Exhibit 10.1

 

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

CONCENTRA GROUP HOLDINGS PARENT, LLC

 

Dated as of
February 1, 2018

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I.

DEFINED TERMS

2

 

 

 

1.1.

Defined Terms

2

 

 

 

ARTICLE II.

GENERAL PROVISIONS

13

 

 

 

2.1.

Formation

13

 

 

 

2.2.

Company Name

13

 

 

 

2.3.

Purpose and Business

13

 

 

 

2.4.

Powers

13

 

 

 

2.5.

Statement of Common Values

14

 

 

 

2.6.

Location of the Principal Place of Business

14

 

 

 

2.7.

Registered Agent and Registered Office

14

 

 

 

2.8.

Term

14

 

 

 

2.9.

Recordation and Filing

14

 

 

 

2.10.

Title to Assets

14

 

 

 

2.11.

Fiscal Year

14

 

 

 

ARTICLE III.

COMPANY INTERESTS

15

 

 

 

3.1.

Members; Company Interests.

15

 

 

 

3.2.

Termination Call Option

17

 

 

 

ARTICLE IV.

MANAGEMENT

18

 

 

 

4.1.

Board Composition

18

 

 

 

4.2.

Authority, Powers and Duties of Board

19

 

 

 

4.3.

Restrictions on Proxies, Voting Trusts and Voting Agreements

24

 

 

 

4.4.

Indemnification.

24

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

4.5.

Limitation on Liability.

25

 

 

 

4.6.

Officers

27

 

 

 

4.7.

Members

27

 

 

 

ARTICLE V.

DISTRIBUTIONS

28

 

 

 

5.1.

Distributions

28

 

 

 

5.2.

Limitation on Distributions

28

 

 

 

5.3.

Non-Cash Distributions

28

 

 

 

5.4.

Repurchase Agreements and Adjustment Payments

29

 

 

 

ARTICLE VI.

TAX AND ACCOUNTING MATTERS

29

 

 

 

6.1.

Classification as an Association Taxable as a Corporation

29

 

 

 

6.2.

Books of Account

29

 

 

 

ARTICLE VII.

TRANSFER OF COMPANY INTERESTS

29

 

 

 

7.1.

Transfers

29

 

 

 

7.2.

Transfers to Permitted Transferees

30

 

 

 

7.3.

Securities Law Compliance.

30

 

 

 

7.4.

Distributions Subsequent to Transfer

31

 

 

 

7.5.

Registration Rights

31

 

 

 

ARTICLE VIII.

DISSOLUTION, LIQUIDATION, WINDING-UP AND TERMINATION

31

 

 

 

8.1.

Causes of Dissolution

31

 

 

 

8.2.

Winding Up and Liquidation

32

 

 

 

8.3.

Documentation of Dissolution and Termination

32

 

 

 

8.4.

Waiver of Partition

32

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

ARTICLE IX.

TAG-ALONG, DRAG-ALONG, PUT AND CALL AND PREEMPTIVE RIGHTS

32

 

 

 

9.1.

Tag-Along Rights

32

 

 

 

9.2.

Drag-Along Rights

36

 

 

 

9.3.

Put and Call Rights

39

 

 

 

9.4.

Preemptive Rights

47

 

 

 

9.5.

Treatment of Class A Additional Capital and Class A Additional Capital Yield

48

 

 

 

ARTICLE X.

AMENDMENTS TO AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

49

 

 

 

10.1.

Amendments.

49

 

 

 

ARTICLE XI.

QUALIFIED MEMBER INFORMATION, ACCESS AND MANAGEMENT RIGHTS; CONSOLIDATION;
EXPENSES

49

 

 

 

11.1.

Qualified Member Information Rights

49

 

 

 

11.2.

Contractual Management Rights

50

 

 

 

11.3.

Consolidation

50

 

 

 

11.4.

Confidentiality

51

 

 

 

11.5.

Expenses

51

 

 

 

ARTICLE XII.

GENERAL PROVISIONS

51

 

 

 

12.1.

Confidentiality

51

 

 

 

12.2.

Notices

52

 

 

 

12.3.

Successors

53

 

 

 

12.4.

Effect and Interpretation

53

 

 

 

12.5.

Counterparts

53

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

12.6.

Remedies

53

 

 

 

12.7.

Members Not Agents

53

 

 

 

12.8.

Entire Understanding; Etc

53

 

 

 

12.9.

Severability

53

 

 

 

12.10.

Construction of Agreement

54

 

 

 

12.11.

Third Party Beneficiaries

55

 

 

 

12.12.

Duration of Rights Under Agreement

55

 

 

 

12.13.

Consent to Jurisdiction

55

 

 

 

12.14.

Waiver of Jury Trial

55

 

 

 

12.15.

Incorporation of Exhibits

56

 

 

 

12.16.

Assurances

56

 

 

 

12.17.

Exclusivity

56

 

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AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF
CONCENTRA GROUP HOLDINGS PARENT, LLC

 

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (as the same may
be amended, amended and restated, supplemented or otherwise modified from time
to time in accordance with its terms, this “Agreement”) is made and entered into
as of February 1, 2018, by and among Concentra Group Holdings Parent, LLC, a
Delaware limited liability company (the “Company”), and each of the individuals
and entities from time to time named on Schedule I hereto, each as Members of
the Company, and is joined in by Select Medical Holdings Corporation, a Delaware
corporation (“Select Holdings”), solely for the purposes of Sections 4.5 and
9.3(d) hereof.

 

RECITALS

 

WHEREAS, on March 22, 2015, MJ Acquisition Corporation, a Delaware corporation
(“MJ Acquisition”), Humana Inc., a Delaware corporation (“Humana”), and
Concentra Inc., a Delaware corporation (“Concentra”), entered into a Stock
Purchase Agreement, pursuant to which MJ Acquisition acquired from Humana all of
the issued and outstanding capital stock of Concentra, with Concentra becoming
an indirect wholly owned Subsidiary of MJ Acquisition, which subsequently merged
into Concentra with Concentra surviving;

 

WHEREAS, Concentra delivers occupational medicine, urgent care, physical
therapy, and wellness services to employees and the general public through its
operation of medical centers and worksite medical facilities, which facilities
will hereafter also be considered owned and operated by SEM for purposes of the
Indenture dated as of May 28, 2013 between SEM and US Bank, National
Association;

 

WHEREAS, each of the individuals and entities named on Schedule I hereto (other
than Dignity), entered into (or subsequently joined) the Amended and Restated
Limited Liability Company Agreement of Concentra Group Holdings, LLC
(“Holdings”) dated June 1, 2015 (as subsequently amended on July 7, 2015,
September 9, 2015 and March 29, 2016) (the “Existing Agreement”);

 

WHEREAS, prior to the acquisition of U.S. HealthWorks, Inc., a Delaware
corporation (“USHW”) (described below), the Company was formed and the Company
formed a wholly owned subsidiary that merged with Holdings with Holdings
surviving the merger as a wholly owned subsidiary of the Company and each of the
members of Holdings at the time of the merger received Company Interests for
their membership interests in Holdings (the “Reorganization”);

 

WHEREAS, on October 22, 2017, Holdings, Concentra, Dignity Health Holding
Corporation, a Nevada corporation (“Dignity”) wholly owned by Dignity Health, a
California not-for-profit public benefit corporation (“Dignity Parent”), USHW
and the Company, entered into an Equity Purchase and Contribution Agreement (the
“Purchase Agreement”), pursuant to which USHW will become an indirect wholly
owned subsidiary of the Company (the

 

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“Acquisition” and, together with the other transactions to be consummated in
connection therewith, the “Transactions”);

 

WHEREAS, in connection with the Acquisition, the parties desire to enter into
this Agreement in order to, among other things, admit Dignity as an additional
Member in consideration of Dignity’s exchange of the Rollover Shares (as defined
in the Purchase Agreement) to the Company for Company Interests pursuant to the
Purchase Agreement;

 

WHEREAS, in connection with the Acquisition, Dignity will transfer to Concentra
all of Dignity’s right, title and interest in and to all of USHW’s common stock
(other than the Rollover Shares) and, subsequently, the Company will contribute
the Rollover Shares to Concentra such that USHW becomes a direct wholly owned
Subsidiary of Concentra;

 

WHEREAS, USHW is a provider of occupational medicine and urgent care services
through its facilities nationwide, which facilities will hereafter also be
considered owned and operated by SEM for purposes of the Indenture dated as of
May 28, 2013 between SEM and US Bank, National Association; and

 

WHEREAS, the parties hereto desire to provide for certain matters relating to
the Company, the Company Interests and any securities directly or indirectly
convertible into or exercisable or exchangeable for Company Interests (“Options
or Convertible Securities”) that are from time to time held by the Members.

 

NOW, THEREFORE, intending to be legally bound hereby, the parties hereto hereby
agree to amend and restate the Limited Liability Company Agreement of the
Company in its entirety as follows:

 

AGREEMENTS

 

ARTICLE I.
DEFINED TERMS

 

1.1.                            Defined Terms.  In addition to the terms defined
elsewhere herein, the following terms have the following meanings when used
herein with initial capital letters:

 

“Act” means the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101, et
seq, as the same may hereafter be amended or supplemented from time to time and
any successor thereto.

 

“Affiliate” means, with respect to any specified Person, a Person that directly,
or indirectly through one or more intermediaries, Controls, is Controlled by or
is under common Control with, the specified Person; provided, that officers,
directors or employees of the Company or any of its Subsidiaries will not be
deemed to be Affiliates of any Member solely by reason of being officers,
directors or employees of the Company or any of its Subsidiaries; provided,
further, that, for purposes of the definition of Third Party contained in
Section 9.2(a), no portfolio company of WCAS or Cressey (or of any other
investment fund under common Control with WCAS or Cressey) shall be deemed to be
an Affiliate of the Company, WCAS or

 

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Cressey unless at least a majority of the outstanding voting securities of such
portfolio company are at the time owned by WCAS or Cressey or such other
investment fund.

 

“Agreement” shall have the meaning set forth in the preamble hereto.

 

“Amended and Restated Shared Services Agreement” means the agreement, dated as
of the date hereof, by and between Concentra and SEM pursuant to which SEM will
provide certain goods and services to Concentra, as purchaser of such goods and
services, as the same may be amended from time to time in accordance with
Section 4.2(e).

 

“Amended and Restated Tax Sharing Agreement” means the Amended and Restated Tax
Sharing Agreement, dated as of the date hereof, by and between the Company,
Holdings and Select Holdings, as the same may be amended from time to time in
accordance with Section 4.2(g).

 

“Applicable Percentage” means, with respect to any Put Exercise, the quotient
obtained by dividing (i) the number of Company Interests that WCAS elects to
sell to SEM in connection with such Put Exercise by (ii) WCAS’s Put Cap.

 

“Board” means the Board of Directors of the Company.

 

“Board Approval” shall have the meaning set forth in Section 4.2(h).

 

“Business Day” means a day other than a day on which commercial banks in New
York, New York are authorized or required by law to close.

 

“Call Price Per Interest” means the quotient obtained by dividing the amount in
clause (i) below by the amount in clause (ii) below:

 

(i)                                     the Company Equity Value;

 

(ii)                                  the number of Fully Diluted Company
Interests.

 

“Call Valuation Request Period” means (i) for the Fiscal Year beginning on
January 1, 2022, the later of (x) the 60 day period beginning on the fourth
anniversary of the date of this Agreement and (y) the 60 day period following
the delivery of the audited financial statements of the Company for the Fiscal
Year ending December 31, 2021 and (ii) for each Fiscal Year beginning on and
after January 1, 2023, the 60 day period following the delivery of the audited
financial statements of the Company for the immediately preceding Fiscal Year.

 

“Cash” means, with respect to a specified Person as of a given measuring date,
the aggregate amount of all cash and cash equivalents of such Person and its
consolidated Subsidiaries as of such measuring date, as determined in accordance
with GAAP, including the amounts of any received but uncleared checks, drafts
and wires issued prior to such time, less the amounts of any issued but
uncleared checks, drafts and wires issued prior to such time.

 

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“Certificate of Formation” means the certificate of formation of the Company, as
in effect on the date hereof and as the same may be amended, supplemented or
otherwise modified in accordance with the terms thereof and the terms of this
Agreement.

 

“Class A Additional Capital” means with respect to the Class A Interests held by
those Class A Members on Schedule I with an asterisk next to their name,
$18,966,735 as reduced by amounts previously distributed to such Members in
respect of such Class A Interests pursuant to Section 5.1(b).

 

“Class A Additional Capital Yield” means with respect to the Class A Interests
held by those Class A Members on Schedule I with an asterisk next to their name,
the compounded yield on the unreturned Class A Additional Capital, which shall
begin to accrue on the date hereof on the Class A Additional Capital and any
unpaid Class A Additional Capital Yield.  The variable interest rate for
purposes of calculating the Class A Additional Capital Yield shall be calculated
on the same basis as the calculation of interest under the Concentra revolving
facility based on the Alternate Base Rate formula (whether or not there are
outstanding borrowings under such facility), minus 0.25%; provided that if at
any time the Concentra revolving facility is extinguished and not replaced such
interest rate shall be equal to the interest rate based on the Alternate Base
Rate formula in place under the Concentra revolving facility as of the date
hereof, minus 0.25%.

 

“Class A Interest” means a Company Interest having the relative rights,
preferences and obligations specified with respect to the Class A Interests set
forth in Section 3.1(b) and elsewhere in this Agreement.

 

“Class A Member” means any Member in its capacity as owner of one or more
Class A Interests.

 

“Class B Interest” means a Company Interest having the relative rights,
preferences and obligations specified with respect to the Class B Interests set
forth in Section 3.1(b) and elsewhere in this Agreement.

 

“Class B Member” means any Member in its capacity as owner of one or more
Class B Interests.

 

“Class C Interest” means a Company Interest having the relative rights,
preferences and obligations specified with respect to the Class C Interests set
forth in Section 3.1(b) and elsewhere in this Agreement.

 

“Class C Member” means any Member in its capacity as owner of one or more
Class C Interests.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Company” has the meaning set forth in the preamble hereto.

 

“Company Business” means the business of owning and operating medical centers
and worksite medical facilities that deliver occupational medicine to the
employees of third parties

 

4

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through such centers and facilities and that are not generally open to patients
other than such employees.

 

“Company Enterprise Value” means the lesser of (x) the fair market value of the
Company and its Subsidiaries (assuming that they were delivered on a debt free,
cash free basis) based upon an arm’s-length sale between a willing buyer and a
willing seller, without giving effect to minority or illiquidity discounts, as
determined by the Investment Bank using a precedent transaction analysis based
on the precedent transactions set forth on Part I of Exhibit A to this Agreement
using multiples of EBITDA, as Exhibit A may be modified from time to time by the
mutual agreement of SEM, Dignity and WCAS in writing, and (y) the amount,
without giving effect to any minority or illiquidity discount, equal to the
product of (A) the EBITDA multiple set forth on Part II of Exhibit A to this
Agreement and (B) the Company’s EBITDA for the period determined in accordance
with, and otherwise calculated in accordance with, Section 9.3(e) (provided that
for purposes of calculating the Put Price Per Interest or Call Price Per
Interest that is paid to a Dignity Member (and any definitions from which such
amounts are derived), and only a Dignity Member, in no event shall the EBITDA
multiple for such purposes be less than the EBITDA multiple set forth on
Part III of Exhibit A to this Agreement).

 

“Company Equity Plans” means all option plans, restricted security purchase
plans, option agreements, restricted security purchase agreements and other
incentive plans and agreements relating to the issuance of Company Equity
Securities, including the Grant Agreements.

 

“Company Equity Securities” means all Company Interests or other equity
securities now or hereafter issued by the Company, including all Options or
Convertible Securities now or hereafter issued by the Company.

 

“Company Equity Value” means, as of the date of any purchase or sale pursuant to
a Put Exercise, Call Exercise, WCAS SEM COC Put Exercise or Dignity SEM COC Put
Exercise, the amount equal to (1) Company Enterprise Value determined pursuant
to Section 9.3(e) with respect to such Put Exercise, Call Exercise, WCAS SEM COC
Put Exercise or Dignity SEM COC Put Exercise, as applicable, minus (2) the Net
Debt and Senior Securities of the Company as of the most recent month end prior
to such date, plus (3) the exercise price for all in-the-money Options or
Convertible Securities outstanding on such date.

 

“Company Interests” means all Class A Interests, Class B Interests and Class C
Interests.

 

“Continuing Director” shall mean, with respect to any Person for any period, any
individuals (i) who were members of the board of directors or other equivalent
governing body of such Person on the first day of such period, (ii) whose
election or nomination to that board or equivalent governing body was approved
by individuals referred to in clause (i) above constituting at the time of such
election or nomination at least one-half (1/2) of that board or equivalent
governing body, or (iii) whose election or nomination to that board or other
equivalent governing body was, to the extent required, approved by individuals
referred to in clauses (i) and (ii) above constituting at the time of such
election or nomination at least one-half (1/2) of that board or equivalent
governing body.

 

5

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“Control” (including the terms “Controlling”, “Controlled by” and “under common
Control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

 

“Costs” shall have the meaning set forth in Section 9.1(a)(iii).

 

“Cressey” means Cressey & Company Fund IV LP.

 

“Cressey Fund” means each of (i) Cressey and (ii) each Member that is a
Permitted Transferee of Cressey of the type described in clause (iv)(B) of the
definition of Permitted Transferee.

 

“Cressey Member” means each of (i) Cressey and (ii) each Member that is a
Permitted Transferee of Cressey.

 

“Debt and Senior Securities” means as of a given measuring date and without
duplication, all of the Company’s and its consolidated Subsidiaries’ obligations
for principal, interest, premiums or other obligations (including prepayment
penalties or breakage costs assuming any of the following is repaid or otherwise
settled in its entirety on the measuring date) in respect of (a) indebtedness
for borrowed money, (b) all obligations evidenced by bonds, debentures, notes or
similar instruments, together with all premiums, penalties and accrued interest
thereon and other costs, fees and expenses payable in connection therewith,
(c) all obligations for the deferred purchase price of property, goods or
services other than accounts payable incurred in the ordinary course of
business, (d) all indebtedness created or arising under a conditional sale or
other title retention agreement with respect to property acquired, (e) all
obligations as lessee or lessees under leases that are recorded as capital
leases in accordance with GAAP, (f) all obligations under acceptance, letters of
credit, bankers’ acceptances, surety bonds and similar instruments, in each
case, to the extent drawn, (g) amounts required to terminate contractual
obligations relating to interest rate protection, swap agreements, collar
agreements or similar hedging instruments, (h) guarantees of all indebtedness of
a Person of the type referred to in clauses (a) through (g) above, (i) all
indebtedness of the type referred to in clauses (a) through (h) above that is
secured by (or for which the holder of such indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien on property (including
accounts and contract rights), even though such Person has not assumed, become
liable for or guaranteed the payment of such indebtedness, (j) all Company
Equity Securities issued after the date hereof which are senior to the Class A
Interests with respect to dividends or distributions or upon liquidation,
(k) the unreturned Class A Additional Capital plus the aggregate unpaid amount
of Class A Additional Capital Yield, (l) amounts with respect to professional
liability claims, workers compensation liability claims and employment practices
liability claims that are classified and recorded on the financial statements of
the Company as a non-current liability, net of any associated receivables or
other assets recorded on the financial statements of the Company, in each case
as SEM, Dignity and WCAS mutually agree, and (m) the fees, costs and expenses of
the Company incurred in connection with the applicable Put Exercise, Dignity Put
Exercise, Call Exercise, WCAS SEM COC Put Exercise or Dignity SEM COC Put
Exercise (including the fees and expenses of the Investment Bank).  For the
avoidance of doubt, Debt and Senior Securities do not include deferred items not
described in clause (c), such as deferred income taxes.

 

6

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“Dignity Member” means (i) Dignity and (ii) each Member that is a Permitted
Transferee of Dignity.

 

“Dignity Put Cap” means the number of Class A Interests equal to thirty three
and one third percent (33 1/3%) of the number of Class A Interests listed for
Dignity as of the date hereof on Schedule I (as the same may be adjusted for any
limited liability company interest split, limited liability company interest
dividend, distribution, combination or reclassification or similar transaction
occurring after the date of this Agreement).

 

“Dignity Start Number” means 89,613,968.8, which is the number of Class A
Interests owned by the Dignity Members as of the date of this Agreement (as the
same may be adjusted for any limited liability company interest split, limited
liability company interest dividend, distribution, combination or
reclassification or similar transaction occurring after the date of this
Agreement) and representing, as of the date of admission, twenty percent (20%)
of the total number of Fully Diluted Company Interests outstanding at such time.

 

“Director” means any member of the Board elected pursuant to Section 4.1.

 

“EBITDA” means, for any period, with respect to the Company, (i) the
consolidated net income of the Company and its Subsidiaries for such period,
plus (ii) without duplication and to the extent deducted in determining such
consolidated net income for such period, the sum of (A) consolidated interest
expense (net of consolidated interest income) of the Company and its
Subsidiaries for such period, (B) consolidated income tax expense of the Company
and its Subsidiaries for such period, (C) all amounts attributable to
depreciation and amortization expense of the Company and its Subsidiaries for
such period and (D) any non-cash charges or non-recurring charges for such
period as SEM, Dignity and WCAS mutually agree (net of any mutually agreed
non-cash income or non-recurring income), including mutually agreed charges in
respect of (1) management restructuring, (2) start-up losses for new locations
or business lines, (3) retention bonuses and other one-time expenses related to
acquisitions, (4) out of period items and (5) non-recurring information
technology expenses; in each case (x) as each component of EBITDA is determined
in accordance with GAAP and (y) as calculated on a pro forma basis giving effect
to any acquisitions or dispositions that were consummated during the
twelve-month period immediately preceding the end of such calculation period.

 

“Exchange Act” means the Securities Exchange Act of 1934, or any successor
federal statute, and the rules and regulations of the United States Securities
and Exchange Commission thereunder, as the same may be amended from time to
time.

 

“Fair Market Value” means the fair market value based upon an arm’s-length sale
between a willing buyer and a willing seller.

 

“Fiscal Year” means any 12-month period commencing on January 1 and ending on
December 31.

 

“Fully Diluted Company Interests” means, as of any time, the aggregate number of
outstanding Class A Interests, Class B Interests (whether or not vested),
Class C Interests (whether or not vested), Class B Interests underlying
in-the-money Options or Convertible

 

7

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Securities outstanding at such time (whether or not vested) and Class C
Interests underlying in-the-money Options or Convertible Securities outstanding
at such time (whether or not vested).

 

“GAAP” means United States generally accepted accounting principles, as in
effect from time to time.

 

“Grant Agreement” shall mean, with respect to any Class B Member or Class C
Member, any agreement pursuant to which the Company has granted the Class B
Member or Class C Member his or her Class B Interests, Class C Interests or any
Options or Convertible Securities.

 

“Governmental Entity” means any (i) multinational, national, federal,
provincial, territorial, state, regional, municipal, local or other governmental
or public department, central bank, court, arbitral body, commission,
commissioner, tribunal, board, bureau, agency, instrumentality, or stock
exchange, domestic or foreign, (ii) any subdivision, agent, commission, board or
authority of any of the foregoing, (iii) any quasi-governmental or private body
exercising any regulatory, expropriation or taxing authority under or for the
account of any of the above, or (iv) any self-regulatory agency or organization
exercising any regulatory, expropriation or taxing authority.

 

“Indemnitee” means (i) each of the Directors and (ii) each of the Members, but
in each case only in his, her or its capacity as such and not in any other
capacity.

 

“Initial Public Offering” means the initial Public Offering registered on
Form S-1 (or any successor form under the Securities Act).

 

“Investment Bank” means an investment bank chosen in accordance with
Section 9.3(e) from the list of investment banks set forth on Exhibit B to this
Agreement, as Exhibit B may be modified from time to time by SEM, Dignity and
WCAS in writing.

 

“Joinder Agreement” means a written instrument in the form of Exhibit C hereto
(with such changes thereto as are from time to time reasonably requested by the
Company) whereby a Permitted Transferee of Company Equity Securities becomes a
party to, and agrees to be bound (to the same extent as its transferor) by, the
terms of this Agreement as a “Member” hereunder.

 

“Liquidator” shall have the meaning set forth in Section 8.2.

 

“Majority-In-Interest of the Members” means one or more Members who hold in the
aggregate more than fifty percent (50%) of the Class A Interests then held by
the Class A Members.

 

“Member” means those Persons listed under the heading “Members” on the signature
pages hereto, their permitted successors and assigns who, at the time of
reference thereto, are duly admitted as members of the Company, and any other
Person who, at the time of reference thereto, is duly admitted as a member of
the Company in accordance with this Agreement, each of the foregoing in its
capacity as a member of the Company.

 

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“Net Debt and Senior Securities” means, with respect to the Company and its
consolidated Subsidiaries, as of a given measuring date, Debt and Senior
Securities less Cash; it being understood that if Cash exceeds Debt and Senior
Securities, Net Debt and Senior Securities will be a negative number.

 

“Options or Convertible Securities” shall have the meaning set forth in the
recitals hereto.

 

“Permitted Transferee” means (i) in the case of any Member that is not a natural
person, any direct or indirect, wholly owned Subsidiary of such Member but only
for so long as such Subsidiary is wholly owned by the Member, (ii) in the case
of a Member who is a natural person, such Member’s parents, spouse and lineal
descendants and the lineal descendants of such Member’s parents or spouse, or
trusts solely for the benefit of, or corporations, limited liability companies
or partnerships, the stockholders, members or general or limited partners of
which are only such Member or such Member’s parents, spouse or lineal
descendants or the lineal descendants of such Member’s parents or spouse (it
being agreed that lineal descendants shall be deemed to include children by
adoption for purposes of this clause (ii)), (iii) in the case of each WCAS
Member, (A) each of the other WCAS Members, (B) any other investment fund under
common Control with WCAS, (C) WCAS Management Corporation (or any other entity
serving as a management company for WCAS or any investment fund referred to in
(A) or (B) of this clause (iii)), (D) each partner, manager, member,
stockholder, officer, director or employee of or consultant to any of the
foregoing referred to in clauses (iii)(A), (iii)(B) or (iii)(C) and (E) JCSC
Holding LLC, (iv) in the case of each Cressey Member, (A) each of the other
Cressey Members, (B) any other investment fund under common Control with
Cressey, (C) any entity serving as a management company for Cressey or any
investment fund referred to in (A) or (B) of this clause (iv) and (D) each
partner, manager, member, stockholder, officer, director or employee of or
consultant to any of the foregoing referred to in clauses (iv)(A), (iv)(B) or
(iv)(C), and (v) in the case of any Dignity Member, any direct or indirect
wholly owned Subsidiary of Dignity Parent, or any Person (or direct or indirect
wholly owned subsidiary of such Person) wholly owning (through a membership
interest or otherwise) Dignity Parent as a result of the affiliation, merger or
other business combination of Dignity Parent with Catholic Health Initiatives, a
Colorado nonprofit corporation (“CHI”) so long as such Person has, at the time
such Person acquires such interest in Dignity, at least fifty percent (50%) of
its directors composed of persons who would be Continuing Directors of Dignity
Parent (and thereafter such board remains composed of at least fifty percent
(50%) of directors who, at the time of determination, constitute Continuing
Directors of such Person).

 

“Person” means any natural person, corporation, limited liability company,
partnership, trust, joint stock company, business trust, unincorporated
association, joint venture, governmental authority or other legal entity of any
nature whatsoever.

 

“Prior Unsold Interests” means, with respect to any Class B Member, (x) the
maximum number of Class B Interests that such Class B Member could have sold
pursuant to Section 9.3(a)(i) in connection with all previous WCAS Put Exercises
minus (y) the number of Class B Interests that such Class B Member actually sold
pursuant to Section 9.3(a)(i) in connection with such WCAS Put Exercises.

 

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“Public Offering” means the sale of Company Equity Securities to the public
pursuant to an effective registration statement (other than a registration
statement on Form S-4, Form S-8 or any similar or successor form) filed under
the Securities Act.

 

“Put Cap” means, (x) with respect to a Class A Member, a number of Class A
Interests equal to thirty three and one third percent (33 1/3%) of the number of
Class A Interests listed as of the date hereof on Schedule I (as the same may be
adjusted for any limited liability company interest split, limited liability
company interest dividend, distribution, combination or reclassification or
similar transaction occurring after the date of this Agreement); and (y) with
respect to a Class B Member, a number of Class B Interests equal to (i) thirty
three and one third percent (33 1/3%) of the number of Class B Interests issued
listed as of the date hereof on Schedule I (as the same may be adjusted for any
limited liability company interest split, limited liability company interest
dividend, distribution, combination or reclassification or similar transaction
occurring after the date of this Agreement) plus (ii) with respect to any WCAS
Put Exercise, the quotient of (A) such Class B Member’s Prior Unsold Interests
with respect to all previous WCAS Put Exercises divided by (B) the Applicable
Percentage with respect to the applicable WCAS Put Exercises; provided that if
any Company Interests listed as of the date hereof on Schedule I are thereafter
Transferred to another Member, then, for purposes of determining each Member’s
Put Cap only, the owner of such Transferred Company Interests on the date of the
WCAS Put Exercise Notice or Additional Put Exercise Notice shall be deemed to
have owned such Transferred Company Interests as of the date of this Agreement
and the Person who owned such Transferred Company Interests on the date of this
Agreement shall be deemed not to have owned such Transferred Company Interests
on the date of this Agreement.

 

“Put Price Per Interest” means the quotient obtained by dividing the amount in
clause (i) below by the amount in clause (ii) below:

 

(i)                                     the Company Equity Value;

 

(ii)                                  the number of Fully Diluted Company
Interests.

 

“Put Valuation Request Period” means (i) for the Fiscal Year beginning on
January 1, 2020, the later of (x) the 60 day period beginning on the second
anniversary of the date of this Agreement and (y) the 60 day period following
the delivery of the audited financial statements of the Company for the Fiscal
Year ending December 31, 2019 and (ii) for each Fiscal Year beginning on and
after January 1, 2021, the 60 day period following the delivery of the audited
financial statements of the Company for the immediately preceding fiscal year.

 

“Qualified Fund Member” means (i) each WCAS Fund and (ii) each Cressey Fund.

 

“Qualified Member” means (i) each SEM Member, (ii) each Dignity Member,
(iii) each WCAS Member and (iv) each Cressey Member.

 

“Qualifying SEM Change of Control” means an SEM Change of Control that has not
been approved by Dignity and WCAS in writing prior to the consummation thereof.

 

“Representatives” shall have the meaning set forth in Section 12.1.

 

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“Repurchase Agreements” means those agreements providing for Holdings to acquire
Class A Interests and/or vested Class B Interests of Holdings as of the date of
the Agreement.

 

“Restricted Business” the business of owning and/or operating freestanding
(a) occupational medicine clinics or (b) community-based outpatient clinics
listed at any time on the U.S. Department of Veterans Affairs’ (the “USDVA”)
website (see https://www.va.gov/directory/guide/allstate.asp) (“CBOCs”) which
outpatient clinics are operated under contract with the USDVA and under a CBOC
program (and related laws, rules regulations and directives) substantially
similar to, and with substantially the same scope, as the CBOC program presently
in effect; provided, that for the avoidance of doubt, the term “Restricted
Business” shall not include any of the following, so long as they do not hold
themselves out as primarily occupational medicine clinics or CBOCs: (i) urgent
care clinics; (ii) outpatient physical therapy clinics; (iii) physician
practices; or (iv) provision of health care services to veterans other than
through a CBOC.

 

“SEC” means the United States Securities and Exchange Commission or any other
successor agency of the federal government administering the Securities Act and
the Exchange Act.

 

“Securities Act” means the Securities Act of 1933, or any successor federal
statute, and the rules and regulations of the United States Securities and
Exchange Commission thereunder, as the same may be amended from time to time.

 

“SEM” means Select Medical Corporation, a Delaware corporation.

 

“SEM Change of Control” means (a) the sale of all or substantially all of the
assets of Select Holdings and its Subsidiaries, taken as a whole (including by
Transfer of the capital stock of any Subsidiary of Select Holdings), or (b) a
merger, recapitalization or other Transfer or business combination transaction
by Select Holdings or SEM, or the stockholders of Select Holdings, with or to
any Person (or group of such Persons acting in concert) that results in any
Person (or group of such Persons acting in concert) owning, directly or
indirectly, more than 50% of the equity interests of Select Holdings, SEM or
other holding company holding SEM’s business (or any resulting company after a
merger or business combination transaction), but only in the event that, in the
case of either (a) or (b), three (3) or more of the SEM NEOs are not officers of
SEM or Select Holdings (or the applicable acquirer, successor or any resulting
company after a merger or business combination transaction) immediately after
the consummation of such transaction.

 

“SEM Common Stock” means the common stock, $0.001 par value per share, of Select
Holdings.

 

“SEM Directors” shall have the meaning set forth in Section 4.1(b).

 

“SEM Member” means (i) SEM and (ii) each Member that is a Permitted Transferee
of SEM.

 

“SEM NEO” means, as of any reference date, any “named executive officer” (as
defined by Item 402(a)(3) of Regulation S-K promulgated by the SEC) of Select
Holdings as would be

 

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set forth in a proxy statement of Select Holdings had Select Holdings filed such
proxy statement with respect to a period ending on the Business Day immediately
preceding such reference date.

 

“Subsidiary” means, with respect to any Person on any date, any Person of which
securities or other ownership interests representing more than fifty percent
(50%) of the equity interests or more than fifty percent (50%) of the ordinary
voting power or, in the case of a partnership, more than fifty percent (50%)  of
the general partnership interests or more than fifty percent (50%) of the
profits or losses of which are, as of such date, owned or held by the applicable
Person or one or more subsidiaries of such Person.

 

“Supermajority Vote” means the receipt of the following: (i) Board Approval,
(ii) if the WCAS Members collectively own a number of Company Interests greater
than or equal to fifty percent (50%) of the WCAS Start Number, approval of at
least one (1) WCAS Director and (iii) if the Dignity Members collectively own a
number of Company Interests greater than or equal to fifty percent (50%) of the
Dignity Start Number, approval of at least one (1) Dignity Director.

 

“Transfer” means any direct or indirect transfer, sale, assignment, pledge,
encumbrance, hypothecation or other disposition (including by operation of law),
including pursuant to the creation of a derivative security, the grant of an
option or other right or the imposition of a restriction on disposition or
voting.  Notwithstanding the foregoing, a “Transfer” does not include (x) any
transfer of limited partnership interests in WCAS or any other Member that is an
investment fund under common Control with WCAS, (y) any transfer of limited
partnership interests in Cressey or any other Member that is an investment fund
under common Control with Cressey, or (z) any direct or indirect transfer of
ownership interests in Dignity or any Affiliate of Dignity to any Person, if
either (i) such Person has, at the time such Person acquires such interest in
Dignity or its Affiliate, at least fifty percent (50%) of its directors
comprised of persons who would be Continuing Directors of Dignity Parent (and
thereafter such board of directors remains comprised of at least fifty percent
(50%) of directors who, at the time of determination, constitute Continuing
Directors of such Person), (ii) no other Person has the right to appoint a
greater number of directors of such Person than the number of directors Dignity
Parent or any Subsidiary of Dignity Parent has the right to appoint, or
(iii) such transfer is part of a sale or acquisition of control of a majority of
the business or assets of Dignity Parent.

 

“WCAS” means Welsh, Carson, Anderson & Stowe XII, L.P., a Delaware limited
partnership.

 

“WCAS Directors” shall have the meaning set forth in Section 4.1(b).

 

“WCAS Funds” means (i) WCAS, (ii) Welsh, Carson, Anderson & Stowe XII Delaware,
L.P., (iii) Welsh, Carson, Anderson & Stowe XII Delaware II, L.P., (iv) Welsh,
Carson, Anderson & Stowe XII Cayman, L.P. and (v) each Member that is a
Permitted Transferee of the type described in clause (iii)(B) of the definition
of Permitted Transferee of a Person set forth in any of clauses (i) — (iv) of
this definition.

 

“WCAS Member” means (i) WCAS, (ii) Welsh, Carson, Anderson & Stowe XII Delaware,
L.P., (iii) Welsh, Carson, Anderson & Stowe XII Delaware II, L.P., (iv) Welsh,
Carson, Anderson & Stowe XII Cayman, L.P., (v) WCAS XII Co-Investors LLC,
(vi) WCAS

 

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Management Corporation and (vii) each Member that is a Permitted Transferee of a
Person set forth in any of clauses (i) — (vi) of this definition.

 

“WCAS Start Number” means 114,827,175.8, which is the number of Class A
Interests owned by the WCAS Members as of the date of this Agreement (as the
same may be adjusted for any limited liability company interest split, limited
liability company interest dividend, distribution, combination or
reclassification or similar transaction occurring after the date of this
Agreement).

 

ARTICLE II.
GENERAL PROVISIONS

 

2.1.                            Formation.  The Company was formed as a limited
liability company on October 11, 2017, upon the filing of the Certificate of
Formation with the Secretary of State of the State of Delaware.  The Members
hereby agree that all actions taken in connection with the formation of the
Company are hereby authorized and ratified in all respects.  This Agreement
shall constitute the “limited liability company agreement” (as that term is used
in the Act) of the Company.  The rights, powers, duties, obligations and
liabilities of the Members and Board shall be determined pursuant to the Act and
this Agreement.  To the extent that the rights, powers, duties, obligations and
liabilities of any Member or the Board are different by reason of any provision
of this Agreement than they would be in the absence of such provision, this
Agreement shall, to the extent permitted by the Act, control.

 

2.2.                            Company Name.  The name of the Company, and the
name under which the business of the Company shall be conducted, shall be
Concentra Group Holdings Parent, LLC.  The Board may change the name of the
Company or adopt such trade or fictitious names for the Company as it may
determine from time to time.

 

2.3.                            Purpose and Business.  The purpose of the
Company shall be to conduct any lawful business whatsoever that may be conducted
by a limited liability company under the Act including, without limitation,
acquiring, directly or indirectly, the issued and outstanding capital stock of
Concentra and USHW, managing and supervising such investment and the Company
Business and the other businesses of the Company and its direct and indirect
Subsidiaries, selling, distributing or otherwise disposing of such investment,
in whole or in part, and engaging in any and all activities necessary,
desirable, advisable, incidental or ancillary thereto.

 

2.4.                            Powers.  Subject to the limitations set forth in
this Agreement, the Company shall have all powers necessary, suitable or
convenient for the accomplishment of the purposes of the Company as set forth in
Section 2.3, including, without limitation, the following:

 

(a)                                 to acquire, hold, sell or otherwise dispose
of, in whole or in part, directly or indirectly, the issued and outstanding
capital stock of Concentra, exercise all voting, consent or similar rights in
connection therewith, and manage and supervise such investment and the Company
Business and the other businesses of the Company and its direct and indirect
Subsidiaries;

 

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(b)                                 to enter into the documents in connection
with the Transactions to which the Company is a party and to exercise its rights
and comply with its obligations thereunder;

 

(c)                                  to make and perform all contracts, enter
into all agreements, and engage in all activities and transactions necessary or
advisable to carry out the purposes of the Company, including, without
limitation, the purchase, sale, transfer, pledge and exercise of all rights,
privileges and incidents of ownership or possession with respect to any Company
asset or liability; and

 

(d)                                 otherwise to have all the powers available
to it as a limited liability company under applicable law.

 

2.5.                            Statement of Common Values. The Company will
comply with the Mission, Vision and Values Statement of Common Values attached
hereto as Exhibit G.

 

2.6.                            Location of the Principal Place of Business. 
The location of the principal place of business of the Company shall be such
location as the Board may from time to time select.

 

2.7.                            Registered Agent and Registered Office.  The
registered agent of the Company in the State of Delaware shall be The
Corporation Trust Company, which maintains an office at 1209 Orange Street, City
of Wilmington, County of New Castle, State of Delaware 19801, or such other
Person as the Board may from time to time select.  The registered office of the
Company in the State of Delaware shall be c/o Corporation Trust Center, 1209
Orange Street, City of Wilmington, County of New Castle, State of Delaware
19801, or such other location as the Board may from time to time select.

 

2.8.                            Term.  The term of the Company shall continue
until the Company is dissolved in accordance with the provisions of
Article VIII.

 

2.9.                            Recordation and Filing.  The Board or any Person
designated by the Board shall have the power to execute, file and record any and
all certificates, notices, statements and other documents required under the Act
or any other applicable law of any jurisdiction where the Company maintains an
office or does business.  At the request of the Board, each Member shall
execute, acknowledge, swear to, and deliver all certificates and other
instruments conforming with this Agreement that are necessary or appropriate to
qualify, continue, and terminate the Company as a foreign entity in all such
jurisdictions in which the Company may conduct business, provided that no Member
shall be required to file any general consent to service of process or to
qualify as a foreign corporation, limited liability company, partnership or
other entity in any jurisdiction in which it is not already so qualified.

 

2.10.                     Title to Assets.  Title to Company assets shall be in
the name of the Company.  The Members shall not have any interest in any
specific assets of the Company.  The interest of the Members in the Company is
personal property.

 

2.11.                     Fiscal Year.  The Board may change the Fiscal Year of
the Company from time to time, in accordance with applicable law, and will
promptly give written notice of any such change to the Members.

 

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ARTICLE III.
COMPANY INTERESTS

 

3.1.                            Members; Company Interests.

 

(a)                                 Members.  Each of the Persons executing this
Agreement as a Member is hereby admitted as a member of the Company.  The names
and addresses of the Members, together with the class and number of Company
Interests held by each such Member, in each case effective immediately following
the execution of this Agreement, are set forth on Schedule I hereto.  The Board
shall update Schedule I as required by the Act and this Agreement and ensure
that it accurately reflects the information to be provided for therein.  Any
amendment or revision to Schedule I made in accordance with this Agreement shall
not be deemed an amendment to this Agreement.  Any reference in this Agreement
to Schedule I shall be deemed to be a reference to Schedule I as amended and in
effect from time to time. Unless delegated such power herein, no Member shall,
in its capacity as such, have the authority or power to act for or on behalf of
the Company in any manner or to participate in the management or control of the
affairs of the Company, to do any act that would be (or could be construed as)
binding on the Company, or to make any expenditures on behalf of the Company,
and the Members hereby consent to the exercise by the Board of the powers and
rights conferred on it by law and by this Agreement.  Except as expressly
provided for in this Agreement or as expressly required by the Act to be
performed or approved by the act of Members, no Company action or event shall be
taken by the vote or approval of the Members or require the approval of the
Members.

 

(b)                                 Classes.  Subject to Section 3.1(c), the
Company Interests shall be the “Class A Interests” issued to, and owned by, the
Class A Members, the “Class B Interests” issued to, and owned by, the Class B
Members and the “Class C Interests” issued to, and owned by, the Class C
Members.  Class A Interests are voting interests in the Company, and include any
and all benefits to which such Class A Member is entitled as provided in this
Agreement, together with all obligations of such Class A Member to comply with
the terms and provisions of this Agreement.  The Class A Members shall be the
only class of Members that have the right to vote with respect to any matter
related to the Company.  Each Class A Member shall be entitled to cast one
(1) vote per Class A Interest of which such Class A Member is the record owner. 
Class B Interests and Class C Interests are non-voting interests in the Company
and, except as required by law, Class B Members and Class C Members shall not be
entitled to vote with respect to any matter.  Class B Interests include any and
all benefits to which such Class B Member is entitled as provided in this
Agreement, together with all obligations of such Class B Member to comply with
the terms and provisions of this Agreement.  Class C Interests include any and
all benefits to which such Class C Member is entitled as provided in this
Agreement, together with all obligations of such Class C Member to comply with
the terms and provisions of this Agreement.  With respect to any Class B Member
or Class C Member, his or her Class B Interests or Class C Interests,
respectively, shall be subject to the vesting and other limitations and
restrictions as set forth in such Class B Member’s Grant Agreement or Class C
Member’s Grant Agreement, as applicable.

 

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(c)                                  Issuances of Additional Company Equity
Securities.  Subject to Sections 4.2(b)(vii) and 9.4, the Board is hereby
authorized to cause the Company from time to time to create and issue to the
Members or other Persons additional Company Equity Securities in one or more
classes, or one or more series of any of such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including rights, powers and duties senior to those of the
Members, all as shall be determined by the Board in its sole discretion and,
without the approval of any of the Members, including (A) the right of each such
class of Company Equity Securities to share in distributions made by the
Company; and (B) the right of each such class of Company Equity Securities upon
the dissolution and/or liquidation of the Company.  If applicable, each Person
acquiring such additional Company Equity Securities shall be admitted to the
Company as a Member upon the execution of the Joinder Agreement.

 

(d)                                 Interest Certificates.  Unless and until the
Board shall determine otherwise, Company Interests shall be uncertificated and
recorded in the books and records of the Company (including Schedule I).  To the
extent any Company Interest is certificated, such certificate shall be in the
form approved by the Board from time to time.  The Board may determine the
conditions upon which a new certificate may be issued in place of a certificate
that is alleged to have been lost, stolen or destroyed and may, in its sole
discretion, require the owner of such certificate or its legal representative to
give an agreement of indemnity or a bond, with sufficient surety, to indemnify
the Company and each transfer agent and registrar agent, if any, against any and
all losses and claims that may arise as a result of the issuance of a new
certificate in place of the one so lost, stolen or destroyed.  To the extent any
Company Interest is certificated, each certificate will bear a legend
substantially to the following effect with such additions thereto or changes
therein as the Board may determine are required by law or necessary to give full
effect to this Agreement:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT, DATED AS OF FEBRUARY 1, 2018,
AMONG THE COMPANY AND THE OTHER PARTIES THERETO, AS AMENDED, A COPY OF WHICH IS
ON FILE WITH THE SECRETARY OF THE COMPANY.  NO TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH AMENDED
AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT.  THE HOLDER OF THIS
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE
PROVISIONS OF SUCH AMENDED AND RESTATED LIMITED LIABILITY COMPANY
AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE VOTING AGREEMENT CONTAINED
THEREIN, THE RESTRICTIONS ON TRANSFER CONTAINED THEREIN AND THE REPURCHASE AND
FORCED SALE PROVISIONS CONTAINED THEREIN.

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND NO INTEREST HEREIN MAY BE SOLD, OFFERED,
ASSIGNED, DISTRIBUTED,

 

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PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING ANY SUCH TRANSACTION OR (B) THE COMPANY
RECEIVES AN OPINION IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY
OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY STATING THAT SUCH TRANSACTION
IS EXEMPT FROM SUCH REGISTRATION AND IN COMPLIANCE WITH ALL APPLICABLE STATE
SECURITIES LAWS OR (C) THE COMPANY AND ITS COUNSEL ARE OTHERWISE SATISFIED THAT
SUCH TRANSACTION IS EXEMPT FROM SUCH REGISTRATION AND IN COMPLIANCE WITH ALL
STATE SECURITIES LAWS.”

 

In addition, any certificated Company Interests shall bear such legends as may
be required under any other applicable securities laws from time to time.

 

3.2.                            Termination Call Option.

 

(a)                                 In the event a Class B Member’s or Class C
Member’s employment or other service relationship with the Company or any of its
Subsidiaries terminates for any reason (whether by the Company, any of its
Subsidiaries or the Class B Member or Class C Member), the Company shall have an
option (but not the obligation) to purchase (a “Termination Call Option”) all or
a portion of the vested Class B Interests and vested Class C Interests then
owned by such Class B Member or Class C Member or any of its Permitted
Transferees (all such vested Class B Interests and vested Class C Interests
being collectively referred to as the “Subject Interests”) for the applicable
Termination Call Option Purchase Price; provided, that all unvested Class B
Interests or unvested Class C Interests owned by such Class B Member or Class C
Member or any of its Permitted Transferees shall be automatically forfeited
without payment of any consideration therefor.  The Company may exercise a
Termination Call Option by written notice to the applicable Class B Member or
Class C Member within one hundred eighty (180) days after the later of (x) the
date that the applicable Class B Member’s or Class C Member’s employment or
other service relationship with the Company or its Subsidiaries terminates and
(y) the date on which the applicable Subject Interests were acquired by such
Class B Member, Class C Member or Permitted Transferee.  Such notice shall set
forth a time and place of closing which shall be no earlier than ten (10) days
and no later than ninety (90) days after the date such notice is sent.  At the
closing, the applicable Class B Member or Class C Member and any other holder of
Subject Interests shall deliver any documents that are necessary to transfer to
the Company good title to such Person’s Subject Interests, and concurrently with
such delivery, the Company shall deliver to the applicable Class B Member,
Class C Member or other holder(s), as applicable, the full amount of the
Termination Call Option Purchase Price for such Subject Interests in cash.

 

(b)                                 As used in this Agreement, “Termination Call
Option Purchase Price” means:

 

(i)                                     if a Class B Member’s or Class C
Member’s employment or other service relationship with the Company or any of its
Subsidiaries has been

 

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terminated by the Company or its Subsidiaries for “Cause” (as defined in the
applicable Company Equity Plan), the lesser of (a) the Fair Market Value of the
Subject Interests as determined by the Board in its reasonable good faith
judgment and (b) the original purchase price, if any, paid for the Subject
Interests; and

 

(ii)                                  in all other cases, the Fair Market Value
of the Subject Interests as determined by the Board in its reasonable good faith
judgment.

 

ARTICLE IV.
MANAGEMENT

 

4.1.                            Board Composition.  From and after the date
hereof, at each annual or special meeting of Members at which directors are to
be elected, and whenever the Members act by written consent with respect to the
election of Directors, each Member agrees to vote, or otherwise give such
Member’s consent, in respect of all Company Equity Securities at the time owned
by such Member or over which such Member has voting control, and take all other
necessary actions, and the Company shall take all necessary actions within its
control, in order to cause:

 

(a)                                 the authorized number of directors on the
Board to be fixed at eleven (11);

 

(b)                                 subject to Sections 4.1(e) and 4.1(f), the
election to the Board of:

 

(i)                                     seven (7) directors designated by SEM
(the “SEM Directors”), with the initial SEM Directors being Robert A. Ortenzio,
Martin F. Jackson, David S. Chernow, John K. Carlyle, Keith Newton, Daniel
Thomas and James Greenwood;

 

(ii)                                  two (2) directors designated by WCAS (the
“WCAS Directors”), with the initial WCAS Directors being D. Scott Mackesy and
Bryan C. Cressey; and

 

(iii)                               two (2) directors designated by Dignity (the
“Dignity Directors”), with the initial Dignity Directors being Lisa Zuckerman
and Kent Bradley, M.D.;

 

all of which persons shall hold office, subject to their earlier death,
resignation or removal in accordance with clause (c) below, until their
respective successors shall have been elected and shall have qualified;

 

(c)                                  the removal from the Board (with or without
cause) of any Director elected in accordance with clause (b)(i), (b)(ii) or
(b)(iii) above upon the written request of the Member that is entitled to
designate such Director under clause (b)(i), (b)(ii) or (b)(iii), as applicable,
it being agreed that no Member shall vote for or consent to, and the Company
shall not take any actions to effect, any other removal (with or without cause)
of a Director elected pursuant to clause (b)(i), (b)(ii) or (b)(iii) above
without the written consent of the Member that is entitled to designate such
Director;

 

(d)                                 upon any vacancy in the Board as a result of
any individual designated as provided in clause (b) above ceasing to be a member
of the Board, whether by death,

 

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resignation, removal or otherwise, the election to the Board as promptly as
possible of an individual designated in accordance with clause (b) above;

 

(e)                                  notwithstanding anything in
Section 4.1(b) to the contrary, (i) on and after such time as the WCAS Members
collectively own a number of Company Interests that is less than or equal to
fifty percent (50%) of the WCAS Start Number, SEM shall have the right to
designate an additional director pursuant to Section 4.1(b)(i) (which shall be
an “SEM Director” for purposes of this Agreement) and WCAS shall have the right
to designate one (1) director pursuant to Section 4.1(b)(ii) (which shall be the
“WCAS Director” for purposes of this Agreement) and (ii) on and after such time
as the WCAS Members collectively do not own any Company Interests, SEM shall
have the right to designate two (2) additional directors pursuant to
Section 4.1(b)(i) (each of which shall be an “SEM Director” for purposes of this
Agreement) and WCAS shall no longer have the right to designate any directors
pursuant to Section 4.1(b)(ii);

 

(f)                                   notwithstanding anything in
Section 4.1(b) to the contrary, (i) on and after such time as the Dignity
Members collectively own a number of Company Interests that is less than or
equal to fifty percent (50%) of the Dignity Start Number, SEM shall have the
right to designate an additional director pursuant to Section 4.1(b)(i) (which
shall be an “SEM Director” for purposes of this Agreement) and Dignity shall
have the right to designate one (1) director pursuant to
Section 4.1(b)(iii) (which shall be the “Dignity Director” for purposes of this
Agreement) and (ii) on and after such time as the Dignity Members collectively
do not own any Company Interests, SEM shall have the right to designate two
(2) additional directors pursuant to Section 4.1(b)(i) (each of which shall be
an “SEM Director” for purposes of this Agreement) and Dignity shall no longer
have the right to designate any directors pursuant to Section 4.1(b)(iii).

 

4.2.                            Authority, Powers and Duties of Board.

 

(a)                                 Subject to the limitations set forth in
Sections 4.2(b), (c) and (d), the Board shall have authority with respect to all
aspects of the operations of the Company and the exclusive right to manage and
control the business and affairs of the Company, and the Board shall have all
rights, powers and authority of a manager under the Act and otherwise under
applicable law.  Except as otherwise expressly set forth in this Agreement, all
determinations, acts and designations to be made by the Company or the Board
hereunder shall be made by Board Approval in the Board’s sole discretion.  Third
parties dealing with the Company are entitled to rely conclusively on the
authority of the Board under the Act and as set forth in this Agreement. 
Notwithstanding anything to the contrary in this Agreement, no Director, acting
solely in his or her capacity as such, shall have the right, power or authority
to act as agent of the Company, to bind the Company or to execute any documents
to be signed by the Company unless expressly authorized in writing by Board
Approval.

 

(b)                                 For so long as the WCAS Members collectively
own a number of Company Interests greater than or equal to fifty percent (50%)
of the WCAS Start Number or the Dignity Members collectively own a number of
Company Interests greater than or equal to fifty percent (50%) of the Dignity
Start Number, in addition to any Board

 

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Approval or vote or consent of the Members required by this Agreement or
applicable Law, the Company shall not take, and shall not permit its
Subsidiaries to take, directly or indirectly (including by amendment, merger,
consolidation or otherwise), any of the following actions except with a prior
Supermajority Vote:

 

(i)                                     any change in the number of, or method
of designating, directors on the Board;

 

(ii)                                  delegation of rights or powers of the
Board requiring a Supermajority Vote hereunder to any committee of the Board
(unless Dignity and/ or WCAS, as applicable, maintains an approval right
analogous to the Supermajority Vote with respect to actions of such committee)
or any other Person;

 

(iii)                               the conduct by the Company or any of its
Subsidiaries of any material business other than, or the engagement by the
Company or any of its Subsidiaries in any material transaction not substantially
related to, either the Company Business or the other businesses of the Company
and its direct and indirect Subsidiaries as of the date of this Agreement (and
activities related to such businesses);

 

(iv)                              any incurrence, assumption or guarantee of
indebtedness for borrowed money (except for any indebtedness incurred under
Concentra’s first lien credit agreement and the second lien credit agreement, in
each case as in effect on the date of this Agreement and as the same may be
amended in accordance with this Section 4.2(b)(iv), including borrowings under
the revolving facility thereunder or refinancings of such credit agreements) in
excess of $20,000,000 in the aggregate, or any material amendment with respect
to any of the foregoing or to Concentra’s first lien credit agreement and the
second lien credit agreement (it being agreed that any amendment that increases
the amount of indebtedness that may be borrowed under a credit agreement shall
be deemed material for these purposes);

 

(v)                                 declare, make or pay any dividend,
distribution or transfer (whether in cash, securities or other property) (other
than in connection with repayment of the unpaid Class A Additional Capital or
the aggregate unpaid amount of Class A Additional Capital Yield) to the Members,
or redeem or repurchase any Company Equity Securities (other than Class B
Interests and Class C Interests) or any equity securities of its Subsidiaries,
unless pro rata among all Members owning such securities;

 

(vi)                              (a) enter into any amendment, modification or
other change to the Amended and Restated Tax Sharing Agreement or the Amended
and Restated Shared Services Agreement (including approval of amendments adding
additional services under the Amendment and Restated Shared Services Agreement)
or (b) except for the transactions contemplated by the Repurchase Agreements or
as contemplated by Schedule II, enter into or amend any other agreement,

 

20

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arrangement or transaction with any Member or any Affiliate of any Member in
excess of $100,000, including without limitation any amendment, modification or
other change to intercompany or related party expenses charged to the Company by
any Member or any Affiliate of any Member;

 

(vii)                           issue any Company Equity Securities or admit to
the Company any new Member, or issue any equity securities of any Subsidiary of
the Company, other than (A) as a result of Transfers of Company Equity
Securities by a Member to a Permitted Transferee in accordance with this
Agreement or (B) the issuance of Class C Interests pursuant to a management
incentive plan, which Class C Interests shall not constitute more than 2.5% of
the Fully Diluted Company Interests as of immediately after the execution of
this Agreement;

 

(viii)                        dissolve, liquidate or wind up the Company or any
of its material Subsidiaries (other than liquidation or dissolution into the
Company or a material wholly owned Subsidiary) or commence a voluntary
proceeding seeking reorganization or other similar relief;

 

(ix)                              except with respect to a Drag-Along Sale in
accordance with Section 9.2, merge, consolidate or enter into any other business
combination, or acquire or sell any assets having a value in excess of
$10,000,000 in a single or series of related transactions; or

 

(x)                                 enter into any contract, arrangement,
understanding or other similar agreement with respect to any of the foregoing
paragraphs (i)-(ix) of this Section 4.2(b).

 

Subject to subsection (vii) above, (x) if the Dignity Members then hold 20.6% or
more of the Class A Interests, the Company shall not issue any Company Equity
Securities that would cause the Dignity Members collectively to own less than
20.0% of the Fully Diluted Company Interests, unless each Dignity Member has
been granted the right to purchase such Member’s Proportionate Percentage (as
hereinafter defined) of such Company Equity Securities pursuant to and in
accordance with Section 9.4 and (y) if the WCAS Members then hold 26.3% or more
of the Class A Interests, the Company shall not issue any Company Equity
Securities that would cause the WCAS Members collectively to own less than 25.6%
of the Fully Diluted Company Interests, unless each WCAS Member has been granted
the right to purchase such Member’s Proportionate Percentage (as hereinafter
defined) of such Company Equity Securities pursuant to and in accordance with
Section 9.4.

 

(c)                                  Notwithstanding Section 4.2(a) and
(b) (except for clause (iv) below, which shall be subject to the restrictions
set forth in Section 4.2(b)), and subject to the requirement that before taking
any action described in this clause without Board approval SEM will have caused
such action to have been presented to the Board for discussion at a properly
called meeting, and the Board shall have reviewed and provided recommendations
to SEM regarding such action, SEM (and not the Board or any other Member) shall
have the sole power and authority to direct the Company with respect to the
following matters, and the Company shall not take, and shall not permit its

 

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Subsidiaries to take, directly or indirectly (including by amendment, merger,
consolidation or otherwise), any of the following actions except with the prior
approval of SEM:

 

(i)                                     the appointment or removal of the Chief
Executive Officer of the Company and its Subsidiaries;

 

(ii)                                  the approval of the operating budget of
the Company and its Subsidiaries;

 

(iii)                               the approval of the capital budget of the
Company and its Subsidiaries; and

 

(iv)                              to the extent not otherwise inconsistent with
the terms of this Agreement (including Section 4.2(b)), approval of any action
that either SEM or its auditors, in their respective judgment, reasonably
believes is necessary to enable SEM to consolidate the financial results of the
Company with the financial results of SEM in accordance with GAAP.

 

(d)                                 The chairperson of the Board shall be an SEM
Director designated by SEM.  The chairperson shall be entitled to call meetings
of the Board as described in Section 4.2(f) and shall have general charge of the
affairs and meetings of the Board.  The initial chairperson of the Board shall
be Keith Newton.

 

(e)                                  The Board shall have the right to delegate
any of its rights, powers and authorities to a committee of the Board consisting
of some or all of the Directors.  Except as expressly provided in this
Section 4.2(e), any such committee shall have (i) a majority of members that are
SEM Directors, (ii) for so long as the Board includes at least one (1) Dignity
Director, at least one (1) member that is a Dignity Director and (iii) for so
long as the Board includes at least one (1) WCAS Director, at least one
(1) member that is a WCAS Director.  The chairperson of any such committee shall
be an SEM Director or any other Director approved by SEM to serve as chairperson
of such committee. Notwithstanding the foregoing or anything else to the
contrary contained in this Agreement, for as long as the Board includes at least
one (1) Dignity Director, the Board shall maintain a committee of the Board
composed of one (1) SEM Director and one (1) Dignity Director charged with
overseeing organizational culture, values and employee engagement, expectation
and performance.  Notwithstanding the foregoing or anything else to the contrary
contained in this Agreement, for as long as the Board includes at least one
(1) WCAS Director or (1) Dignity Director, the Board will delegate full
authority to act on behalf of the Company to a committee consisting solely of an
equal number of WCAS Directors and Dignity Directors (provided that (x) if the
Board does not include at least one (1) Dignity Director at such time, the Board
will delegate full authority to act on behalf of the Company to a committee
consisting solely of the WCAS Directors and (ii) if the Board does not include
at least one (1) WCAS Director at such time, the Board will delegate full
authority to act on behalf of the Company to a committee consisting solely of
the Dignity Directors) when considering or approving any matters pertaining to
the Amended and Restated Shared Services Agreement, the Amended and Restated Tax

 

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Sharing Agreement or any subsequent amendments, modifications or changes to
(including approval of amendments adding additional services under the Amended
and Restated Shared Services Agreement) the foregoing agreements, and the
approval of a majority of the members of such committee shall be deemed to be
Board Approval for all purposes of this Agreement.  The initial members and
chairpersons of each committee of the Board are set forth on Exhibit F.

 

(f)                                   Meetings of the Board may be held at any
time and at any place within or without the State of Delaware designated in the
notice of the meeting, when called by the chairperson of the Board with notice
thereof being given to each Director.  Such notice shall be delivered (i) by
overnight delivery at least three (3) Business Days before the meeting addressed
to such Director at such Director’s usual or last known business or residence
address, (ii) by e-mail at least forty-eight (48) hours before the meeting, or
(iii) in person or by telephone at least forty-eight (48) hours before the
meeting.  Notice of a meeting need not be given to any Director if a written
waiver of notice, executed by such Director before or after the meeting, is
filed with the records of the meeting, or to any Director who attends the
meeting (in person or otherwise) without protesting prior thereto or at its
commencement the lack of notice to such Director.  Neither notice of a meeting
nor a waiver of a notice need specify the purposes of the meeting.  Directors
may participate in a meeting of the Board (or any committee thereof) by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other or by any other means
permitted by law.  Such participation shall constitute presence in person at
such meeting.

 

(g)                                  At any meeting of the Board or committee
thereof, a majority of the Directors then in office and present in person or by
proxy shall constitute a quorum.  Any meeting may be adjourned from time to time
by a majority of the votes cast upon the question, whether or not a quorum is
present, and the meeting may be held as adjourned without further notice.

 

(h)                                 Subject to Section 4.2(b), a quorum being
present, any decisions to be made by the Board shall require the approval of a
majority of the Board (“Board Approval”).  Directors may vote in person or by
proxy.  The person appointed by a Director as his proxy shall in all cases be
another Director.  A proxy must be filed with the Company before or at the time
of the meeting.  Unless the writing appointing a proxy otherwise provides, the
presence at a meeting of the Director who appointed a proxy shall operate to
revoke the appointment.  Any proxy granted by a Director shall also be revocable
by notice to the Company, in writing, of the revocation of the appointment of a
proxy, but any such revocation shall not affect any vote or action previously
taken or authorized.

 

(i)                                     Any action required or permitted to be
taken at any meeting of the Board may be taken in writing without a meeting if
approved by unanimous written consent of all Directors, and such writing or
writings are filed with the records of the meetings of the Board and copies of
such are promptly provided to any Director not consenting to such action.  Such
consent shall be treated for all purposes as Board Approval.

 

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(j)                                    To the fullest extent permitted by law,
the provisions of this Agreement, to the extent that they restrict or eliminate
the duties and liabilities of the Board otherwise existing at law or in equity,
are agreed by the Members to modify such duties and liabilities.

 

4.3.                            Restrictions on Proxies, Voting Trusts and
Voting Agreements.  No Member shall grant any proxy or enter into or agree to be
bound by any voting trust with respect to any voting securities of the Company
held by him, her or it, which conflicts or is inconsistent in any manner with
the provisions of this Agreement, nor shall any Member enter into any voting
agreement or other arrangement of any kind with respect to the voting securities
of the Company now held or hereafter acquired by him, her or it, which conflicts
or is inconsistent in any manner with the provisions of this Agreement.

 

4.4.                            Indemnification.

 

(a)                                 To the fullest extent permitted by law and
subject to the remainder of this Section 4.4(a), the Company shall indemnify and
hold harmless each Indemnitee from and against any and all claims, liabilities,
damages, losses, costs and expenses (including amounts paid in satisfaction of
judgments, in compromises and settlements, as fines and penalties and legal or
other costs and reasonable expenses of investigating or defending against any
claim or alleged claim and any tax imposed on an Indemnitee in respect of
amounts of indemnification received hereunder) of any nature whatsoever,
liquidated or unliquidated, that are incurred by any Indemnitee and arise out of
or in connection with the affairs or businesses of the Company or its
Subsidiaries.  In furtherance of the foregoing, an Indemnitee shall be entitled
to indemnification hereunder unless there has been a final, non-appealable
determination by a court of competent jurisdiction that the conduct giving rise
to such indemnification constituted bad faith, fraud or willful misconduct.  The
satisfaction of any indemnification and any holding harmless pursuant to this
Section 4.4 shall be from and limited to Company assets (including insurance and
any agreements pursuant to which the Company, its officers or employees or any
Indemnitee are entitled to indemnification), and no Member shall have any
personal liability on account thereof.

 

(b)                                 To the fullest extent permitted by law,
expenses reasonably incurred by an Indemnitee in defense or settlement of any
claim that may be subject to a right of indemnification hereunder shall be
advanced by the Company prior to the final disposition thereof after receipt of
an undertaking by or on behalf of the Indemnitee to repay such amount if there
is a final adjudication, after all possible appeals have been exhausted, by a
court of competent jurisdiction that such Indemnitee is not entitled to be
indemnified hereunder.

 

(c)                                  The right of any Indemnitee to the
indemnification expressly provided herein shall be cumulative of, and in
addition to, any and all rights to which such Indemnitee may otherwise be
entitled by contract or as a matter of law or equity and shall extend to such
Indemnitee’s successors, assigns and legal representatives.

 

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(d)                                 The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or a plea of nolo
contendere or its equivalent shall not, by itself, create a presumption that an
Indemnitee is not entitled to indemnification under this Agreement.

 

(e)                                  The Company may purchase and maintain
insurance, on behalf of the Indemnitees and such other Persons as the Board
shall determine, against any liability that may be asserted against or expenses
that may be incurred by such Person in connection with the Company’s activities,
regardless of whether the Company would have the obligation to indemnify such
Person against such liability under the provisions of this Agreement.  The
Company shall purchase such insurance if it is available on terms the Board
concludes are reasonable.

 

(f)                                   The Indemnitees may also have certain
rights to indemnification by Affiliates of the Company and/or insurance provided
by such Affiliates (the “Affiliated Indemnitors”).  The Company and its
Subsidiaries, jointly and severally, are the indemnitors of first resort (it
being understood, for the avoidance of doubt, that the obligations of the
Company hereunder to the Indemnitees are primary, and any obligation of the
Affiliated Indemnitors to advance expenses or to provide indemnification to the
Indemnitees are secondary).  Each of the Company and its Subsidiaries
irrevocably waives, relinquishes and releases the Affiliated Indemnitors from
any and all claims against the Affiliated Indemnitors for contribution,
subrogation or any other recovery of any kind in respect of advancements or
other indemnification payments.  Each of the Company and its Subsidiaries
further agrees that no advancement or other indemnification payment by the
Affiliated Indemnitors on behalf of any Indemnitee with respect to any claim for
which such Indemnitee has sought indemnification or advancement from the Company
or any of its Subsidiaries shall affect the foregoing, and the Affiliated
Indemnitors shall have a right of contribution and/or be subrogated to the
extent of such advancements or other indemnification payments.  Nothing in the
foregoing shall be deemed a limitation on an Indemnitee’s right to
indemnification.

 

(g)                                  The provisions of this Section 4.4 are for
the benefit of the Indemnitees, their heirs, successors, assigns and
administrators, all of whom are express third-party beneficiaries of this
Section 4.4.

 

4.5.                            Limitation on Liability.

 

(a)                                 To the fullest extent permitted by law
(including Section 18-1101(b), (c), (d) and (e) of the Act):

 

(i)                                     notwithstanding any duty otherwise
existing at law or in equity, and notwithstanding any other provision of this
Agreement, neither the Directors nor any other Indemnitee shall owe any duty
(including fiduciary duties or duties under the corporate opportunity doctrine)
to the Company, any of the Members or any other Person that is a party to or is
otherwise bound by this Agreement, in connection with any act or failure to act;
and

 

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(ii)                                  none of the Directors shall have any
personal liability to the Company, any of the Members, or any other Person that
is a party to or is otherwise bound by this Agreement for monetary damages in
connection with any act or failure to act, or breach, whether hereunder,
thereunder or otherwise, other than for conduct that constitutes bad faith,
willful misconduct or fraud.

 

(b)                                 If any provision of Section 4.5(a) is held
to be invalid, illegal or unenforceable, the duties and personal liability of
either the Directors or any other Indemnitee to the Company, any of the Members
or any other Person that is a party to or is otherwise bound by this Agreement
shall be eliminated to the greatest extent permitted under the Act.

 

(c)                                  The Members expressly acknowledge that the
Board is acting on behalf of the Company.  Neither the Board nor any other
Indemnitee shall be obligated to consider or not consider the separate interest
of any Member or other Person (including the tax consequences to any Member or
other Person) in deciding, pursuant to its authority granted under this
Agreement, whether to cause the Company to take (or decline to take) any actions
that are in the interest of the Company.  Neither the Directors nor any other
Indemnitee shall be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by Members in connection with such
decisions.

 

(d)                                 Notwithstanding anything to the contrary
herein, all officers of the Company shall be subject to all fiduciary and other
duties under applicable law to the Company and the Members (but not any creditor
of the Company).  Without limiting the generality of the foregoing, each officer
of the Company shall have fiduciary duties to the Company and the Members (but
not any creditor of the Company) to the same extent that officers of a Delaware
corporation would have to such corporation and its stockholders.

 

(e)                                  Except as otherwise required by mandatory
provisions of applicable law or as expressly set forth herein, no Member shall
have any personal liability whatsoever in such Member’s capacity as a Member,
whether to the Company, to any of the other Members, to the creditors of the
Company or to any other third party, for the debts, obligations and liabilities
of the Company, whether arising in contract, tort or otherwise (including those
arising as member, owner or shareholder of another company, partnership or
entity).  Under the Act, a member of a limited liability company may, under
certain circumstances, be required to return amounts previously distributed to
such member.  It is the intent of the Members that no distribution to any Member
pursuant to this Agreement shall be deemed to constitute money or other property
paid or distributed in violation of the Act, and the Members agree that each
such distribution shall constitute a compromise of the Members within the
meaning of Section 18-502(b) of the Act, and that the Member receiving such
distribution shall not be required to return to any Person any such money or
property, unless such distribution was made in error or in contravention of
non-waivable provisions of applicable law or in breach of this Agreement.  If,
however, any court of competent jurisdiction holds that, notwithstanding the
provisions of this Agreement, any Member is obligated to make any such payment,
such obligation shall be the obligation of such Member and not of the other
Members.

 

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(f)                                   The provisions of this Section 4.5 are for
the benefit of the Indemnitees and their respective heirs, successors, assigns
and administrators, all of whom are third-party beneficiaries of this
Section 4.5, and shall not be deemed to create any rights for the benefit of any
other Persons.

 

4.6.                            Officers.  The officers of the Company are as
follows each of whom shall serve until the earlier of their death, resignation,
or removal by the Board, which such removal may be for any reason or no reason:

 

Officer

 

Title

W. Keith Newton

 

President

Michael E. Tarvin

 

Executive Vice President and Secretary

Martin F. Jackson

 

Executive Vice President

John A. Saich

 

Executive Vice President

John F. Duggan

 

Senior Vice President and Assistant Secretary

Matthew T. DiCanio

 

Senior Vice President

Michael F. Malatesta

 

Senior Vice President

Scott A. Romberger

 

Senior Vice President

Joel T. Veit

 

Senior Vice President and Treasurer

Robert Bein

 

Vice President and Assistant Secretary

John Tyler Hollenbach

 

Vice President

 

The Board shall appoint such additional officers who shall have such power and
authority as may be specified in a resolution of the Board.  Officers shall
serve at the pleasure of the Board.

 

4.7.                            Members.  No Member shall participate in the
control of the Company’s business, transact any business in the Company’s name,
or have the power to sign documents for or otherwise bind the Company; provided,
however, the Members shall have the consent, voting and other rights expressly
provided herein. No Member may withdraw from the Company without the prior
written consent of the Board, other than as expressly provided in this
Agreement.

 

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ARTICLE V.
DISTRIBUTIONS

 

5.1.                            Distributions.  Distributions, including without
limitation, distributions of cash, shall be made to Members only when and if,
and in the amounts, the Board shall determine in its sole discretion.  All
distributions (other than pursuant to a Termination Call Option) shall be made
as follows:

 

(a)                                 First, to the Class A Interests held by
those Class A Members on Schedule I with an asterisk next to their name a
portion of such distribution equal to the aggregate unpaid amount of Class A
Additional Capital Yield determined immediately prior to each distribution, on a
pro rata basis in accordance with the relative unreturned Class A Additional
Capital Yield of the Class A Interests held by those Class A Members on Schedule
I with an asterisk next to their name.

 

(b)                                 Second, to the Class A Interests held by
those Class A Members on Schedule I with an asterisk next to their name a
portion of such distribution equal to the aggregate unreturned Class A
Additional Capital determined immediately prior to each distribution, on a pro
rata basis in accordance with the relative unreturned Class A Additional Capital
of the Class A Interests held by those Class A Members on Schedule I with an
asterisk next to their name.

 

(c)                                  Thereafter, to the Members pro rata in
accordance with the number of Company Interests owned by each Member; provided
that any unvested Class B Interests and unvested Class C Interests shall be
disregarded for purposes of this Section 5.1(c), subject to the provisions of
any Company Equity Plan that provide for different treatment.  If the Company
makes a cash distribution to any Member that is subject to withholding or other
taxes payable by the Company on behalf of such Member, the Company shall be
entitled to withhold any such withholding or other taxes, and any such withheld
amounts shall be treated as having been distributed to such Member.

 

5.2.                            Limitation on Distributions.  Notwithstanding
anything to the contrary contained in this Agreement, the Company, and the Board
on behalf of the Company, shall not be required to make a distribution to any
Member if such distribution would violate this Agreement, the Act or other
applicable law.

 

5.3.                            Non-Cash Distributions.  Whenever a distribution
provided for in this Article V is made in property other than cash, the value of
such distribution shall be deemed to be the Fair Market Value of such property
as determined in the sole discretion of the Board.  If the Company makes such a
non-cash distribution to any Member and such distribution is subject to
withholding or other taxes payable by the Company on behalf of such Member, the
Board shall notify such Member as to the amount of such withholding or other
taxes and such Member shall make a prompt payment to the Company of such amount
by wire transfer.

 

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5.4.                            Repurchase Agreements and Adjustment Payments.

 

(a)                                 Notwithstanding anything to the contrary
herein, any payments made by the Company or any of its Subsidiaries in
accordance with Schedule II or the Repurchase Agreements shall not be subject
to, or paid in accordance with, this Article V.

 

(b)                                 Each Member hereby agrees (i) that the
Company and its Subsidiaries shall take the actions set forth on Schedule II and
(ii) in the event the Additional Distribution Amount (as defined on Schedule II)
is finally determined to be a negative amount in accordance with the procedures
set forth on Schedule II, that such Member will fulfill its obligations
thereunder.

 

ARTICLE VI.
TAX AND ACCOUNTING MATTERS

 

6.1.                            Classification as an Association Taxable as a
Corporation.  The parties hereto intend the Company be classified as an
association taxable as a corporation for United States federal and all
applicable state and local income tax purposes.  The Board shall, for and on
behalf of the Company, take all steps as may be required to establish and
maintain the Company’s classification as an association taxable as a corporation
for United States federal and all applicable state and local income tax
purposes, including, but not limited to, making any required election pursuant
to Regulations Section 301.7701-3 promulgated under the Code, as such
regulations may be amended from time to time (including corresponding provisions
of succeeding regulations).

 

6.2.                            Books of Account.  At all times during the
continuance of the Company, the Company shall maintain or cause to be maintained
books of account that are complete and correct in all material respects, wherein
shall be entered particulars of all monies, goods or effects belonging to or
owing to or by the Company, or paid, received, sold or purchased in the course
of the Company’s business, and all of such other transactions, matters and
things relating to the business of the Company as are usually entered in books
of account kept by Persons engaged in a business of a like kind and character. 
In addition, the Company shall keep all records as required to be kept pursuant
to the Act.

 

ARTICLE VII.
TRANSFER OF COMPANY INTERESTS

 

7.1.                            Transfers.  No Member may Transfer any Company
Equity Securities other than (i) Transfers made with the prior written consent
of SEM, Dignity and WCAS; (ii) with respect to Class A Interests only, Transfers
to Permitted Transferees that are made in accordance with Section 7.2;
(iii) with respect to Class A Interests only, Transfers made pursuant to
Section 9.1 (Tag-Along Rights); (iv) Transfers of Class B Interests or Class C
Interests permitted by the Company Equity Plans and the terms of any applicable
Grant Agreement (provided that such Class B Interests or Class C Interests, as
applicable, are vested for federal income tax purposes at the time of Transfer);
(v) Transfers made pursuant to Section 9.2 (Drag-Along Rights); (vi) Transfers
made pursuant to Section 9.3 (Put and Call Rights); and (vii) Transfers made
pursuant to Section 3.2 (Termination Call Option).  Any attempted Transfer of
Company Equity Securities in violation of the provisions of this Agreement shall
be null and void ab initio and of no effect.

 

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7.2.                            Transfers to Permitted Transferees.  Any Class A
Member may, at any time, Transfer any or all of the Class A Interests held by
such Member to any one or more Permitted Transferees of such Member so long as
each such Permitted Transferee duly executes and delivers a Joinder Agreement
(such Transfer to be effective only upon the delivery to and acceptance of such
Joinder Agreement by the Company); provided, that (A) if the Company so requests
in writing, such Joinder Agreement shall not be effective unless and until the
Company has been furnished with the opinion contemplated by Section 7.3 below to
the effect that such Transfer is exempt from or not subject to the provisions of
Section 5 of the Securities Act and made in compliance with any other applicable
securities laws, (B) no Transfer under this Section 7.2 shall be permitted if
such Transfer would result in (x) there being more than fifteen (15) WCAS
Members or (y) there being more than five (5) Cressey Members, and (C) no
Transfer under this Section 7.2 shall be permitted if such Transfer would
require the Company to register a class of equity securities under Section 12 of
the Exchange Act under circumstances where the Company does not then have
securities of any class registered under Section 12 of the Exchange Act. 
Notwithstanding the foregoing, no party hereto shall avoid the provisions of
this Agreement by making one or more Transfers to one or more Permitted
Transferees and then disposing of all or any portion of such party’s interest in
any such Permitted Transferee.  Each Member hereby agrees that, if any Company
Interests are Transferred to a Member’s Permitted Transferee and subsequently
such transferee ceases to be a Permitted Transferee of the applicable Member,
then all such Company Interests shall, upon such cessation, be automatically
Transferred back to the applicable Member without any further action on the part
of any Person.

 

7.3.                            Securities Law Compliance.

 

(a)                                 In addition to the requirements set forth in
Section 7.1, each Member agrees that it will not effect any Transfer of Company
Equity Securities unless such Transfer is made pursuant to an effective
registration statement under the Securities Act or pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act and, in either case, in compliance with all applicable state
securities laws.  The Company agrees, and each Member understands and consents,
that the Company will not cause or permit the Transfer of any Company Equity
Securities to be made on its books (or on any register of securities maintained
on its behalf) unless the Transfer is permitted by, and has been made in
accordance with the terms of this Agreement and all applicable federal and state
securities laws.  Any attempted Transfer in violation of the terms hereof shall
be null and void ab initio and of no effect.  Each Member agrees that in
connection with any Transfer of Company Equity Securities that is not made
pursuant to a Public Offering, the Company may, in its sole discretion, request
an opinion in form and substance reasonably satisfactory to the Company of
counsel reasonably satisfactory to the Company stating that such transaction is
exempt from registration under the Securities Act and made in compliance with
all applicable state securities laws.

 

(b)                                 With respect to any Company Equity
Securities that are then certificated, the Company shall be obligated to
promptly reissue certificates without the second paragraph of the legend set
forth in Section 3.1(d) at the request of any holder thereof if the holder shall
have obtained an opinion of counsel reasonably acceptable to the Company to the
effect that, or the Company is otherwise satisfied that, the securities

 

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proposed to be disposed of may lawfully be so disposed of without registration,
qualification or such legend.

 

7.4.                            Distributions Subsequent to Transfer.  A
Transfer of a Member’s Company Interests shall be effective on the first day on
which the requirements of Section 7.1 hereof are satisfied, or at such earlier
time as the Board determines.  Distributions made after the effective date of
the Transfer shall be made to the assignee.  Notwithstanding anything to the
contrary contained herein, the Company and the Board shall be entitled to treat
the assignor of Company Interests or rights attributable to the Company
Interests or any Member as the absolute owner thereof in all respects, and shall
incur no liability for distributions made in good faith to it, until such time
as a written Transfer that conforms to the requirements of this Article VII has
been received by and recorded on the books of the Company.

 

7.5.                            Registration Rights.  Prior to the effectiveness
of any registration statement of the Company (or any successor to or parent of
the Company) filed in connection with an Initial Public Offering, the Company,
the SEM Member, Dignity Members and the WCAS Members will enter into a
registration rights agreement, in form and substance reasonably satisfactory to
the Company (or any successor to or parent of the Company), SEM, Dignity and
WCAS, which agreement shall provide for the following: (a) the SEM Member,
Dignity Members and WCAS Members would have piggyback registration rights to
participate in any secondary shares to be sold in the Initial Public Offering on
a pro rata basis, (b) after the Initial Public Offering, SEM would be entitled
to three demand registration rights and unlimited shelf registration rights,
(c) after the Initial Public Offering, the Dignity Members and the WCAS Members
would each be entitled to three demand registration rights and unlimited shelf
registration rights, (d) the SEM Member, Dignity Members and WCAS Members would
have customary piggyback registration rights to participate in all other Public
Offerings, (e) in connection with the Initial Public Offering, the SEM Member,
Dignity Members and WCAS Members would be subject to the same lock-up as other
investors (not to exceed 180 days following the date of the Initial Public
Offering) and would be released from the lock-up pro rata to the extent that
other investors are so released and (f) such other terms and conditions as are
then reasonable and customary to include in such agreements.

 

ARTICLE VIII.
DISSOLUTION, LIQUIDATION, WINDING-UP
AND TERMINATION

 

8.1.                            Causes of Dissolution.  The Company shall be
dissolved upon the first to occur of the following:

 

(a)                                 the sale or other disposition of all of the
Company’s assets; and

 

(b)                                 the decree of the dissolution of the Company
by a court of competent jurisdiction;

 

provided, that the Company would not be dissolved as a result of the foregoing
if the Board determines that it is in the best interests of the Company or the
Members to continue the Company’s existence (to the extent permissible under the
Act).

 

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To the fullest extent permitted by law, the Members agree that no act, thing,
occurrence, event or circumstance shall cause or result in the dissolution or
termination of the Company except as provided above in this Section 8.1.

 

8.2.                            Winding Up and Liquidation.  Except as otherwise
provided in this Agreement, upon dissolution of the Company, the business and
affairs of the Company shall be wound up as provided in this Section 8.2.  SEM
shall act as the “Liquidator.” If upon dissolution, however, SEM is no longer a
Member, a Majority-In-Interest of the Members shall designate a Person to act as
Liquidator.  The Liquidator shall wind up the affairs of the Company, shall
dispose of such assets of the Company as it deems necessary or appropriate and
shall pay and distribute the assets of the Company, including the proceeds of
any such dispositions, as follows:

 

(a)                                 first, to creditors in satisfaction of
liabilities of the Company (whether by payment or by the making of reasonable
provision for payment as determined by the Liquidator in its sole discretion);
and

 

(b)                                 thereafter, to the Members in accordance
with Section 5.1.

 

8.3.                            Documentation of Dissolution and Termination. 
Upon the dissolution of the Company and the appointment of a Liquidator in
accordance with Section 8.2, the Liquidator shall execute and file all
appropriate certificates of amendment to the Certificate of Formation as
required under the Act, and shall execute, file and record such other
certificates, instruments and documents as it shall deem necessary or
appropriate in each state in which the Company or its Affiliates do business. 
Upon the completion of the winding-up of the Company (including the application
or distribution of all cash or other assets placed in reserve in accordance with
Section 8.2), the Company shall be terminated and the Liquidator shall cause the
cancellation of the Certificate of Formation as required under the Act, and
shall execute, file and record such other certificates, instruments and
documents as it shall deem necessary or appropriate in each state in which the
Company or its Affiliates do business in order to reflect or effect the
termination of the Company.

 

8.4.                            Waiver of Partition.  Each Member hereby waives
any right to a partition of the Company’s assets.

 

ARTICLE IX.
TAG-ALONG, DRAG-ALONG, PUT AND CALL AND PREEMPTIVE RIGHTS

 

9.1.                            Tag-Along Rights.

 

(a)                                 Tag-Along Rights.

 

(i)                                     With respect to any proposed Transfer
(other than a Transfer pursuant to Sections 9.2 or 9.3) by a Class A Member or
Class A Members (collectively, the “Selling Members”) of Company Interests to
any Person who is not a Permitted Transferee thereof (the “Proposed Transferee”)
and which Transfer has been approved by the prior written consent of Dignity,
WCAS and SEM (a “Proposed Sale”), each Class A Member (other than the Selling
Members) who exercises its rights under this Section 9.1 (each a “Tagging

 

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Member”) shall have the right to include in the Proposed Sale to the Proposed
Transferee a number of Class A Interests up to the product (rounded down to the
nearest whole number) of (i) the quotient determined by dividing (A) the
aggregate number of Class A Interests owned by such Tagging Member by (B) the
aggregate number of Class A Interests then outstanding and (ii) the total number
of Class A Interests proposed to be Transferred to the Proposed Transferee, at
the same price per Company Interest and upon the same terms and conditions
(including time of payment, amount, form and choice of consideration (excluding
any amount payable to a Selling Member for any unpaid Class A Additional Capital
or the aggregate unpaid amount of Class A Additional Capital Yield) and
adjustments to purchase price) as the Selling Members; provided that to the
extent one or more Class A Members elect not to sell his, her or its entire
allotment, then the allotment of the Tagging Members who have elected to sell
their entire allotment (and who elect to sell additional Class A Interests)
shall be increased proportionately among such Tagging Members who wish to sell
additional Class A Interests based on their relative holdings of Class A
Interests up to the full amount of Class A Interests which the non-electing
Members were entitled to sell pursuant to this Section 9.1; provided, further
that in order to be entitled to exercise its right to sell the Company Interests
to the Proposed Transferee pursuant to this Section 9.1, each Tagging Member, if
requested by the Selling Members or the Proposed Transferee, (x) shall agree to
the same covenants as the Selling Members agree to in connection with the
Proposed Sale (provided that no Tagging Member shall be required to agree to any
covenant not to compete or any covenant that would bind or restrict any
Affiliate of a Tagging Member that is not itself a Member), (y) shall be
obligated to join individually and ratably (and not jointly and severally) on a
pro rata basis (based on the proceeds to be received by such Tagging Member in
connection with the Proposed Sale but that in no event exceeds the amount of
consideration otherwise received by the Tagging Member in connection with such
Proposed Sale) in any pro rata indemnification that the Selling Members agree to
provide in connection with the Proposed Sale (provided that no Tagging Member
shall be required to share in any indemnification obligations relating to a
breach of a representation, warranty or covenant relating solely to another
Member or such other Member’s Company Interests, such as with respect to title
to Company Interests or authorization of a Member to enter into transaction
agreements (such obligations to be borne solely by the other Member)) and
(z) shall make such representations and warranties concerning itself and the
Company Interests to be sold by it in connection with such Transfer as each
Selling Member makes with respect to itself and its Company Interests (and
provide sole indemnity with respect thereto consistent with any indemnification
provided by each Selling Member with respect to its representations and
warranties); provided, further, that, payment of cash consideration to any
Tagging Member entitled to receive less than $100,000 in connection with any
such Transfer may be made by check regardless of whether other participating
Members receive payment by check or wire transfer of immediately available
funds.

 

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(ii)                                  Each Tagging Member will be responsible
for funding its proportionate share (based on the proceeds to be received by
each Tagging Member in connection with the Proposed Sale) of any adjustment in
purchase price or escrow arrangements in connection with the Proposed Sale and
for its proportionate share of any withdrawals from any such escrow, including
any such withdrawals that are made with respect to claims arising out of such
Tagging Member’s agreements, covenants, representations, warranties or other
provisions relating to the Proposed Sale and shall receive its proportionate
share of any upward adjustment in purchase price or release of funds to the
Members from any escrow arrangement in connection with the Proposed Sale.

 

(iii)                               Each Tagging Member will be responsible for
its proportionate share (based on the proceeds to be received by each Tagging
Member in connection with the Proposed Sale) of the fees, commissions and other
out-of-pocket expenses (collectively, “Costs”) of the Proposed Sale.  The
Selling Members shall be entitled to estimate in its reasonable, good faith
judgment each Tagging Member’s proportionate share of such Costs and to withhold
such amounts from payments to be made to each Tagging Member at the time of
closing of such Proposed Sale; provided, that (i) such estimate shall not
preclude the Selling Members from recovering additional amounts from the Tagging
Members in respect of each such Tagging Member’s proportionate share (based on
the proceeds to be received by each Tagging Member in connection with the
Proposed Sale) of such Costs and (ii) the Selling Members shall reimburse each
Tagging Member to the extent actual amounts are ultimately less than the
estimated amounts.

 

(b)                                 Exercise of Tag-Along Rights; Notices.  The
Selling Members shall give the Company prior written notice of each Proposed
Sale, setting forth the number of Class A Interests proposed to be so
Transferred, the identity of the Proposed Transferee, the proposed amount of
consideration and other material terms and conditions of payment offered by the
Proposed Transferee.  In the event that any of the material terms or conditions
set forth in the notice are thereafter amended in any material respect, the
Selling Members shall also give written notice of the amended terms and
conditions of the Proposed Sale to the Company.  Upon its receipt of any such
notice or amended notice, the Company shall promptly, but in all events within
two (2) Business Days of its receipt thereof, forward copies thereof to each of
the Class A Members other than the Selling Members (such initial notice, the
“Tag-Along Opportunity Notice” and any amended notice, an “Amended Tag-Along
Opportunity Notice”).  In order to exercise the tag-along rights provided by
this Section 9.1 a Member must send a written notice to the Company and the
Selling Members indicating its desire to exercise its rights and specifying the
number of Class A Interests it desires to sell, including the number of Class A
Interests it would be willing to Transfer if one or more Members do not elect to
fully participate in the Proposed Sale (the “Tag-Along Exercise Notice”) within
twenty (20) Business Days following the giving of the Tag-Along Opportunity
Notice to such Member (or if an Amended Tag-Along Opportunity Notice is given to
the Members, within twenty (20) Business Days following the giving of such
Amended Tag-Along Opportunity Notice).  Upon the giving of an Amended Tag-Along
Opportunity Notice to

 

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a Member that had previously provided a Tag-Along Exercise Notice, such Tagging
Member shall be permitted to cancel its exercise of its rights under this
Section 9.1 upon delivery within such twenty (20) Business Day period of written
notice to the Selling Members and the Company to such effect and shall be
released from its obligation hereunder.  After the delivery of any Tag-Along
Opportunity Notice or an Amended Tag-Along Opportunity Notice, during the
applicable twenty (20) Business Day period, each of the Members other than the
Selling Members shall have the opportunity to ask and have answered any
questions of the Company’s management and the Selling Member regarding such
items as the Member may reasonably want to know with respect to the sale of
Company Interests in the Proposed Sale.  There shall be no liability on the part
of the Selling Members to any Tagging Member if the sale of Company Interests
pursuant to this Section 9.1 is not consummated for whatever reason.  Whether or
not to consummate a Proposed Sale shall be within in the sole and absolute
discretion of the Selling Members.

 

(c)                                  Closing of Proposed Sale.

 

(i)                                     At the closing of the Proposed Sale, if
the applicable Company Interests are certificated, each Tagging Member shall
deliver to the Proposed Transferee one or more certificates, properly endorsed
for transfer, which represent the Company Interests that such Tagging Member is
permitted to dispose of pursuant to this Section 9.1.  The consummation of the
Proposed Sale shall be subject to the sole discretion of the Selling Members,
who shall have no liability or obligation whatsoever to any Tagging Member
participating therein except as set forth in this Section 9.1.  In connection
with the consummation of any such Proposed Sale, each Tagging Member shall
transfer to the Proposed Transferee at the closing of such Proposed Sale the
Company Interests to be disposed of by any Tagging Members and the Proposed
Transferee shall concurrently remit to each Tagging Member that portion of the
proceeds of the disposition to which such Tagging Member is entitled by reason
of such participation.

 

(ii)                                  If any Tagging Member exercises its rights
under this Section 9.1, the closing of the purchase of the Company Interests
with respect to which such rights have been exercised will take place
concurrently with the closing of the sale of the Selling Member’s Company
Interests to the Proposed Transferee.  If, by the end of the ninety (90) day
period following the date of delivery of the Tag-Along Opportunity Notice (or,
following the delivery of the last Amended Tag-Along Opportunity Notice, if
applicable), the Selling Members and the Proposed Transferee have not completed
the Proposed Sale, each Tagging Member shall be released from its obligations
under this Section 9.1, and the Tag-Along Exercise Notices shall be null and
void, and it shall be necessary for the terms of this Section 9.1 to be
separately complied with in order to consummate such Proposed Sale pursuant to
this Section 9.1.

 

(d)                                 Upon delivering a Tag-Along Exercise Notice,
each Tagging Member will, if requested by the Selling Members, execute and
deliver a power of attorney in

 

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form and substance reasonably satisfactory to the Selling Members with respect
to the Proposed Sale and the Company Interests that are to be sold by such
Tagging Member pursuant hereto (a “Tag-Along Power of Attorney”); it being
understood that the Tag-Along Power of Attorney will provide that each such
Tagging Member will irrevocably appoint said attorney-in-fact as its agent and
attorney-in-fact with full power and authority to act under the Tag-Along Power
of Attorney on its behalf with respect to (and subject to the terms and
conditions of) the matters specified in this Section 9.1.  For the avoidance of
doubt, if by the end of ninety (90) days following the date of delivery of the
Tag-Along Opportunity Notice (or, following the delivery of the last Amended
Tag-Along Opportunity Notice, if applicable), the Selling Members and the
Proposed Transferee have not completed the Proposed Sale, each Tag-Along Power
of Attorney and all authority, power and rights granted therein shall be
revoked, rescinded and terminated and the Tag-Along Power of Attorney shall be
null and void ab initio.

 

9.2.                            Drag-Along Rights.

 

(a)                                 Drag-Along Rights.  If Members owning
greater than 65% of the issued and outstanding Class A Interests (collectively,
the “Dragging Members”) approve (x) a sale or exchange (by merger, consolidation
or otherwise) of at least a majority of the Company Interests that are then
issued and outstanding to a Person who is not an Affiliate of the Company or the
Dragging Members (a “Third Party”) or (y) a sale or exchange by the Company and
its Subsidiaries to a Third Party of all or substantially all of the assets of
Company and its Subsidiaries, taken as a whole, then each Member other than the
Dragging Members (the “Drag-Along Members”) hereby agrees that such Member shall
(A) waive any appraisal rights that it would otherwise have in respect of the
Drag-Along Sale (as defined below), (B) vote for, approve and otherwise consent
to and raise no objection against (and instruct any Directors appointed by such
Drag-Along Members to vote for, approve and otherwise consent to and raise no
objection against) the Drag-Along Sale, (C) Transfer to or exchange with such
Third Party, subject to the other provisions of this Section 9.2, on the terms
approved by the Dragging Members in respect of their Company Interests to be
sold or exchanged in the transaction, including time of payment, amount, form
and choice of consideration (excluding any amount payable to a Member for any
unpaid Class A Additional Capital or the aggregate unpaid amount of Class A
Additional Capital Yield) and adjustments to purchase price, that number of
Company Interests equal to the number outstanding Company Interests owned by
such Member immediately prior to the Drag-Along Sale multiplied by the aggregate
percentage of Company Interests to be sold in the Drag-Along Sale (if structured
as a sale or exchange of equity), and (D) take any other action in connection
with the Drag-Along Sale as may be reasonably requested by the Dragging
Members.  Each Drag-Along Member agrees to cooperate in connection with the
consummation of a Drag-Along Sale, including the execution of such agreements,
stock powers and other related documents as may be required to effect the
Drag-Along Sale.  Notwithstanding the foregoing, no Drag-Along Member which
receives all cash in an amount meeting the requirement of this
Section 9.2(a) shall have any right whatsoever hereunder to invest in any Third
Party or to retain or receive any securities of the Company or securities of any
Third Party acquiring the Company (and the condition set forth in this
Section 9.2(a) shall be deemed satisfied) even if other Members are granted a
right to invest in any entity acquiring the

 

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Company or to retain or receive any securities of the Company or to exchange
securities of the Company for securities of any entity acquiring the Company.

 

(b)                                 Exercise of Drag-Along Rights; Notices;
Certain Conditions of Drag-Along Sales.

 

(i)                                     The Dragging Members will promptly give
notice (the “Drag-Along Notice”) to the Company (which will promptly give notice
to the Drag-Along Members) of any proposed Transfer giving rise to the rights of
the Dragging Members set forth in this Section 9.2 (a “Drag-Along Sale”) not
less than ten (10) Business Days prior to the proposed closing date for such
Drag-Along Sale.  The Drag-Along Notice will set forth the number of Company
Interests proposed to be Transferred in the Drag-Along Sale, the identity of the
proposed transferee or acquiring Person, the proposed amount and form of
consideration, the number of Company Interests sought and the other material
terms and conditions of the offer.

 

(ii)                                  Each Drag-Along Member (x) shall agree to
the same covenants as the Dragging Member agrees to in connection with the
Drag-Along Sale (provided that no Drag-Along Member shall be required to agree
to any covenant not to compete or any covenant that would bind or restrict any
Affiliate of a Drag-Along Member that is not itself a Member), (y) shall be
obligated to join individually and ratably (and not jointly and severally) on a
pro rata basis (based on the proceeds to be received by such Drag-Along Member
in connection with the Drag-Along Sale but that in no event exceeds the amount
of consideration otherwise received by the Drag-Along Member in connection with
such Drag-Along Sale) in any pro rata indemnification that the Dragging Members
agree to provide in connection with the Proposed Sale (provided that no
Drag-Along Member shall be required to share in any indemnification obligations
relating to a breach of a representation, warranty or covenant relating solely
to another Member or such other Member’s Company Interests, such as with respect
to title to Company Interests or authorization of a Member to enter into
transaction agreements (such obligations to be borne solely by the other
Member)) and (z) shall make such representations and warranties concerning
itself and the Company Interests to be sold by it in connection with such
Drag-Along Sale as each Dragging Member makes with respect to itself and its
Company Interests (and provide sole indemnity with respect thereto consistent
with any indemnification provided by each Dragging Member with respect to its
representations and warranties).

 

(iii)                               Each Drag-Along Member will be responsible
for funding its proportionate share (based on the proceeds to be received by
each Member in connection with the Drag-Along Sale) of any adjustment in
purchase price or escrow arrangements in connection with the Drag-Along Sale and
for its proportionate share of any withdrawals from any such escrow, including
any such withdrawals that are made with respect to claims arising out of
agreements, covenants, representations, warranties or other provisions relating
to the Drag-

 

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Along Sale and shall receive its proportionate share of any upward adjustment in
purchase price or release of funds to the Members from any escrow arrangement in
connection with the Drag-Along Sale.

 

(iv)                              Each Drag-Along Member will be responsible for
its proportionate share (based on the proceeds to be received by each Member in
connection with the Drag-Along Sale) of the Costs of the Drag-Along Sale.  The
Dragging Members shall be entitled to estimate in their reasonable, good faith
judgment each Drag-Along Member’s proportionate share of such Costs and to
withhold such amounts from payments to be made to each Drag-Along Member at the
time of closing of the Drag-Along Sale; provided that (i) such estimate shall
not preclude the Dragging Members from recovering additional amounts from the
Drag-Along Members in respect of each Drag-Along Member’s proportionate share of
such Costs and (ii) the Dragging Members shall reimburse each Drag-Along Member
to the extent actual amounts are ultimately less than the estimated amounts.

 

(c)                                  Closing of Drag-Along Sale.

 

(i)                                     At the closing of such Drag-Along Sale,
if the Company Interests are certificated and if so requested by the Dragging
Members, each of the Drag-Along Members shall deliver certificates evidencing
the Company Interests then held by it which are to be sold in connection with
such sale, duly endorsed for transfer or accompanied by interest powers executed
in blank, against payment of the purchase price therefor by check or wire
transfer to the account or accounts specified by such Drag-Along Member.

 

(ii)                                  If the Drag-Along Sale is not consummated
within 180 days from the date of the Drag-Along Notice, the Dragging Members
must deliver another Drag-Along Notice in order to exercise their rights under
this Article IX with respect to such Drag-Along Sale.

 

(d)                                 Power of Attorney.  Each Drag-Along Member
hereby appoints each Dragging Member as such Drag-Along Member’s
attorney-in-fact, agent and representative with respect to such action to be
taken by such Member set forth in this Section 9.2.  Each such power-of-attorney
granted hereby is coupled with an interest and shall be irrevocable (except as
set forth in the last sentence of this Section 9.2(d)) by any Drag-Along Member
in any manner or for any reason.  This authority granted to the Dragging Members
shall not be affected by the death, illness, dissolution, disability,
incapacity, bankruptcy, insolvency or other inability to act of any Member
pursuant to any applicable law.  Pursuant to this power of attorney, the
Dragging Members have full power and authority to act on each Drag-Along
Member’s behalf with respect to (and subject to the terms and conditions of) the
matters specified in this Section 9.2 and the Dragging Members are authorized to
make the Drag-Along Member party to any shareholder, investor rights, voting,
registration rights or other similar agreements to be entered into in connection
with any Drag-Along Sale.  For the avoidance of doubt, if the applicable
Drag-Along Sale is not consummated within 180 days from the date of the

 

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Drag-Along Notice, all authority, power and rights granted pursuant to this
Section 9.2(d) shall be revoked, rescinded and terminated with respect to such
Drag-Along Sale until the Dragging Members deliver another Drag-Along Notice in
accordance with this Section 9.2 with respect to the Drag-Along Sale.

 

9.3.                            Put and Call Rights.

 

(a)                                 Put Rights.

 

(i)                                     WCAS Put Rights.  On and after the
second anniversary of the date of this Agreement, during each Put Valuation
Request Period, WCAS shall have the right to send one (1) written notice to the
Company (with a copy to SEM) requesting that the Company engage an Investment
Bank to determine the Company Enterprise Value and Put Price Per Interest in
accordance with Section 9.3(e) hereof (each, a “WCAS Put Valuation Request”) if
Dignity has not already initiated a Dignity Put Valuation Request for such Put
Valuation Request Period (it being understood that if an Investment Bank does
not determine the Company Enterprise Value and the Put Price Per Interest after
a Dignity Put Valuation Request, WCAS shall have the right to initiate a WCAS
Put Valuation Request).  Following delivery of a WCAS Put Valuation Request (or
a Dignity Put Valuation Request, as the case may be), the Company shall instruct
the Investment Bank selected pursuant to Section 9.3(e) to calculate the Company
Enterprise Value and Put Price Per Interest in accordance with
Section 9.3(e) hereof and deliver written notice of its determination thereof to
SEM, WCAS and Dignity.  During the ten (10) day period following SEM’s, WCAS’s
and Dignity’s receipt of such written notice from the applicable Investment Bank
that sets forth such Investment Bank’s determination of the Company Enterprise
Value and Put Price Per Interest in accordance with Section 9.3(e), WCAS may
elect, in its sole and absolute discretion, to sell to SEM a number of Company
Interests up to WCAS’s Put Cap at a price per Company Interest equal to the Put
Price Per Interest (each, a “WCAS Put Exercise”).  Any WCAS Put Exercise shall
be made by delivery of a written notice by WCAS to SEM and the Company during
such ten (10) day period (each, a “WCAS Put Exercise Notice”), which WCAS Put
Exercise Notice shall indicate the number of Company Interests that WCAS wishes
to sell to SEM subject to WCAS’s Put Cap.  Following proper delivery of a WCAS
Put Exercise Notice, the Company shall promptly notify each Class A Member
(other than WCAS and Dignity) and Class B Member of the WCAS Put Exercise in
writing (each, a “WCAS Put Notification”), and each Class A Member (other than
WCAS and Dignity) and Class B Member, during the ten (10) day period following
such Member’s receipt of such WCAS Put Notification, may elect, in its sole and
absolute discretion, to sell to SEM a number of Company Interests up to the
product of such Member’s Put Cap and the Applicable Percentage, in each case at
a price per interest equal to the Put Price Per Interest (each, an “Additional
Put Exercise” and together with a WCAS Put Exercise, each a “Put Exercise”). 
For the avoidance of doubt, if WCAS does not deliver a WCAS Put Exercise Notice
during an applicable period, no other Member (other than Dignity pursuant to
Section 9.3(a)(ii)) may deliver an

 

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Additional Put Exercise Notice or otherwise sell any Company Interests in
connection with the put rights described in this Section 9.3(a)(i) for such
period.  Any Additional Put Exercise shall be made by delivery of a written
notice by the applicable Member to SEM and the Company during the ten (10) day
period following such Member’s receipt of the WCAS Put Notification (each, an
“Additional Put Exercise Notice” and together with a WCAS Put Exercise Notice,
each a “Put Exercise Notice”), which Additional Put Exercise Notice shall
indicate the number of Company Interests that such Member wishes to sell to SEM
subject to such Member’s Put Cap; provided, however, that, with respect to
Class B Members, such Member may only elect to sell vested Class B Interests to
SEM and for only so long as such Member is an employee of the Company or one of
its Subsidiaries.  In connection with each Put Exercise, (x) SEM shall purchase,
and the applicable Class A Member or Class B Member shall sell, the applicable
Company Interests no later than forty five (45) days following delivery of the
applicable Put Exercise Notice and (y) SEM shall pay the applicable purchase
price at the closing by one of the following methods determined in SEM’s sole
and absolute discretion: (A) wire transfer of immediately available funds,
(B) so long as SEM Common Stock is publicly traded, the issuance of shares of
SEM Common Stock (valued at the 21 trading day volume-weighted average sales
price of such shares for the period beginning ten (10) trading days immediately
preceding the first public announcement of the Put Exercise and ending on the
tenth (10th) trading day immediately following such announcement) or (C) a
combination thereof; provided that each Member delivering a Put Exercise Notice
shall be paid in the same relative mix of cash and SEM Common Stock.  Each
Member hereby acknowledges that the issuance of any shares of SEM Common Stock
that are paid to such Member pursuant to the immediately preceding sentence will
not be registered under applicable securities laws (other than as required by
Section 9.3(d)).

 

(ii)                                  Dignity Put Rights.  On and after the
second anniversary of the date of this Agreement, during each Put Valuation
Request Period, Dignity shall have the right to send one (1) written notice to
the Company (with a copy to SEM) requesting that the Company engage an
Investment Bank to determine the Company Enterprise Value and Put Price Per
Interest in accordance with Section 9.3(e) hereof (each, a “Dignity Put
Valuation Request”) if WCAS has not already initiated a WCAS Put Valuation
Request for such Put Valuation Request Period (it being understood that if an
Investment Bank does not determine the Company Enterprise Value and the Put
Price Per Interest after a WCAS Put Valuation Request, Dignity shall have the
right to initiate a Dignity Put Valuation Request).  Following delivery of a
Dignity Put Valuation Request (or a WCAS Put Valuation Request, as the case may
be), the Company shall instruct the Investment Bank selected pursuant to
Section 9.3(e) to calculate the Company Enterprise Value and Put Price Per
Interest in accordance with Section 9.3(e) hereof and deliver written notice of
its determination thereof to SEM, WCAS and Dignity. During the ten (10) day
period following SEM’s, WCAS’s and Dignity’s receipt of such written notice from
the applicable Investment Bank that sets forth such Investment Bank’s
determination of the Company Enterprise Value and Put

 

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Price Per Interest in accordance with Section 9.3(e), Dignity may elect, in its
sole and absolute discretion, to sell to SEM a number of Company Interests up to
the Dignity Put Cap at a price per Company Interest equal to the Put Price Per
Interest (each, a “Dignity Put Exercise”).  Any Dignity Put Exercise shall be
made by delivery of a written notice by Dignity to SEM and the Company during
such ten (10) day period (each, a “Dignity Put Exercise Notice”), which Dignity
Put Exercise Notice shall indicate the number of Company Interests that Dignity
wishes to sell to SEM subject to the Dignity Put Cap.  In connection with each
Dignity Put Exercise, (x) SEM shall purchase, and Dignity shall sell, the
Company Interests no later than forty five (45) days following delivery of the
Dignity Put Exercise Notice and (y) SEM shall pay the purchase price at the
closing by one of the following methods determined in SEM’s sole and absolute
discretion: (A) wire transfer of immediately available funds, (B) so long as SEM
Common Stock is publicly traded, the issuance of shares of SEM Common Stock
(valued at the 21 trading day volume-weighted average sales price of such shares
for the period beginning ten (10) trading days immediately preceding the first
public announcement of the Dignity Put Exercise and ending on the tenth (10th)
trading day immediately following such announcement) or (C) a combination
thereof.  Dignity hereby acknowledges that the issuance of any shares of SEM
Common Stock that are paid to Dignity pursuant to the immediately preceding
sentence will not be registered under applicable securities laws (other than as
required by Section 9.3(d)).

 

(b)                                 Call Rights.  On and after the fourth
anniversary of the date of this Agreement, during each Call Valuation Request
Period, SEM shall have the right to send a written notice to the Company (with a
copy to Dignity and WCAS) requesting that the Company engage an Investment Bank
to determine the Company Enterprise Value and Call Price Per Interest in
accordance with Section 9.3(e) (each, a “Call Valuation Request”).  Following
delivery of a Call Valuation Request, the Company shall instruct the Investment
Bank selected pursuant to Section 9.3(e) to calculate the Company Enterprise
Value and Call Price Per Interest in accordance with Section 9.3(e).  During the
ten (10) day period following SEM’s, Dignity’s and WCAS’s receipt of a written
notice from the applicable Investment Bank that sets forth such Investment
Bank’s determination of the Company Enterprise Value and Call Price Per Interest
in accordance with Section 9.3(e), SEM may elect, in its sole and absolute
discretion, to purchase from the Class A Members, Class B Members and Class C
Members all or less than all of such Members’ Company Interests at a price per
interest equal to the Call Price Per Interest (each, a “Call Exercise”);
provided that if SEM shall purchase less than all of the Company Interests in
connection with any Call Exercise, SEM shall purchase the same relative
proportion of each such Member’s Company Interests.  Any Call Exercise shall be
made by delivery during such ten (10) day period of a written notice by SEM to
the Class A Members, Class B Members and Class C Members (each, a “Call Exercise
Notice”), which Call Exercise Notice shall indicate the number of Company
Interests that SEM wishes to purchase from such Members.  In connection with
each Call Exercise, (x) SEM shall purchase, and the applicable Members shall
sell, the applicable Company Interests no later than forty five (45) days
following delivery of the applicable Call Exercise Notice and (y) SEM shall pay
the applicable purchase price at the closing by

 

41

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one of the following methods determined in SEM’s sole and absolute discretion:
(A) wire transfer of immediately available funds, (B) the issuance of shares of
SEM Common Stock (valued at the 21 trading day volume-weighted average sales
price of such shares for the period beginning ten (10) trading days immediately
preceding the first public announcement of the Call Exercise and ending on the
tenth (10th) trading day immediately following such announcement) or (C) a
combination thereof; provided that each Class A Member, Class B Member and
Class C Member shall be paid in the same relative mix of cash and SEM Common
Stock.  Each Member hereby acknowledges that the issuance of any shares of SEM
Common Stock that are paid to such Member pursuant to the immediately preceding
sentence will not be registered under applicable securities laws (other than as
required by Section 9.3(d)).

 

(c)                                  SEM COC Put Rights.

 

(i)                                     During the sixty (60) day period
following a Qualifying SEM Change of Control, WCAS shall have the right to send
a written notice to the Company (with a copy to SEM) requesting that the Company
have an Investment Bank determine the Company Enterprise Value and Put Price Per
Interest in accordance with Section 9.3(e) (each, a “WCAS SEM COC Valuation
Request”).  Following delivery of a WCAS SEM COC Valuation Request, the Company
shall instruct the Investment Bank selected pursuant to Section 9.3(e) to
calculate the Company Enterprise Value and Put Price Per Interest in accordance
with Section 9.3(e).  During the ten (10) day period following SEM’s and WCAS’s
receipt of a written notice from the applicable Investment Bank that sets forth
such Investment Bank’s determination of the Put Price Per Interest (i) WCAS may
elect, in its sole and absolute discretion, to sell to SEM all (but not less
than all) of the Company Interests it then owns to SEM at a price per interest
equal to the Put Price Per Interest (a “WCAS SEM COC Put Exercise”), and (ii) if
WCAS elects to make a WCAS SEM COC Put Exercise, each Class A Member (other than
Dignity), Class B Member and Class C Member shall be obligated to sell all (but
not less than all) of the Company Interests that it then owns to SEM at a price
per interest equal to the Put Price Per Interest.  Any WCAS SEM COC Put Exercise
shall be made by delivery of a written notice by WCAS to SEM and the Company (a
“WCAS SEM COC Put Exercise Notice”).  Following delivery of a WCAS SEM COC Put
Exercise Notice, the Company shall promptly notify each Class A Member (other
than WCAS), Class B Member and Class C Member of the WCAS SEM COC Put Exercise. 
In connection with a WCAS SEM COC Put Exercise, (x) SEM shall purchase, and the
applicable Members shall sell, the Company Interests no later than forty five
(45) days following delivery of the WCAS SEM COC Put Exercise Notice and (y) SEM
shall pay the applicable purchase price at the closing by one of the following
methods: (A) wire transfer of immediately available funds, (B) at the election
of WCAS, but subject to the consent of the purchaser of SEM (or its assets) in
the Qualifying SEM Change of Control, the same form of consideration paid in the
Qualifying SEM Change of Control (with respect to any publicly traded
securities, valued at the 21 trading day volume-weighted average sales price of
such securities for the period beginning ten (10) trading days immediately
preceding the first public

 

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announcement of the WCAS SEM COC Put Exercise and ending on the tenth (10th)
trading day immediately following such announcement) or (C) at the election of
WCAS, but subject to the consent of the purchaser of SEM (or its assets) in the
Qualifying SEM Change of Control, a combination thereof; provided that if any
non-cash consideration is paid to the extent permitted by this sentence, each
Member shall be paid in the same relative mix of cash and form of consideration
paid in the Qualifying SEM Change of Control.  Each Member hereby acknowledges
that the issuance of any securities that are paid to such Member pursuant to the
immediately preceding sentence will not be registered under applicable
securities laws and will therefore be subject to transfer restrictions under
applicable securities laws.

 

(ii)                                  During the sixty (60) day period following
a Qualifying SEM Change of Control, Dignity shall have the right to send a
written notice to the Company (with a copy to SEM) requesting that the Company
have an Investment Bank determine the Company Enterprise Value and Put Price Per
Interest in accordance with Section 9.3(e) (each, a “Dignity SEM COC Valuation
Request”).  Following delivery of a Dignity SEM COC Valuation Request, the
Company shall instruct the Investment Bank selected pursuant to
Section 9.3(e) to calculate the Company Enterprise Value and Put Price Per
Interest in accordance with Section 9.3(e).  During the ten (10) day period
following SEM’s and Dignity’s receipt of a written notice from the applicable
Investment Bank that sets forth such Investment Bank’s determination of the Put
Price Per Interest Dignity may elect, in its sole and absolute discretion, to
sell to SEM all (but not less than all) of the Company Interests it then owns to
SEM at a price per interest equal to the Put Price Per Interest (a “Dignity SEM
COC Put Exercise”).  Any Dignity SEM COC Put Exercise shall be made by delivery
of a written notice by Dignity to SEM and the Company (a “Dignity SEM COC Put
Exercise Notice”).  In connection with a Dignity SEM COC Put Exercise, (x) SEM
shall purchase, and Dignity shall sell, its Company Interests no later than
forty five (45) days following delivery of the Dignity SEM COC Put Exercise
Notice and (y) SEM shall pay the purchase price at the closing by one of the
following methods: (A) wire transfer of immediately available funds, (B) at the
election of Dignity, but subject to the consent of the purchaser of SEM (or its
assets) in the Qualifying SEM Change of Control, the same form of consideration
paid in the Qualifying SEM Change of Control (with respect to any publicly
traded securities, valued at the 21 trading day volume-weighted average sales
price of such securities for the period beginning ten (10) trading days
immediately preceding the first public announcement of the Dignity SEM COC Put
Exercise and ending on the tenth (10th) trading day immediately following such
announcement) or (C) at the election of Dignity, but subject to the consent of
the purchaser of SEM (or its assets) in the Qualifying SEM Change of Control, a
combination thereof.  Dignity hereby acknowledges that the issuance of any
securities that are paid to it pursuant to the immediately preceding sentence
will not be registered under applicable securities laws and will therefore be
subject to transfer restrictions under applicable securities laws.

 

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(d)                                 Resale of SEM Common Stock.

 

(i)                                     If in connection with any Put Exercise,
Dignity Put Exercise or Call Exercise, SEM shall elect to pay any of the
applicable purchase price in shares of SEM Common Stock, Select Holdings shall
as soon as possible file with the SEC (in no event later than twenty (20) days
in the event SEM qualifies as a well-known seasoned issuer (as defined in
Rule 405 of the Securities Act), and thirty (30) days if otherwise, following
the issuance of such shares of SEM Common Stock), and use its commercially
reasonable efforts to cause to become and remain effective for so long as the
applicable Class A Member, Class B Member or Class C Member holds such shares of
SEM Common Stock, an effective resale registration statement (the “Resale
Registration Statement”) to register the resale of all such shares of SEM Common
Stock; provided, however, that Select Holdings shall not be required to file or
maintain a Resale Registration Statement with respect to any shares of SEM
Common Stock when (A) a registration statement with respect to the sale of such
shares shall have become effective under the Securities Act and all such
securities shall have been disposed of in accordance with such registration
statement, (B) (but only so long as) all such shares may be sold pursuant to
Rule 144 (or any successor provision) under the Securities Act free of any
restrictions on transfer (including volume limitations) or (C) all such shares
shall have ceased to be outstanding.

 

(ii)                                  Notwithstanding anything to the contrary
contained herein, if there is a possible acquisition or business combination or
other transaction, business development or event involving Select Holdings or
any of its Subsidiaries that, upon the advice of counsel, would require
disclosure in the Resale Registration Statement and Select Holdings determines
in the exercise of its good faith judgment and not for the purpose of avoidance
of its obligations under this Section 9.3 that such disclosure is not in the
best interest of Select Holdings or its stockholders or obtaining any financial
statements relating to any such acquisition or business combination required to
be included in the Resale Registration Statement would be impracticable or would
make any statement in the Resale Registration Statement untrue in any material
respects, then Select Holdings shall be entitled to delay the filing of the
Resale Registration Statement until the termination of the condition giving rise
to such delay; provided, however, that Select Holdings shall not be permitted to
exercise the rights in this Section 9.2(d)(ii) for a period or periods not to
exceed ninety (90) days in the aggregate in any three hundred sixty-five (365)
day period.

 

(iii)                               Select Holdings shall not be required to
register or qualify any SEM Common Stock issued pursuant to this
Section 9.3(d) under any state securities or “blue sky” laws of such
jurisdiction other than as it deems necessary in connection with the chosen
method of distribution or to take any other actions or do any other things other
than those it reasonably deems necessary or advisable to consummate such
distribution, and Select Holdings shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it would not otherwise be obligated to be so qualified, to

 

44

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subject itself to taxation in any such jurisdiction or to consent to general
service or process in any such jurisdiction.

 

(iv)                              In connection with the resale, Select Holdings
may require a Class A Member, Class B Member or Class C Member to furnish to
Select Holdings such information regarding such Class A Member, Class B Member
or Class C Member, as applicable, and the distribution of such securities as
Select Holdings may from time to time reasonably request in writing.

 

(v)                                 Select Holdings shall promptly notify each
Class A Member, Class B Member and Class C Member when Select Holdings becomes
aware of (a) the issuance by the SEC or any state securities authority of any
stop order, injunction or other order or requirement suspending the
effectiveness of such Resale Registration Statement or (b) the happening of any
event as a result of which the Resale Registration Statement, as then in effect,
the prospectus related thereto or any document included therein by reference
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances under which they were made (and
such Member shall forthwith discontinue disposition of SEM Common Stock pursuant
to the registration statement covering such securities until such Member’s
receipt of the copies of the supplemented or amended prospectus), and as
promptly as reasonably practicable thereafter, Select Holdings shall prepare and
file with the SEC, and furnish without charge to such Members, an amendment or
supplement to the Resale Registration Statement or prospectus, which shall
correct such misstatement or omission or effect such compliance.

 

(e)                                  In the event a Dignity Put Valuation
Request, WCAS Put Valuation Request, Call Valuation Request, Dignity SEM COC
Valuation Request or WCAS SEM COC Valuation Request is made pursuant to the
terms of this Section 9.3, the Investment Bank shall determine the Company
Enterprise Value and the Put Price Per Interest or Call Price Per Interest, as
applicable, for all purposes of this Agreement, and such determinations shall be
binding on all the Members and the Company.  SEM along with one of either WCAS
or Dignity shall mutually agree on an Investment Bank to make such
determinations within five (5) Business Days following delivery of the Dignity
Put Valuation Request, WCAS Put Valuation Request, Call Valuation Request,
Dignity SEM COC Valuation Request or WCAS SEM COC Valuation Request, as
applicable.  The selected Investment Bank shall be instructed to use its
commercially reasonable efforts to deliver its determinations within forty five
(45) days of its engagement.  When making the determinations pursuant to this
Section 9.3(e) with respect to a Dignity Put Valuation Request, WCAS Put
Valuation Request, Call Valuation Request, Dignity SEM COC Valuation Request or
WCAS SEM COC Valuation Request, (i) the Investment Bank shall calculate EBITDA
in a manner consistent with the calculation of EBITDA the Company and Dignity
used to value the Class A Interests issued to Dignity in connection with the
Acquisition and (ii) the applicable period for the calculation of EBITDA shall
be the twelve (12) calendar month period ended on the last day of the most
recent calendar month for which month-end financial statements are available at
the time of the delivery

 

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of the Dignity Put Valuation Request, WCAS Put Valuation Request, Call Valuation
Request, Dignity SEM COC Valuation Request or WCAS SEM COC Valuation Request, as
applicable, and such calculation shall be based on the Company’s monthly
financial statements for each month in the applicable twelve (12) calendar month
period, in each case prepared in accordance with GAAP and consistent with the
Company’s historical accounting methodologies, policies and procedures.  The
Company will provide such access to its books, records and personnel as is
necessary to allow the Investment Bank to make such determinations.  The fees
and expenses of the Investment Bank will be borne by the Company.
Notwithstanding anything else contained in this Section 9.3(e), the
determination of Company Enterprise Value and Put Price Per Interest pursuant to
either a Dignity Put Valuation Request or WCAS Put Valuation Request shall be
binding on all parties pursuant to this Section 9.3(e) for such Put Valuation
Request Period.

 

(f)                                   On the True Up Date of a Member, in
addition to the payments of the Call Price Per Interest or Put Price Per
Interest due to such Member on such date, SEM shall pay to such Member in cash
its True Up Amount (as defined below), if any, with respect to any previous Put
Exercise or Dignity Put Exercise by such Member or Call Exercise by SEM prior to
the True Up Date.   For purposes of this Section 9.3(f),

 

(i)                                     “Disregarded Securities” means, with
respect to any prior determination of Put Price Per Interest or Call Price Per
Interest, any unvested Class B Interests, unvested Class B Interests underlying
in-the-money Options or Convertible Securities, any unvested Class C Interests
or unvested Class C Interests underlying in-the-money Options or Convertible
Securities that (x) were outstanding at the time of, and included in, the number
of Fully Diluted Company Interests used in such calculation of Put Price Per
Interest or Call Price Per Interest, and (y) were subsequently forfeited and are
no longer outstanding on the True Up Date (other than Options or Convertible
Securities that were exercised by the applicable Member on the True Up Date);

 

(ii)                                  “True Up Amount” means, with respect to
any prior Put Exercise or Dignity Put Exercise by a Member or Call Exercise by
SEM, the excess of (x) the aggregate amount that would have been paid to a
Member in connection with such prior Put Exercise, Dignity Put Exercise or Call
Exercise if both (A) any Disregarded Securities had not been included in the
calculation of Fully Diluted Company Interests used in the calculation of Put
Price Per Interest or Call Price Per Interest with respect to such Put Exercise,
Dignity Put Exercise or Call Exercise and (B) the exercise price of any
Disregarded Securities had not been included in clause (iii) of the definition
of the Company Equity Value used in the calculation of Put Price Per Interest or
Call Price Per Interest with respect to such Put Exercise or Call Exercise, over
(y) the aggregate amount (whether in the form of cash or SEM Common Stock)
actually paid to such Member in connection with the prior Put Exercise or Call
Exercise; and

 

(iii)                               “True Up Date” means, with respect to a
Member, the first date on which any of the following occur: (a) consummation of
the transactions contemplated by any Call Exercise that result in such Member no
longer owning

 

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any Company Interests, (b) consummation of the transactions contemplated by the
WCAS SEM COC Put Exercise or Dignity SEM COC Put Exercise that result in such
Member no longer owning any Company Interests, and (c) consummation of the
transactions contemplated by any Put Exercise that result in such Member no
longer owning any Company Interests.

 

9.4.                            Preemptive Rights.

 

(a)                                 Grant of Preemptive Rights.  Subject to the
terms and conditions of this Agreement, the Company hereby grants to each
Qualified Member the right to purchase such Qualified Member’s Proportionate
Percentage (as hereinafter defined) of any Company Equity Securities to be
issued in any future Eligible Issuance (as hereinafter defined).  For the
purposes of this Section 9.4, the following terms shall have the meanings set
forth below:

 

“Proportionate Percentage” means, with respect to any Qualified Member as of any
date, the result (expressed as a percentage) obtained by dividing (i) the number
of Company Interests owned by such Qualified Member as of such date by (ii) the
total number of Company Interests owned by all Qualified Members as of such
date; provided, that, for purposes of determining the Proportionate Percentage
of a Qualified Member, such Qualified Member, at its election, shall be deemed
to own all Company Interests held by its Permitted Transferees as of the date of
determination and the applicable Permitted Transferee shall be deemed not to own
any such Company Interests for such purposes.

 

“Eligible Issuance” means the issuance by the Company to any Person or Persons
(including any of the Members), for cash, cash equivalents, property or
indebtedness, of any Company Equity Securities, other than an issuance by the
Company of:

 

(i)                                     Company Interests contemplated by the
Purchase Agreement;

 

(ii)                                  Class B Interests or options to purchase
Class B Interests in connection with or pursuant to a management equity plan
approved by the Board;

 

(iii)                               Class C Interests or options to purchase
Class C Interests in connection with or pursuant to a management equity plan
approved by the Board;

 

(iv)                              Company Equity Securities as consideration in
any bona fide business acquisition by the Company or any Subsidiary thereof,
whether by merger, consolidation, purchase of assets or otherwise;

 

(v)                                 Company Equity Securities upon the exercise,
exchange or conversion of outstanding Options or Convertible Securities;

 

(vi)                              Company Equity Securities in a Public
Offering; or

 

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(vii)                           Company Equity Securities as a dividend or
distribution on (or payment of accrued yield in respect of) the outstanding
securities or in connection with any splits, reclassifications,
recapitalizations, consolidations or similar events affecting the securities.

 

(b)                                 Notice of Eligible Issuance.  The Company
shall, before issuing any Company Equity Securities in an Eligible Issuance,
give written notice thereof to each Qualified Member.  Such notice shall specify
the Company Equity Securities the Company proposes to issue, the proposed date
of issuance, the consideration that the Company intends to receive therefor and
all other material terms and conditions of such proposed issuance.  For a period
of ten (10) Business Days following the date of such notice, each Qualified
Member shall be entitled, by written notice to the Company, to elect to purchase
all or any part of such Qualified Member’s Proportionate Percentage of the
Company Equity Securities being sold in the Eligible Issuance; provided, that if
two or more securities shall be proposed to be sold as a “unit” in an Eligible
Issuance, any such election must relate to such unit of securities.  To the
extent that elections pursuant to this Section 9.4 shall not be made with
respect to any Company Equity Securities included in an Eligible Issuance within
such ten (10) Business Day period, then the Company may issue such Company
Equity Securities, but only for consideration not less than, and otherwise on
terms no less favorable to the Company in any material respect than, those set
forth in the Company’s notice and only within ninety (90) days after the end of
such ten (10) Business Day period.  In the event that any such offer is accepted
by one or more Qualified Members, the Company shall sell to such Qualified
Member or Qualified Members, and such Qualified Member or Qualified Members
shall purchase from the Company, for the consideration and on the terms set
forth in the notice as aforesaid, the Company Equity Securities that such
Qualified Member or Qualified Members shall have elected to purchase and the
Company may sell the balance, if any, of the Company Equity Securities it
proposed to sell in such Eligible Issuance in accordance with the immediately
preceding sentence.  Notwithstanding anything to the contrary contained above,
if the Board shall have determined that it is in the best interests of the
Company to proceed with an Eligible Issuance prior to providing the notices
required by this Section 9.4 or affording each of the Qualified Members its
preemptive rights in strict compliance with this Section 9.4, the Company shall
be permitted to first consummate such issuance and thereafter deliver such
notices and afford the Qualified Members an opportunity to exercise their
preemptive rights hereunder so long as (i) such notices are delivered and such
preemptive rights offer is conducted as soon as practicable thereafter,
(ii) such offer is structured such that the rights of the Qualified Members
hereunder are not prejudiced in any material respect thereby and (iii) the
number of Company Equity Securities that are so offered to each Qualified Member
is no less than the number that would have been offered to such Qualified Member
had all Company Equity Securities been offered together as a single Eligible
Issuance in accordance with this Section 9.4.

 

9.5.                            Treatment of Class A Additional Capital and
Class A Additional Capital Yield.  If any holder of Class A Interests entitled
to Class A Additional Capital or Class A Additional Capital Yield Transfers any
Class A Interests in accordance with Section 9.1 (Tag-Along Rights), Section 9.2
(Drag-Along Rights) or Section 9.3 (Put and Call Rights), in

 

48

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connection with such Transfer the Company shall simultaneously pay such Class A
Member any unpaid Class A Additional Capital and the aggregate unpaid amount of
Class A Additional Capital Yield with respect to such Class A Interest.  For the
avoidance of doubt, the Class A Additional Capital or Class A Additional Capital
Yield shall not be considered as paid by the Company in connection with any such
Transfer for purposes of Sections 9.1, 9.2 or 9.3.

 

ARTICLE X.
AMENDMENTS TO AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

 

10.1.                     Amendments.

 

(a)                                 This Agreement shall not be amended nor any
provision hereof waived without the written consent of (i) SEM, (ii) for so long
as the Dignity Members own at least one (1) Company Interest, Dignity and
(iii) for so long as the WCAS Members own at least one (1) Company Interest,
WCAS; provided that notwithstanding the foregoing, the Board shall have the
power, without the consent of the Members, to amend this Agreement as may be
required to reflect the admission, substitution, termination, or withdrawal of
Members that is otherwise made in accordance with the terms of this Agreement. 
The Board shall provide reasonably prompt written notice to the Members when any
action under this Section 10.1(a) is taken.

 

(b)                                 Notwithstanding anything in
Section 10.1(a) to the contrary, this Agreement shall not be amended nor any
provision hereof waived without the written consent of a Member if such
amendment by its express terms would have a disproportionate and materially
adverse effect on the rights, obligations, powers or interests (economic or
otherwise) of such Member relative to the other Members.

 

(c)                                  Each Member agrees to be bound by each and
every amendment adopted in accordance with this Agreement even if such Member
did not execute such amendment.

 

ARTICLE XI.
QUALIFIED MEMBER INFORMATION, ACCESS AND MANAGEMENT RIGHTS; CONSOLIDATION;
EXPENSES

 

11.1.                     Qualified Member Information Rights.  The Company
shall provide to each Qualified Member, by electronic means or otherwise,
(a) annual audited consolidated financial statements within 90 days of the end
of the Company’s fiscal year, (b)  unaudited consolidated financial statements
(including a balance sheet, statement of operations and statement of members’
equity) for each of the Company’s first three fiscal quarters within 45 days of
the end of each such quarter, each prepared in accordance with GAAP, (c) within
30 days after the commencement of each fiscal year of the Company, a detailed
consolidated budget for such fiscal year (including a projected consolidated
balance sheet and consolidated statements of projected operations and cash flows
as of the end of and for such fiscal year) and, promptly when available, any
material revisions of such budget, (d) any other consolidated financial
statements, budgets or projections provided to the lenders of the Company and
its Subsidiaries promptly

 

49

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after delivery of such financial information to such lenders, (e) so long as
Dignity or WCAS has the right to designate any Dignity or WCAS Directors,
Dignity or WCAS, as the case may be, shall have the right to receive all
information provided or available to the director or directors of any direct or
indirect Subsidiary of the Company, and (f) upon demand for any purpose
reasonably related to the Qualified Member’s interest as a Member of the
Company, any other information regarding the affairs of the Company, subject to
reasonable standards prescribed by the Board with respect to the time and
location such information may be furnished.

 

11.2.                     Contractual Management Rights.  With respect to each
Qualified Fund Member, from the date of this Agreement (or from such later date
as a Qualified Fund Member becomes a Member hereunder) until the earliest of
(i) the first date on which such Qualified Fund Member no longer holds any
Company Interests, (ii) the date of the Initial Public Offering of the common
equity of the Company and (iii) the first date on which such Qualified Fund
Member is no longer intended to qualify as a venture capital operating company
under United States Department of Labor Regulations published at 29 C.F.R.
Section 2510.3-101(d)(3)(i), such Qualified Fund Member shall be entitled to the
following contractual management rights relating to the Company and its
Subsidiaries:

 

(a)                                 Such Qualified Fund Member shall have the
right to meet with the management personnel of the Company and its Subsidiaries
on a regular basis and from time to time during normal business hours and upon
reasonable notice to the Company or the applicable Subsidiary for the purpose of
consulting with, and making recommendations to the management of the Company or
its Subsidiaries or obtaining information regarding, the Company’s or any of its
Subsidiaries’ operations, activities and prospects and expressing its views and
recommendations thereon.

 

(b)                                 Such Qualified Fund Member shall have the
right to receive copies of (but only to the extent available), within a
reasonable time after its written request therefor, all financial statements
(including balance sheets, profit and loss and cash flow statements), budgets,
financial forecasts and projections and other financial information relating to
the Company or its Subsidiaries; provided that the Company shall not be required
to provide such information if the provision thereof would result in the waiver
of the attorney-client or any other privileges.

 

11.3.                     Consolidation.  The Company acknowledges that SEM
intends to consolidate the financial results of the Company with the other
financial results of SEM in accordance with GAAP.  If there is a change in
applicable law, regulations, or accounting principles with respect to such
consolidation, or if SEM receives a written opinion from its outside auditor
such that this Agreement must be modified for SEM to consolidate the financial
results of the Company with the other financial results of SEM, then SEM will
provide written notice to Dignity, WCAS and the Company stating the
modifications that it believes are necessary to achieve such consolidation, and
upon receipt of such notice, SEM, Dignity and WCAS shall promptly conduct good
faith discussions to seek to amend this Agreement to reorganize and restructure
the governance structure in a way that is mutually acceptable to SEM, Dignity
and WCAS to achieve consolidation.

 

50

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11.4.                     Confidentiality.  Each Qualified Member acknowledges
that any and all information provided to any Qualified Member pursuant to the
terms of this Article XI shall be Confidential Information (as defined in
Section 12.1(d)) and be subject to the provisions of Section 12.1.

 

11.5.                     Expenses.  The Company shall pay or reimburse any
Member for (a) compensation for third-party accounting, administrative, legal,
technical, management and other services rendered to the Company or any
Subsidiary of the Company, and (b) any amounts owed and payable by the Company
or any Subsidiary of the Company under the Amended and Restated Tax Sharing
Agreement or the Amended and Restated Shared Services Agreement.  The Company
shall also assume, and pay when due, all reasonable out of pocket expenses of
the Directors for attending meetings of the Board in person.

 

ARTICLE XII.
GENERAL PROVISIONS

 

12.1.                     Confidentiality.

 

(a)                                 Each Member agrees that it will not use at
any time any Confidential Information (as hereinafter defined) of which any such
Member is or becomes aware except in connection with its investment in the
Company (except that Members who are directors, officers or employees of the
Company or its Subsidiaries shall also be permitted to use such Confidential
Information in connection with the performance of their duties as directors,
officer or employees).

 

(b)                                 Each Member further agrees that the
Confidential Information will be kept strictly confidential and will not be
disclosed by it or its Representatives (as defined below), except (i) as
required by applicable law, regulation or legal process or in response to any
inquiry from a regulatory authority having jurisdiction over such Member or the
Company, and only after compliance with Section 12.1(c) and (ii) that it may
disclose the Confidential Information or portions thereof to those of its
officers, employees, managers, directors, members, general and limited partners,
advisors and other agents and representatives (the persons to whom such
disclosure is permissible being “Representatives”) who need or are required to
know such information in connection with the investment by the Member in the
Company or performance and compliance with the Amended and Restated Shared
Services Agreement or the Amended and Restated Tax Sharing Agreement; provided
that such Representatives (x) are informed of the confidential and proprietary
nature of the Confidential Information and (y) have agreed to or are otherwise
obligated to maintain the confidentiality of the Confidential Information in a
manner consistent with the provisions of this Article XII.  Each Member agrees
to be responsible for any breach of this Article XII by its Representatives (it
being understood that such responsibility shall be in addition to and not by way
of limitation of any right or remedy the Company may have against such
Representatives with respect to any such breach).

 

(c)                                  If any Member or Representative thereof
becomes legally compelled (including by deposition, interrogatory, request for
documents, subpoena, civil

 

51

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investigative demand or similar process) to disclose any of the Confidential
Information, such Member or Representative shall provide the Company with prompt
and, if possible, prior written notice of such requirement to disclose such
Confidential Information.  Upon receipt of such notice, the Company may seek a
protective order or other appropriate remedy.  If such protective order or other
remedy is not obtained, such Member and its Representatives shall disclose only
that portion of the Confidential Information which is legally required to be
disclosed (as determined in good faith by counsel to such Member) and shall take
all reasonable steps to preserve the confidentiality of the Confidential
Information.  In addition, neither such Member nor its Representative will
oppose any action (and such Member and its Representatives will, if and to the
extent requested by the Company and legally permissible to do so, cooperate with
and assist the Company, at the Company’s expense and on a reasonable basis, in
any reasonable action) by the Company to obtain an appropriate protective order
or other reliable assurance that confidential treatment will be accorded the
Confidential Information.

 

(d)                                 As used herein, “Confidential Information”
means oral and written information concerning the Company and its Subsidiaries
and Affiliates furnished to any Member or Representative thereof by or on behalf
of the Company or its Representatives (irrespective of the form of communication
and whether such information is so furnished before, on or after the date
hereof), and all analyses, compilations, data, studies, notes, interpretations,
memoranda or other documents prepared by any Member or any Representative
thereof containing or based in whole or in part on any such furnished
information.  The term “Confidential Information” does not, with respect to any
Member, include any information which (i) at the time of disclosure or
thereafter is generally available to the public (other than as a result of a
disclosure directly or indirectly by such Member or its Representative in
violation hereof), (ii) is or becomes available to such Member on a
nonconfidential basis from a source other than the Company or its
Representatives provided that such source was not known by such Member to be
prohibited from disclosing such information to such Member by a legal,
contractual or fiduciary obligation, or (iii) such Member includes in its
filings under the Exchange Act or Securities Act.

 

12.2.                     Notices.  Any notice or communication required or
permitted hereunder shall be in writing and shall be delivered personally,
delivered by nationally recognized overnight courier service, sent by certified
or registered mail, postage prepaid, or sent by facsimile (subject to electronic
confirmation of such facsimile transmission).  Any such notice or communication
shall be deemed to have been given (i) when delivered, if personally delivered,
(ii) the first Business Day after it is deposited with a nationally recognized
overnight courier service, if sent by nationally recognized overnight courier
service during a Business Day (and otherwise two (2) Business Days after it is
so deposited), (iii) the day of sending, if sent by facsimile prior to 5:00
p.m. (New York City time) on any Business Day or the next succeeding Business
Day if sent by facsimile after 5:00 p.m. (New York City time) on any Business
Day or on any day other than a Business Day or (iv) five Business Days after the
date of mailing, if mailed by certified or registered mail, postage prepaid, in
each case, to the following address or facsimile number, or to such other
address or addresses or facsimile number or numbers as such party may
subsequently designate to the other parties by notice given hereunder:

 

52

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if to the Company, to it:

 

c/o Select Medical Corporation

4717 Gettysburg Road

Mechanicsburg, PA 17088

Attention:  Michael E. Tarvin

Facsimile:  (717) 412-9142

 

if to any Member, to such Member at the address set forth opposite such Member’s
name on Schedule I hereto

 

12.3.                     Successors.  This Agreement and all of the terms and
provisions hereof shall be binding upon and shall inure to the benefit of all
Members, and their legal representatives, heirs, successors and permitted
assigns, subject to the restrictions and provisions on Transfer set forth in
this Agreement and except as expressly herein otherwise provided.

 

12.4.                     Effect and Interpretation.  This Agreement shall be
governed by and construed in conformity with the laws of the State of Delaware
without regard to any conflict of laws rules thereof.

 

12.5.                     Counterparts.  This Agreement may be executed in two
or more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together will constitute one and
the same agreement.  Delivery of executed signature pages hereof by facsimile
transmission or portable document format (pdf) shall constitute effective and
binding execution and delivery of this Agreement.

 

12.6.                     Remedies.  The Company and each Member shall be
entitled to enforce their rights under this Agreement to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor.  The parties hereto agree and acknowledge
that money damages will not be an adequate remedy for any breach of the
provisions of this Agreement and that the Company and each Member may in its
sole discretion obtain from any court of law or equity of competent jurisdiction
specific performance and/or injunctive relief (without posting a bond or other
security) in order to enforce or prevent any violation of the provisions of this
Agreement.

 

12.7.                     Members Not Agents.  Nothing contained herein shall be
construed to constitute any Member the agent of another Member, except as
otherwise expressly provided herein, or in any manner to limit the Members in
carrying on of their own respective businesses or activities.

 

12.8.                     Entire Understanding; Etc.  This Agreement and the
other agreements referred to herein together constitute the entire agreement and
understanding among the Members with respect to the subject matter hereof and
supersedes any prior or contemporaneous understandings and/or written or oral
agreements among them with respect to the subject matter hereof.

 

12.9.                     Severability.  If any provision of this Agreement, or
the application of such provision to any Person or circumstance, shall be held
invalid by a court of competent jurisdiction, the remainder of this Agreement,
or the application of such provision to Persons or

 

53

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circumstances other than those to which it is held invalid by such court, shall
not be affected thereby.

 

12.10.              Construction of Agreement.

 

(a)                                 The parties hereto have participated jointly
in the negotiation and drafting of this Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.  Unless the context otherwise requires: (i) “or”
is disjunctive but not exclusive (i.e., “or” shall mean “and/or”), (ii) words in
the singular include the plural, and in the plural include the singular,
(iii) the words “hereof,” “herein,” and “hereunder” and words of similar import
when used in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement, (iv) the headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement, (v) the words “Article” and
“Section” are references to the articles and sections of this Agreement unless
otherwise specified and (vi) whenever the words “include”, “includes” or
“including” are used in this Agreement they shall be deemed to be followed by
the words “without limitation.”  Unless expressly provided to the contrary in
this Agreement, any action, consent, approval, election, decision or
determination to be made by the Board under or in connection with this Agreement
(including any act by the Board within its “discretion” under this Agreement and
the execution and delivery of any documents or agreements on behalf of any other
Person), shall be in the sole discretion of the Board.  To the fullest extent
permitted by law and notwithstanding any other provision of this Agreement or in
any other agreement contemplated herein or applicable provisions of law or
equity or otherwise, whenever in this Agreement the Board is permitted or
required to make a decision (a) in its “sole discretion” or “discretion” or
under a grant of similar authority or latitude, the Board (and each Director) 
shall be entitled to consider only such interests and factors as it, her or she
desires, including, without limitation, its, his or her own interests and those
of its, his or her Affiliates, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Company or any other
Person, or (b) in its “good faith” or under another express standard, the Board
(and each Director) shall act under such express standard and shall not be
subject to any other or different standard.

 

(b)                                 If WCAS transfers all (but not less than
all) of its Company Equity Securities to a Permitted Transferee of WCAS
described in clauses (i), (iii)(B) or (iii)(C) of the definition thereof in
compliance with the terms of this Agreement, all references in this Agreement to
WCAS (other than references in this Section 12.10(b)) shall mean such Permitted
Transferee, and any right or action that may be taken at the election of WCAS
may thereafter be taken only at the election of such Permitted Transferee.

 

(c)                                  If Dignity transfers all (but not less than
all) of its Company Equity Securities to a Permitted Transferee of Dignity
described in clause (i) of the definition thereof in compliance with the terms
of this Agreement, all references in this Agreement to Dignity (other than
references in this Section 12.10(c)) shall mean such Permitted

 

54

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Transferee, and any right or action that may be taken at the election of Dignity
may thereafter be taken only at the election of such Permitted Transferee.

 

12.11.              Third Party Beneficiaries.  Except as set forth in
Section 4.4 and Section 4.5, nothing expressed by or mentioned in this Agreement
is intended or shall be construed to give any Person other than the parties
hereto and their respective successors and permitted assigns any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained.  Except as set forth in Section 4.4 and Section 4.5,
this Agreement and all conditions and provisions hereof are intended to be and
are for the sole and exclusive benefit of the parties hereto and their
respective successors and permitted assigns.  Except as expressly permitted
hereby, each party’s rights and obligations under this Agreement shall not be
subject to assignment or delegation by any party hereto, and any attempted
assignment or delegation in violation hereof shall be null and void ab initio. 
Notwithstanding anything to the contrary contained in this Agreement, no
Transfer shall result in WCAS or Dignity transferring any of their rights and
obligations that are specific to WCAS or Dignity under this Agreement to any
Person except as set forth in Section 12.10(b) and Section 12.10(c).

 

12.12.              Duration of Rights Under Agreement.  Each Member agrees
that, at the earliest time that a Person that is a Member ceases to own any
Company Interests, such Person shall cease to be a Member and shall have no
continuing rights under this Agreement.

 

12.13.              CONSENT TO JURISDICTION.  EACH OF THE PARTIES IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE,
FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS
AGREEMENT, ANY RELATED AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR
THEREBY.  EACH OF THE PARTIES HERETO FURTHER AGREES THAT TO THE FULLEST EXTENT
PERMITTED BY LAW, SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S.
REGISTERED MAIL TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH ON SCHEDULE I
HERETO SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING
WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION IN THIS
PARAGRAPH.  TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF
ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY IN THE COURTS OF
THE STATE OF DELAWARE, AND HEREBY AND THEREBY FURTHER IRREVOCABLY AND
UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.

 

12.14.              WAIVER OF JURY TRIAL.  AS A SPECIFICALLY BARGAINED FOR
INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER
HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY

 

55

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LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR
THE MATTERS CONTEMPLATED HEREBY.

 

12.15.              Incorporation of Exhibits.  All exhibits and schedules
attached hereto are incorporated herein and made a part hereof.

 

12.16.              Assurances.  Each of the Members shall hereafter execute and
deliver such further instruments and do such further acts and things as may be
required to carry out the intent and purpose of this Agreement and as are not
inconsistent with the terms hereof.

 

12.17.              Exclusivity. For so long as both a Dignity Member and a SEM
Member are Members of the Company, the Dignity Members and the SEM Members, as
applicable, shall not, and shall cause their respective Controlled Affiliates
not to, directly or indirectly, (a) engage in any Restricted Business, or
(b) acquire a majority interest in, or the ability to appoint the majority of
the directors of, any Person that engages in the Restricted Business in
competition with the Company.  Even if such activities would otherwise
constitute a Restricted Business, activities of Dignity or SEM, or any of their
respective Controlled Affiliates, may continue to be carried on in substantially
the manner carried on as of the date of this Agreement.  Further, even if such
activities would otherwise constitute a Restricted Business, (i) the activities
described on Exhibit D (in the case of the SEM Members) and on Exhibit E (in the
case of the Dignity Members), (ii) any activity that Dignity or SEM, as
applicable, offers to the Company and in which the Board elects not to engage
within thirty (30) days of such offer, or (iii) any business conducted by an
acquired Person if the Restricted Business is less than 20% of such acquired
Person’s total revenues for the last reportable twelve-month period prior to the
acquisition shall not be prohibited under this Section 12.17.  For the avoidance
of doubt, this Section 12.17 shall not restrict any business conducted by CHI as
of the date of consummating any business combination between Dignity Parent and
CHI.  Except as set forth in this Section, Dignity and SEM agree that nothing in
this Agreement restricts the business operations of Dignity or SEM or either
Member’s Affiliates in any way.   Dignity and SEM acknowledge that the
restrictions contained in this Section are reasonable and necessary to protect
the legitimate interests of Dignity and SEM in promoting the business of the
Company.  In the event that any covenant contained in this Section should ever
be adjudicated to exceed the duration, scope, or other limitations permitted by
applicable Law in any jurisdiction, then any court is expressly empowered to
reform such covenant, and such covenant shall be deemed reformed, in such
jurisdiction to the maximum duration, scope, or other limitations permitted by
applicable Law.

 

[Remainder of page intentionally left blank]

 

56

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed effective as of the date and year first above
written.

 

 

 

THE COMPANY:

 

 

 

CONCENTRA GROUP HOLDINGS PARENT, LLC

 

 

 

 

 

 

By:

/s/ Martin F. Jackson

 

 

Name: Martin F. Jackson

 

 

Title: Executive Vice President

 

 

 

 

 

 

 

MEMBERS:

 

 

 

SELECT MEDICAL CORPORATION

 

 

 

 

 

 

By:

/s/ Martin F. Jackson

 

 

Name: Martin F. Jackson

 

 

Title: Executive Vice President and Chief Financial Officer

 

(Signature Page to Amended and Restated Limited Liability Company Agreement of
Concentra Group Holdings Parent, LLC)

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed effective as of the date and year first above
written.

 

 

 

 

DIGNITY HEALTH HOLDING CORPORATION

 

 

 

 

 

 

By:

/s/ Dan Morissette

 

 

Name: Dan Morissette

 

 

Title: Vice President

 

(Signature Page to Amended and Restated Limited Liability Company Agreement of
Concentra Group Holdings Parent, LLC)

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed effective as of the date and year first above
written.

 

 

 

WELSH, CARSON, ANDERSON & STOWE XII, L.P.

 

 

 

By: WCAS XII ASSOCIATES LLC, its General Partner

 

 

 

 

 

By:

/s/ Jonathan Rather

 

 

Name: Jonathan Rather

 

 

Title: Managing Member

 

 

 

 

 

WELSH, CARSON, ANDERSON & STOWE XII DELAWARE, L.P.

 

 

 

By: WCAS XII ASSOCIATES CAYMAN L.P., its General Partner

 

 

 

By: WCAS XII ASSOCIATES LLC, its General Partner

 

 

 

 

 

By:

/s/ Jonathan Rather

 

 

Name: Jonathan Rather

 

 

Title: Managing Member

 

(Signature Page to Amended and Restated Limited Liability Company Agreement of
Concentra Group Holdings Parent, LLC)

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed effective as of the date and year first above
written.

 

 

 

WELSH, CARSON, ANDERSON & STOWE XII DELAWARE II, L.P.

 

 

 

By: WCAS XII ASSOCIATES LLC, its General Partner

 

 

 

 

 

 

By:

/s/ Jonathan Rather

 

 

Name: Jonathan Rather

 

 

Title: Managing Member

 

 

 

 

 

 

WELSH, CARSON, ANDERSON & STOWE XII CAYMAN, L.P.

 

 

 

By: WCAS XII ASSOCIATES CAYMAN L.P., its General Partner

 

 

 

By: WCAS XII ASSOCIATES LLC, its General Partner

 

 

 

 

 

 

By:

/s/ Jonathan Rather

 

 

Name: Jonathan Rather

 

 

Title: Managing Member

 

(Signature Page to Amended and Restated Limited Liability Company Agreement of
Concentra Group Holdings Parent, LLC)

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed effective as of the date and year first above
written.

 

 

 

WCAS XII CO-INVESTORS LLC

 

 

 

 

 

 

By:

/s/ Jonathan Rather

 

 

Name: Jonathan Rather

 

 

Title: Managing Member

 

 

 

 

 

WCAS MANAGEMENT CORPORATION

 

 

 

 

 

 

By:

/s/ Jonathan Rather

 

 

Name: Jonathan Rather

 

 

Title: Treasurer

 

(Signature Page to Amended and Restated Limited Liability Company Agreement of
Concentra Group Holdings Parent, LLC)

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed effective as of the date and year first above
written.

 

 

 

CRESSEY & COMPANY FUND IV LP

 

 

 

 

 

By: Cressey & Company GP LP, its general partner

 

 

 

 

 

By: Cressey & Company LLC, its general partner

 

 

 

 

 

 

 

By:

/s/ Bryan Cressey

 

 

Name: Bryan Cressey

 

 

Title: Partner

 

(Signature Page to Amended and Restated Limited Liability Company Agreement of
Concentra Group Holdings Parent, LLC)

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed effective as of the date and year first above
written.

 

 

 

DAEG HOLDINGS, LLC

 

 

 

 

 

 

By:

/s/ James M. Greenwood

 

 

Name: James M. Greenwood

 

 

Title: Manager

 

(Signature Page to Amended and Restated Limited Liability Company Agreement of
Concentra Group Holdings Parent, LLC)

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed effective as of the date and year first above
written.

 

 

 

JKC TR HOLDINGS, LLC

 

 

 

 

 

 

By:

/s/ John K. Carlyle

 

 

Name: John K. Carlyle

 

 

Title: Manager

 

(Signature Page to Amended and Restated Limited Liability Company Agreement of
Concentra Group Holdings Parent, LLC)

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed effective as of the date and year first above
written.

 

 

 

DTLT PRIVATE HOLDINGS, LLC

 

 

 

 

 

 

By:

/s/ Daniel J. Thomas

 

 

Name: Daniel J. Thomas

 

 

Title: Manager

 

(Signature Page to Amended and Restated Limited Liability Company Agreement of
Concentra Group Holdings Parent, LLC)

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed effective as of the date and year first above
written.

 

 

 

SELECT MEDICAL HOLDINGS CORPORATION, solely for the purposes of Sections 4.5 and
9.3(d)

 

 

 

 

 

 

By:

/s/ Martin F. Jackson

 

 

Name: Martin F. Jackson

 

 

Title: Executive Vice President and Chief Financial Officer

 

(Signature Page to Amended and Restated Limited Liability Company Agreement of
Concentra Group Holdings Parent, LLC)

 

--------------------------------------------------------------------------------