abide by all applicable provisions of the Code and adhere to the principles and values set out in the Code when representing CRH to the public or performing services for, or on behalf of, CRH. In this Code, “you” means all CRH employees, directors, officers and, where applicable, other representatives of CRH and “our” refers to CRH.

This Code will be available to any interested parties, including our shareholders. The board of directors of CRH (the “Board”) will review the effectiveness of this Code on an ongoing basis to ensure that CRH’s business activities are conducted in accordance with this Code and that CRH’s reputation for high ethical standards is maintained.

B. Purpose

CRH is proud of the values with which it conducts business. It has and will continue to uphold the highest levels of business ethics and personal integrity in all types of transactions and interactions. To this end, this Code serves to: (1) emphasize CRH’s commitment to ethics and compliance with the law; (2) set forth basic standards of ethical and legal behaviour; (3) provide reporting mechanisms for known or suspected ethical or legal violations; and (4) help prevent and detect wrongdoing.

In order to ensure that this Code is working effectively, questions or concerns about this Code are encouraged and will be treated seriously and respectfully. This Code provides fundamental guidance with respect to expected standards for ethical conduct, but cannot describe all situations that you might face. Accordingly, an important feature of this Code is the procedures for seeking further guidance if you have questions, and for communicating concerns that you might have regarding compliance with this Code, that everyone is encouraged to use. In any ambiguous situation, you should seek advice from your supervisor, manager or other appropriate personnel to ensure that all actions taken on behalf of CRH honour this commitment.

C. Compliance Procedures

All employees, directors, officers and other representatives of CRH must work together to ensure prompt and consistent action against violations of this Code. In some situations, however, it is difficult to know if a violation has occurred. Because every situation that will arise cannot be anticipated, it is important that there is a way to approach a new question or problem. These are the steps to keep in mind:

• Ask first, act later. If you are unsure of what to do in any situation, seek guidance before you act.

• Make sure you have all the facts. In order to reach the right solutions, you must be as informed as possible.

• Ask yourself: What specifically am I being asked to do? Does it seem unethical or improper? Use your judgment and common sense. If something seems unethical or improper, it probably is.

• Clarify your responsibility and role. In most situations, there is shared responsibility. Are your colleagues informed? It may help to get others involved and discuss the problem.

• Discuss the problem with your supervisor or manager. This is the basic guidance for all situations. In many cases, your supervisor or manager will be more knowledgeable about the questions, and he or she will appreciate being consulted as part of the decision-making process.

• Seek help from CRH resources. In rare cases where it would be inappropriate or uncomfortable to discuss an issue with your supervisor or manager, or where you believe your supervisor or manager has

given you an inappropriate answer, discuss it with the Chief Financial Officer (the “Compliance Officer”).

• You may report ethical violations in confidence without fear of retaliation. If your situation requires that your identity be kept secret, your anonymity will be protected to the maximum extent consistent with CRH’s legal obligations. CRH in all circumstances prohibits retaliation of any kind against those who report ethical violations in good faith.

D. Ethical Standards

Honest and Responsible Conduct

Working for a company that provides products and services to improve human health is an extraordinary privilege. It also comes with enormous responsibility. To achieve success, each of you must wholeheartedly embrace the obligations demanded by working in the medical products and services industry. You must also maintain strict compliance with the spirit and intent of applicable laws and regulations.

CRH expects its employees to maintain the highest of personal and professional ethics. This standard of ethics includes values such as honesty, integrity, open communication and trust in all endeavours. As a member of CRH, individual credibility is essential. The manner in which you achieve success is often more important than the success itself.

Conflicts of Interest

A conflict of interest exists if your private interest interferes in any way with the interests of CRH. A conflict can arise when you take action or have interests that may make it difficult to perform your work for CRH objectively and effectively. Conflicts of interest may also arise when you, or members of your family, receive improper personal benefits as a result of your position at CRH. Loans to, or guarantees of obligations of, you and your family members may create conflicts of interest. It is almost always a conflict of interest for you to work simultaneously for a competitor or supplier of CRH. You should be sensitive to any activities, interests or relationships that might interfere with, or even appear to interfere with, your ability to act in the best interests of CRH.

Conflicts of interest may not always be clear-cut, so if you have a question, you should consult with your supervisor, manager or other appropriate personnel or, if circumstances warrant, the Compliance Officer. If you become aware of a conflict or potential conflict, you should bring it to the attention of your supervisor, manager or other appropriate personnel or consult the procedures described in Section F of this Code.

All directors and executive officers of CRH will disclose any material transaction or relationship that reasonably could be expected to give rise to such a conflict to the Chair of the Audit Committee of CRH (the “Audit Committee”). No action may be taken with respect to such transaction or party unless and until such action has been approved by the Audit Committee.

The purpose of business entertainment and gifts in a commercial setting is to create good will and sound working relationships, not to gain unfair advantage with third parties. No gift or entertainment should ever be offered or accepted by you or any family member of yours unless it: (1) is consistent with customary business practices; (2) is not excessive in value; (3) cannot be seen by others as a bribe or payoff; and (4) does not violate any laws or regulations. The offer or acceptance of cash gifts by you is prohibited. You should discuss with your supervisor, manager or other appropriate personnel any gifts or proposed gifts which you think may be inappropriate.

Gifts of nominal value (or gifts in such form and substance where accepting the gift will not influence your judgment of the giver), customary and reasonable meals and entertainment at which the giver is present, such as

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an occasional business meal and sporting event are generally acceptable, if permitted by applicable law. If you have a question about the appropriateness of accepting a gift or invitation, consult with the Compliance Officer for guidance.

You will not make any payment, or provide a gift or favour, to any person in a position of trust, such as a government or corporate official, to induce him or her to violate his or her duty or to obtain favourable treatment in the negotiations or the award of contracts or otherwise.

You must notify your supervisor, manager or other appropriate personnel of any business relationship or proposed business relationship that CRH may have with any company in which you or a related party has a direct or indirect interest or from which you or a related party may derive some benefit, or where a related party member is employed, if such relationship or transaction might give rise to the appearance of a conflict of interest. This requirement generally does not apply if the interest consists solely as a result of your beneficial ownership of less than 1% of the outstanding publicly traded equity securities of such company.

Because of potential conflicts with CRH or even the potential perception of a conflict of interest, CRH requires that you obtain approval of the Compliance Officer or, in the case of CRH’s directors, approval from the chairman of CRH’s board of directors, before you accept a position as a director of an unaffiliated for-profit company or organization. In connection with acceptance of an appointment as director of an unaffiliated for-profit company or organization you must ensure the proper treatment of confidential information received from such entity in connection with being a director. Before accepting such an appointment, you are required to obtain approvals and execute certain documents specified by CRH on approving such directorships. In addition you should not accept or hold a position as a director, employee, or agent of, or consultant or advisor to, any competitor of CRH unless you obtain CRH’s approval.

Corporate Opportunities

You owe a duty to CRH to advance its legitimate interests when the opportunity to do so arises. You are prohibited from taking for yourself opportunities that are discovered through the use of corporate property, information or position without the consent of the Board. You may not use corporate property, information or position for improper personal gain, and you will not compete with CRH directly or indirectly.

Fair Dealing

CRH is committed to promoting equal opportunity in all dealings with employees, clients, suppliers and others. CRH will conduct its business in a manner that will make it a desirable employer. In doing so, CRH will:

• strive to maintain a work environment in which the personal dignity of all individuals is respected by it, as well as its employees;

• prohibit discrimination, intimidation or harassment on the basis of race, gender, sexual orientation or religious beliefs or any other personal characteristic protected by law; and

• forbid coercion or intimidation in the workplace.

Keeping these principles in mind, you are required to behave honestly and ethically at all times and with all people. You are required to act in good faith, with due care, and to engage only in fair and open competition, by treating competitors, suppliers, customers, colleagues and shareholders in an ethical manner. Stealing proprietary information, possessing trade secret information that was obtained without the owner’s consent, or inducing such disclosures by past or present employees of other companies is prohibited. You will not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair practice.

You will not make any payment, directly or indirectly, to a person who has a decision-making role in a contemplated transaction with CRH in an attempt to influence such decision. You will not use illegal means to

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obtain information on any business matters generally, and more particularly, on those being the object of research, studies or analysis by CRH. Fees that are paid to agents and consultants are to be reasonable and in accordance with sound business practice.

You will not knowingly aid or abet any party to circumvent any laws, evade income taxes or defraud minority interests or creditors. Accordingly, no payment due to a customer, agent or distributor to a third party or to another entity nominated by the customer, agent or distributor, will be made if, after reasonable inquiry, it is possible that such purpose is intended. No payments are to be made to an unidentified bank account.

All contractual agreements of CRH will only be entered into by officers of CRH in accordance with the authority given to such officers by the Board. All agreements for the procurement of goods and services by CRH will be made in accordance with CRH’s procurement policy, as applicable.

Insider Trading

You will review and comply with CRH’s Insider Trading Policy. Those of us who have access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of CRH’s business. All non-public information about CRH should be considered confidential information. It is illegal to trade in securities of CRH while in possession of material, non-public information (unless such trades are affected pursuant to a pre existing automatic securities disposition or purchase plan established in accordance with CRH’s Insider Trading Policy). The definition of “material, non-public information” is broad. Information is “material” (and potentially subject to the prohibition of insider trading) if there is a substantial likelihood that a reasonable investor would consider the information important in determining how to vote or whether to trade in a security, or if the information, if made public, likely would affect the market price of CRH’s securities. Information may be material even if it relates to future, speculative or contingent events, and even if it is significant only when considered in combination with publicly available information. Information is considered to be “non-public” unless it has been publicly disclosed, and adequate time has passed for the securities markets to digest the information. It is also illegal to “tip” or pass on inside information to any other person except in the necessary course of business.

Confidentiality

You must maintain the confidentiality of confidential information entrusted to you, except when disclosure is authorized by an appropriate officer of CRH or required by laws or regulations. Confidential information includes all non-public information that might be of use to competitors or harmful to CRH or its customers if disclosed. It also includes information that suppliers and customers have entrusted to CRH. The obligation to preserve confidential information continues even after employment ends.

Protection and Proper Use of CRH Assets

Confidential Information – Information about CRH’s business activities, technology, plans and strategies, which has not been publicly disclosed by CRH or is not publicly available, is confidential. You will conduct yourself in a manner that protects and safeguards CRH’s confidential information. Each CRH employee signs a confidentiality agreement or an employment agreement containing confidentiality undertakings and is required to strictly abide by such terms.

If you believe it is necessary to disclose confidential information to a third party in order for the third party to provide a valuable service to CRH, you will first seek the guidance of the Compliance Officer prior to disclosure of any confidential information.

Confidential information of a third party that has been communicated to CRH must be protected and is not to be used or disclosed except in accordance with the terms under which it was provided to CRH. Any employee who has access to information of a third party that has been provided pursuant to a confidentiality agreement between the third party and CRH must be familiar with the terms of that agreement and act in accordance with such terms.

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Intellectual Property – CRH’s intellectual property (including trade secrets, patents, trademarks and copyrights) is one of its most important business assets and each of you, pursuant to your employment agreement or confidentiality agreement, is under an obligation to CRH to safeguard intellectual property as confidential information that is proprietary to CRH. Any ideas, inventions, or documentation that a CRH employee generates is the intellectual property of CRH. This intellectual property must be disclosed to CRH and must be kept strictly confidential. Unless you have consent from the Compliance Officer, such information cannot be disclosed to a third party at any time including after termination of employment.

Other CRH Assets – Each of us is personally responsible for protecting and appropriately using CRH’s property that is entrusted to us. In addition to confidential or proprietary information and intellectual property, CRH’s assets include physical assets such as equipment and facilities, as well as its information and communications systems, computer and telephonic equipment and supplies.

You should endeavour to protect CRH’s assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on CRH’s profitability. Any suspected incident of fraud or theft should be immediately reported to your supervisor, manager or other appropriate personnel for investigation. CRH’s equipment should not be used for non-CRH business, though incidental personal use is permitted.

Your obligation to protect CRH’s assets also includes information such as business, marketing and service plans, engineering and manufacturing ideas, designs, databases, records, salary information and any unpublished financial data and reports. Unauthorized use or distribution of this information violates CRH policy. It could also be illegal and result in civil or criminal penalties.

Compliance with Laws, Rules and Regulations

Obeying the law, both in letter and in spirit, is the foundation on which CRH’s ethical standards are built. In conducting the business of CRH, you will strictly comply with applicable governmental laws, rules and regulations at all levels of government in Canada and in any non-Canadian jurisdiction in which CRH does business, including the United States. Although not all of us are expected to know the details of these laws, it is important to know enough about the applicable local, provincial and federal laws to determine when to seek advice from your supervisor, manager or other appropriate personnel.

These areas of regulated business activity require particular attention:

Compliance with securities laws and regulations – You are expected to read, understand, and comply with CRH’s policies, including the Disclosure Policy, and to immediately bring forward to your manager, supervisor or other appropriate personnel information regarding any development that might be material to investors. Additionally, each of CRH’s officers is required to carry out his or her responsibilities in a manner that supports full compliance by CRH with our disclosure obligations.

Laws and regulations governing safety and the environment – CRH is committed to providing a safe and healthy work environment and to protecting and preserving the environment. You will comply with environmental, health and safety laws and regulations, and follow CRH’s environmental and safety policies and procedures.

Laws and regulations respecting privacy and human rights in the workplace – CRH is committed to providing a work environment where you are free from discrimination or harassment. To ensure that all employees are treated with dignity and respect, as well as to ensure compliance with applicable laws, you will comply fully with CRH’s Harassment Policy as set out in CRH’s employee manual.

Antitrust and Competition Laws – CRH is subject to complex laws known as “antitrust” laws designed to preserve competition among enterprises and to protect consumers from unfair business arrangements and practices. It is the policy of CRH to comply with antitrust and competition laws of each country in which it does business. You are expected to comply with these laws at all times.

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Timely and Truthful Public Disclosure

If you are involved in the preparation of reports and documents filed with or submitted to Canadian provincial securities regulators, the U.S. Securities and Exchange Commission or other regulators by CRH, or in other public communications made by CRH (including the preparation of financial or other reports and the information included in such reports and documents), you will act in accordance with CRH’s Disclosure Policy and make disclosures that are full, fair, accurate, timely and understandable. Where applicable, you will provide thorough and accurate financial and accounting data for inclusion in such disclosures. You will not knowingly conceal or falsify information, misrepresent material facts or omit material facts necessary to avoid misleading CRH’s independent public auditors or investors. Any questions relating to such communications on behalf of CRH should be directed to CRH’s Disclosure Committee.

Effective Financial Controls and Accurate Records

You must record all assets and liabilities in accordance with accepted accounting standards. No undisclosed or unrecorded fund or asset will be established or maintained for any purpose. No false or artificial entry, or entry that obscures the purposes of the underlying transaction, will be made in CRH’s books or records for any reason.

You must not conceal any information from CRH’s external auditors. It is a breach of this Code and the law for you to attempt to influence, such as through bribery or otherwise, the conduct of the external audit or the determination or judgment of CRH’s auditors.

The Chief Executive Officer and each senior financial officer will promptly bring to the attention of the Audit Committee any information he or she may have concerning: (a) significant deficiencies in the design or operation of internal controls over financial reporting that could adversely affect CRH’s ability to record, process, summarize and report financial data; or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in CRH’s financial reporting, disclosures or internal controls over financial reporting.

E. Responsibility for Code of Ethics Compliance

This Code applies to all employees, officers and directors of CRH, and, to the extent applicable, all other representatives of CRH. All officers, senior financial managers, human resources managers and legal counsel are expected to conduct themselves in a manner that fosters compliance with this Code and to that end each is required to abide by additional undertakings to CRH that he or she will exhibit role model behaviour in respect of this Code.

Overall responsibility for monitoring compliance with this Code will rest with the Board. Certain aspects of that responsibility may be delegated by the Board to the Audit Committee or the Compliance Officer.

CRH encourages each of you to report any situation or conduct that you believe is contrary to this Code or constitutes a violation of any law or breach of another CRH policy. Each supervisor, manager or other personnel who is made aware of any behaviour that might constitute a breach of this Code, is required to report such behaviour to the Compliance Officer, who must respond appropriately to any such report that is received.

CRH will not tolerate any retaliation or reprisal against anyone who in good faith reports a potential breach of this Code or raises a concern with respect to whether certain conduct constitutes a breach. (“In good faith” means a report that is made honestly, whether or not the person has all of the facts or is certain a breach has occurred; a report that is knowingly false would not be in good faith.)

CRH will take disciplinary action, up to and including termination, in respect of breaches of this Code. The type of disciplinary action will be dependent on the nature of the breach, and will be subject to and in accordance with applicable employment law. Disciplinary action will be consistently applied.

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You will follow established CRH policies and procedures. CRH acknowledges that from time to time extenuating circumstances may arise where a policy cannot be fully adhered to in a particular instance. Not every instance in which a policy is overridden or an exception to a policy is taken will constitute a breach of this Code. However, any decision to depart from this Code may only be made by the Board or Audit Committee and will, if applicable, be promptly disclosed as required by law or stock exchange regulation.

F. How to Raise a Concern With Respect to this Code

CRH encourages each of you to report any conduct that you might constitute a breach of this Code. A report may be made to your supervisor, manager, other appropriate personnel or to the Compliance Officer.

A report may also be made by leaving an anonymous message, such as writing to your manager, supervisor, other appropriate personnel or the Compliance Officer without identifying yourself. Regardless of how a submission is made, CRH encourages directors, officers and employees to provide as much detail as possible in order to allow the matter to be thoroughly investigated. The Audit Committee has responsibility for ensuring that all submissions are appropriately investigated in accordance with an appropriate protocol. You might be required to cooperate with such an investigation. In the discretion of the Audit Committee, the matter might be investigated by third parties. Any supervisor, manager or other appropriate personnel who receives or is aware of an allegation of a breach of this Code will report it to the Compliance Officer. The Compliance Officer will report to the Audit Committee in respect of each allegation of a breach of this Code brought to him or her. The Audit Committee will oversee the taking of appropriate corrective actions where breaches of this Code have occurred, which may include the making of process improvements to corporate practices or procedures and/or the taking of disciplinary action, up to and including termination of employment in respect of employees whose conduct was in violation of this Code. Such disciplinary action may include: written notices to the individual involved that a violation has been determined, demotion or re-assignment of the individual involved, and suspension with or without pay or benefits. Violations of this Code may also constitute violations of law and may result in criminal penalties and civil liabilities for the offending person and CRH. The type of disciplinary action that will be taken in respect of Code violations will be dependent on the nature of the violation and will be in accordance with and subject to applicable employment laws.

Approved by the Board: December 6, 2018

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EX-21.1

Exhibit 21.1

Subsidiaries of the Registrant

The Registrant has the following wholly-owned subsidiaries:

1. CRH Medical Corporation

2. CRH Anesthesia Management LLC

3. Gastroenterology Anesthesia Associates LLC

4. NC GAA, PC

5. CRH GAA PLLC

6. CRH Anesthesia of Gainesville LLC

7. CRH Anesthesia of Florida LLC

8. CRH Anesthesia of Cape Coral LLC

9. CRH Anesthesia of Knoxville LLC

10. CRH Anesthesia of Colorado, LLC

11. Alamo Sedation Associates LLC

12. Shreveport Sedation Associates, LLC

13. CRH Anesthesia of Ohio, LLC

14. CRH GAA of Washington, PLLC

15. Lake Erie Sedation Associates LLC

The Company also holds ownership interests in the following subsidiaries:

1. Macon Gastroenterology Anesthesia Associates LLC

2. Knoxville Gastroenterology Anesthesia Associates LLC

3. Austin Gastroenterology Anesthesia Associates PLLC

4. Greater Boston Anesthesia Associates PLLC

5. Arapahoe Gastroenterology Anesthesia LLC

6. Osceola Gastroenterology Anesthesia Associates LLC

7. DDAB LLC

8. West Florida Anesthesia Associates LLC

9. Central Colorado Anesthesia Associates LLC

10. Raleigh Sedation Associates LLC

11. Western Ohio Sedation Associates, LLC

12. Lake Washington Anesthesia Associates, LLC

13. Tennessee Valley Anesthesia Associates, LLC

14. Triad Sedation Associates, LLC

EX-23.1

Exhibit 23.1

         KPMG LLP Chartered Accountants PO Box 10426 777 Dunsmuir Street Vancouver BC V7Y 1K3 Canada Telephone        (604) 691-3000 Fax                   (604) 691-3031 Internet             www.kpmg.ca

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors

CRH Medical Corporation

We consent to the incorporation by reference in the registration statement (No. 333-206945, No. 333-206946, No. 333-218971, and No. 333-218985) on Form S-8 of CRH Medical Corporation of our report dated March 13, 2019, with respect to the consolidated balance sheets of CRH Medical Corporation as of December 31, 2018 and 2017, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows for each of the years in the two-year period ended December 31, 2018, and the related notes, which report appears in the December 31, 2018 annual report on Form 10-K of CRH Medical Corporation.

Our report on the consolidated financial statements referred to above contains an explanatory paragraph indicating the Company has changed its comprehensive basis of accounting from International Financial Reporting Standards as issued by the International Accounting Standards Board to U.S. generally accepted accounting principles effective with the preparation of the consolidated financial statements as of and for the year ended December 31, 2018.

Our report on the consolidated financial statements refers to a change in the accounting for revenue recognition in 2018 due to the adoption of ASC 606 – Revenue from Contracts with Customers.

/s/ KPMG LLP

Chartered Professional Accountants

Vancouver, Canada

March 13, 2019

EX-31.1

Exhibit 31.1

CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Edward Wright, certify that:

1. I have reviewed this Annual Report on Form 10-K of CRH Medical Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 13, 2019

/s/ Edward Wright

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard Bear, certify that:

1. I have reviewed this Annual Report on Form 10-K of CRH Medical Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 13, 2019

/s/ Richard Bear

Chief Financial Officer

EX-32.1

Exhibit 32.1

SECTION 906 CERTIFICATION

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) in connection with the Annual Report on Form 10-K of CRH Medical Corporation for the annual period ended December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer hereby certifies, to such officer’s knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of CRH Medical Corporation.

/s/ Edward Wright

Name:    Edward Wright

Title:      Chief Executive Officer

Date:      March 13, 2019

This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed “filed” by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.

EX-32.2

Exhibit 32.2

SECTION 906 CERTIFICATION

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) in connection with the Annual Report on Form 10-K of CRH Medical Corporation for the annual period ended December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer hereby certifies, to such officer’s knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of CRH Medical Corporation.

/s/ Richard Bear

Name:    Richard Bear

Title:      Chief Financial Officer

Date:      March 13, 2019

This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed “filed” by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.

XML

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Mar. 12, 2019	Jun. 30, 2018
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Trading Symbol	CRHM
Entity Registrant Name	CRH MEDICAL CORPORATION
Entity Central Index Key	0001461119
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Shell Company	false
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		71,712,288
Entity Public Float			$ 215.8

XML

Consolidated Balance Sheets - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 9,946,945	$ 12,486,884
Trade and other receivables, net	19,467,803	15,486,312
Income tax receivable	2,243,319	374,943
Prepaid expenses and deposits	822,119	889,882
Inventories	402,544	423,445
Total current assets	32,882,730	29,661,466
Non-current assets:
Property and equipment, net	303,291	364,366
Intangible assets, net	179,384,263	170,127,415
Deferred asset acquisition costs	116,025
Deferred tax assets	6,301,687	3,802,258
Total non-current assets	186,105,266	174,294,039
Total assets	218,987,996	203,955,505
Current liabilities:
Trade and other payables	5,763,222	5,661,844
Employee benefits	827,436	500,754
Notes payable and bank indebtedness	2,239,637	989,637
Deferred consideration	1,043,645	906,956
Earn-out obligation	2,920,583
Short-term advances	26,783
Member loan	49,000	435,000
Total current liabilities	12,870,306	8,494,191
Non-current liabilities:
Deferred consideration	1,183,092	2,226,737
Notes payable and bank indebtedness	67,621,470	60,061,105
Earn-out obligation		1,875,427
Deferred tax liabilities	21,951
Total non-current liabilities	68,826,513	64,163,269
Equity
Common stock, no par value; 72,055,688 and 73,018,588 shares issued and outstanding at December 31, 2018 and 2017, respectively	55,372,884	54,614,601
Additional paid-in capital	9,329,335	8,219,760
Accumulated other comprehensive income (loss)	(66,772)	(66,772)
Retained earnings	12,916,565	11,078,608
Total equity attributable to shareholders of the Company	77,552,012	73,846,197
Non-controlling interest	59,739,165	57,451,848
Total equity	137,291,177	131,298,045
Total liabilities and equity	$ 218,987,996	$ 203,955,505

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Common stock, no par value	$ 0	$ 0
Common stock, shares issued	72,055,688	73,018,588
Common stock, shares outstanding	72,055,688	73,018,588

XML

Consolidated Statements of Operations and Comprehensive Income - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Revenue:
Total revenue	$ 112,749,380	$ 95,006,145
Expenses:
Total expenses	92,454,250	74,186,860
Operating income	20,295,130	20,819,285
Finance income		(11,825,256)
Finance expense	4,567,327	6,310,406
Net finance (income) expense	4,567,327	(5,514,850)
Income before tax	15,727,803	26,334,135
Income tax expense	2,711,886	7,159,065
Net and comprehensive income	13,015,917	19,175,070
Attributable to:
Shareholders of the Company	4,679,921	12,078,853
Non-controlling interest	8,335,996	7,096,217
Net income	$ 13,015,917	$ 19,175,070
Earnings per share attributable to shareholders
Basic	$ 0.064	$ 0.164
Diluted	$ 0.063	$ 0.161
Weighted average shares outstanding:
Basic	72,582,733	73,712,670
Diluted	74,085,172	75,056,003
Anesthesia Services [Member]
Revenue:
Total revenue	$ 101,790,165	$ 83,505,140
Expenses:
Total expenses	81,079,150	62,135,447
Product [Member]
Revenue:
Total revenue	10,959,215	11,501,005
Expenses:
Total expenses	5,022,737	4,997,550
Corporate Expense [Member]
Expenses:
Total expenses	$ 6,352,363	$ 7,053,863

XML

Consolidated Statements of Changes in Equity - USD ($)	Total	Common Stock [Member]	Contributed Surplus [Member]	Accumulated Other Comprehensive Loss [Member]	Retained Earnings (Deficit) [Member]	Non-Controlling Interest [Member]
Beginning Balance at Dec. 31, 2016	$ 96,918,935	$ 52,706,484	$ 6,987,072	$ (66,772)	$ 881,695	$ 36,410,456
Beginning Balance , shares at Dec. 31, 2016		72,745,939
Total net and comprehensive income for the year	19,175,070				12,078,853	7,096,217
Stock based compensation expense	4,036,070		4,036,070
Common shares purchased on exercise of options	$ 153,026	$ 218,436	(65,410)
Common shares purchased on exercise of options , shares	247,500	247,500
Common shares issued on vesting of share units	$ (67,021)	$ 2,670,951	(2,737,972)
Common shares issued on vesting of share units , shares		1,292,549
Common shares repurchased in connection with normal course issuer bid and cancelled (note 10(e))	(2,708,488)	$ (928,244)			(1,780,244)
Common shares repurchased in connection with normal course issuer bid and cancelled, shares		(1,267,400)
Common shares repurchased in connection with normal course issuer bid and held as treasury shares (10,400 treasury shares) (note 10(e))	$ (154,722)	$ (53,026)			(101,696)
Common shares repurchased in connection with normal course issuer bid and held as treasury shares , shares	72,400
Cancellation of treasury shares (held as treasury shares as of 12/31/2017)	(1,267,400)
Distributions to members	$ (12,899,353)					(12,899,353)
Acquisition of non-controlling interest (note 4)	26,844,528					26,844,528
Ending Balance at Dec. 31, 2017	131,298,045	$ 54,614,601	8,219,760	(66,772)	11,078,608	57,451,848
Ending Balance , shares at Dec. 31, 2017		73,018,588
Total net and comprehensive income for the year	13,015,917				4,679,921	8,335,996
Stock based compensation expense	2,800,750		2,800,750
Common shares issued on vesting of share units		$ 1,691,175	(1,691,175)
Common shares issued on vesting of share units , shares		364,000
Common shares repurchased in connection with normal course issuer bid and cancelled (note 10(e))	(3,743,548)	$ (925,076)			(2,818,472)
Common shares repurchased in connection with normal course issuer bid and cancelled, shares		(1,254,500)
Common shares repurchased in connection with normal course issuer bid and held as treasury shares (10,400 treasury shares) (note 10(e))	$ (31,308)	$ (7,816)			(23,492)
Common shares repurchased in connection with normal course issuer bid and held as treasury shares , shares	10,400	0
Cancellation of treasury shares (held as treasury shares as of 12/31/2017)	(72,400)	(72,400)
Distributions to members	$ (19,289,740)					(19,289,740)
Acquisition of non-controlling interest (note 4)	13,241,061					13,241,061
Ending Balance at Dec. 31, 2018	$ 137,291,177	$ 55,372,884	$ 9,329,335	$ (66,772)	$ 12,916,565	$ 59,739,165
Ending Balance , shares at Dec. 31, 2018		72,055,688

XML

Consolidated Statements of Changes in Equity (Parenthetical) - shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Statement of Stockholders' Equity [Abstract]
Treasury stock	10,400	72,400

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Operating activities:
Net income	$ 13,015,917	$ 19,175,070
Adjustments for:
Depreciation of property, equipment and intangibles	31,486,055	23,834,400
Stock-based compensation	2,800,750	4,036,070
Unrealized foreign exchange	(4,494)	73,735
Deferred income tax expense (recovery)	(2,407,176)	2,755,707
Change in fair value of contingent consideration	971,627	(11,825,256)
Accretion on contingent consideration and deferred consideration	166,575	600,602
Amortization of deferred financing fees	260,363	204,057
Loss on extinguishment of debt		1,408,221
Change in current tax receivable (payable)	(1,936,436)	(1,106,541)
Change in trade and other receivables	(3,981,491)	(5,649,573)
Change in prepaid expenses	171,911	(339,071)
Change in inventories	20,902	(122,685)
Change in trade and other payables	101,379	2,432,159
Change in employee benefits	326,681	273,880
Cash provided by operating activities	40,992,563	35,750,775
Financing activities
Proceeds from member loans	303,351	566,819
Repayment of member loans	(662,568)	(131,819)
Repayment of notes payable and bank indebtedness	(14,250,000)	(52,543,750)
Proceeds on bank indebtedness	22,800,000	68,200,000
Payment of deferred consideration	(1,000,000)	(900,000)
Distributions to non-controlling interest	(19,289,740)	(12,899,353)
Proceeds on settlement of derivative asset		1,313,874
Proceeds from the issuance of shares relating to stock-based compensation		(6,626)
Repurchase of shares for cancellation	(3,774,856)	(2,863,210)
Cash (used in) provided by financing activities	(15,873,813)	735,935
Investing activities
Acquisition of property and equipment	(35,105)	(125,285)
Deferred asset acquisition costs	(116,025)
Acquisition of anesthesia services providers	(27,509,811)	(33,376,849)
Cash used in investing activities	(27,660,941)	(33,502,134)
Effects of foreign exchange on cash and cash equivalents	2,252	(4,696)
Increase (decrease) in cash and cash equivalents	(2,539,939)	2,979,880
Cash and cash equivalents, beginning of year	12,486,884	9,507,004
Cash and cash equivalents, end of year	9,946,945	12,486,884
Supplemental disclosure of cash interest and taxes paid:
Cash interest paid	(3,180,808)	(3,563,837)
Taxes paid	$ (7,055,498)	$ (5,509,915)

XML

Reporting entity

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Reporting entity

1.     Reporting entity:

CRH Medical Corporation (“CRH” or “the Company”) was incorporated on April 21, 2001 and is incorporated under the Business Corporations Act (British Columbia). The Company provides anesthesiology services to gastroenterologists in the United States through its subsidiaries and sells its patented proprietary technology for the treatment of hemorrhoids directly to physicians in the United States and Canada.

CRH principally operates in the United States and is headquartered from its registered offices located at Unit 578, 999 Canada Place, Vancouver, British Columbia, Canada.

XML

Basis of preparation

12 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of preparation

2.     Basis of preparation:

(a)    Change in basis of presentation:

As a non-U.S. company listed on the NYSE, the United States Securities and Exchange Commission (“SEC”) requires us to perform a test on the last business day of the second quarter of each fiscal year to determine whether we continue to meet the definition of a foreign private issuer (“FPI”). Historically, we met the definition of an FPI, and as such, prepared consolidated financial statements in accordance with IFRS, reported with the SEC on FPI forms, and complied with SEC rules and regulations applicable to FPIs.

On June 30, 2018, we performed the test and determined that we no longer met the definition of a FPI. As such, from January 1, 2019, the Company is required to prepare consolidated financial statements in accordance with United States Generally Accepted Accounting Principles (“US GAAP”), report with the SEC on domestic forms, and comply with SEC rules and regulations applicable to domestic issuers.

These consolidated financial statements have been prepared in accordance with US GAAP beginning December 31, 2018 on a retrospective basis. The Company’s historical financial statements were previously presented under International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) up to and including the Company’s September 30, 2018 interim report.

(b)    Functional and presentation currency:

These consolidated financial statements are presented in United States dollars, which is the Company’s presentation currency. The functional currency of the Company and its subsidiaries is the United States dollar.

(c)    Use of estimates, assumptions and judgments:

The preparation of the Company’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Reported amounts and note disclosures reflect the overall economic conditions that are most likely to occur and anticipated measures management intends to take. Actual results could differ from those estimates.

(i)    Use of estimates and assumptions:

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Significant areas requiring the use of management estimates relate to the assessment for impairment and useful lives of intangible assets, determining the fair value of share units and derivatives, estimates supporting reported anesthesia revenues, the recoverability of trade receivables, the valuation of certain long term liabilities and other assets, including liabilities relating to contingent consideration, the vesting term for share units with market and non-market based performance targets, the valuation of acquired intangibles, the valuation of deferred tax assets.

(ii)    Judgments:

Significant judgments made by management in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements includes the determination of control for the purposes of consolidation and the Company’s assessment of whether an acquisition is a business acquisition or an asset acquisition.

XML

Significant accounting policies

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Significant accounting policies

3.     Significant accounting policies:

The accounting policies have been applied consistently by the subsidiaries of the Company.

(a)    Basis of consolidation:

These consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities controlled by the Company through voting control and for anesthesia business, control over the assets and business operations of the subsidiary through operating agreements. Control exists when the Company has the continuing power to govern the financial and operating polices of the investee. Subsidiaries are included in the consolidated financial results of the Company from the effective date of acquisition up to the effective date of disposition or loss of control. Minority interests, if any, are valued at fair value at inception. All significant intercompany transactions and balances have been eliminated in consolidation.

(b)    Cash equivalents

The Company considers all highly liquid investments with an original maturity of 90 days or less, when acquired, to be cash equivalents.

(c)    Foreign currency:

Transactions in foreign currencies are translated to the respective functional currencies of the subsidiaries of the Company at exchange rates at the dates of the transactions.

Period end balances of monetary assets and liabilities in foreign currency are translated to the respective functional currencies using period end foreign currency rates. Foreign currency gains and losses arising from settlement of foreign currency transactions are recognized in earnings. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date on which the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

(d)    Inventories:

Inventories are measured at the lower of cost, determined using the first-in first-out method, and net realizable value. Inventory costs include the purchase price and other costs directly related to the acquisition of inventory and costs related to bringing the inventories to their present location and condition.

Net realizable value is the estimated selling price in the Company’s ordinary course of business, less the estimated costs of completion and selling expenses. All inventory held is finished goods inventory.

(e)    Property and equipment, net:

Property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

The estimated useful lives and the methods of depreciation for the current and comparative periods are as follows:

Asset	Basis	Rate
Computer equipment	Declining balance	30%
Computer software	Declining balance	100%
Furniture and equipment	Declining balance	20%
Leasehold improvements	Straight-line	Shorter of initial lease term or useful life
Injection mold	Straight-line	5 years

These depreciation methods most closely reflect the expected pattern of consumption of the future economic benefits embodied in the asset.

Estimates for depreciation methods, useful lives and residual values are reviewed at each reporting period-end and adjusted if appropriate.

(f)    Intangible assets:

Intangible assets, consisting of acquired exclusive professional service agreements to provide anesthesia services and the cost of acquiring patents, are recorded at historical cost. For patents, costs also include legal costs involved in expanding the countries in which the patents are recognized to the extent expected cash flows from those countries exceed these costs over the amortization period and costs related to new patents. The amortization term for professional services agreements are based on the contractual terms of the agreements. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives and are measured at cost less accumulated amortization and accumulated impairment losses. Intangible assets with finite lives are amortized over the following periods:

Asset	Basis		Rate
Intellectual property rights to the CRH O’Regan System		Straight-line	15 years
Intellectual property new technology		Straight-line	20 years
Exclusive professional services agreements		Straight-line	4.5 to 15 years

(g)    Impairment:

Non-financial assets:

The carrying amounts of the Company’s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there are any events or changes in circumstances indicated that the carrying value may not be recoverable. Example factors that could trigger impairment reviews include significant underperformance relative to historical or projected future operating results, significant changes in the use of the acquired assets or strategy for the overall business and significant negative economic trends. Depending on the specific asset and circumstances, assets are assessed for impairment as an individual asset, as part of an asset group or at the reporting unit (RU”) level. A reporting unit is an operating segment or one level below an operating segment if certain conditions are met. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of cash inflows from other assets or groups of assets.

If indicators of impairment exist, an asset or asset group is impaired if its carrying amount exceeds its fair value, being the projected future discounted cash flows that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset or asset group. Projected cash flows are based upon historical results adjusted to reflect management’s best estimate of future market and operating conditions which may differ from actual cash flows. Significant assumptions included in projected cash flows include anesthesia revenue growth rates, discount rates, and operating cost growth rates.

(h)    Income taxes:

The Company is subject to income taxes in Canada and the United States. Judgment is required in determining the provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.

The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, it recognizes deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. The Company recognizes the deferred income tax effects of a change in tax rates in the period of the enactment. The Company records a valuation allowance to reduce its deferred tax assets to the net amount that management believes is more likely than not to be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than fifty percent likely of being realized. The Company records interest related to unrecognized tax benefits in interest expense and penalties in operating expenses.

Income tax expense is comprised of current and deferred tax.

(i)    Share-based compensation:

The Company records share-based compensation related to equity classified stock options and share units granted using the fair value based method estimated using either the Black-Scholes model or Binomial method. The vesting components of graded vesting employee awards, with only a service vesting condition, are accounted for as separate share-based arrangements. Each vesting installment is measured separately and expensed over the related installment’s vesting period. Compensation cost is measured at fair value at the date of grant and expensed as employee benefits over the period in which employees unconditionally become entitled to the award. Forfeitures are estimated in recognizing share-based compensation, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting date.

Prior to January 1, 2018, each vesting tranche of equity classified non-employee awards were remeasured each reporting period at the award’s fair value each reporting period with a final measurement date of each vesting date of each vesting tranche. Post vesting, if continued services are not required, the award would become subject to other standards. Starting January 1, 2018, the accounting standards for non-employee awards were amended by ASU 2018-07 (note 3 p(v)).

(j)    Share capital:

Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares, stock options and share options are recognized as a deduction from equity, net of any tax effects.

(k)    Earnings per share:

The Company presents basic and diluted earnings per share (EPS) data for its common shares. Basic EPS is calculated by dividing the net income or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period, adjusted for own shares held, if applicable. Diluted EPS is determined by adjusting the income or loss attributable to common shareholders and the weighted average number of common shares outstanding, adjusted for own shares held if applicable, for the effects of all dilutive potential common shares. Diluted EPS for year-to-date (including annual) periods is based on the weighted average of the incremental shares included in each interim period for the year-to-date period.

(l)    Segment reporting:

The Company’s operating segments consist of the sale of medical products and the provision of anesthesia services.

(m)  Finance costs:

Finance cost is primarily comprised of interest on the Company’s notes payable and bank indebtedness and also includes the amortization of costs incurred to obtain loan financing and any fees in respect of arranging loan financing. Deferred finance costs are amortized using the effective interest method over the term of the related loan financing. Deferred finance costs are presented as a reduction to the related liability.

(n)   Asset acquisitions:

Asset acquisitions are accounted for using the cost accumulation and allocation method. The acquisition cost includes directly related acquisition costs. The cost of the acquisition is allocated to the net assets acquired on a relative fair value basis.

Contingent consideration, where the arrangement is not a derivative, is recognized when it is probable and estimable. After the initial acquisition accounting, changes in contingent and deferred consideration are recorded within finance (income) expense.

The Company’s policy is to recognize any non-controlling interest on consolidation either at fair value of the non-controlling interest or at the fair value of the proportionate share of the net assets acquired.

(o)   Revenue recognition:

Our anesthesia service revenues are derived from anesthesia procedures performed under our professional services agreements. The fees for such services are billed either to a third party payor, including Medicare or Medicaid or to the patient. We recognize anesthesia service revenues, net of contractual adjustments and implicit price concessions, which we estimate based on the historical trend of our cash collections and contractual adjustments.

Anesthesia services procedures for each patient qualify as a distinct service obligation, as they are provided simultaneously with other readily available resources during the service procedure. The transaction price is variable and not constrained. Variable consideration relates to contractual allowances, credit provisions and other discounts. The standard requires management to estimate the transaction price, including any implicit concessions from the credit approval process. The Company adopted a portfolio approach to estimate variable consideration transaction price by payor type (patient, government and/or insurer) and the specifics of the services being provided. These portfolios share characteristics such that the results of applying a portfolio approach are not materially different than if the standard was applied to individual patient contracts. Revenue is recognized upon completion of the services to the customer (patient) for practical reasons as the service period is performed over a short time period.

The Company recognizes revenue from product sales at the time the product is shipped, which is when title passes to the customer, and when all significant contractual obligations have been satisfied, collection is probable and the amount of revenue can be estimated reliably.

Product sales contracts generally contain a single distinct performance obligation, but multiple performance obligations may exist when multiple product types are ordered by a physician in a contract. The transaction price for product sales is fixed and no variable consideration exists. Contract consideration is allocated to each distinct performance obligation in the contract based upon available stand-alone selling prices obtained from historical sales transactions for each product. The Company recognizes revenue from product sales at the point in time when control of the goods passes to the customer (physician) when the product is shipped, which is when title passes to the customer and an obligation to pay for the goods arises. Shipping services performed after control has passed to the customer, if any, is a separate performance obligation, but was determined to be nominal.

(p)   Adoption of new accounting standards:

i)    Revenue from Contracts with Customers

This standard establishes a comprehensive framework for determining whether, how much and when revenue is recognized. The Company adopted the standard effective January 1, 2018 applying the full retrospective method, resulting with the standard being applied to the prior reporting period with a cumulative effect of adjustment, if any, recognized as at January 1, 2017.

The Company has elected to make use of the following practical expedients:

• incremental costs of obtaining a contract are recognized as an expense when incurred because the amortization period of the asset that the Company otherwise would have recognized is one year or less; and

• the promised amount of consideration has not been adjusted for the effects of a significant financing component because, at contract inception, the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

The adoption of this standard did not have a material impact on the results of operations or cash flows and there was no adjustment to retained earnings as at January 1, 2017. However, the standard did require the Company’s provision for net uncollectable accounts, previously recognized as bad debt expense in anesthesia services expenses, to be recognized as a reduction to anesthesia service revenues. There was no impact to the Company’s other operating segments. For the year ended December 31, 2017, the adoption of the standard resulted in a reduction of anesthesia services revenue and a similar reduction of anesthesia services expenses of $5,235,934.

ii)    Financial Instruments – Overall

In January 2016, FASB issued ASU No. 2016-01, “Financial Instruments – Overall,” which requires equity investments, not subject to consolidation or equity accounting, to be measured at fair value at fair value and fair value through profit and loss subsequently, unless a practical exception applies. This update did not change the classification and measurement of investments in debt securities and loans. This standard was effective January 1, 2018 and it had no impact on the Company’s balance sheet, results of operations or cash flows.

iii)    Employee Share-based Payments

In March 2016, FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting”, which requires companies to recognize the income tax effects of awards in the income statement when awards vest or are settled. The Company adopted the standard effective January 1, 2017, with no cumulative transition impact. The Company recognized a tax recovery of $952,495 related to awards that were either exercised or vested during the year ended December 31, 2017.

iv)    Clarifying the Definition of a Business

In January 2017, FASB issued ASU No. 2017-01, “Business Combinations (Topic 805) – Clarifying the Definition of a Business”, which changes the definition of a business to assist entities with evaluating when a set of transferred assets is a Business and business acquisition or an asset acquisition. This guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. This guidance is effective for annual periods beginning after December 15, 2017 and can be early adopted in certain situations and is applied prospectively to acquisitions after the effective date of adoption only. The Company early adopted this standard and concluded that all previously reported business combinations in 2017 would be asset acquisitions under this new guidance. The change in classification to asset acquisitions resulted in an increase to the cost allocation to PSA intangible assets due to the capitalization of acquisition costs of $223,581. As a result, anesthesia services expenses reduced by $194,326 for the year ended December 31, 2017 and the net allocation to PSA intangible asset, minority interest and retained earnings increased by $381,794, $173,194 and $14,274, respectively, as at December 31, 2017.

v)    Nonemployee Share-Based Payment Accounting

In June 2018, FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718) – Improvements to Non-Employee Share-based Payment Accounting”, which is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. This ASU substantially aligns non-employee award accounting with employee awards accounting under ASC 718, with the exception of attribution of compensation costs and certain inputs used to value non-employee awards. Vested non-employee awards will continued to be accounted under ASC 718 unless they are modified after the non-employee stops providing goods and services. The ASU is applied to unsettled liability awards and equity classified awards for which a measurement date has not been established only at the effective adoption date using the modified retrospective method. This standard is effective for fiscal years beginning after December 15, 2018, but may be early adopted. The Company adopted this ASU on January 1, 2018 and it had no impact on the Company’s balance sheet, results of operations or cash flows.

(q)   New standards and interpretations not yet applied:

(i)    ASU 2016-02 Leases

In February 2016, FASB issued ASU No. 2016-02 “Leases”, and subsequently ASU No. 2017-13, establishes principles for the recognition, measurement, presentation and disclosure of leases. The standard requires lessees to recognize most leases on the balance sheet and certain limited changes to lessor accounting. The standard is effective for annual periods beginning after December 15, 2018, with early adoption permitted. The standard requires a modified retrospective application to all leases outstanding at, or entered into after the date of initial application, with options to use various transitional relief. The Company plans to adopt the standard effective January 1, 2019 and expects nearly all operating classified leases to also be classified as operating leases under this new standard with a right-of-use asset and a corresponding obligation recognized on the balance sheet at the adoption date. The lease obligation is measured at amortized cost using the effective interest method. The Company will apply the exemption to treat short-term leases as executory contracts. The Company has evaluated the impact of this standard and determined that the impact from this ASU on its consolidated balance sheet, results of operations and cash flows is not material at January 1, 2019.

(ii)    Credit Losses

In June 2016, FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326)”, which requires companies to measure credit losses on financial instruments measured at amortized cost applying an “expected credit loss” model based upon past events, current conditions and reasonable and supportable forecasts that affect collectability. Previously, companies applied an “incurred loss” methodology for recognizing credit losses. This standard is effective for fiscal years beginning after December 15, 2019, but may be early adopted by the Company on January 1, 2019.

The Company is in the process of evaluating the impact of this standard on its balance sheet, results of operations and cash flows.

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Asset acquisitions

12 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Asset acquisitions

4.     Asset acquisitions:

During the year ended December 31, 2018, the Company completed five asset acquisitions. These asset acquisitions have been included in the anesthesia segment of the Company and represents the following:

Acquired Operation	Date Acquired	Consideration
Shreveport Sedation Associates LLC (“SSA”)	March 2018	$	9,495,184
Western Ohio Sedation Associates LLC (“WOSA”)	May 2018	$	6,483,698
Lake Washington Anesthesia LLC (“LWA”)	July 2018	$	5,041,939
Lake Erie Sedation Associates LLC (“LESA”)	September 2018	$	4,233,115
Tennessee Valley Anesthesia Associates LLC (“TVAA”)	December 2018	$	2,255,875

The results of operations of the acquired entities have been included in the Company’s consolidated financial statements from the date of acquisition as the Company has control over these entities.

The following table summarizes the fair value of the consideration transferred and the allocated costs of the assets and liabilities acquired at the acquisition date.

	SSA			WOSA			LWA			LESA			TVAA			Total
Cash	$	9,404,148		$	6,409,000		$	5,000,000		$	4,180,000		$	2,200,000		$	27,193,148
Acquisition Costs		91,036			74,698			41,939			53,115			55,875			316,663
Purchase consideration	$	9,495,184		$	6,483,698		$	5,041,939		$	4,233,115		$	2,255,875		$	27,509,811
Non-controlling interest	$	—		$	6,229,435		$	4,844,217		$	—		$	2,167,409		$	13,241,061
	$	9,495,184		$	12,713,133		$	9,886,156		$	4,233,115		$	4,423,284		$	40,750,872
Assets and liabilities acquired:
Exclusive professional services agreements	$	9,391,036		$	12,713,133		$	9,886,155		$	4,233,115		$	4,423,284		$	40,646,723
Prepaid expenses and deposits		104,149			—			—			—						104,149
Pre-close accounts receivable		—			—			652,506			—						652,506
Pre-close accounts payable		—			—			(652,506	)		—						(652,506	)
Fair value of net identifiable assets and liabilities acquired	$	9,495,185		$	12,713,133		$	9,886,155		$	4,233,115		$	4,423,284		$	40,750,872
Exclusive professional services agreements – amortization term		7 years			10 years			7 years			10 years			7 years
CRH ownership interest		100	%		51	%		51	%		100	%		51	%

The value of the acquired intangible assets, being exclusive professional services agreements, relate to the acquisition of exclusive professional services agreements to provide professional anesthesia services. The amortization term for the agreements is based upon contractual terms within the acquisition agreement and professional services agreement.

The non-controlling interest was determined with reference to the non-controlling interest shareholder’s share of the fair value of the net identifiable assets as estimated by the Company.

The Company has obtained control over the acquired assets via the Company’s majority ownership in the shares of the entities and its agreements with the non-controlling interest shareholders.

For those asset acquisitions where CRH ownership interest is less than 100%, in conjunction with the acquisition, both the Company and the non-controlling interest shareholder contributed loans. The terms of the loans are such that they will be repaid first, prior to any future distributions and are non-interest bearing.

	SSA		WOSA		LWA		LESA		TVAA		Total
CRH member loan	$	—	$	193,800	$	—	$	—	$	51,000	$	244,800
Non-controlling interest member loan	$	—	$	186,200	$	—	$	—	$	49,000	$	235,200
Amount outstanding at December 31, 2018	$	—	$	—	$	—	$	—	$	100,000	$	100,000

In conjunction with the LWA acquisition, the non-controlling interest shareholder of LWA provided a working capital advance to LWA totaling $254,351 at July 1, 2018. The balance of the advance at December 31, 2018 is $26,783.

The Company also incurred legal costs of $116,025 associated with its acquisition of the assets of Anesthesia Care Associates, LLC (“ACA”) which closed subsequent to December 31, 2018 (see note 17). These costs are deferred as of December 31, 2018 on the statements of financial position.

In October 2018, the Company entered into an agreement with Digestive Health Specialists (“DHS”), located in North Carolina, to assist DHS in the development and management of a monitored anesthesia care program. Under the terms of the agreement, CRH is a 15% equity owner in the anesthesia business, Triad Sedation Associates LLC, and receives compensation for its billing and collection services. Under the terms of the limited liability company agreement, CRH has the right, at CRH’s option, to acquire an additional 36% interest in the anesthesia business at a future date, but no sooner than November 2019. The Company assessed and concluded that CRH does not have significance influence over TSA. The option agreement was determined to be an executory contract and both the equity interest and option agreement were determined to have only nominal value upon grant and as at December 31, 2018.

During the year ended December 31, 2017, the Company completed six asset acquisitions. All asset acquisitions completed during the period have been included in the anesthesia segment of the Company and include the following:

Acquired Operation	Date Acquired	Consideration
DDAB, LLC (“DDAB”)	February 2017	$	5,278,940
Osceola Gastroenterology Anesthesia Associates, LLC (“OGAA”)	March 2017	$	3,452,247
West Florida Anesthesia Associates, LLC (“WFAA”)	August 2017	$	5,904,980
Central Colorado Anesthesia Associates, LLC (“CCAA”)	September 2017	$	7,909,243
Raleigh Sedation Associates, LLC & Blue Ridge Sedation Associates, PLLC (“RSA”)	September 2017	$	7,328,060
Alamo Sedation Associates, LLC (“ASA”)	September 2017	$	3,503,379

The results of operations of the acquired entities have been included in the Company’s consolidated financial statements from the date of acquisition as the Company has control over these entities.

The following table summarizes the fair value of the consideration transferred and the allocated costs of the assets and liabilities acquired at the acquisition date.

	DDAB			OGAA			WFAA			CCAA			RSA			ASA			Total
Cash and acquisition costs	$	4,089,791		$	3,401,819		$	5,840,000		$	7,888,919		$	7,248,960		$	3,500,000		$	31,969,489
Acquisition costs		5,370			50,428			64,980			20,324			79,100			3,379			223,581
Contingent consideration		1,183,779			—			—			—			—			—			1,183,779
Purchase consideration	$	5,278,940		$	3,452,247		$	5,904,980		$	7,909,243		$	7,328,060		$	3,503,379			33,376,849
Non-controlling interest		5,071,922			2,301,498			4,831,346			7,599,077			7,040,685			—			26,844,528
	$	10,350,862		$	5,753,745		$	10,736,326		$	15,508,320		$	14,368,745		$	3,503,379		$	60,221,377
Assets and liabilities acquired:
Exclusive professional services agreements		10,350,862		$	5,753,745		$	10,724,338		$	15,508,320		$	14,368,745		$	3,503,379		$	60,209,389
Pre-close trade receivables		525,000			—			—			—			—			—			525,000
Pre-close trade payables		(525,000	)		—			—			—			—			—			(525,000	)
Prepaid expenses and deposits		—			—			11,988			—			—			—			11,988
Fair value of net identifiable assets and liabilities acquired	$	10,350,862		$	5,753,745		$	10,736,326		$	15,508,320		$	14,368,745		$	3,503,379		$	60,221,377
Exclusive professional services agreements – amortization term		4.5 years			5 years			15 years			7 years			5 years			7 years
CRH ownership interest		51	%		60	%		55	%		51	%		51	%		100	%

The value of the acquired intangible assets, being exclusive professional services agreements relate to the acquisition of exclusive professional services agreements to provide professional anesthesia services. The amortization terms for the agreements are based upon contractual terms within the acquisition agreements and professional services agreements.

The non-controlling interest was determined with reference to the non-controlling interest shareholders share of the fair value of the net identifiable assets as estimated by the Company.

The Company has obtained control over the acquired assets via the Company’s majority ownership in the shares of the entities and its agreements with the non-recurring interest shareholders.

For those asset acquisitions where CRH ownership interest is less than 100%, in conjunction with the acquisition, both the Company and the non-controlling interest shareholder contributed loans. The terms of the loans are such that they will be repaid first, prior to any future distributions and are non-interest bearing.

	DDAB		OGAA		WFAA		CCAA		RSA		ASA		Total
CRH member loan	$	—	$	90,000	$	82,500	$	178,500	$	204,000	$	—	$	555,000
Non-controlling interest member loan	$	—	$	60,000	$	67,500	$	171,500	$	196,000	$	—	$	495,000
Amount outstanding at December 31, 2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—

In conjunction with the acquisition, the non-controlling interest shareholder of DDAB provided a working capital advance to DDAB totaling $71,819 at March 31, 2017. The working capital advance was repaid as of December 31, 2017.

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Trade and other receivables

12 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Trade and other receivables

5.     Trade and other receivables:

	2018			2017
Trade receivables, gross	$	19,373,260		$	15,325,553
Other receivables		141,141			260,759
Less: allowance for doubtful accounts		(46,598	)		(100,000	)
	$	19,467,803		$	15,486,312
Anesthesia segment – trade receivables, gross		18,199,847			13,405,303
Product segment – trade receivables, gross		1,173,413			1,920,250
	$	19,373,260		$	15,325,553

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Trade and other payables

12 Months Ended

Dec. 31, 2018

Payables and Accruals [Abstract]

Trade and other payables

6.     Trade and other payables:

	2018		2017
Trade payables	$	1,316,821	$	2,042,487
Payments due to former owners of acquired entities		—		76,403
Accruals and other payables		4,446,401		3,542,954
	$	5,763,222	$	5,661,844

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Property and equipment

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Property and equipment

7.    Property and equipment:

Property and equipment consist of the following:

	December 31,
	2018			2017
Computer equipment and software	$	94,566		$	82,055
Furniture and equipment		237,616			215,021
Leasehold improvements		5,784			5,784
Injection mold		408,062			408,062
Property and equipment	$	746,028		$	710,922
Less: Accumulated depreciation		(442,737	)		(346,556	)
Property and equipment, net	$	303,291		$	364,366

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Intangible assets

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets

8.    Intangible assets:

	Professional Services Agreements		Patents		Total
Cost
Balance as at January 1, 2017		155,635,148		532,598		156,167,746
Additions through asset acquisitions (note 4)		60,209,389		—		60,209,389
Balance as at December 31, 2017	$	215,844,537	$	532,598	$	216,377,135
Additions through asset acquisitions (note 4)		40,646,723		—		40,646,723
Balance as at December 31, 2018	$	256,491,260	$	532,598	$	257,023,858

	Professional Services Agreements		Patents			Total
Accumulated depreciation
Balance as at January 1, 2017		21,999,771		500,664			22,500,435
Amortization expense		23,752,532		(3,247	)		23,749,285
Balance as at December 31, 2017	$	45,752,303	$	497,417		$	46,249,720
Amortization expense		31,387,429		2,446			31,389,875
Balance as at December 31, 2018	$	77,139,732	$	499,863		$	77,639,595

	Professional Services Agreements		Patents		Total
Net book value
December 31, 2018	$	179,351,528	$	32,735	$	179,384,263
December 31, 2017	$	170,092,234	$	35,181	$	170,127,415

At December 31, 2018, the Company identified indicators of impairment in respect of four of its professional services agreements. Upon performing undiscounted cash flow models for these assets, the Company identified only two assets that required further review for impairment.

The Company performed discounted cash flow modelling for these assets and compared the resultant discounted cash flows expected over the life of the assets to the carrying amounts as at December 31, 2018. The income approach is used for the quantitative assessment to estimate the fair value of the assets, which requires estimating future cash flows and risk-adjusted discount rates in the Company’s discounted cash flow model. The overall market outlook and cash flow projections of the reporting unit involves the use of key assumptions, including anesthesia growth rates, discount rates and operating cost growth rates. Due to uncertainties in the estimates that are inherent to the Company’s industry, actual results could differ significantly from the estimates made. Many key assumptions in the cash flow projections are interdependent on each other. A change in any one or combination of these assumptions could impact the estimated fair value of the reporting unit.

As a result of this test, no write-downs to the intangible assets were required.

At December 31, 2017, the Company identified indicators of impairment in respect of two of its professional services agreements. Upon performing undiscounted cash flow models for these assets, no impairment was indicated.

Various of the Company’s professional services agreements are subject to renewal terms. The weighted average period before the Company’s professional services agreements are up for renewal is 4 years. The Company anticipates that it will be able to renew all contract terms under its professional services agreements. The weighted average remaining amortization period for the Company’s professional services agreements is 6.23 years.

Based on the Company’s professional services agreements in place at December 31, 2018, the Company anticipates that the amortization expense to be incurred by the Company over the next five years is as follows:

	Amortization Expense
For professional services agreements as at December 31, 2018:
2019	$	33,674,000
2020		33,593,000
2021		28,287,000
2022		21,565,000
2023		17,419,000
	$	134,538,000

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Notes payable

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Notes payable

9.    Notes payable:

	December 31,
	2018		2017
Current portion	$	2,239,637	$	989,637
Non-current portion		67,621,470		60,061,105
Total loans and borrowings	$	69,861,107	$	61,050,742

The Bank of Nova Scotia (“Scotia Facility”)

On November 24, 2015, the Company entered into a credit facility with the Bank of Nova Scotia. The facility, which had a maturity date of April 30, 2018, provided financing of up to $55,000,000, after amendment on June 15, 2016.

On June 26, 2017, the Company amended the Scotia Facility to provide financing of up to $100,000,000 via a revolving and term facility. The amended facility has a maturity date of June 26, 2020. In conjunction with this amendment, the Company incurred fees of $445,598 which were capitalized. As at December 31, 2018, the Company had drawn $70,250,000 on the amended facility (2017 – $61,700,000). Since there was no reduction in borrowing capacity as a result of this amendment, no existing deferred or new financing fees were expensed upon this modification. The Facility is repayable in full at maturity, with scheduled principal repayments on a quarterly basis beginning September 30, 2017 based on the initial principal issued under the term facility. The facility bears interest at a floating rate based on the US prime rate, LIBOR or bankers’ acceptance rates plus an applicable margin. At December 31, 2018, interest on the facility is calculated at LIBOR plus 2.50% on the revolving portion and term portion of the facility. The Facility is secured by the assets of the Company. As at December 31, 2018 the Company is required to maintain the following financial covenants in respect of the Facility:

Financial Covenant	Required Ratio
Total funded debt ratio		2.50:1.00
Fixed charge coverage ratio		1.15:1.00

The Company is in compliance with all covenants at December 31, 2018.

The consolidated minimum loan payments (principal) for all loan agreements in the future are as follows:

	Minimum Principal
At December 31, 2018
2019	$	2,500,000
2020		67,750,000
	$	70,250,000

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Share capital

12 Months Ended

Dec. 31, 2018

Text Block [Abstract]

Share capital

10.  Share capital:

(a)   Authorized:

100,000,000 common shares without par value.

(b)   Issued and outstanding – common shares:

Other than in connection with shares issued in respect of the Company’s share unit and share option plans and in connection with the Company’s normal course issuer bid (note 16(e)), there were no share transactions in the years ended December 31, 2018 and 2017.

(c)   Stock option plan:

Under the Company’s Stock Option Plan, the Company may grant options to its directors, officers, consultants and eligible employees. The plan provides for the granting of stock options at the fair market value of the Company’s stock at the date of grant, and the term of options range from two to ten years. The Board of Directors may, in its sole discretion, determine the time during which options shall vest and the method of vesting. All options under the Plan will be subject to vesting provisions determined by the Board of Directors, over a period of not less than 18 months, in equal portions on a quarterly basis. Options granted to consultants providing investor relations activities will vest at the end of 12 months or longer from the date of issuance. As of December 31, 2018, the Company is authorized to grant 2,258,097 awards under its stock options plan, but has chosen not to issue further awards under its stock option plan. A summary of the status of the plan as of December 31, 2018 and 2017 is as follows (options are granted in CAD and USD amounts are calculated using prevailing exchange rates):

	Number of options			Weighted average exercise price
				CAD		USD
Outstanding, January 1, 2017		1,603,124		$	0.63	$	0.47
Issued		—			—		—
Exercised		(247,500	)		0.32		0.25
Forfeited		(10,937	)		0.60		0.48
Expired		—			—		—
Outstanding, December 31, 2017		1,344,687			0.69		0.55
Issued		—			—		—
Exercised		—			—		—
Forfeited		—			—		—
Expired		—			—		—
Outstanding, December 31, 2018		1,344,687			0.69		0.50

All options are vested as of December 31, 2018 and 2017.

For those options that vested in 2017, the intrinsic value of the options that vested was $1,198,495 and the fair value of the options that vested was $147,730.

The following table summarizes information about the stock options outstanding as at:

December 31, 2018:

Exercise price

Options outstanding

Options exercisable

$CAD

$USD

Number of options

Weighted average remaining contractual life (years)

Weighted average exercise price ($CAD)

Weighted average exercise price ($USD)

Number of options

Weighted average exercise price ($CAD)

Weighted average exercise price ($USD)

0.44 – 0.51

1,344,687

5.05

0.69

0.50

1,344,687

0.69

0.50

All options are vested as of December 31, 2018 and 2017.

December 31, 2017:

Exercise price

Options outstanding

Options exercisable

$CAD

$USD

Number of options

Weighted average remaining contractual life (years)

Weighted average exercise price ($CAD)

Weighted average exercise price ($USD)

Number of options

Weighted average exercise price ($CAD)

Weighted average exercise price ($USD)

0.60 – 0.70

0.48 – 0.56

1,344,687

6.05

0.69

0.55

1,272,812

0.68

0.54

As of December 31, 2017, 1,272,812 options are vested.

For the year ended December 31, 2018, the Company recognized $468 (2017 – $22,179), in compensation expense as a result of stock options awarded and vested. Compensation expense is recorded in the consolidated statement of operations and comprehensive income and is allocated to product sales expenses, corporate expenses and anesthesia expenses on the same basis as the allocations of cash compensation.

(d)   Share unit plan:

In June 2017, the shareholders of the Company approved a Share Unit Plan. Employees, directors and eligible consultants of the Company and its designated subsidiaries are eligible to participate in the Share Unit Plan. In accordance with the terms of the plan, the Company will approve those employees, directors and eligible consultants who are entitled to receive share units and the number of share units to be awarded to each participant. Each share unit awarded conditionally entitles the participant to receive one common share of the Company upon attainment of the share unit vesting criteria. The vesting of share units is conditional upon the expiry of time-based vesting conditions or performance-based vesting conditions or a combination of the two. Once the share units vest, the participant is entitled to receive the equivalent number of underlying common shares; the Company issues new shares in satisfying its obligations under the plan. As at December 31, 2018, the Company is authorized to grant 1,057,534 awards under its share unit plan.

A summary of the status of the plan as of December 31, 2018 and 2017 is as follows:

	Time based share units			Performance based share units
Outstanding, January 1, 2017		1,068,000			2,350,000
Issued		324,000			—
Exercised		(302,000	)		(1,000,000	)
Forfeited		(53,500	)		—
Expired		—			—
Outstanding, December 31, 2017		1,036,500			1,350,000
Vested		—			—
Expected to vest		1,036,500			1,100,000
Outstanding, January 1, 2018		1,036,500			1,350,000
Issued		452,125			150,000
Exercised		(364,000	)		—
Forfeited		(79,375	)		—
Expired		—			—
Outstanding, December 31, 2018		1,045,250			1,500,000
Vested		—			—
Expected to vest		1,045,250			1,100,000

	Time based share units		Performance based share units
Outstanding, January 1, 2017		1,036,500		1,350,000
Weighted average contractual life (years)		2.96		8.86
Outstanding, December 31, 2017		1,045,250		1,500,000
Weighted average contractual life (years)		2.74		7.99

During the year ended December 31, 2018, the Company granted 452,125 time based share units and 150,000 performance based share units. The weighted average fair value for the time based units at the date of grant was $3.45 (CAD$4.71) per unit and the weighted average fair value per unit for the performance based share units granted in the in the period was $2.78 (CAD$3.79) per unit. The fair value per unit was based on the market value of the underlying shares at the date of issuance.

During the year ended December 31, 2018, the Company issued 364,000 shares in respect of the 364,000 time-based share units which vested during the year.

During the year ended December 31, 2017, the Company issued 324,000 share units (“Time based share units”). The weighted average fair value per unit was $3.31 (CAD$4.16) based on the market value of the underlying shares at the date of issuance.

During the year ended December 31, 2017, 1,000,000 of those Performance based share units which vest upon the Company meeting certain market-based performance targets vested. Upon vesting, the Company issued 1,000,000 common shares. The Company also issued net shares of 292,549 in respect of 302,000 time-based share units which vested during the year.

During the year ended December 31, 2018, the Company recognized $2,800,280 (2017 – $4,013,891), in compensation expense in relation to the granting and vesting of share units.

(e)   Normal Course Issuer Bid:

On November 6, 2017, the Board of Directors of the Company approved a normal course issuer bid to purchase outstanding shares of the Company. On November 8, 2018, the Company’s normal course issuer bid was renewed. Under the renewed bid, the Company may purchase up to 7,044,410 shares pursuant to the bid, representing no more than 10.0% of the Company’s shares outstanding on October 31, 2018. All purchases of shares under the bid are made pursuant to an Automated Share Purchase Plan. Subject to any block purchases made in accordance with the rules of the TSX, the bid is subject to a daily repurchase maximum of 46,958 shares. Shares are purchased at the market price of the shares at the time of purchase and are purchased on behalf of the Company by a registered investment dealer through the facilities of the TSX or alternative Canadian and US marketplaces.

During 2018, the Company repurchased 1,264,900 of its shares for a total cost, including transaction fees, of $3,784,733 (CAD$4,945,155). As at December 31, 2018, 1,254,500 of these shares have been cancelled with the remaining 10,400 shares cancelled on January 4, 2019.

As of December 31, 2017, the Company repurchased 1,339,800 of its shares for a total cost, including transaction fees, of $2,872,713 (CAD$3,669,120). As at December 31, 2017, 1,267,400 of these shares had been cancelled with the remaining 72,400 shares cancelled on January 5, 2018.

(f)   Earnings per share:

The calculation of basic earnings per share for the years ended December 31, 2018 and 2017 is as follows:

	2018						2017
	Net earnings		Weighted average number of common shares outstanding		Per share amount		Net earnings		Weighted average number of common shares outstanding		Per share amount
Net earnings attributable to shareholders:
Earnings per common share:
Basic	$	4,679,921		72,582,733	$	0.064	$	12,078,853		73,712,670	$	0.164
Share options				1,122,708						925,286
Share units				379,731						418,047
Diluted	$	4,679,921		74,085,172	$	0.063	$	12,078,853		75,056,003	$	0.161

For the year ended December 31, 2018, 221,979 options (2017 – 539,624) and 2,095,260 share units (2017 – 2,094,363) were excluded from the diluted weighted average number of common shares calculation.

The average market value of the Company’s shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for the period during which the options were outstanding. The treasury method is used to determine the calculation of dilutive shares.

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Income taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income taxes

11.    Income taxes:

(a)   Income tax expense is comprised of the following:

	2018			2017
Current tax expense	$	5,119,062		$	4,403,358
Deferred tax expense (recovery):		(2,407,176	)		2,755,707
Total tax expense (recovery)	$	2,711,886		$	7,159,065

The reconciliation of income tax computed at statutory tax rates to income tax expense, using a 27% (2017 – 23%) statutory rate, is:

	2018			2017
Net income before tax – Canada	$	5,957,089		$	10,239,231
Net income before tax – United States		9,770,714			16,094,904
Net income before tax – All jurisdictions	$	15,727,803		$	26,334,135
Tax expense at statutory income tax rates	$	4,259,890		$	6,060,003
Permanent differences		503,964			(513,050	)
Income attributable to non-controlling interest		(2,245,809	)		(1,571,060	)
Foreign income taxed at different rates		(26,042	)		1,458,302
Impact of change in tax rates		216,295			1,767,124
Other		3,588			(42,254	)
Total tax expense (recovery)	$	2,711,886		$	7,159,065

In 2018, the Canadian statutory tax rate increased from 26% to 27% due to a 1% increase in the provincial rate. The Company’s statutory tax rate in Canada in 2017 was lower, at 23%, as a result of the IBA patent program in Canada, which was cancelled at the end of 2017.

On December 22, 2017, in the United States the 2017 Tax Cuts and Jobs Act (the 2017 Act) was enacted into law. The 2017 Act contains several key tax provisions, including a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. At December 31, 2017, the Company’s deferred tax balances for its U.S. subsidiaries have been re-measured based on the newly enacted tax rates at which the deferred tax assets and liabilities are expected to reverse in future fiscal years. As a result of tax legislation enacted in the U.S. at the end of 2017, the federal corporate tax rate applicable to years after 2017 was substantially reduced.

(b)   Deferred tax assets and liabilities:

The Company had the following deferred tax assets and liabilities resulting from temporary differences recognized for financial statement and income tax purposes.

	2018			2017
Deferred tax assets:
Property and equipment	$	356			3,501
Intangible assets		4,752,898			2,448,322
Finance related costs		375,182			472,428
Reserves		—			34,048
Share transaction costs		87,337			196,508
Stock-based compensation		534,926			410,448
Earn-out obligation		732,986			499,052
Deferred tax liabilities:
Property and equipment		(40,357	)		(3,396	)
Deferred consideration		(18,388	)		(44,255	)
Reserves		(55,568	)		(41,205	)
Unrealized foreign exchange		(20,698	)		—
Finance related costs		(68,938	)		(173,193	)
Net deferred tax asset	$	6,279,736		$	3,802,258

Deferred tax assets by jurisdiction	2018			2017
Canada:
Deferred tax asset	$	87,343		$	200,009
Deferred tax liability		(109,294	)		(173,194	)
Net deferred tax asset (liability)	$	(21,951	)	$	26,815
United States:
Deferred tax asset	$	6,396,340		$	3,864,298
Deferred tax liability		(94,654	)		(88,855	)
Net deferred tax asset (liability)	$	6,301,687		$	3,775,443

The realization of deferred income tax assets is dependent on the generation of sufficient taxable income during future periods in which the temporary differences are expected to revers. If it is more likely than not that all or a portion of deferred tax assets will not be realized, a valuation allowance is provided against such deferred tax assets. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income,tax-planning strategies, and results of recent operations.

As at December 31, 2018 and 2017, the Company had no valuation allowance against its deferred income tax assets. The Company currently does not have any unrecognized tax benefits or uncertain tax positions.

The Company currently files income tax returns in Canada and the US, the jurisdiction in which the Company believes that it is subject to tax. Management is not aware of any material income tax examination currently in progress by any taxing jurisdiction. Tax years ranging from 2016 to 2018 remain subject to Canadian income tax examinations. Tax years ranging from 2015 to 2018 remain subject to U.S. income tax examinations.

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Net finance expense

12 Months Ended

Dec. 31, 2018

Text Block [Abstract]

Net finance expense

12.    Net finance expense

Recognized in earnings in the years ended December 31:

	2018		2017
Finance income:
Foreign exchange gain	$	—	$	—
Net change in fair value of financial liabilities at fair value through earnings (note 13)		—		(11,825,256	)
Total finance income	$	—	$	(11,825,256	)
Finance expense:
Interest and accretion expense on borrowings	$	3,168,762	$	3,322,321
Accretion expense on earn-out obligation and deferred consideration		166,575		600,602
Amortization of deferred financing fees		260,363		204,057
Net change in fair value of financial liabilities at fair value through earnings		971,627		—
Foreign exchange loss		—		88,084
Extinguishment of notes payable and bank indebtedness		—		2,044,867
Other		—		50,475
Total finance expense	$	4,567,327	$	6,310,406
Net finance (income) expense	$	4,567,327	$	(5,514,850	)

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Financial instruments

12 Months Ended

Dec. 31, 2018

Investments, All Other Investments [Abstract]

Financial instruments

13.    Financial instruments:

The Company’s financial instruments consist of cash and cash equivalents, trade and other receivables, trade and other payables, employee benefit obligations, short term advances, loans, notes payable and bank indebtedness, deferred consideration and the Company’s earn-out obligation. The fair values of these financial instruments, except the notes payable balances, the deferred consideration and the earn-out obligation, approximate carrying value because of their short-term nature. The earn-out obligation is recorded at fair value. The fair value of the notes payable and bank indebtedness, which is comprised of the Scotia Facility, approximates carrying value as it is a floating rate instrument. The Company’s deferred consideration was initially measured at fair value and is being accreted to its face value over a period of four years from the acquisition date. The amounts payable as deferred compensation are specified in the acquisition agreement for Austin Gastroenterology Anesthesia Associates LLC, which was acquired in 2016.

An established fair value hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is available and significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value:

• Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Liabilities	December 31, 2018		Level 1		Level 2		Level 3
Earn-out obligation	$	2,920,583	$	—	$	—	$	2,920,583
Total	$	2,920,583	$	—	$	—	$	2,920,583
Liabilities	December 31, 2017		Level 1		Level 2		Level 3
Earn-out obligation	$	1,875,427	$	—	$	—	$	1,875,427
Total	$	1,875,427	$	—	$	—	$	1,875,427

The Company’s earn-out obligation is measured at fair value on a recurring basis using significant unobservable inputs (Level 3). The earn-out obligation relates to the Company’s Gastroenterology Anesthesia Associates LLC acquisition, which was acquired in 2014. As part of the business combination, the Company is required to pay consideration contingent on the post-acquisition earnings of the acquired asset. The Company measures the fair value of the earn-out obligation based on its best estimate of the cash outflows payable in respect of the earn-out obligation. This valuation technique includes inputs relating to estimated cash outflows under the arrangement and the use of a discount rate appropriate to the Company. The Company evaluates the inputs into the valuation technique at each reporting period. During the year ended December 31, 2018, the Company revised its assumptions underlying the discount rate used in the calculation of the fair value of the earn-out obligation to account for changes in the underlying credit risk of the Company as well as the estimates underlying the amount of payment. The upward adjustment of the discount rate from 3.59% at December 31, 2017 to 4.69% at December 31, 2018 and the amendment of cash outflow estimates underlying the earn-out resulted in an increase of $971,625 to the fair value of the earn-out obligation. The impact of this adjustment was recorded through finance expense in the period.

The fair value measurements are sensitive to the discount rate used in calculating the fair values as well as the probability assessments used. A 1% increase in the discount rate would reduce the fair value of the earn-out obligation by $13,870. During the year ended December 31, 2018, the Company recorded accretion expense of $73,531 (2017 – $473,738), in relation to this liability, reflecting the change in fair value of the liabilities that is attributable to credit risk.

Reconciliation of level 3 fair values:
	Earn-out obligation
Balance as at January 1, 2018	$	1,875,427
Payment		—
Recorded in finance expense:
Accretion expense		73,529
Fair value adjustment		971,627
Balance as at December 31, 2018	$	2,920,583

The Company’s financial instruments are exposed to certain financial risks, including credit risk, and market risk.

(a)   Credit risk:

Credit risk is the risk of financial loss to the Company if counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s cash and cash equivalents, and trade receivables. The carrying amount of the financial assets represents the maximum credit exposure.

The Company limits its exposure to credit risk on cash and cash equivalents by placing these financial instruments with high-credit quality financial institutions and only investing in liquid, investment grade securities.

The Company has a number of individual customers and no one customer represents a concentration of credit risk.

No one customer accounts for more than 10% of the Company’s consolidated revenue. The Company establishes a provision for losses on accounts receivable if it is determined that all or part of the outstanding balance is uncollectable. Collectability is reviewed regularly and an allowance is established or adjusted, as necessary, using a combination of the specific identification method, historic collection patterns and existing economic conditions. Estimates of allowances are subject to change as they are impacted by the nature of healthcare collections, which may involve delays and the current uncertainty in the economy.

(b)   Market risk:

Market risk is the risk that changes in market prices, such as and interest rates, will affect the Company’s income or the value of the financial instruments held.

(ii)   Interest rate risk:

As at December 31, 2018, the Company’s only interest bearing liability is its Scotia Facility. With respect to the Company’s Scotia Facility, with all other variables held constant, a 10% point increase in the interest rate would have reduced net income by approximately $295,000 (2017 – $164,000) for the year ended December 31, 2018. There would be an equal and opposite impact on net income with a 10% point decrease.

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Commitments and contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

14.   Commitments and contingencies:

(a) The following are the minimum payments required for the lease of premises:

Less than one year	$	364,068
One to three years		229,764
Four to five years		—
Thereafter		—
Total	$	593,832

Rent expense for the year ended December 31, 2018 was $227,743 (2017 – $236,455).

(b) The Company is a party to a variety of agreements in the ordinary course of business under which it may be obligated to indemnify third parties with respect to certain matters. These obligations include, but are not limited to contracts entered into with physicians where the Company agrees, under certain circumstances, to indemnify a third party, against losses arising from matters including but not limited to medical malpractice and product liability. The impact of any such future claims, if made, on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to final outcome of these potential claims.

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Related party transactions

12 Months Ended

Dec. 31, 2018

Related Party Transactions [Abstract]

Related party transactions

15.   Related party transactions:

Balances and transactions between the Company and its wholly owned and controlled subsidiaries have been eliminated on consolidation and are not disclosed in this note. Details of the transactions between the Company and other related parties are disclosed below:

(a) Related party transactions:

During the year ended December 31, 2018, the Company made product sales totaling $29,685 (2017 – $39,485) to one company owned or controlled by one of the Company’s Directors. The transaction terms with related parties may not be on the same price as those that would result from transactions among non-related parties. There were no amounts owing by or to this related party as of December 31, 2018 (2017 – $nil).

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Segmented information

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Segmented information

16.   Segmented information:

The Company operates in two industry segments: the sale of medical products and the provision of anesthesia services. The revenues relating to geographic segments based on customer location, in United States dollars, for the years ended December 31, 2018 and 2017 are as follows:

	2018		2017
Revenue:
Canada and other	$	271,803	$	238,342
United States		112,477,577		94,767,803
Total	$	112,749,380	$	95,006,145

The Company’s revenues are disaggregated below into categories which differ in terms of the economic factors which impact the amount, timing and uncertainty of revenue and cash flows.

	2018		2017
Revenue:
Commercial Insurers	$	86,992,218	$	72,264,107
Federal Insurers		14,246,626		10,568,096
Physicians		10,959,215		11,501,005
Other		551,321		672,937
Total	$	112,749,380	$	95,006,145

The Company’s property and equipment, intangibles, other assets and total assets are located in the following geographic regions as at December 31, 2018 and 2017:

	2018		2017
Property and equipment:
Canada	$	276,621	$	347,676
United States		26,670		16,690
Total	$	303,291	$	364,366
Intangible assets:
Canada	$	32,735	$	35,181
United States		179,351,528		170,092,234
Total	$	179,384,263	$	170,127,415
Total assets:
Canada	$	9,293,796	$	4,595,719
United States		209,694,200		199,359,786
Total	$	218,987,996	$	203,955,505

The financial measures reviewed by the Company’s Chief Operating Decision Maker are presented below for the years ended December 31, 2018 and 2017. The Company does not allocate expenses related to corporate activities. These expenses are presented within “Other” to allow for reconciliation to reported measures.

	2018
	Anesthesia services		Product sales		Other			Total
Revenue	$	101,790,165	$	10,959,215	$	—		$	112,749,380
Operating costs		81,079,150		5,022,737		6,352,363			92,454,250
Operating income (loss)	$	20,711,015	$	5,936,478	$	(6,352,363	)	$	20,295,130

	2017
	Anesthesia services		Product sales		Other			Total
Revenue	$	83,505,140	$	11,501,005	$	—		$	95,006,145
Operating costs		62,135,447		4,997,550		7,053,863			74,186,860
Operating income (loss)	$	21,369,693	$	6,503,455	$	(7,053,863	)	$	20,819,285

Additionally, the company incurs the following in each of its operating segments:

	2018
	Anesthesia services		Product sales		Other		Total
Finance income	$	—	$	—	$	—	$	—
Finance expense		1,138,200		—		3,429,127		4,567,327
Depreciation and amortization expense		31,394,245		68,509		23,301		31,486,055

	2017
	Anesthesia services			Product sales		Other		Total
Finance income	$	(11,825,256	)	$	—	$	—	$	(11,825,256	)
Finance expense		600,602			—		5,709,804		6,310,406
Depreciation and amortization expense		23,762,012			56,907		15,481		23,834,400

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Subsequent event

12 Months Ended

Dec. 31, 2018

Subsequent Events [Abstract]

Subsequent event

17.   Subsequent event:

On January 1, 2019, a subsidiary of the Company entered into a membership interest purchase agreement to acquire a 100% interest in Anesthesia Care Associates, LLC (”ACA”), a gastroenterology anesthesia services provider in Indiana. The purchase consideration, paid via cash, for the acquisition of the Company’s 100% interest was $5,239,003 plus deferred acquisition costs of $116,025. The allocated cost of the exclusive professional service agreement which was acquired as part of this acquisition was $5,355,028.

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Significant accounting policies (Policies)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Basis of consolidation

(a)    Basis of consolidation:

These consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities controlled by the Company through voting control and for anesthesia business, control over the assets and business operations of the subsidiary through operating agreements. Control exists when the Company has the continuing power to govern the financial and operating polices of the investee. Subsidiaries are included in the consolidated financial results of the Company from the effective date of acquisition up to the effective date of disposition or loss of control. Minority interests, if any, are valued at fair value at inception. All significant intercompany transactions and balances have been eliminated in consolidation.

Cash equivalents

(b)    Cash equivalents

The Company considers all highly liquid investments with an original maturity of 90 days or less, when acquired, to be cash equivalents.

Foreign currency

(c)    Foreign currency:

Transactions in foreign currencies are translated to the respective functional currencies of the subsidiaries of the Company at exchange rates at the dates of the transactions.

Period end balances of monetary assets and liabilities in foreign currency are translated to the respective functional currencies using period end foreign currency rates. Foreign currency gains and losses arising from settlement of foreign currency transactions are recognized in earnings. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date on which the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Inventories

(d)    Inventories:

Inventories are measured at the lower of cost, determined using the first-in first-out method, and net realizable value. Inventory costs include the purchase price and other costs directly related to the acquisition of inventory and costs related to bringing the inventories to their present location and condition.

Net realizable value is the estimated selling price in the Company’s ordinary course of business, less the estimated costs of completion and selling expenses. All inventory held is finished goods inventory.

Property and equipment, net

(e)    Property and equipment, net:

Property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

The estimated useful lives and the methods of depreciation for the current and comparative periods are as follows:

Asset	Basis	Rate
Computer equipment	Declining balance	30%
Computer software	Declining balance	100%
Furniture and equipment	Declining balance	20%
Leasehold improvements	Straight-line	Shorter of initial lease term or useful life
Injection mold	Straight-line	5 years

These depreciation methods most closely reflect the expected pattern of consumption of the future economic benefits embodied in the asset.

Estimates for depreciation methods, useful lives and residual values are reviewed at each reporting period-end and adjusted if appropriate.

Intangible assets

(f)    Intangible assets:

Intangible assets, consisting of acquired exclusive professional service agreements to provide anesthesia services and the cost of acquiring patents, are recorded at historical cost. For patents, costs also include legal costs involved in expanding the countries in which the patents are recognized to the extent expected cash flows from those countries exceed these costs over the amortization period and costs related to new patents. The amortization term for professional services agreements are based on the contractual terms of the agreements. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives and are measured at cost less accumulated amortization and accumulated impairment losses. Intangible assets with finite lives are amortized over the following periods:

Asset	Basis		Rate
Intellectual property rights to the CRH O’Regan System		Straight-line	15 years
Intellectual property new technology		Straight-line	20 years
Exclusive professional services agreements		Straight-line	4.5 to 15 years

Impairment

(g)    Impairment:

Non-financial assets:

The carrying amounts of the Company’s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there are any events or changes in circumstances indicated that the carrying value may not be recoverable. Example factors that could trigger impairment reviews include significant underperformance relative to historical or projected future operating results, significant changes in the use of the acquired assets or strategy for the overall business and significant negative economic trends. Depending on the specific asset and circumstances, assets are assessed for impairment as an individual asset, as part of an asset group or at the reporting unit (RU”) level. A reporting unit is an operating segment or one level below an operating segment if certain conditions are met. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of cash inflows from other assets or groups of assets.

If indicators of impairment exist, an asset or asset group is impaired if its carrying amount exceeds its fair value, being the projected future discounted cash flows that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset or asset group. Projected cash flows are based upon historical results adjusted to reflect management’s best estimate of future market and operating conditions which may differ from actual cash flows. Significant assumptions included in projected cash flows include anesthesia revenue growth rates, discount rates, and operating cost growth rates.

Income taxes

(h)    Income taxes:

The Company is subject to income taxes in Canada and the United States. Judgment is required in determining the provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.

The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, it recognizes deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. The Company recognizes the deferred income tax effects of a change in tax rates in the period of the enactment. The Company records a valuation allowance to reduce its deferred tax assets to the net amount that management believes is more likely than not to be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than fifty percent likely of being realized. The Company records interest related to unrecognized tax benefits in interest expense and penalties in operating expenses.

Income tax expense is comprised of current and deferred tax.

Share-based compensation

(i)    Share-based compensation:

The Company records share-based compensation related to equity classified stock options and share units granted using the fair value based method estimated using either the Black-Scholes model or Binomial method. The vesting components of graded vesting employee awards, with only a service vesting condition, are accounted for as separate share-based arrangements. Each vesting installment is measured separately and expensed over the related installment’s vesting period. Compensation cost is measured at fair value at the date of grant and expensed as employee benefits over the period in which employees unconditionally become entitled to the award. Forfeitures are estimated in recognizing share-based compensation, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting date.

Prior to January 1, 2018, each vesting tranche of equity classified non-employee awards were remeasured each reporting period at the award’s fair value each reporting period with a final measurement date of each vesting date of each vesting tranche. Post vesting, if continued services are not required, the award would become subject to other standards. Starting January 1, 2018, the accounting standards for non-employee awards were amended by ASU 2018-07 (note 3 p(v)).

Share capital

(j)    Share capital:

Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares, stock options and share options are recognized as a deduction from equity, net of any tax effects.

Earnings per share

(k)    Earnings per share:

The Company presents basic and diluted earnings per share (EPS) data for its common shares. Basic EPS is calculated by dividing the net income or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period, adjusted for own shares held, if applicable. Diluted EPS is determined by adjusting the income or loss attributable to common shareholders and the weighted average number of common shares outstanding, adjusted for own shares held if applicable, for the effects of all dilutive potential common shares. Diluted EPS for year-to-date (including annual) periods is based on the weighted average of the incremental shares included in each interim period for the year-to-date period.

Segment reporting

(l)    Segment reporting:

The Company’s operating segments consist of the sale of medical products and the provision of anesthesia services.

Finance costs

(m)  Finance costs:

Finance cost is primarily comprised of interest on the Company’s notes payable and bank indebtedness and also includes the amortization of costs incurred to obtain loan financing and any fees in respect of arranging loan financing. Deferred finance costs are amortized using the effective interest method over the term of the related loan financing. Deferred finance costs are presented as a reduction to the related liability.

Asset acquisitions

(n)   Asset acquisitions:

Asset acquisitions are accounted for using the cost accumulation and allocation method. The acquisition cost includes directly related acquisition costs. The cost of the acquisition is allocated to the net assets acquired on a relative fair value basis.

Contingent consideration, where the arrangement is not a derivative, is recognized when it is probable and estimable. After the initial acquisition accounting, changes in contingent and deferred consideration are recorded within finance (income) expense.

The Company’s policy is to recognize any non-controlling interest on consolidation either at fair value of the non-controlling interest or at the fair value of the proportionate share of the net assets acquired.

Revenue recognition

(o)   Revenue recognition:

Our anesthesia service revenues are derived from anesthesia procedures performed under our professional services agreements. The fees for such services are billed either to a third party payor, including Medicare or Medicaid or to the patient. We recognize anesthesia service revenues, net of contractual adjustments and implicit price concessions, which we estimate based on the historical trend of our cash collections and contractual adjustments.

Anesthesia services procedures for each patient qualify as a distinct service obligation, as they are provided simultaneously with other readily available resources during the service procedure. The transaction price is variable and not constrained. Variable consideration relates to contractual allowances, credit provisions and other discounts. The standard requires management to estimate the transaction price, including any implicit concessions from the credit approval process. The Company adopted a portfolio approach to estimate variable consideration transaction price by payor type (patient, government and/or insurer) and the specifics of the services being provided. These portfolios share characteristics such that the results of applying a portfolio approach are not materially different than if the standard was applied to individual patient contracts. Revenue is recognized upon completion of the services to the customer (patient) for practical reasons as the service period is performed over a short time period.

The Company recognizes revenue from product sales at the time the product is shipped, which is when title passes to the customer, and when all significant contractual obligations have been satisfied, collection is probable and the amount of revenue can be estimated reliably.

Product sales contracts generally contain a single distinct performance obligation, but multiple performance obligations may exist when multiple product types are ordered by a physician in a contract. The transaction price for product sales is fixed and no variable consideration exists. Contract consideration is allocated to each distinct performance obligation in the contract based upon available stand-alone selling prices obtained from historical sales transactions for each product. The Company recognizes revenue from product sales at the point in time when control of the goods passes to the customer (physician) when the product is shipped, which is when title passes to the customer and an obligation to pay for the goods arises. Shipping services performed after control has passed to the customer, if any, is a separate performance obligation, but was determined to be nominal.

Adoption of new accounting standards

(p)   Adoption of new accounting standards:

i)    Revenue from Contracts with Customers

This standard establishes a comprehensive framework for determining whether, how much and when revenue is recognized. The Company adopted the standard effective January 1, 2018 applying the full retrospective method, resulting with the standard being applied to the prior reporting period with a cumulative effect of adjustment, if any, recognized as at January 1, 2017.

The Company has elected to make use of the following practical expedients:

• incremental costs of obtaining a contract are recognized as an expense when incurred because the amortization period of the asset that the Company otherwise would have recognized is one year or less; and

• the promised amount of consideration has not been adjusted for the effects of a significant financing component because, at contract inception, the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

The adoption of this standard did not have a material impact on the results of operations or cash flows and there was no adjustment to retained earnings as at January 1, 2017. However, the standard did require the Company’s provision for net uncollectable accounts, previously recognized as bad debt expense in anesthesia services expenses, to be recognized as a reduction to anesthesia service revenues. There was no impact to the Company’s other operating segments. For the year ended December 31, 2017, the adoption of the standard resulted in a reduction of anesthesia services revenue and a similar reduction of anesthesia services expenses of $5,235,934.

ii)    Financial Instruments – Overall

In January 2016, FASB issued ASU No. 2016-01, “Financial Instruments – Overall,” which requires equity investments, not subject to consolidation or equity accounting, to be measured at fair value at fair value and fair value through profit and loss subsequently, unless a practical exception applies. This update did not change the classification and measurement of investments in debt securities and loans. This standard was effective January 1, 2018 and it had no impact on the Company’s balance sheet, results of operations or cash flows.

iii)    Employee Share-based Payments

In March 2016, FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting”, which requires companies to recognize the income tax effects of awards in the income statement when awards vest or are settled. The Company adopted the standard effective January 1, 2017, with no cumulative transition impact. The Company recognized a tax recovery of $952,495 related to awards that were either exercised or vested during the year ended December 31, 2017.

iv)    Clarifying the Definition of a Business

In January 2017, FASB issued ASU No. 2017-01, “Business Combinations (Topic 805) – Clarifying the Definition of a Business”, which changes the definition of a business to assist entities with evaluating when a set of transferred assets is a Business and business acquisition or an asset acquisition. This guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. This guidance is effective for annual periods beginning after December 15, 2017 and can be early adopted in certain situations and is applied prospectively to acquisitions after the effective date of adoption only. The Company early adopted this standard and concluded that all previously reported business combinations in 2017 would be asset acquisitions under this new guidance. The change in classification to asset acquisitions resulted in an increase to the cost allocation to PSA intangible assets due to the capitalization of acquisition costs of $223,581. As a result, anesthesia services expenses reduced by $194,326 for the year ended December 31, 2017 and the net allocation to PSA intangible asset, minority interest and retained earnings increased by $381,794, $173,194 and $14,274, respectively, as at December 31, 2017.

v)    Nonemployee Share-Based Payment Accounting

In June 2018, FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718) – Improvements to Non-Employee Share-based Payment Accounting”, which is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. This ASU substantially aligns non-employee award accounting with employee awards accounting under ASC 718, with the exception of attribution of compensation costs and certain inputs used to value non-employee awards. Vested non-employee awards will continued to be accounted under ASC 718 unless they are modified after the non-employee stops providing goods and services. The ASU is applied to unsettled liability awards and equity classified awards for which a measurement date has not been established only at the effective adoption date using the modified retrospective method. This standard is effective for fiscal years beginning after December 15, 2018, but may be early adopted. The Company adopted this ASU on January 1, 2018 and it had no impact on the Company’s balance sheet, results of operations or cash flows.

New standards and interpretations not yet applied

(q)   New standards and interpretations not yet applied:

(i)    ASU 2016-02 Leases

In February 2016, FASB issued ASU No. 2016-02 “Leases”, and subsequently ASU No. 2017-13, establishes principles for the recognition, measurement, presentation and disclosure of leases. The standard requires lessees to recognize most leases on the balance sheet and certain limited changes to lessor accounting. The standard is effective for annual periods beginning after December 15, 2018, with early adoption permitted. The standard requires a modified retrospective application to all leases outstanding at, or entered into after the date of initial application, with options to use various transitional relief. The Company plans to adopt the standard effective January 1, 2019 and expects nearly all operating classified leases to also be classified as operating leases under this new standard with a right-of-use asset and a corresponding obligation recognized on the balance sheet at the adoption date. The lease obligation is measured at amortized cost using the effective interest method. The Company will apply the exemption to treat short-term leases as executory contracts. The Company has evaluated the impact of this standard and determined that the impact from this ASU on its consolidated balance sheet, results of operations and cash flows is not material at January 1, 2019.

(ii)    Credit Losses

In June 2016, FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326)”, which requires companies to measure credit losses on financial instruments measured at amortized cost applying an “expected credit loss” model based upon past events, current conditions and reasonable and supportable forecasts that affect collectability. Previously, companies applied an “incurred loss” methodology for recognizing credit losses. This standard is effective for fiscal years beginning after December 15, 2019, but may be early adopted by the Company on January 1, 2019.

The Company is in the process of evaluating the impact of this standard on its balance sheet, results of operations and cash flows.

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Significant accounting policies (Tables)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Estimated Useful Lives and the Methods of Depreciation for Current and Comparative Periods

The estimated useful lives and the methods of depreciation for the current and comparative periods are as follows:

Asset	Basis	Rate
Computer equipment	Declining balance	30%
Computer software	Declining balance	100%
Furniture and equipment	Declining balance	20%
Leasehold improvements	Straight-line	Shorter of initial lease term or useful life
Injection mold	Straight-line	5 years

Intangible Assets Finite Lives Amortized Over Period

 Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives and are measured at cost less accumulated amortization and accumulated impairment losses. Intangible assets with finite lives are amortized over the following periods:

Asset	Basis		Rate
Intellectual property rights to the CRH O’Regan System		Straight-line	15 years
Intellectual property new technology		Straight-line	20 years
Exclusive professional services agreements		Straight-line	4.5 to 15 years

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Asset acquisitions (Tables)

12 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Summary of Asset Acquisitions

During the year ended December 31, 2018, the Company completed five asset acquisitions. These asset acquisitions have been included in the anesthesia segment of the Company and represents the following:

Acquired Operation	Date Acquired	Consideration
Shreveport Sedation Associates LLC (“SSA”)	March 2018	$	9,495,184
Western Ohio Sedation Associates LLC (“WOSA”)	May 2018	$	6,483,698
Lake Washington Anesthesia LLC (“LWA”)	July 2018	$	5,041,939
Lake Erie Sedation Associates LLC (“LESA”)	September 2018	$	4,233,115
Tennessee Valley Anesthesia Associates LLC (“TVAA”)	December 2018	$	2,255,875

During the year ended December 31, 2017, the Company completed six asset acquisitions. All asset acquisitions completed during the period have been included in the anesthesia segment of the Company and include the following:

Acquired Operation	Date Acquired	Consideration
DDAB, LLC (“DDAB”)	February 2017	$	5,278,940
Osceola Gastroenterology Anesthesia Associates, LLC (“OGAA”)	March 2017	$	3,452,247
West Florida Anesthesia Associates, LLC (“WFAA”)	August 2017	$	5,904,980
Central Colorado Anesthesia Associates, LLC (“CCAA”)	September 2017	$	7,909,243
Raleigh Sedation Associates, LLC & Blue Ridge Sedation Associates, PLLC (“RSA”)	September 2017	$	7,328,060
Alamo Sedation Associates, LLC (“ASA”)	September 2017	$	3,503,379

Summary of Fair Value of Consideration Transferred and Allocated Costs of Assets and Liabilities Acquired at Acquisition Date

The following table summarizes the fair value of the consideration transferred and the allocated costs of the assets and liabilities acquired at the acquisition date.

	SSA			WOSA			LWA			LESA			TVAA			Total
Cash	$	9,404,148		$	6,409,000		$	5,000,000		$	4,180,000		$	2,200,000		$	27,193,148
Acquisition Costs		91,036			74,698			41,939			53,115			55,875			316,663
Purchase consideration	$	9,495,184		$	6,483,698		$	5,041,939		$	4,233,115		$	2,255,875		$	27,509,811
Non-controlling interest	$	—		$	6,229,435		$	4,844,217		$	—		$	2,167,409		$	13,241,061
	$	9,495,184		$	12,713,133		$	9,886,156		$	4,233,115		$	4,423,284		$	40,750,872
Assets and liabilities acquired:
Exclusive professional services agreements	$	9,391,036		$	12,713,133		$	9,886,155		$	4,233,115		$	4,423,284		$	40,646,723
Prepaid expenses and deposits		104,149			—			—			—						104,149
Pre-close accounts receivable		—			—			652,506			—						652,506
Pre-close accounts payable		—			—			(652,506	)		—						(652,506	)
Fair value of net identifiable assets and liabilities acquired	$	9,495,185		$	12,713,133		$	9,886,155		$	4,233,115		$	4,423,284		$	40,750,872
Exclusive professional services agreements – amortization term		7 years			10 years			7 years			10 years			7 years
CRH ownership interest		100	%		51	%		51	%		100	%		51	%

The following table summarizes the fair value of the consideration transferred and the allocated costs of the assets and liabilities acquired at the acquisition date.

	DDAB			OGAA			WFAA			CCAA			RSA			ASA			Total
Cash and acquisition costs	$	4,089,791		$	3,401,819		$	5,840,000		$	7,888,919		$	7,248,960		$	3,500,000		$	31,969,489
Acquisition costs		5,370			50,428			64,980			20,324			79,100			3,379			223,581
Contingent consideration		1,183,779			—			—			—			—			—			1,183,779
Purchase consideration	$	5,278,940		$	3,452,247		$	5,904,980		$	7,909,243		$	7,328,060		$	3,503,379			33,376,849
Non-controlling interest		5,071,922			2,301,498			4,831,346			7,599,077			7,040,685			—			26,844,528
	$	10,350,862		$	5,753,745		$	10,736,326		$	15,508,320		$	14,368,745		$	3,503,379		$	60,221,377
Assets and liabilities acquired:
Exclusive professional services agreements		10,350,862		$	5,753,745		$	10,724,338		$	15,508,320		$	14,368,745		$	3,503,379		$	60,209,389
Pre-close trade receivables		525,000			—			—			—			—			—			525,000
Pre-close trade payables		(525,000	)		—			—			—			—			—			(525,000	)
Prepaid expenses and deposits		—			—			11,988			—			—			—			11,988
Fair value of net identifiable assets and liabilities acquired	$	10,350,862		$	5,753,745		$	10,736,326		$	15,508,320		$	14,368,745		$	3,503,379		$	60,221,377
Exclusive professional services agreements – amortization term		4.5 years			5 years			15 years			7 years			5 years			7 years
CRH ownership interest		51	%		60	%		55	%		51	%		51	%		100	%

Summary of Asset Acquisition Loan Contribution

The terms of the loans are such that they will be repaid first, prior to any future distributions and are non-interest bearing.

	SSA		WOSA		LWA		LESA		TVAA		Total
CRH member loan	$	—	$	193,800	$	—	$	—	$	51,000	$	244,800
Non-controlling interest member loan	$	—	$	186,200	$	—	$	—	$	49,000	$	235,200
Amount outstanding at December 31, 2018	$	—	$	—	$	—	$	—	$	100,000	$	100,000

 The terms of the loans are such that they will be repaid first, prior to any future distributions and are non-interest bearing.

	DDAB		OGAA		WFAA		CCAA		RSA		ASA		Total
CRH member loan	$	—	$	90,000	$	82,500	$	178,500	$	204,000	$	—	$	555,000
Non-controlling interest member loan	$	—	$	60,000	$	67,500	$	171,500	$	196,000	$	—	$	495,000
Amount outstanding at December 31, 2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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Trade and other receivables (Tables)

12 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Summary of Trade Receivables and Other Receivable

	2018			2017
Trade receivables, gross	$	19,373,260		$	15,325,553
Other receivables		141,141			260,759
Less: allowance for doubtful accounts		(46,598	)		(100,000	)
	$	19,467,803		$	15,486,312
Anesthesia segment – trade receivables, gross		18,199,847			13,405,303
Product segment – trade receivables, gross		1,173,413			1,920,250
	$	19,373,260		$	15,325,553

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Trade and other payables (Tables)

12 Months Ended

Dec. 31, 2018

Payables and Accruals [Abstract]

Summary of Trade and Other Payables

	2018		2017
Trade payables	$	1,316,821	$	2,042,487
Payments due to former owners of acquired entities		—		76,403
Accruals and other payables		4,446,401		3,542,954
	$	5,763,222	$	5,661,844

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Property and equipment (Tables)

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Summary of Property and Equipment

Property and equipment consist of the following:

	December 31,
	2018			2017
Computer equipment and software	$	94,566		$	82,055
Furniture and equipment		237,616			215,021
Leasehold improvements		5,784			5,784
Injection mold		408,062			408,062
Property and equipment	$	746,028		$	710,922
Less: Accumulated depreciation		(442,737	)		(346,556	)
Property and equipment, net	$	303,291		$	364,366

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Intangible assets (Tables)

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Intangible Assets

	Professional Services Agreements		Patents		Total
Cost
Balance as at January 1, 2017		155,635,148		532,598		156,167,746
Additions through asset acquisitions (note 4)		60,209,389		—		60,209,389
Balance as at December 31, 2017	$	215,844,537	$	532,598	$	216,377,135
Additions through asset acquisitions (note 4)		40,646,723		—		40,646,723
Balance as at December 31, 2018	$	256,491,260	$	532,598	$	257,023,858

	Professional Services Agreements		Patents			Total
Accumulated depreciation
Balance as at January 1, 2017		21,999,771		500,664			22,500,435
Amortization expense		23,752,532		(3,247	)		23,749,285
Balance as at December 31, 2017	$	45,752,303	$	497,417		$	46,249,720
Amortization expense		31,387,429		2,446			31,389,875
Balance as at December 31, 2018	$	77,139,732	$	499,863		$	77,639,595

	Professional Services Agreements		Patents		Total
Net book value
December 31, 2018	$	179,351,528	$	32,735	$	179,384,263
December 31, 2017	$	170,092,234	$	35,181	$	170,127,415

Summary of Amortization Expense to be Incurred by Company Over Next Five Years

Based on the Company’s professional services agreements in place at December 31, 2018, the Company anticipates that the amortization expense to be incurred by the Company over the next five years is as follows:

	Amortization Expense
For professional services agreements as at December 31, 2018:
2019	$	33,674,000
2020		33,593,000
2021		28,287,000
2022		21,565,000
2023		17,419,000
	$	134,538,000

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Notes payable (Tables)

12 Months Ended

Dec. 31, 2018

Summary of Detailed Information about Financial Covenants Ratios

As at December 31, 2018 the Company is required to maintain the following financial covenants in respect of the Facility:

Financial Covenant	Required Ratio
Total funded debt ratio		2.50:1.00
Fixed charge coverage ratio		1.15:1.00

Summary of Notes Payable/Consolidated Minimum Loans Payments

The consolidated minimum loan payments (principal) for all loan agreements in the future are as follows:

	Minimum Principal
At December 31, 2018
2019	$	2,500,000
2020		67,750,000
	$	70,250,000

Notes Payable [Member]

Summary of Notes Payable/Consolidated Minimum Loans Payments

	December 31,
	2018		2017
Current portion	$	2,239,637	$	989,637
Non-current portion		67,621,470		60,061,105
Total loans and borrowings	$	69,861,107	$	61,050,742

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Share capital (Tables)

12 Months Ended

Dec. 31, 2018

Text Block [Abstract]

Summary of Stock Option Activity

A summary of the status of the plan as of December 31, 2018 and 2017 is as follows (options are granted in CAD and USD amounts are calculated using prevailing exchange rates):

	Number of options			Weighted average exercise price
				CAD		USD
Outstanding, January 1, 2017		1,603,124		$	0.63	$	0.47
Issued		—			—		—
Exercised		(247,500	)		0.32		0.25
Forfeited		(10,937	)		0.60		0.48
Expired		—			—		—
Outstanding, December 31, 2017		1,344,687			0.69		0.55
Issued		—			—		—
Exercised		—			—		—
Forfeited		—			—		—
Expired		—			—		—
Outstanding, December 31, 2018		1,344,687			0.69		0.50

Schedule of Information With Respect to Stock Options Outstanding and Exercisable

The following table summarizes information about the stock options outstanding as at:

December 31, 2018:

Exercise price

Options outstanding

Options exercisable

$CAD

$USD

Number of options

Weighted average remaining contractual life (years)

Weighted average exercise price ($CAD)

Weighted average exercise price ($USD)

Number of options

Weighted average exercise price ($CAD)

Weighted average exercise price ($USD)

0.44 – 0.51

1,344,687

5.05

0.69

0.50

1,344,687

0.69

0.50

All options are vested as of December 31, 2018 and 2017.

December 31, 2017:

Exercise price

Options outstanding

Options exercisable

$CAD

$USD

Number of options

Weighted average remaining contractual life (years)

Weighted average exercise price ($CAD)

Weighted average exercise price ($USD)

Number of options

Weighted average exercise price ($CAD)

Weighted average exercise price ($USD)

0.60 – 0.70

0.48 – 0.56

1,344,687

6.05

0.69

0.55

1,272,812

0.68

0.54

Summary of Status of Plan for Other Equity Instruments

A summary of the status of the plan as of December 31, 2018 and 2017 is as follows:

	Time based share units			Performance based share units
Outstanding, January 1, 2017		1,068,000			2,350,000
Issued		324,000			—
Exercised		(302,000	)		(1,000,000	)
Forfeited		(53,500	)		—
Expired		—			—
Outstanding, December 31, 2017		1,036,500			1,350,000
Vested		—			—
Expected to vest		1,036,500			1,100,000
Outstanding, January 1, 2018		1,036,500			1,350,000
Issued		452,125			150,000
Exercised		(364,000	)		—
Forfeited		(79,375	)		—
Expired		—			—
Outstanding, December 31, 2018		1,045,250			1,500,000
Vested		—			—
Expected to vest		1,045,250			1,100,000

	Time based share units		Performance based share units
Outstanding, January 1, 2017		1,036,500		1,350,000
Weighted average contractual life (years)		2.96		8.86
Outstanding, December 31, 2017		1,045,250		1,500,000
Weighted average contractual life (years)		2.74		7.99

Summary of Calculation of Basic Earnings Per Share

The calculation of basic earnings per share for the years ended December 31, 2018 and 2017 is as follows:

	2018						2017
	Net earnings		Weighted average number of common shares outstanding		Per share amount		Net earnings		Weighted average number of common shares outstanding		Per share amount
Net earnings attributable to shareholders:
Earnings per common share:
Basic	$	4,679,921		72,582,733	$	0.064	$	12,078,853		73,712,670	$	0.164
Share options				1,122,708						925,286
Share units				379,731						418,047
Diluted	$	4,679,921		74,085,172	$	0.063	$	12,078,853		75,056,003	$	0.161

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Income taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Summary of Income Tax Expense (Recovery)

(a)   Income tax expense is comprised of the following:

	2018			2017
Current tax expense	$	5,119,062		$	4,403,358
Deferred tax expense (recovery):		(2,407,176	)		2,755,707
Total tax expense (recovery)	$	2,711,886		$	7,159,065

The reconciliation of income tax computed at statutory tax rates to income tax expense, using a 27% (2017 – 23%) statutory rate, is:

	2018			2017
Net income before tax – Canada	$	5,957,089		$	10,239,231
Net income before tax – United States		9,770,714			16,094,904
Net income before tax – All jurisdictions	$	15,727,803		$	26,334,135
Tax expense at statutory income tax rates	$	4,259,890		$	6,060,003
Permanent differences		503,964			(513,050	)
Income attributable to non-controlling interest		(2,245,809	)		(1,571,060	)
Foreign income taxed at different rates		(26,042	)		1,458,302
Impact of change in tax rates		216,295			1,767,124
Other		3,588			(42,254	)
Total tax expense (recovery)	$	2,711,886		$	7,159,065

Summary of Deferred Tax Assets and Liabilities

The Company had the following deferred tax assets and liabilities resulting from temporary differences recognized for financial statement and income tax purposes.

	2018			2017
Deferred tax assets:
Property and equipment	$	356			3,501
Intangible assets		4,752,898			2,448,322
Finance related costs		375,182			472,428
Reserves		—			34,048
Share transaction costs		87,337			196,508
Stock-based compensation		534,926			410,448
Earn-out obligation		732,986			499,052
Deferred tax liabilities:
Property and equipment		(40,357	)		(3,396	)
Deferred consideration		(18,388	)		(44,255	)
Reserves		(55,568	)		(41,205	)
Unrealized foreign exchange		(20,698	)		—
Finance related costs		(68,938	)		(173,193	)
Net deferred tax asset	$	6,279,736		$	3,802,258

Deferred tax assets by jurisdiction	2018			2017
Canada:
Deferred tax asset	$	87,343		$	200,009
Deferred tax liability		(109,294	)		(173,194	)
Net deferred tax asset (liability)	$	(21,951	)	$	26,815
United States:
Deferred tax asset	$	6,396,340		$	3,864,298
Deferred tax liability		(94,654	)		(88,855	)
Net deferred tax asset (liability)	$	6,301,687		$	3,775,443

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Net finance expense (Tables)

12 Months Ended

Dec. 31, 2018

Text Block [Abstract]

Summary of Net Finance Expense

Recognized in earnings in the years ended December 31:

	2018		2017
Finance income:
Foreign exchange gain	$	—	$	—
Net change in fair value of financial liabilities at fair value through earnings (note 13)		—		(11,825,256	)
Total finance income	$	—	$	(11,825,256	)
Finance expense:
Interest and accretion expense on borrowings	$	3,168,762	$	3,322,321
Accretion expense on earn-out obligation and deferred consideration		166,575		600,602
Amortization of deferred financing fees		260,363		204,057
Net change in fair value of financial liabilities at fair value through earnings		971,627		—
Foreign exchange loss		—		88,084
Extinguishment of notes payable and bank indebtedness		—		2,044,867
Other		—		50,475
Total finance expense	$	4,567,327	$	6,310,406
Net finance (income) expense	$	4,567,327	$	(5,514,850	)

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Financial instruments (Tables)

12 Months Ended

Dec. 31, 2018

Investments, All Other Investments [Abstract]

Schedule of Fair Value of Financial Instruments

Liabilities	December 31, 2018		Level 1		Level 2		Level 3
Earn-out obligation	$	2,920,583	$	—	$	—	$	2,920,583
Total	$	2,920,583	$	—	$	—	$	2,920,583
Liabilities	December 31, 2017		Level 1		Level 2		Level 3
Earn-out obligation	$	1,875,427	$	—	$	—	$	1,875,427
Total	$	1,875,427	$	—	$	—	$	1,875,427

Summary of Reconciliation of Level 3 Fair Values

Reconciliation of level 3 fair values:
	Earn-out obligation
Balance as at January 1, 2018	$	1,875,427
Payment		—
Recorded in finance expense:
Accretion expense		73,529
Fair value adjustment		971,627
Balance as at December 31, 2018	$	2,920,583

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Commitments and contingencies (Tables)

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Summary of Minimum Payments Required for the Lease of Premises

(a) The following are the minimum payments required for the lease of premises:

Less than one year	$	364,068
One to three years		229,764
Four to five years		—
Thereafter		—
Total	$	593,832

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Segmented information (Tables)

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Summary of Revenues Relating to Geographic Segments

 The revenues relating to geographic segments based on customer location, in United States dollars, for the years ended December 31, 2018 and 2017 are as follows:

	2018		2017
Revenue:
Canada and other	$	271,803	$	238,342
United States		112,477,577		94,767,803
Total	$	112,749,380	$	95,006,145

Summary of Revenue from Contract with Customer

The Company’s revenues are disaggregated below into categories which differ in terms of the economic factors which impact the amount, timing and uncertainty of revenue and cash flows.

	2018		2017
Revenue:
Commercial Insurers	$	86,992,218	$	72,264,107
Federal Insurers		14,246,626		10,568,096
Physicians		10,959,215		11,501,005
Other		551,321		672,937
Total	$	112,749,380	$	95,006,145

Summary of Property and Equipment, Intangibles and Other Assets Located in Geographic Regions

The Company’s property and equipment, intangibles, other assets and total assets are located in the following geographic regions as at December 31, 2018 and 2017:

	2018		2017
Property and equipment:
Canada	$	276,621	$	347,676
United States		26,670		16,690
Total	$	303,291	$	364,366
Intangible assets:
Canada	$	32,735	$	35,181
United States		179,351,528		170,092,234
Total	$	179,384,263	$	170,127,415
Total assets:
Canada	$	9,293,796	$	4,595,719
United States		209,694,200		199,359,786
Total	$	218,987,996	$	203,955,505

Summary of Operating Segments

The financial measures reviewed by the Company’s Chief Operating Decision Maker are presented below for the years ended December 31, 2018 and 2017. The Company does not allocate expenses related to corporate activities. These expenses are presented within “Other” to allow for reconciliation to reported measures.

	2018
	Anesthesia services		Product sales		Other			Total
Revenue	$	101,790,165	$	10,959,215	$	—		$	112,749,380
Operating costs		81,079,150		5,022,737		6,352,363			92,454,250
Operating income (loss)	$	20,711,015	$	5,936,478	$	(6,352,363	)	$	20,295,130

	2017
	Anesthesia services		Product sales		Other			Total
Revenue	$	83,505,140	$	11,501,005	$	—		$	95,006,145
Operating costs		62,135,447		4,997,550		7,053,863			74,186,860
Operating income (loss)	$	21,369,693	$	6,503,455	$	(7,053,863	)	$	20,819,285

Additionally, the company incurs the following in each of its operating segments:

	2018
	Anesthesia services		Product sales		Other		Total
Finance income	$	—	$	—	$	—	$	—
Finance expense		1,138,200		—		3,429,127		4,567,327
Depreciation and amortization expense		31,394,245		68,509		23,301		31,486,055

	2017
	Anesthesia services			Product sales		Other		Total
Finance income	$	(11,825,256	)	$	—	$	—	$	(11,825,256	)
Finance expense		600,602			—		5,709,804		6,310,406
Depreciation and amortization expense		23,762,012			56,907		15,481		23,834,400

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Significant Accounting Policies - Estimated Useful Lives and the Methods of Depreciation for Current and Comparative Periods (Detail)	12 Months Ended
	Dec. 31, 2018
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Basis	Straight-line
Lease term or useful life	Shorter of initial lease term or useful life
Injection Mold [Member]
Property, Plant and Equipment [Line Items]
Basis	Straight-line
Lease term or useful life	5 years
Computer Equipment and Software [Member]
Property, Plant and Equipment [Line Items]
Basis	Declining balance
Rate	30
Computer Software [Member]
Property, Plant and Equipment [Line Items]
Basis	Declining balance
Rate	100
Furniture And Equipment [Member]
Property, Plant and Equipment [Line Items]
Basis	Declining balance
Rate	20

XML

Significant Accounting Policies - Intangible Assets Finite Lives Amortized Over Period (Detail)	12 Months Ended
	Dec. 31, 2018
Intellectual Property Rights to the CRH O'Regan System [Member]
Finite-Lived Intangible Assets [Line Items]
Basis	Straight-line
Rate	15 years
Intellectual Property New Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Basis	Straight-line
Rate	20 years
Exclusive Professional Services Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Basis	Straight-line
Minimum [Member] | Exclusive Professional Services Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Rate	4 years 6 months
Maximum [Member] | Exclusive Professional Services Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Rate	15 years

XML

Significant Accounting Policies - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Significant Accounting Policies [Line Items]
Minimum percentage likelihood to recognize tax benefit from uncertain tax position	50.00%
Revenue, practical expedient, incremental cost of obtaining contract	true
Revenue, practical expedient, financing component	true
Reduction of anesthesia services expenses	$ 92,454,250	$ 74,186,860
Reduction of anesthesia services expenses	112,749,380	95,006,145
Capitalization of acquisition costs	116,025
Accounting Standards Update 2016-09 [Member]
Significant Accounting Policies [Line Items]
Tax expense related to awards		952,495
Accounting Standards Update 2017-01 [Member]
Significant Accounting Policies [Line Items]
Capitalization of acquisition costs		223,581
Accounting Standards Update 2017-01 [Member] | Intangible Assets [Member]
Significant Accounting Policies [Line Items]
Net allocation of expenses		381,794
Accounting Standards Update 2017-01 [Member] | Non-Controlling Interest [Member]
Significant Accounting Policies [Line Items]
Net allocation of expenses		173,194
Accounting Standards Update 2017-01 [Member] | Retained Earnings (Deficit) [Member]
Significant Accounting Policies [Line Items]
Net allocation of expenses		14,274
Anesthesia Services [Member]
Significant Accounting Policies [Line Items]
Reduction of anesthesia services expenses	81,079,150	62,135,447
Reduction of anesthesia services expenses	$ 101,790,165	83,505,140
Anesthesia Services [Member] | Accounting Standards Update 2014-09 [Member]
Significant Accounting Policies [Line Items]
Reduction of anesthesia services expenses		5,235,934
Anesthesia Services [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member]
Significant Accounting Policies [Line Items]
Reduction of anesthesia services expenses		(5,235,934)
Anesthesia Services [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2017-01 [Member]
Significant Accounting Policies [Line Items]
Reduction of anesthesia services expenses		$ (194,326)

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Asset Acquisitions - Additional Information - 2018 Acquisitions (Detail)		12 Months Ended
	Jul. 01, 2018 USD ($)	Dec. 31, 2018 USD ($) Acquisition	Dec. 31, 2017 USD ($) Acquisition	Oct. 31, 2018
Business Acquisition [Line Items]
Number of asset acquisitions completed | Acquisition		5	6
Asset acquired control, description		The Company has obtained control over the acquired assets via the Company’s majority ownership in the shares of the entities and its agreements with the non-controlling interest shareholders.	The Company has obtained control over the acquired assets via the Company’s majority ownership in the shares of the entities and its agreements with the non-recurring interest shareholders.
Business combination loan contribution description		For those asset acquisitions where CRH ownership interest is less than 100%, in conjunction with the acquisition, both the Company and the non-controlling interest shareholder contributed loans. The terms of the loans are such that they will be repaid first, prior to any future distributions and are non-interest bearing.	For those asset acquisitions where CRH ownership interest is less than 100%, in conjunction with the acquisition, both the Company and the non-controllinginterest shareholder contributed loans. The terms of the loans are such that they will be repaid first, prior to any future distributions and are non-interest bearing.
Short-term advances		$ 26,783
Anesthesia Services [Member]
Business Acquisition [Line Items]
Business acquisition, Legal costs		$ 316,663	$ 223,581
Anesthesia Services [Member] | Triad Sedation Associates LLC [Member]
Business Acquisition [Line Items]
Percentage of equity interest				15.00%
Option to acquire additional interest		36.00%
Lake Washington Anesthesia LLC [Member] | Anesthesia Services [Member]
Business Acquisition [Line Items]
Working capital advance	$ 254,351
Short-term advances		$ 26,783
Business acquisition, Legal costs		41,939
Anesthesia Care Associates, LLC [Member] | Anesthesia Services [Member]
Business Acquisition [Line Items]
Business acquisition, Legal costs		$ 116,025

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Asset Acquisitions - Summary of Asset Acquisitions (Detail) - Anesthesia Services [Member] - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Consideration	$ 27,509,811	$ 33,376,849
DDAB LLC [Member]
Business Acquisition [Line Items]
Date Acquired		2017-02
Consideration		$ 5,278,940
Osceola Gastroenterology Anesthesia Associates, LLC [Member]
Business Acquisition [Line Items]
Date Acquired		2017-03
Consideration		$ 3,452,247
West Florida Anesthesia Associates, LLC [Member]
Business Acquisition [Line Items]
Date Acquired		2017-08
Consideration		$ 5,904,980
Central Colorado Anesthesia Associates, LLC [Member]
Business Acquisition [Line Items]
Date Acquired		2017-09
Consideration		$ 7,909,243
Raleigh Sedation Associates, LLC & Blue Ridge Sedation Associates, PLLC [Member]
Business Acquisition [Line Items]
Date Acquired		2017-09
Consideration		$ 7,328,060
Alamo Sedation Associates, LLC [Member]
Business Acquisition [Line Items]
Date Acquired		2017-09
Consideration		$ 3,503,379
Shreveport Sedation Associates LLC [Member]
Business Acquisition [Line Items]
Date Acquired	2018-03
Consideration	$ 9,495,184
Western Ohio Sedation Associates LLC [Member]
Business Acquisition [Line Items]
Date Acquired	2018-05
Consideration	$ 6,483,698
Lake Washington Anesthesia LLC [Member]
Business Acquisition [Line Items]
Date Acquired	2018-07
Consideration	$ 5,041,939
Lake Erie Sedation Associates LLC [Member]
Business Acquisition [Line Items]
Date Acquired	2018-09
Consideration	$ 4,233,115
Tennessee Valley Anesthesia LLC [Member]
Business Acquisition [Line Items]
Date Acquired	2018-12
Consideration	$ 2,255,875

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Asset Acquisitions - Summary of Fair Value of Consideration Transferred and Allocated Costs of Assets and Liabilities Acquired at Acquisition Date (Detail) - Anesthesia Services [Member] - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Cash	$ 27,193,148	$ 31,969,489
Acquisition costs	316,663	223,581
Contingent consideration		1,183,779
Purchase consideration	27,509,811	33,376,849
Non-controlling interest	13,241,061	26,844,528
Fair value of net identifiable assets and liabilities acquired	40,750,872	60,221,377
Assets and liabilities acquired:
Exclusive professional services agreements	40,646,723	60,209,389
Pre-close accounts receivable	652,506	525,000
Pre-close accounts payable	(652,506)	(525,000)
Prepaid expenses and deposits	104,149	11,988
Fair value of net identifiable assets and liabilities acquired	$ 40,750,872	60,221,377
Exclusive professional services agreements - amortization term	0 years
Shreveport Sedation Associates LLC [Member]
Business Acquisition [Line Items]
Cash	$ 9,404,148
Acquisition costs	91,036
Purchase consideration	9,495,184
Fair value of net identifiable assets and liabilities acquired	9,495,184
Assets and liabilities acquired:
Exclusive professional services agreements	9,391,036
Prepaid expenses and deposits	104,149
Fair value of net identifiable assets and liabilities acquired	$ 9,495,185
Exclusive professional services agreements - amortization term	7 years
CRH ownership interest	100.00%
Western Ohio Sedation Associates LLC [Member]
Business Acquisition [Line Items]
Cash	$ 6,409,000
Acquisition costs	74,698
Purchase consideration	6,483,698
Non-controlling interest	6,229,435
Fair value of net identifiable assets and liabilities acquired	12,713,133
Assets and liabilities acquired:
Exclusive professional services agreements	12,713,133
Fair value of net identifiable assets and liabilities acquired	$ 12,713,133
Exclusive professional services agreements - amortization term	10 years
CRH ownership interest	51.00%
Lake Washington Anesthesia LLC [Member]
Business Acquisition [Line Items]
Cash	$ 5,000,000
Acquisition costs	41,939
Purchase consideration	5,041,939
Non-controlling interest	4,844,217
Fair value of net identifiable assets and liabilities acquired	9,886,156
Assets and liabilities acquired:
Exclusive professional services agreements	9,886,155
Pre-close accounts receivable	652,506
Pre-close accounts payable	(652,506)
Fair value of net identifiable assets and liabilities acquired	$ 9,886,155
Exclusive professional services agreements - amortization term	7 years
CRH ownership interest	51.00%
Lake Erie Sedation Associates LLC [Member]
Business Acquisition [Line Items]
Cash	$ 4,180,000
Acquisition costs	53,115
Purchase consideration	4,233,115
Fair value of net identifiable assets and liabilities acquired	4,233,115
Assets and liabilities acquired:
Exclusive professional services agreements	4,233,115
Fair value of net identifiable assets and liabilities acquired	$ 4,233,115
Exclusive professional services agreements - amortization term	10 years
CRH ownership interest	100.00%
Tennessee Valley Anesthesia LLC [Member]
Business Acquisition [Line Items]
Cash	$ 2,200,000
Acquisition costs	55,875
Purchase consideration	2,255,875
Non-controlling interest	2,167,409
Fair value of net identifiable assets and liabilities acquired	4,423,284
Assets and liabilities acquired:
Exclusive professional services agreements	4,423,284
Fair value of net identifiable assets and liabilities acquired	$ 4,423,284
Exclusive professional services agreements - amortization term	7 years
CRH ownership interest	51.00%
DDAB LLC [Member]
Business Acquisition [Line Items]
Cash		4,089,791
Acquisition costs		5,370
Contingent consideration		1,183,779
Purchase consideration		5,278,940
Non-controlling interest		5,071,922
Fair value of net identifiable assets and liabilities acquired		10,350,862
Assets and liabilities acquired:
Exclusive professional services agreements		10,350,862
Pre-close accounts receivable		525,000
Pre-close accounts payable		(525,000)
Fair value of net identifiable assets and liabilities acquired		$ 10,350,862
Exclusive professional services agreements - amortization term		4 years 6 months
CRH ownership interest		51.00%
Osceola Gastroenterology Anesthesia Associates, LLC [Member]
Business Acquisition [Line Items]
Cash		$ 3,401,819
Acquisition costs		50,428
Purchase consideration		3,452,247
Non-controlling interest		2,301,498
Fair value of net identifiable assets and liabilities acquired		5,753,745
Assets and liabilities acquired:
Exclusive professional services agreements		5,753,745
Fair value of net identifiable assets and liabilities acquired		$ 5,753,745
Exclusive professional services agreements - amortization term		5 years
CRH ownership interest		60.00%
West Florida Anesthesia Associates, LLC [Member]
Business Acquisition [Line Items]
Cash		$ 5,840,000
Acquisition costs		64,980
Purchase consideration		5,904,980
Non-controlling interest		4,831,346
Fair value of net identifiable assets and liabilities acquired		10,736,326
Assets and liabilities acquired:
Exclusive professional services agreements		10,724,338
Prepaid expenses and deposits		11,988
Fair value of net identifiable assets and liabilities acquired		$ 10,736,326
Exclusive professional services agreements - amortization term		15 years
CRH ownership interest		55.00%
Central Colorado Anesthesia Associates, LLC [Member]
Business Acquisition [Line Items]
Cash		$ 7,888,919
Acquisition costs		20,324
Purchase consideration		7,909,243
Non-controlling interest		7,599,077
Fair value of net identifiable assets and liabilities acquired		15,508,320
Assets and liabilities acquired:
Exclusive professional services agreements		15,508,320
Fair value of net identifiable assets and liabilities acquired		$ 15,508,320
Exclusive professional services agreements - amortization term		7 years
CRH ownership interest		51.00%
Raleigh Sedation Associates, LLC & Blue Ridge Sedation Associates, PLLC [Member]
Business Acquisition [Line Items]
Cash		$ 7,248,960
Acquisition costs		79,100
Purchase consideration		7,328,060
Non-controlling interest		7,040,685
Fair value of net identifiable assets and liabilities acquired		14,368,745
Assets and liabilities acquired:
Exclusive professional services agreements		14,368,745
Fair value of net identifiable assets and liabilities acquired		$ 14,368,745
Exclusive professional services agreements - amortization term		5 years
CRH ownership interest		51.00%
Alamo Sedation Associates, LLC [Member]
Business Acquisition [Line Items]
Cash		$ 3,500,000
Acquisition costs		3,379
Purchase consideration		3,503,379
Fair value of net identifiable assets and liabilities acquired		3,503,379
Assets and liabilities acquired:
Exclusive professional services agreements		3,503,379
Fair value of net identifiable assets and liabilities acquired		$ 3,503,379
Exclusive professional services agreements - amortization term		7 years
CRH ownership interest		100.00%

XML

Asset acquisitions - Summary of Asset Acquisition Loan Contribution (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Acquisition Date [Line Items]
Amount outstanding at December 31, 2018	$ 49,000	$ 435,000
Anesthesia Services [Member]
Acquisition Date [Line Items]
CRH member loan	244,800	555,000
Non-controlling interest member loan	235,200	495,000
Amount outstanding at December 31, 2018	100,000
Western Ohio Sedation Associates LLC [Member] | Anesthesia Services [Member]
Acquisition Date [Line Items]
CRH member loan	193,800
Non-controlling interest member loan	186,200
Tennessee Valley Anesthesia LLC [Member] | Anesthesia Services [Member]
Acquisition Date [Line Items]
CRH member loan	51,000
Non-controlling interest member loan	49,000
Amount outstanding at December 31, 2018	$ 100,000
Osceola Gastroenterology Anesthesia Associates, LLC [Member] | Anesthesia Services [Member]
Acquisition Date [Line Items]
CRH member loan		90,000
Non-controlling interest member loan		60,000
West Florida Anesthesia Associates, LLC [Member] | Anesthesia Services [Member]
Acquisition Date [Line Items]
CRH member loan		82,500
Non-controlling interest member loan		67,500
Central Colorado Anesthesia Associates, LLC [Member] | Anesthesia Services [Member]
Acquisition Date [Line Items]
CRH member loan		178,500
Non-controlling interest member loan		171,500
Raleigh Sedation Associates, LLC & Blue Ridge Sedation Associates, PLLC [Member] | Anesthesia Services [Member]
Acquisition Date [Line Items]
CRH member loan		204,000
Non-controlling interest member loan		$ 196,000

XML

Asset Acquisitions - Additional Information - 2017 Acquisitions (Detail)		12 Months Ended
	Mar. 31, 2017 USD ($)	Dec. 31, 2018 Acquisition	Dec. 31, 2017 Acquisition
Business Acquisition [Line Items]
Number of asset acquisitions completed | Acquisition		5	6
DDAB LLC [Member] | Anesthesia Services [Member]
Business Acquisition [Line Items]
Working capital advance | $	$ 71,819

XML

Trade and Other Receivables - Summary of Trade Receivables and Other Receivable (Detail) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Balance Sheet Related Disclosures [Line Items]
Accounts receivables	$ 19,373,260	$ 15,325,553
Other receivables	141,141	260,759
Less: allowance for doubtful accounts	(46,598)	(100,000)
Receivables net current	19,467,803	15,486,312
Anesthesia Services [Member]
Balance Sheet Related Disclosures [Line Items]
Accounts receivables	18,199,847	13,405,303
Product Sales [Member]
Balance Sheet Related Disclosures [Line Items]
Accounts receivables	$ 1,173,413	$ 1,920,250

XML

Trade and Other Payables - Summary of Trade and Other Payables (Detail) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Debt Instruments [Abstract]
Trade payables	$ 1,316,821	$ 2,042,487
Payments due to former owners of acquired entities		76,403
Accruals and other payables	4,446,401	3,542,954
Total	$ 5,763,222	$ 5,661,844

XML

Property and Equipment - Summary of Property and Equipment (Detail) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Property and equipment, Gross	$ 746,028	$ 710,922
Less: Accumulated depreciation	(442,737)	(346,556)
Property and equipment, net	303,291	364,366
Computer Equipment and Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, Gross	94,566	82,055
Furniture and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, Gross	237,616	215,021
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, Gross	5,784	5,784
Injection Mold [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, Gross	$ 408,062	$ 408,062

XML

Intangible Assets - Summary of Intangible Assets (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Beginning balance	$ 216,377,135	$ 156,167,746
Additions through asset acquisitions (note 4)	40,646,723	60,209,389
Ending balance	257,023,858	216,377,135
Beginning balance	46,249,720	22,500,435
Amortization expense	31,389,875	23,749,285
Ending balance	77,639,595	46,249,720
Net balance	179,384,263	170,127,415
Professional Services Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning balance	215,844,537	155,635,148
Additions through asset acquisitions (note 4)	40,646,723	60,209,389
Ending balance	256,491,260	215,844,537
Beginning balance	45,752,303	21,999,771
Amortization expense	31,387,429	23,752,532
Ending balance	77,139,732	45,752,303
Net balance	179,351,528	170,092,234
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning balance	532,598	532,598
Ending balance	532,598	532,598
Beginning balance	497,417	500,664
Amortization expense	2,446	(3,247)
Ending balance	499,863	497,417
Net balance	$ 32,735	$ 35,181

XML

Intangible Assets - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2018 USD ($) Services	Dec. 31, 2017 Services
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Number of professional services agreements identified with impairment indicators	4	2
Number of professional services agreements identified for impairment upon undiscounted cash flow models	2
Renewal term of professional services agreements	4 years
Impairment of Intangible Assets | $	$ 0
Weighted average amortization period	6 years 2 months 23 days

XML

Intangible Assets - Summary of Amortization Expense to be Incurred by Company Over Next Five Years (Detail) - Professional Services Agreements [Member]	Dec. 31, 2018 USD ($)
Finite Lived Intangible Assets, Future Amortization Expense [Line Items]
2019	$ 33,674,000
2020	33,593,000
2021	28,287,000
2022	21,565,000
2023	17,419,000
Amortization Expense	$ 134,538,000

XML

Notes Payable - Summary Of Notes Payable (Detail) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Notes Payable [Line Items]
Total loans and borrowings	$ 70,250,000
Scotia Facility [Member]
Notes Payable [Line Items]
Current portion	2,239,637	$ 989,637
Non-current portion	67,621,470	60,061,105
Total loans and borrowings	$ 69,861,107	$ 61,050,742

XML

Notes Payable - Additional Information (Detail) - Scotia Facility [Member] - USD ($)			12 Months Ended
	Jun. 26, 2017	Nov. 24, 2015	Dec. 31, 2018	Dec. 31, 2017	Jun. 15, 2016
Notes Payable [Line Items]
Credit facility maturity date	Jun. 26, 2020	Apr. 30, 2018
Credit facility maximum borrowing capacity	$ 100,000,000				$ 55,000,000
Amendment fees incurred	$ 445,598
Credit facility drawn amount			$ 70,250,000	$ 61,700,000
Borrowings, adjustment to interest rate basis			2.50%
Borrowing interest rate			LIBOR plus 2.50%
Increase decrease in borrowing capacity			$ 0
Deferred or new financing fees			$ 0

XML

Notes Payable - Summary of Detailed Information about Financial Covenants Ratios (Detail)	12 Months Ended
	Dec. 31, 2018
Debt Disclosure [Abstract]
Total funded debt ratio	2.50
Fixed charge coverage ratio	1.15

XML

Notes Payable - Summary Of Consolidated Minimum Loan Payments (Detail)	Dec. 31, 2018 USD ($)
Debt Disclosure [Abstract]
2019	$ 2,500,000
2020	67,750,000
Total loans and borrowings	$ 70,250,000

XML

Share Capital - Additional Information (Detail)				12 Months Ended
	Jan. 04, 2019 shares	Jan. 05, 2018 shares	Nov. 08, 2017 shares	Dec. 31, 2018 USD ($) $ / shares shares	Dec. 31, 2018 CAD ($) $ / shares shares	Dec. 31, 2017 USD ($) $ / shares shares	Dec. 31, 2017 CAD ($) $ / shares shares
Schedule Of Employee Service Share Based Compensation Expense Allocation [Line Items]
Number of shares authorized				100,000,000	100,000,000
Stock option description				All options under the Plan will be subject to vesting provisions determined by the Board of Directors, over a period of not less than 18 months, in equal portions on a quarterly basis. Options granted to consultants providing investor relations activities will vest at the end of 12 months or longer from the date of issuance.	All options under the Plan will be subject to vesting provisions determined by the Board of Directors, over a period of not less than 18 months, in equal portions on a quarterly basis. Options granted to consultants providing investor relations activities will vest at the end of 12 months or longer from the date of issuance.
Share based payment awards issued				0	0	0	0
Number of other equity instruments issued						292,549	292,549
Share-based compensation expense | $				$ 468		$ 22,179
Compensation expense related to granting and vesting of share unit | $				$ 2,800,280		$ 4,013,891
Shares approved in normal course issuer bid			7,044,410
Maximum percentage of shares approved in normal course issuer bid			10.00%
Maximum daily repurchase in normal course issuer bid			46,958
Repurchase of shares				1,264,900	1,264,900	1,339,800	1,339,800
Total cost, including transaction fee				$ 3,784,733	$ 4,945,155	$ 2,872,713	$ 3,669,120
Repurchased shares canceled	10,400	72,400		72,400	72,400	1,267,400	1,267,400
Shares repurchased in connection with normal course issuer bid and cancelled, shares				1,254,500	1,254,500
Restricted Stock Units (RSUs) [Member]
Schedule Of Employee Service Share Based Compensation Expense Allocation [Line Items]
Share based payment awards, authorized to grant				1,057,534	1,057,534
Employee Stock Option [Member]
Schedule Of Employee Service Share Based Compensation Expense Allocation [Line Items]
Share based payment awards issued				0	0
Number of shares authorized to grant				2,258,097	2,258,097
Number of other equity instruments issued						1,198,495	1,198,495
Share-based compensation arrangement by share-based payment award, options, vested in period, fair value | $						$ 147,730
Number of other equity instruments vested						1,272,812	1,272,812
Share options [Member]
Schedule Of Employee Service Share Based Compensation Expense Allocation [Line Items]
Shares excluded from diluted weighted average number of common shares calculation				221,979	221,979	539,624	539,624
Share units [Member]
Schedule Of Employee Service Share Based Compensation Expense Allocation [Line Items]
Shares excluded from diluted weighted average number of common shares calculation				2,095,260	2,095,260	2,094,363	2,094,363
Time Based Restricted Share Unit [Member]
Schedule Of Employee Service Share Based Compensation Expense Allocation [Line Items]
Number of other equity instruments issued				364,000	364,000	324,000	324,000
Number of other equity instruments vested				364,000	364,000	302,000	302,000
Weighted average exercise price of other equity instruments issued | (per share)						$ 3.31	$ 4.16
Time Based Restricted Share Unit [Member] | Additional Share Unit Issuance [Member]
Schedule Of Employee Service Share Based Compensation Expense Allocation [Line Items]
Number of other equity instruments issued				452,125	452,125
Weighted average exercise price of other equity instruments issued | (per share)				$ 3.45	$ 4.71
Performance Based Restricted Stock Units [Member] | Additional Share Unit Issuance [Member]
Schedule Of Employee Service Share Based Compensation Expense Allocation [Line Items]
Number of other equity instruments issued				150,000	150,000
Weighted average exercise price of other equity instruments issued | (per share)				$ 2.78	$ 3.79

XML

Share Capital - Summary of Stock Option Activity (Detail)	12 Months Ended
	Dec. 31, 2018 $ / shares shares	Dec. 31, 2018 $ / shares shares	Dec. 31, 2017 $ / shares shares	Dec. 31, 2017 $ / shares shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number of options, Beginning balance	1,344,687	1,344,687	1,603,124	1,603,124
Issued	0	0	0	0
Exercised			(247,500)	(247,500)
Forfeited			(10,937)	(10,937)
Expired	0	0	0	0
Number of options, Ending balance	1,344,687	1,344,687	1,344,687	1,344,687
Weighted average exercise price, Beginning balance | (per share)	$ 0.69	$ 0.55	$ 0.63	$ 0.47
Weighted average exercise price, Issued | (per share)	0	0	0	0
Weighted average exercise price, Exercised | (per share)			0.32	0.25
Weighted average exercise price, Forfeited | (per share)			0.60	0.48
Weighted average exercise price, Expired | (per share)	0	0	0	0
Weighted average exercise price, Ending balance | (per share)	$ 0.69	$ 0.50	$ 0.69	$ 0.55

XML

Share Capital - Schedule Of Information With Respect To Stock Options Outstanding And Exercisable (Detail) - Exercise Price Range One [Member]	12 Months Ended
	Dec. 31, 2018 $ / shares $ / shares shares	Dec. 31, 2017 $ / shares shares	Dec. 31, 2017 $ / shares $ / shares shares	Dec. 31, 2018 $ / shares shares	Dec. 31, 2017 $ / shares shares
Compensation Related Costs Share Based Payments Disclosure [Line Items]
Exercise price | (per share)	$ 0.44	$ 0.60	$ 0.48
Exercise price | (per share)	$ 0.51	$ 0.70	$ 0.56
Number of options	1,344,687	1,344,687	1,344,687	1,344,687	1,344,687
Options outstanding Weighted average remaining contractual life (years)	5 years 18 days	6 years 18 days	6 years 18 days
Options outstanding Weighted average exercise price ($CAD) | (per share)	$ 0.69	$ 0.69	$ 0.69	$ 0.50	$ 0.55
Number of options	1,344,687	1,272,812	1,272,812	1,344,687	1,272,812
Options exercisable Weighted average exercise price ($CAD) | (per share)	$ 0.69	$ 0.68	$ 0.68	$ 0.50	$ 0.54

XML

Share Capital - Summary of Status of Plan for Other Equity Instruments (Detail) - shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Time Based Share [Member]
Compensation Related Costs Share Based Payments Disclosure [Line Items]
Beginning balance	1,036,500	1,068,000
Issued	452,125	324,000
Exercised	(364,000)	(302,000)
Forfeited	(79,375)	(53,500)
Expired	0	0
Ending balance	1,045,250	1,036,500
Vested	0	0
Expected to vest	1,045,250
Expected to vest		1,036,500
Weighted average contractual life (years)	2 years 8 months 26 days	2 years 11 months 15 days
Performance Based Share [Member]
Compensation Related Costs Share Based Payments Disclosure [Line Items]
Beginning balance	1,350,000	2,350,000
Issued	150,000
Exercised		(1,000,000)
Expired	0	0
Ending balance	1,500,000	1,350,000
Vested	0	0
Expected to vest	1,100,000
Expected to vest		1,100,000
Weighted average contractual life (years)	7 years 11 months 26 days	8 years 10 months 9 days

XML

Share Capital - Summary of Calculation of Basic Earnings Per Share (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Basic	$ 4,679,921	$ 12,078,853
Diluted	$ 4,679,921	$ 12,078,853
Shares	72,582,733	73,712,670
Diluted	74,085,172	75,056,003
Basic	$ 0.064	$ 0.164
Diluted	$ 0.063	$ 0.161
Share options [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Shares	1,122,708	925,286
Share units [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Shares	379,731	418,047

XML

Income Taxes - Summary of Income Tax Expense (Recovery) (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Line Items]
Current tax expense	$ 5,119,062	$ 4,403,358
Deferred tax expense (recovery):	(2,407,176)	2,755,707
Total tax expense (recovery)	2,711,886	7,159,065
Net income before tax - All jurisdictions	15,727,803	26,334,135
Tax expense at statutory income tax rates	4,259,890	6,060,003
Permanent differences	503,964	(513,050)
Income attributable to non-controlling interest	(2,245,809)	(1,571,060)
Foreign income taxed at different rates	(26,042)	1,458,302
Impact of change in tax rates	216,295	1,767,124
Other	3,588	(42,254)
Total tax expense (recovery)	2,711,886	7,159,065
Canada [Member]
Income Tax Disclosure [Line Items]
Net income before tax - All jurisdictions	5,957,089	10,239,231
UNITED STATES
Income Tax Disclosure [Line Items]
Net income before tax - All jurisdictions	$ 9,770,714	$ 16,094,904

XML

Income Taxes - Additional Information (Detail) - USD ($)		12 Months Ended
	Jan. 01, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Line Items]
Company's statutory tax rate	21.00%	27.00%	23.00%
unrecognized tax benefits		$ 0	$ 0
Unrecognized tax benefits		$ 0
Canada [Member]
Income Tax Disclosure [Line Items]
Company's statutory tax rate		27.00%	26.00%	23.00%
Company's provincial rate		1.00%

XML

Income Taxes - Summary of Deferred Tax Assets and Liabilities (Detail) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Deferred tax assets:
Property and equipment	$ 356	$ 3,501
Intangible assets	4,752,898	2,448,322
Finance related costs	375,182	472,428
Reserves		34,048
Share transaction costs	87,337	196,508
Stock-based compensation	534,926	410,448
Earn-out obligation	732,986	499,052
Deferred tax liabilities:
Property and equipment	(40,357)	(3,396)
Deferred consideration	(18,388)	(44,255)
Reserves	(55,568)	(41,205)
Unrealized foreign exchange	(20,698)
Finance related costs	(68,938)	(173,193)
Net deferred tax asset	6,279,736	3,802,258
Net deferred tax asset	6,279,736	3,802,258
Canada [Member]
Deferred tax assets:
Deferred tax asset	87,343	200,009
Deferred tax liabilities:
Net deferred tax asset		26,815
Deferred tax liability	(109,294)	(173,194)
Net deferred tax liability	(21,951)
Net deferred tax asset		26,815
UNITED STATES
Deferred tax assets:
Deferred tax asset	6,396,340	3,864,298
Deferred tax liabilities:
Net deferred tax asset	6,301,687	3,775,443
Deferred tax liability	(94,654)	(88,855)
Net deferred tax asset	$ 6,301,687	$ 3,775,443

XML

Net Finance Expense - Summary of Net Finance Expense (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Finance income:
Foreign exchange gain	$ 0	$ 0
Net change in fair value of financial liabilities at fair value through earnings (note 13)		(11,825,256)
Total finance income		(11,825,256)
Finance expense:
Interest and accretion expense on borrowings	3,168,762	3,322,321
Accretion expense on earn-out obligation and deferred consideration	166,575	600,602
Amortization of deferred financing fees	260,363	204,057
Net change in fair value of financial liabilities at fair value through earnings	971,627
Foreign exchange loss		88,084
Extinguishment of notes payable and bank indebtedness		2,044,867
Other		50,475
Total finance expense	4,567,327	6,310,406
Net finance (income) expense	$ 4,567,327	$ (5,514,850)

XML

Financial Instruments - Schedule of Fair Value of Financial Instruments (Detail) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Fair Value Assets Measured On Recurring and Nonrecurring Basis [Line Items]
Total Liabilities	$ 2,920,583	$ 1,875,427
Earn-out obligation [Member]
Fair Value Assets Measured On Recurring and Nonrecurring Basis [Line Items]
Total Liabilities	2,920,583	1,875,427
Fair Value, Inputs, Level 3 [Member]
Fair Value Assets Measured On Recurring and Nonrecurring Basis [Line Items]
Total Liabilities	2,920,583	1,875,427
Fair Value, Inputs, Level 3 [Member] | Earn-out obligation [Member]
Fair Value Assets Measured On Recurring and Nonrecurring Basis [Line Items]
Total Liabilities	$ 2,920,583	$ 1,875,427

XML

Financial Instruments - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Fair Value, Inputs, Level 3 [Member]
Financial Instruments [Line Items]
Increase (decrease) in fair value of earn-out obligation	$ 971,627
Accretion expense related to earn-out obligation	73,529
10% Point Increase in Interest Rate [Member] | Interest Rate Risk [Member]
Financial Instruments [Line Items]
Increase (decrease) in net income	(295,000)	$ (164,000)
10% Point Decrease in Interest Rate [Member] | Interest Rate Risk [Member]
Financial Instruments [Line Items]
Increase (decrease) in net income	$ 295,000	164,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Instruments [Line Items]
Discount rate	1.00%
Increase (decrease) in fair value of earn-out obligation	$ 13,870
Accretion expense related to earn-out obligation	73,531	$ 473,738
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Measurement Input, Discount Rate [Member]
Financial Instruments [Line Items]
Increase (decrease) in fair value of earn-out obligation	$ 971,625
Fair Value, Measurements, Recurring [Member] | Minimum [Member] | Fair Value, Inputs, Level 3 [Member] | Measurement Input, Discount Rate [Member]
Financial Instruments [Line Items]
Discount rate		3.59%
Fair Value, Measurements, Recurring [Member] | Maximum [Member] | Fair Value, Inputs, Level 3 [Member] | Measurement Input, Discount Rate [Member]
Financial Instruments [Line Items]
Discount rate	4.69%

XML

Financial Instruments - Summary of Reconciliation of Level 3 Fair Values (Detail) - Fair Value, Inputs, Level 3 [Member]	12 Months Ended
	Dec. 31, 2018 USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance	$ 1,875,427
Payment	0
Accretion expense	73,529
Fair value adjustment	971,627
Ending balance	$ 2,920,583

XML

Commitments and Contingencies - Summary of Minimum Payments Required for the Lease of Premises (Detail)	Dec. 31, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Less than one year	$ 364,068
One to three years	229,764
Four to five years	0
Thereafter	0
Total	$ 593,832

XML

Commitments and Contingencies - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Rental expense	$ 227,743	$ 236,455

XML

Related Party Transactions - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Related Party Transaction [Abstract]
Product sales	$ 29,685	$ 39,485
Amounts owing by or to related party	$ 0	$ 0

XML

Segmented Information - Additional information (Detail)	12 Months Ended
	Dec. 31, 2018 Segment
Segment Reporting [Abstract]
Number of segments	2

XML

Segmented Information - Summary of Revenues Relating to Geographic Segments (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Segment Reporting, Revenue Reconciling Item [Line Items]
Total revenue	$ 112,749,380	$ 95,006,145
Canada and Other [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Total revenue	271,803	238,342
UNITED STATES
Segment Reporting, Revenue Reconciling Item [Line Items]
Total revenue	$ 112,477,577	$ 94,767,803

XML

Segmented Information - Summary of Revenue from Contract with Customer (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Disaggregation of Revenue [Line Items]
Revenue	$ 112,749,380	$ 95,006,145
Commercial Insurers [Member]
Disaggregation of Revenue [Line Items]
Revenue	86,992,218	72,264,107
Federal Insurers [Member]
Disaggregation of Revenue [Line Items]
Revenue	14,246,626	10,568,096
Physicians [Member]
Disaggregation of Revenue [Line Items]
Revenue	10,959,215	11,501,005
Other [Member]
Disaggregation of Revenue [Line Items]
Revenue	$ 551,321	$ 672,937

XML

Segmented Information - Summary of Property and Equipment, Intangibles and Other Assets Located in Geographic Regions (Detail) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Segment Reporting, Asset Reconciling Item [Line Items]
Property and equipment	$ 303,291	$ 364,366
Intangible assets	179,384,263	170,127,415
Total assets	218,987,996	203,955,505
UNITED STATES
Segment Reporting, Asset Reconciling Item [Line Items]
Property and equipment	26,670	16,690
Intangible assets	179,351,528	170,092,234
Total assets	209,694,200	199,359,786
Canada [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Property and equipment	276,621	347,676
Intangible assets	32,735	35,181
Total assets	$ 9,293,796	$ 4,595,719

XML

Segmented Information - Summary of Operating Segments (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Revenue	$ 112,749,380	$ 95,006,145
Operating costs	92,454,250	74,186,860
Operating income (loss)	20,295,130	20,819,285
Finance income		(11,825,256)
Finance expense	4,567,327	6,310,406
Depreciation and amortization expense	31,486,055	23,834,400
Anesthesia Services [Member]
Segment Reporting Information [Line Items]
Revenue	101,790,165	83,505,140
Operating costs	81,079,150	62,135,447
Operating income (loss)	20,711,015	21,369,693
Finance income		(11,825,256)
Finance expense	1,138,200	600,602
Depreciation and amortization expense	31,394,245	23,762,012
Product Sales [Member]
Segment Reporting Information [Line Items]
Revenue	10,959,215	11,501,005
Operating costs	5,022,737	4,997,550
Operating income (loss)	5,936,478	6,503,455
Depreciation and amortization expense	68,509	56,907
Other [Member]
Segment Reporting Information [Line Items]
Operating costs	6,352,363	7,053,863
Operating income (loss)	(6,352,363)	(7,053,863)
Finance expense	3,429,127	5,709,804
Depreciation and amortization expense	$ 23,301	$ 15,481

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Subsequent Event - Additional Information (Detail) - USD ($)	Jan. 01, 2019	Dec. 31, 2018	Dec. 31, 2017
Subsequent Event [Line Items]
Deferred acquisition costs		$ 116,025
Anesthesia Services [Member]
Subsequent Event [Line Items]
Exclusive professional services agreements		$ 40,646,723	$ 60,209,389
Subsequent Event [Member] | Anesthesia Services [Member] | Anesthesia Care Associates, LLC [Member]
Subsequent Event [Line Items]
Ownership interest acquired	100.00%
Total cash consideration	$ 5,239,003
Deferred acquisition costs	116,025
Exclusive professional services agreements	$ 5,355,028