Exhibit 10.17

 

AMENDMENT NO. 2 TO TERM LOAN AGREEMENT

 

This Amendment No. 2 to Term Loan Agreement, dated as of September 25, 2014
(this “Amendment”), is among FC-GEN OPERATIONS INVESTMENT, LLC, a Delaware
limited liability company (“LLC Parent”), GEN OPERATIONS I, LLC, a Delaware
limited liability company (“Parent”), GEN OPERATIONS II, LLC, a Delaware limited
liability company (“Holdings”), GENESIS HEALTHCARE LLC, a Delaware limited
liability company (the “Genesis Borrower”), SUN HEALTHCARE GROUP, INC., a
Delaware corporation (the “Sun Borrower”, and together with the Genesis
Borrower, the “Borrowers”), each of the entities listed on Annex I hereto
(together with the Borrowers, Holdings, Parent, and LLC Parent, the “Amendment
Parties”), the Lenders party hereto and BARCLAYS BANK PLC, as administrative
agent and collateral agent (in such capacities, together with its successors and
permitted assigns, the “Administrative Agent”) under the Credit Agreement (as
defined below).

 

W I T N E S S E T H:

 

WHEREAS, reference is made to the Term Loan Agreement, dated as of December 3,
2012, as amended by Amendment No. 1 to Term Loan Agreement, dated as of
January 21, 2014 (as the same may be further amended, restated, extended,
supplemented, modified and otherwise modified from time to time, the “Credit
Agreement”), among, inter alios, the Borrowers, Holdings, Parent, and LLC
Parent, each lender from time to time party thereto and the Administrative
Agent;

 

WHEREAS, LLC Parent intends to indirectly acquire (the “Acquisition”) Skilled
Healthcare Group, Inc., a Delaware corporation (“Ultimate Parent”) pursuant to a
purchase and contribution agreement, dated as of August 18, 2014, by and between
LLC Parent and Ultimate Parent (the “Purchase Agreement”), and to consummate
certain transactions described therein;

 

WHEREAS, LLC Parent intends to finance the Acquisition, the costs and expenses
related to the Transactions (as hereinafter defined), the repayment of certain
existing indebtedness of LLC Parent and Ultimate Parent (the “Refinancing”) and
the ongoing working capital and other general corporate purposes of LLC Parent
and its subsidiaries after consummation of the Acquisition from the following
sources: drawings under (a) the Genesis ABL Credit Agreement, (b) the Skilled
ABL Credit Agreement and  (c) the Skilled RE Credit Agreement, collectively, the
“Facilities”).  The Acquisition, the entering into the Facilities and the
funding of the Facilities, the Refinancing and all related transactions are
hereinafter collectively referred to as the “Transactions”;

 

WHEREAS, the Borrowers have requested that certain amendments be made to the
Credit Agreement to, among other things, facilitate the consummation of the
Transactions; and

 

WHEREAS, subject to the terms and conditions set forth in this Amendment, in
order to effect the foregoing and to modify the Credit Agreement as contained
herein, the Amendment Parties party thereto and the Lenders party hereto are
willing to agree to such modification relating to the Credit Agreement.

 

NOW THEREFORE, in consideration of the foregoing recitals, mutual agreements
contained herein and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Amendment Parties, the
Administrative Agent and the Lenders party hereto hereby agree as follows:

 

Section 1.                                          Defined Terms.  All
capitalized terms used but not defined in this Amendment shall have the
respective meanings specified in the Credit Agreement (as amended by this
Amendment).  The rules of interpretation set forth in Section 1.2 of the Credit
Agreement shall apply to

 

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this Amendment, mutatis mutandis, as if set forth herein.  References in the
Credit Agreement (including references to the Credit Agreement as amended
hereby) to “this Agreement” and “this Credit Agreement” (and indirect references
such as “hereunder,” “hereby,” “herein,” and “hereof”) shall be deemed to be
references to the Credit Agreement as amended by this Amendment.  This Amendment
shall be construed in connection with and as part of the Credit Agreement.

 

Section 2.                                          Amendments and Consent.

 

(a)                                 Amendments.  (i) Subject to the satisfaction
of the conditions set forth in Section 3 hereof, each of the parties hereto
agrees that, effective as of the Amendment No. 2 Effective Date (as defined in
Section 3 below), (A) the Credit Agreement shall be amended to delete the
stricken text (indicated textually in the same manner as the following example:
) and to add the double-underlined text (indicated textually in the same manner
as the following example: double-underlined text) as set forth in the pages of
the Credit Agreement attached as Exhibit A hereto, (B) the existing indebtedness
set forth and contained on Schedule 7.1 attached hereto and made part hereof
replaces, updates and supersedes the information set forth and contained on
Schedule 7.1 to the Credit Agreement, (C) the existing Liens set forth and
contained on Schedule 7.2 attached hereto and made part hereof replaces, updates
and supersedes the information set forth and contained on Schedule 7.2 to the
Credit Agreement and (D) the existing Investments set forth and contained on
Schedule 7.4 attached hereto and made part hereof replaces, updates and
supersedes the information set forth and contained on Schedule 7.4 to the Credit
Agreement.

 

(ii) Subject to the satisfaction of the conditions set forth in Section 3
hereof, each of the parties hereto agrees that, effective as of the Amendment
No. 2 Effective Date (as defined in Section 3 below), the Guarantee and
Collateral Agreement shall be amended to delete the stricken text (indicated
textually in the same manner as the following example: ) and to add the
double-underlined text (indicated textually in the same manner as the following
example: double-underlined text) as set forth in the pages of the Guarantee and
Collateral Agreement attached as Exhibit B hereto.

 

(iii) Subject to the satisfaction of the conditions set forth in
Section 3(a) hereof, each of the parties hereto agrees that, effective as of the
date of this Amendment (regardless of whether the Amendment No 2 Effective Date
occurs), Section 2.14(i) of the Credit Agreement is amended and restated in its
entirety to read as follows:

 

“(a) If any voluntary prepayment of principal of Loans is made pursuant to
Section 2.7(a) (and, for the avoidance of doubt, not with respect to any
mandatory prepayment of principal of Loans pursuant to Section 2.8 or any
prepayment of loans under any ABL Credit Facility), the Borrowers agree to pay
to the Administrative Agent, for the ratable account of each Lender with Loans
that are so prepaid, or any Lender so replaced, a fee in an amount equal to
(1) after the First Amendment Date and on or prior to December 1, 2015, the Make
Whole Amount, (2) if after December 1, 2015 and on or prior to December 1, 2016,
2.00% of the aggregate principal amount of the Loans prepaid and (3) if after
December 1, 2016 and on or prior to December 1, 2017, 1.00% of the aggregate
principal amount of the Loans prepaid, in each case, along with any fees due and
payable.

 

(b) Notwithstanding anything in clause (a) above to the contrary, if any
voluntary prepayments of principal of the Loans is made pursuant to
Section 2.7(a) after the First Amendment Date and on or prior to December 1,
2015 (up to, but not to exceed, 35% of the aggregate principal amount of the
Loans outstanding on the First Amendment Date) with the Net Cash Proceeds
received after the First Amendment Date from any Excluded Issuance, the
Borrowers shall pay a fee with respect to such voluntary prepayments equal to
7.00% of the aggregate principal amount of the Loans prepaid.”

 

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(b)                                 Consent.  Subject to the satisfaction (or
waiver) of the conditions set forth in Section 3 hereof, each of the parties
hereto consents to the Transactions to the extent consummated in all material
respects in accordance with the terms of the Purchase Agreement and the
Distribution Subsidiary Merger Agreement (as defined in the Purchase Agreement)
without giving effect to any modifications or amendments to, or waivers or
consents granted by LLC Parent (or its affiliates) under, the Purchase Agreement
or the Distribution Subsidiary Merger Agreement that are materially adverse to
the Lenders (in their capacity as such) without the consent of the
Administrative Agent.

 

Section 3.                                          Conditions to
Effectiveness.  This Amendment shall become effective on the date on which each
of the following conditions are satisfied or waived by the Required Lenders (the
“Amendment No. 2 Effective Date”):

 

(a)                                 Executed Amendment No. 2 to Credit
Agreement.  The Administrative Agent shall have received one or more
counterparts of this Amendment duly executed by the Amendment Parties, the
Administrative Agent and the Required Lenders.

 

(b)                                 Consummation of Transactions.  Prior to or
substantially simultaneously with the effectiveness of this Amendment, the
Transactions shall have consummated in accordance with the terms of the Purchase
Agreement, without giving effect to any modifications or amendments to, or
waivers or consents granted by LLC Parent (or its affiliates) under, the
Purchase Agreement that are materially adverse to the Lenders (in their capacity
as such) without the consent of the Administrative Agent.

 

(c)                                  GEN ABL Facility.  Prior to or
substantially simultaneously with the effectiveness of this Amendment, the GEN
ABL Credit Agreement (the terms of which shall be materially consistent with the
terms set forth in the term sheet attached hereto as Exhibit C (the “Genesis ABL
Term Sheet”) without giving effect to any modifications or amendments thereto
that are materially adverse to the Lenders (in their capacity as such), shall
have become effective.

 

(d)                                 Skilled ABL Facility.  Prior to or
substantially simultaneously with the effectiveness of this Amendment, the
Skilled ABL Credit Agreement (the terms of which shall be materially consistent
with the terms set forth in the term sheet attached hereto as Exhibit D (the
“Skilled ABL Term Sheet”) without giving effect to any modifications or
amendments thereto that are materially adverse to the Lenders (in their capacity
as such), shall have become effective.

 

(e)                                  RE Term Facility.  Prior to or
substantially simultaneously with the effectiveness of this Amendment, the RE
Term Facility (the terms of which shall be materially consistent with the terms
set forth in the term sheet attached hereto as Exhibit E (the “Skilled Real
Estate Financing Term Sheet”) without giving effect to any modifications or
amendments thereto that are materially adverse to the Lenders (in their capacity
as such) or on other terms that are not, taken as a whole, materially less
favorable to the Borrowers than those set forth in the Skilled Real Estate
Financing Term Sheet, shall have become effective.

 

(f)                                   Joinder Agreement.  The Administrative
Agent shall have received a counterpart to a joinder to the Credit Agreement, in
form and substance reasonably acceptable to the Administrative Agent, duly
executed by Ultimate Parent.

 

(g)                                  Assumption Agreement.  The Administrative
Agent shall have received one or more counterparts to the Assumption Agreement
substantially in the form of Annex I to the Guarantee and Collateral Agreement
duly executed by Ultimate Parent and each of its Subsidiaries (other than any
Subsidiary that is not required to become a Subsidiary Guarantor pursuant to
Section 6.10 of the Credit Agreement) (together with Ultimate Parent, the “New
Loan Parties”).

 

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(h)                                 Security Documents  The Administrative Agent
shall have received any and all documents (including any amendment to the
Intercreditor Agreement), financing statements, agreements and instruments, in
each case duly executed by the Loan Parties and/or New Loan Parties to the
extent the foregoing documents may be required under applicable law, or that the
Administrative Agent has reasonably requested, in order to effectuate the
Transactions or under any other Loan Document and in order to (A) grant,
preserve, protect, perfect and continue the validity and perfection of the
security interests created or intended to be created by the Security Documents
(on a first priority basis in the “Term Priority Collateral” and on a second
priority basis in the “ABL Priority Collateral” (each as defined in the
Intercreditor Agreeement) and (B) to grant a valid third priority perfected
security interest in the Skilled ABL Priority Collateral (as defined in
Exhibit A hereto) on terms that are otherwise consistent in all material
respects with the Security Documents as of the date of this Amendment.

 

(i)                                     Organizational Documents Etc.  The
Administrative Agent shall have received (A) copies of the certificate or
articles of incorporation or other formation documents and bylaws (or similar
governing documentation) of each New Loan Party, and any amendments thereto,
certified by the Secretary or Assistant Secretary of such New Loan Party and,
with respect to the certificate or articles of incorporation or other formation
document, as applicable, by the Secretary of State of the state of its
organization, (B) copies of resolutions of the board of directors or similar
governing body of each New Loan Party approving and authorizing the execution,
delivery and performance of the Loan Documents to which it is party, together
with specimen signatures of the persons authorized to execute such documents on
its behalf, all certified as of the Amendment No. 2 Effective Date in each
instance by its Responsible Officer and (C) copies of the certificate of good
standing as of a recent date for each Loan Party from the Secretary of State of
the state of its organization.

 

(j)                                    Amendment Fee.  The Administrative Agent
shall have received, for the benefit of each of the Lenders that have executed
this Amendment a fully-earned, non-refundable amendment fee equal to 2.00% of
the outstanding principal amount of the Term Loans held by such Lender as of the
date of this Amendment, payable as follows: (i) 50% of such fee will be earned,
due and payable on the date that the conditions set forth in Section 3(a) of
this Amendment have been satisfied and (ii) the remainder of such fee will be
earned, due and payable on the Amendment No. 2 Effective Date.

 

(k)                                 Fees and Expenses.  The Borrowers shall have
paid in full, in immediately available funds, (x) to the extent invoiced at
least 1 Business Day prior to the Amendment No. 2 Effective Date, all reasonable
and documented out-of-pocket fees, costs and expenses (including reasonable and
documented out-of-pocket legal fees and expenses of one primary counsel and, if
necessary, one firm of counsel in each appropriate jurisdiction (which may
include a single special counsel acting in multiple jurisdictions)) to be paid
by it to the Administrative Agent in connection with the arrangement,
preparation, negotiation and execution of this Amendment.

 

(l)                                     Representations and Warranties; No
Default.  Each of the representations and warranties in Section 4 hereof shall
be true and correct in all respects on and as of this date as if made on and as
of this date.

 

(m)                             Restriction on Prepayments.  The Borrowers shall
have complied with Section 5 hereto.

 

Section 4.                                          Representations and
Warranties.  To induce the Administrative Agent and the Lenders to enter into
this Amendment, each Amendment Party hereby represents and warrants to the
Administrative Agent and the Lenders that:

 

(a)                                 Before and after giving effect to this
Amendment, the representations and warranties of such Amendment Party contained
in the Credit Agreement and any other Loan Document

 

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are true and correct in all material respects, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case such representations and warranties are true and correct in all material
respects as of such earlier date (provided that any representation and warranty
that is qualified as to “materiality”, “Material Adverse Effect” or similar
materiality qualifier is true and correct in all respects on and as of this date
or such earlier date, as applicable).

 

(b)                                 At the time of and after giving effect to
this Amendment, no Default or Event of Default has occurred and is continuing.

 

(c)                                  The execution, delivery and performance by
each Amendment Party of the Amendment (i) is within such Amendment Party’s
corporate or similar powers and, at the time of execution, has been duly
authorized by all necessary corporate and similar action, (ii) does not
(A) contravene such Amendment Party’s organizational or governing documents,
(B) violate any applicable Requirement of Law in any material respect or
(C) conflict with, contravene, constitute a default or breach under, or result
in or permit the termination or acceleration of, any material Contractual
Obligation (including the Material Master Leases) of any Amendment Party or any
of their Restricted Subsidiaries other than those that (x) have been permanently
waived or consented to in writing by the applicable counterparty or (y) would
not, in the aggregate, have a Material Adverse Effect and (iii) does not require
any Permit of, or filing with, any Governmental Authority or any consent of, or
notice to, any Person other than (A) those which the failure to obtain would not
result in a Material Adverse Effect and (B) those that have been, or will be
prior to the Amendment No. 2 Effective Date, obtained.

 

(d)                                 From and after its delivery to the
Administrative Agent, the Amendment that has been duly executed and delivered to
the other parties thereto by each Amendment Party thereto, is the legal, valid
and binding obligation of each such Amendment Party and is enforceable against
each such Amendment Party in accordance with its terms except to the extent
limited by general principles of equity and by bankruptcy, insolvency,
fraudulent conveyance or other similar laws affecting creditors’ rights
generally.

 

Section 5.                                          Restriction on Prepayments.
From and as of the date of this Amendment until the earlier of the date on which
(i) the consummation of the Acquisition shall have occurred and (ii) the
Purchase Agreement shall have been terminated, the Borrowers shall make no
optional prepayment of any Loan under Section 2.7 of the Credit Agreement. 
Notwithstanding anything herein to the contrary, this Section 5 shall become
effective immediately upon the satisfaction of the condition set forth in
Section 3(a) of this Amendment.

 

Section 6.                                          Miscellaneous.

 

(a)                                 Confirmation of Loan Documents.  Except as
expressly set forth in this Amendment, all of the terms and provisions of the
Credit Agreement and the other Loan Documents are and shall remain in full force
and effect and the Loan Parties shall continue to be bound by all of such terms
and provisions.  The Credit Agreement, together with this Amendment, shall be
read and construed as a single agreement.  All references in the Loan Documents
to the Credit Agreement shall hereafter refer to the Credit Agreement as amended
hereby.  This Amendment shall constitute a Loan Document.

 

(b)                                 Reaffirmation.  Each of the Loan Parties as
debtor, grantor, pledgor, guarantor, assignor, or in any other similar capacity
in which such Loan Party grants liens or security interests in its property or
otherwise acts as accommodation party or guarantor, as the case may be, hereby
(i) ratifies and reaffirms all of its payment and performance obligations,
contingent or otherwise, under each of the Loan Documents to which it is a party
(after giving effect hereto) and (ii) to the extent such Loan Party granted
liens on or security interests in any of its property pursuant to any such Loan
Document as security for or otherwise guaranteed the Borrowers’ Obligations
under or with respect to the Loan

 

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Documents, ratifies and reaffirms such guarantee and grant of security interests
and liens and confirms and agrees that such security interests and liens
hereafter secure all of the Obligations as amended hereby.  Each of the Loan
Parties hereby consents to this Amendment and acknowledges that each of the Loan
Documents remains in full force and effect and is hereby ratified and
reaffirmed.  Except as expressly set forth herein, the execution of this
Amendment shall not operate as a waiver of any right, power or remedy of the
Administrative Agent or Lenders, constitute a waiver of any provision of any of
the Loan Documents or serve to effect a novation of the Obligations.

 

(c)                                  Limitation of this Amendment.  The
amendments and consents set forth herein are effective solely for the purposes
set forth herein and shall be limited precisely as written.  Except as expressly
provided herein, this Amendment shall not be deemed to (i) be a consent to any
amendment, waiver or modification of any other term or condition of the Credit
Agreement or any other Loan Document, or (ii) operate as a waiver or otherwise
prejudice any right, power or remedy that the Administrative Agent, the Lead
Arrangers or Lenders may now have or may have in the future under or in
connection with the Credit Agreement or any other Loan Document, except as
specifically set forth herein.

 

(d)                                 Captions.  Section headings used herein are
for convenience of reference only, are not part of this Amendment and shall not
affect the construction of, or be taken into consideration in interpreting, this
Amendment.

 

(f)                                   GOVERNING LAW.  THIS AMENDMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY,
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 
THE JURISDICTION AND WAIVER OF RIGHT TO TRIAL BY JURY PROVISIONS IN SECTIONS
10.12 AND 10.17 OF THE CREDIT AGREEMENT ARE INCORPORATED, MUTATIS MUTANDIS,
HEREIN BY REFERENCE.

 

(g)                                  Counterparts.  This Amendment may be
executed by one or more of the parties to this Amendment on any number of
separate counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.  Delivery of an executed
signature page of this Amendment by facsimile transmission or by electronic mail
in “portable document format” shall be effective as delivery of a manually
executed counterpart hereof.  A set of the copies of this Amendment signed by
all the parties shall be lodged with the Borrowers and the Administrative Agent.

 

(h)                                 Successors and Assigns.  The provisions of
this Amendment shall be binding upon and inure to the sole benefit of the Loan
Parties, the Administrative Agent and the Lenders and their respective
successors and assigns.

 

(i)                                     References.  Any reference to the Credit
Agreement contained in any notice, request, certificate, or other document
executed concurrently with or after the execution and delivery of this Amendment
shall be deemed to include this Amendment unless the context shall otherwise
require.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first above written.

 

 

 

BARCLAYS BANK PLC, as Administrative Agent

 

 

 

 

 

By:

/s/ Marguerite Sutton

 

 

Name: Marguerite Sutton

 

 

Title:   Vice President

 

SIGNATURE PAGE TO AMENDMENT NO. 2

 

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[Lender Signature Pages on File with the Administrative Agent]

 

SIGNATURE PAGE TO AMENDMENT NO. 2

 

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Accepted and Agreed:

 

 

 

 

 

FC-GEN OPERATIONS INVESTMENT, LLC

 

GEN OPERATIONS I, LLC

 

GEN OPERATIONS II, LLC

 

 

 

 

 

By:

/s/ Michael S. Sherman

 

Name:

Michael S. Sherman

 

Title:

Secretary

 

 

 

 

 

GENESIS HEALTHCARE LLC

 

SUN HEALTHCARE GROUP, INC.

 

 

 

 

 

By:

/s/ Michael S. Sherman

 

Name:

Michael S. Sherman

 

Title:

Senior Vice President

 

 

 

 

 

EACH OF THE ENTITIES LISTED ON ANNEX I ATTACHED HERETO:

 

 

 

By: GENESIS HEALTHCARE LLC,

 

its authorized agent

 

 

 

 

 

By:

/s/ Michael S. Sherman

 

Name:

Michael S. Sherman

 

Title:

Senior Vice President and Secretary

 

 

SIGNATURE PAGE TO AMENDMENT NO. 2

 

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ANNEX I

 

1 EMERSON DRIVE NORTH OPERATIONS LLC

1 EMERSON DRIVE SOUTH OPERATIONS LLC

1 MAGNOLIA DRIVE OPERATIONS LLC

1 SUTPHIN DRIVE OPERATIONS LLC

10 WOODLAND DRIVE OPERATIONS LLC

100 CHAMBERS STREET OPERATIONS LLC

100 EDELLA ROAD OPERATIONS LLC

1000 ASSOCIATION DRIVE OPERATIONS LLC

1000 LINCOLN DRIVE OPERATIONS LLC

1000 ORWIGSBURG MANOR DRIVE OPERATIONS LLC

1000 SCHUYLKILL MANOR ROAD OPERATIONS LLC

101 13TH STREET OPERATIONS LLC

1020 SOUTH MAIN STREET OPERATIONS LLC

106 TYREE STREET OPERATIONS LLC

1080 SILVER LAKE BOULEVARD OPERATIONS LLC

11 DAIRY LANE OPERATIONS LLC

1100 NORMAN ESKRIDGE HIGHWAY OPERATIONS LLC

1104 WELSH ROAD OPERATIONS LLC

1113 NORTH EASTON ROAD OPERATIONS LLC

1145 POQUONNOCK ROAD OPERATIONS LLC

115 EAST MELROSE AVENUE OPERATIONS LLC

115 SUNSET ROAD OPERATIONS LLC

1201 RURAL AVENUE OPERATIONS LLC

1203 WALKER ROAD OPERATIONS LLC

12-15 SADDLE RIVER ROAD OPERATIONS LLC

12325 NEW HAMPSHIRE AVENUE DIALYSIS SERVICES LLC

12325 NEW HAMPSHIRE AVENUE OPERATIONS LLC

1245 CHURCH ROAD OPERATIONS LLC

125 HOLLY ROAD OPERATIONS LLC

1251 RURAL AVENUE OPERATIONS LLC

128 EAST STATE STREET ASSOCIATES, LLC

1361 ROUTE 72 WEST OPERATIONS LLC

140 PRESCOTT STREET OPERATIONS LLC

1400 WOODLAND AVENUE OPERATIONS LLC

150 EDELLA ROAD OPERATIONS LLC

1515 LAMBERTS MILL ROAD OPERATIONS LLC

1526 LOMBARD STREET SNF OPERATIONS LLC

1539 COUNTRY CLUB ROAD OPERATIONS LLC

1543 COUNTRY CLUB ROAD MANOR OPERATIONS LLC

16 FUSTING AVENUE OPERATIONS LLC

161 BAKERS RIDGE ROAD OPERATIONS LLC

1631 RITTER DRIVE OPERATIONS LLC

1680 SPRING CREEK ROAD OPERATIONS LLC

1700 PINE STREET OPERATIONS LLC

1700 WYNWOOD DRIVE OPERATIONS LLC

1718 SPRING CREEK ROAD OPERATIONS LLC

175 BLUEBERRY LANE OPERATIONS LLC

1785 SOUTH HAYES STREET OPERATIONS LLC

1801 TURNPIKE STREET OPERATIONS LLC

1801 WENTWORTH ROAD OPERATIONS LLC

 

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184 BETHLEHEM PIKE OPERATIONS LLC

2 DEER PARK DRIVE OPERATIONS LLC

20 MAITLAND STREET OPERATIONS LLC

20 SUMMIT STREET OPERATIONS LLC

200 MARTER AVENUE OPERATIONS LLC

200 REYNOLDS AVENUE OPERATIONS LLC

200 SOUTH RITCHIE AVENUE OPERATIONS LLC

201 WOOD STREET OPERATIONS LLC

205 ARMSTRONG AVENUE OPERATIONS LLC

2101 FAIRLAND ROAD OPERATIONS LLC

22 SOUTH STREET OPERATIONS LLC

22 TUCK ROAD OPERATIONS LLC

2240 WHITE HORSE MERCERVILLE ROAD OPERATIONS LLC

225 EVERGREEN ROAD OPERATIONS LLC

227 EVERGREEN ROAD OPERATIONS LLC

227 PLEASANT STREET OPERATIONS LLC

2305 RANCOCAS ROAD OPERATIONS LLC

239 PLEASANT STREET OPERATIONS LLC

24 OLD ETNA ROAD OPERATIONS LLC

24 TRUCKHOUSE ROAD OPERATIONS LLC

240 BARKER ROAD OPERATIONS LLC

25 EAST LINDSLEY ROAD OPERATIONS LLC

25 RIDGEWOOD ROAD OPERATIONS LLC

2507 CHESTNUT STREET OPERATIONS LLC

2601 EVESHAM ROAD OPERATIONS LLC

262 TOLL GATE ROAD OPERATIONS LLC

2720 CHARLES TOWN ROAD OPERATIONS LLC

290 HANOVER STREET OPERATIONS LLC

290 RED SCHOOL LANE OPERATIONS LLC

292 APPLEGARTH ROAD OPERATIONS LLC

3 INDUSTRIAL WAY EAST OPERATIONS LLC

3 PARK DRIVE OPERATIONS LLC

30 PRINCETON BOULEVARD OPERATIONS LLC

30 WEBSTER STREET OPERATIONS LLC

30 WEST AVENUE OPERATIONS LLC

300 COURTRIGHT STREET OPERATIONS LLC

3000 BALFOUR CIRCLE OPERATIONS LLC

3001 EVESHAM ROAD OPERATIONS LLC

302 CEDAR RIDGE ROAD OPERATIONS LLC

32 HOSPITAL HILL ROAD OPERATIONS LLC

3227 BEL PRE ROAD OPERATIONS LLC

330 FRANKLIN TURNPIKE OPERATIONS LLC

331 HOLT LANE OPERATIONS LLC

333 GRAND AVENUE OPERATIONS LLC

333 GREEN END AVENUE OPERATIONS LLC

3330 WILKENS AVENUE OPERATIONS LLC

336 SOUTH WEST END AVENUE OPERATIONS LLC

3485 DAVISVILLE ROAD OPERATIONS LLC

35 MARC DRIVE OPERATIONS LLC

35 MILKSHAKE LANE OPERATIONS LLC

350 HAWS LANE OPERATIONS LLC

390 RED SCHOOL LANE OPERATIONS LLC

 

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4 HAZEL AVENUE OPERATIONS LLC

40 PARKHURST ROAD OPERATIONS LLC

400 GROTON ROAD OPERATIONS LLC

4140 OLD WASHINGTON HIGHWAY OPERATIONS LLC

422 23RD STREET OPERATIONS LLC

438 23RD STREET OPERATIONS LLC

44 KEYSTONE DRIVE OPERATIONS LLC

440 NORTH RIVER STREET OPERATIONS LLC

450 EAST PHILADELPHIA AVENUE OPERATIONS LLC

455 BRAYTON AVENUE OPERATIONS LLC

462 MAIN STREET OPERATIONS LLC

464 MAIN STREET OPERATIONS LLC

4901 NORTH MAIN STREET OPERATIONS LLC

5 ROLLING MEADOWS DRIVE OPERATIONS LLC

50 MULBERRY TREE STREET OPERATIONS LLC

500 EAST PHILADELPHIA AVENUE OPERATIONS LLC

500 SOUTH DUPONT BOULEVARD OPERATIONS LLC

5101 NORTH PARK DRIVE OPERATIONS LLC

515 BRIGHTFIELD ROAD OPERATIONS LLC

525 GLENBURN AVENUE OPERATIONS LLC

530 MACOBY STREET OPERATIONS LLC

536 RIDGE ROAD OPERATIONS LLC

54 SHARP STREET OPERATIONS LLC

5485 PERKIOMEN AVENUE OPERATIONS LLC

549 BALTIMORE PIKE OPERATIONS LLC

55 COOPER STREET OPERATIONS LLC

550 GLENWOOD OPERATIONS LLC

5501 PERKIOMEN AVENUE OPERATIONS LLC

56 WEST FREDERICK STREET OPERATIONS LLC

59 HARRINGTON COURT OPERATIONS LLC

590 NORTH POPLAR FORK ROAD OPERATIONS LLC

600 PAOLI POINTE DRIVE OPERATIONS LLC

6000 BELLONA AVENUE OPERATIONS LLC

6040 HARFORD ROAD OPERATIONS LLC

61 COOPER STREET OPERATIONS LLC

610 DUTCHMAN’S LANE OPERATIONS LLC

613 HAMMONDS LANE OPERATIONS LLC

625 STATE HIGHWAY 34 OPERATIONS LLC

63 COUNTRY VILLAGE ROAD OPERATIONS LLC

642 METACOM AVENUE OPERATIONS LLC

65 COOPER STREET OPERATIONS LLC

650 EDISON AVENUE OPERATIONS LLC

660 COMMONWEALTH AVENUE OPERATIONS LLC

677 COURT STREET OPERATIONS LLC

699 SOUTH PARK ROAD OPERATIONS LLC

7 BALDWIN STREET OPERATIONS LLC

70 GILL AVENUE OPERATIONS LLC

700 MARVEL ROAD OPERATIONS LLC

700 TOLL HOUSE AVENUE OPERATIONS LLC

700 TOWN BANK ROAD OPERATIONS LLC

710 JULIAN ROAD OPERATIONS LLC

715 EAST KING STREET OPERATIONS LLC

 

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

 

72 SALMON BROOK DRIVE OPERATIONS LLC

723 SUMMERS STREET OPERATIONS LLC

7232 GERMAN HILL ROAD OPERATIONS LLC

735 PUTNAM PIKE OPERATIONS LLC

75 HICKLE STREET OPERATIONS LLC

7520 SURRATTS ROAD OPERATIONS LLC

7525 CARROLL AVENUE OPERATIONS LLC

77 MADISON AVENUE OPERATIONS LLC

7700 YORK ROAD OPERATIONS LLC

777 LAFAYETTE ROAD OPERATIONS LLC

8 ROSE STREET OPERATIONS LLC

80 MADDEX DRIVE OPERATIONS LLC

800 WEST MINER STREET OPERATIONS LLC

8015 LAWNDALE STREET OPERATIONS LLC

810 SOUTH BROOM STREET OPERATIONS LLC

8100 WASHINGTON LANE OPERATIONS LLC

825 SUMMIT STREET OPERATIONS LLC

84 COLD HILL ROAD OPERATIONS LLC

840 LEE ROAD OPERATIONS LLC

841 MERRIMACK STREET OPERATIONS LLC

843 WILBUR AVENUE OPERATIONS LLC

845 PADDOCK AVENUE OPERATIONS LLC

850 PAPER MILL ROAD OPERATIONS LLC

867 YORK ROAD OPERATIONS LLC

8710 EMGE ROAD OPERATIONS LLC

8720 EMGE ROAD OPERATIONS LLC

89 MORTON STREET OPERATIONS LLC

899 CECIL AVENUE OPERATIONS LLC

905 PENLLYN PIKE OPERATIONS LLC

91 COUNTRY VILLAGE ROAD OPERATIONS LLC

9101 SECOND AVENUE OPERATIONS LLC

9109 LIBERTY ROAD OPERATIONS LLC

93 MAIN STREET SNF OPERATIONS LLC

932 BROADWAY OPERATIONS LLC

9701 MEDICAL CENTER DRIVE OPERATIONS LLC

CAPCARE, INC.

CDNTE, INC.

COURTYARD JV LLC

DIANE DRIVE OPERATIONS LLC

FC-GEN HOSPICE HOLDINGS, LLC

FIVE NINETY SIX SHELDON ROAD OPERATIONS LLC

FORTY EIGHT NICHOLS STREET OPERATIONS LLC

FORTY SIX NICHOLS STREET OPERATIONS LLC

FRANKLIN WOODS JV LLC

GENESIS BAYVIEW JV HOLDINGS, LLC

GENESIS CT HOLDINGS LLC

GENESIS DE HOLDINGS LLC

GENESIS DIAMOND OPERATIONS LLC

GENESIS ELDERCARE NETWORK SERVICES, INC.

GENESIS ELDERCARE PHYSICIAN SERVICES, INC.

GENESIS ELDERCARE REHABILITATION SERVICES, INC.

GENESIS HEALTH VENTURES OF NEW GARDEN, INC.

 

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

 

GENESIS HEALTHCARE LLC

GENESIS HOSPITALITY SERVICES LLC

GENESIS IP LLC

GENESIS MA HOLDINGS LLC

GENESIS MD HOLDINGS LLC

GENESIS NH HOLDINGS LLC

GENESIS NJ HOLDINGS LLC

GENESIS OMG OPERATIONS LLC

GENESIS OPERATIONS II LLC

GENESIS OPERATIONS III LLC

GENESIS OPERATIONS IV LLC

GENESIS OPERATIONS LLC

GENESIS OPERATIONS V LLC

GENESIS OPERATIONS VI LLC

GENESIS PA HOLDINGS LLC

GENESIS RI HOLDINGS LLC

GENESIS STAFFING SERVICES LLC

GENESIS VA HOLDINGS LLC

GENESIS VT HOLDINGS LLC

GENESIS WV HOLDINGS LLC

GHC ANCILLARY CORPORATION

GHC DIALYSIS JV LLC

GHC HOLDINGS II LLC

GHC HOLDINGS LLC

GHC JV HOLDINGS LLC

GHC PAYROLL LLC

GHC PROPERTY MANAGEMENT LLC

GHC RANDALLSTOWN DIALYSIS JV LLC

GHC SELECTCARE LLC

GRANITE LEDGES JV LLC

HC 63 OPERATIONS LLC

KENNETT CENTER, L.P.

By: GENESIS HEALTH VENTURES OF NEW GARDEN, INC., its general partner

MAGNOLIA JV LLC

NINE HAYWOOD AVENUE OPERATIONS LLC

ODD LOT LLC

RESPIRATORY HEALTH SERVICES LLC

ROMNEY HEALTH CARE CENTER LIMITED PARTNERSHIP

By: GENESIS OPERATIONS VI LLC, its general partner

ROUTE 92 OPERATIONS LLC

SADDLE SHOP ROAD OPERATIONS LLC

SAGECARE CONNECTIONS LLC

SALISBURY JV LLC

SR-73 AND LAKESIDE AVENUE OPERATIONS LLC

STATE STREET ASSOCIATES, INC.

STATE STREET ASSOCIATES, L.P.

By: STATE STREET ASSOCIATES, INC., its general partner

STILLWELL ROAD OPERATIONS LLC

THIRTY FIVE BEL-AIRE DRIVE SNF OPERATIONS LLC

THREE MILE CURVE OPERATIONS LLC

WESTWOOD MEDICAL PARK OPERATIONS LLC

 

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

 

1240 PINEBROOK ROAD, LLC

1501 SE 24TH ROAD, LLC

1775 HUNTINGTON LANE, LLC

1980 SUNSET POINT ROAD, LLC

2600 HIGHLANDS BOULEVARD, NORTH, LLC

2900 TWELFTH STREET NORTH, LLC

315 UPPER RIVERDALE ROAD LLC

3865 TAMPA ROAD, LLC

4602 NORTHGATE COURT, LLC

4927 VOORHEES ROAD, LLC

78 OPAL STREET LLC

AMERICARE HEALTH SERVICES CORP.

BELMONT NURSING CENTER, LLC

BRADFORD SQUARE NURSING, LLC

CAREERSTAFF SERVICES CORPORATION

CAREERSTAFF UNLIMITED, INC.

COUNTRYSIDE HOSPICE CARE, INC.

CRESTVIEW NURSING, LLC

FALMOUTH HEALTHCARE, LLC

FLORIDA HOLDINGS I, LLC

FLORIDA HOLDINGS II, LLC

FLORIDA HOLDINGS III, LLC

GRANT MANOR LLC

GREAT FALLS HEALTH CARE COMPANY, L.L.C.

HARBORSIDE CONNECTICUT LIMITED PARTNERSHIP

By: HARBORSIDE HEALTH I LLC, its general partner

HARBORSIDE DANBURY LIMITED PARTNERSHIP

By: HARBORSIDE HEALTH I LLC, its general partner

HARBORSIDE HEALTH I LLC

HARBORSIDE HEALTHCARE, LLC

HARBORSIDE HEALTHCARE ADVISORS LIMITED PARTNERSHIP

By: KHI LLC, its general partner

HARBORSIDE HEALTHCARE LIMITED PARTNERSHIP

By: KHI LLC, its general partner

HARBORSIDE MASSACHUSETTS LIMITED PARTNERSHIP

By: HARBORSIDE HEALTH I LLC, its general partner

HARBORSIDE NEW HAMPSHIRE LIMITED PARTNERSHIP

By: HARBORSIDE TOLEDO BUSINESS LLC, its general partner

HARBORSIDE NORTH TOLEDO LIMITED PARTNERSHIP

By: HARBORSIDE HEALTH I LLC, its general partner

HARBORSIDE OF CLEVELAND LIMITED PARTNERSHIP

By: HARBORSIDE HEALTH I LLC, its general partner

HARBORSIDE OF DAYTON LIMITED PARTNERSHIP

By: HARBORSIDE HEALTH I LLC, its general partner

HARBORSIDE OF OHIO LIMITED PARTNERSHIP

By: HARBORSIDE HEALTH I LLC, its general partner

HARBORSIDE POINT PLACE, LLC

HARBORSIDE REHABILITATION LIMITED PARTNERSHIP

By: CAREERSTAFF UNLIMITED, INC., its general partner

HARBORSIDE RHODE ISLAND LIMITED PARTNERSHIP

By: HARBORSIDE HEALTH I LLC, its general partner

HARBORSIDE SWANTON, LLC

 

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

 

HARBORSIDE SYLVANIA, LLC

HARBORSIDE TOLEDO BUSINESS LLC

HARBORSIDE TOLEDO LIMITED PARTNERSHIP

By: HARBORSIDE TOLEDO BUSINESS LLC, its general partner

HARBORSIDE TROY, LLC

HBR BARDWELL LLC

HBR BARKELY DRIVE, LLC

HBR BOWLING GREEN LLC

HBR BROWNSVILLE, LLC

HBR CAMPBELL LANE, LLC

HBR DANBURY, LLC

HBR ELIZABETHTOWN, LLC

HBR KENTUCKY, LLC

HBR LEWISPORT, LLC

HBR MADISONVILLE, LLC

HBR OWENSBORO, LLC

HBR PADUCAH, LLC

HBR STAMFORD, LLC

HBR TRUMBULL, LLC

HBR WOODBURN, LLC

HHCI LIMITED PARTNERSHIP

By: HARBORSIDE TOLEDO BUSINESS LLC, its general partner

HUNTINGTON PLACE LIMITED PARTNERSHIP

By: 1775 HUNTINGTON LANE, LLC,

its general partner

KHI LLC

KLONDIKE MANOR LLC

LEISURE YEARS NURSING, LLC

MARIETTA HEALTHCARE, LLC

MARYLAND HARBORSIDE CORP.

MASHPEE HEALTHCARE, LLC

MASSACHUSETTS HOLDINGS I, LLC

MASTHEAD CORPORATION

OHIO HOLDINGS I, LLC

OWENTON MANOR NURSING, LLC

PEAK MEDICAL ASSISTED LIVING, LLC

PEAK MEDICAL COLORADO NO. 2, INC.

PEAK MEDICAL COLORADO NO. 3, INC.

PEAK MEDICAL FARMINGTON, INC.

PEAK MEDICAL GALLUP, INC.

PEAK MEDICAL IDAHO OPERATIONS, INC.

PEAK MEDICAL LAS CRUCES NO. 2, INC.

PEAK MEDICAL LAS CRUCES, INC.

PEAK MEDICAL MONTANA OPERATIONS, INC.

PEAK MEDICAL NEW MEXICO NO. 3, INC.

PEAK MEDICAL OF BOISE, INC.

PEAK MEDICAL OF COLORADO, LLC

PEAK MEDICAL OF IDAHO, INC.

PEAK MEDICAL OF UTAH, INC.

PEAK MEDICAL OKLAHOMA NO. 1, INC.

PEAK MEDICAL OKLAHOMA NO. 10, LLC

PEAK MEDICAL OKLAHOMA NO. 12, INC.

 

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

 

PEAK MEDICAL OKLAHOMA NO. 4, INC.

PEAK MEDICAL OKLAHOMA NO. 5, INC.

PEAK MEDICAL ROSWELL, INC.

PEAK MEDICAL, LLC

PINE TREE VILLA LLC

PM OXYGEN SERVICES, INC.

PROCARE ONE NURSES, LLC

REGENCY HEALTH SERVICES, INC.

REGENCY NURSING, LLC

RIVERSIDE RETIREMENT LIMITED PARTNERSHIP

By: HARBORSIDE HEALTH I LLC, its general partner

SOLAMOR HOSPICE CORPORATION

SUN HEALTHCARE GROUP, INC.

SUNBRIDGE BECKLEY HEALTH CARE CORP.

SUNBRIDGE BRASWELL ENTERPRISES, INC.

SUNBRIDGE BRITTANY REHABILITATION CENTER, INC.

SUNBRIDGE CARE ENTERPRISES WEST, INC.

SUNBRIDGE CARE ENTERPRISES, INC.

SUNBRIDGE CARMICHAEL REHABILITATION CENTER

SUNBRIDGE CHARLTON HEALTHCARE, LLC

SUNBRIDGE CIRCLEVILLE HEALTH CARE CORP.

SUNBRIDGE CLIPPER HOME OF NORTH CONWAY, INC.

SUNBRIDGE CLIPPER HOME OF PORTSMOUTH, INC.

SUNBRIDGE CLIPPER HOME OF ROCHESTER, INC.

SUNBRIDGE CLIPPER HOME OF WOLFEBORO, INC.

SUNBRIDGE DUNBAR HEALTH CARE CORP.

SUNBRIDGE GARDENDALE HEALTH CARE CENTER, LLC

SUNBRIDGE GLENVILLE HEALTH CARE, INC.

SUNBRIDGE GOODWIN NURSING HOME, INC.

SUNBRIDGE HALLMARK HEALTH SERVICES, INC.

SUNBRIDGE HARBOR VIEW REHABILITATION CENTER

SUNBRIDGE HEALTHCARE, LLC

SUNBRIDGE JEFF DAVIS HEALTHCARE, LLC

SUNBRIDGE MARION HEALTH CARE CORP.

SUNBRIDGE MEADOWBROOK REHABILITATION CENTER

SUNBRIDGE MOUNTAIN CARE MANAGEMENT, INC.

SUNBRIDGE NURSING HOME, INC.

SUNBRIDGE OF HARRIMAN, LLC

SUNBRIDGE PARADISE REHABILITATION CENTER, INC.

SUNBRIDGE PUTNAM HEALTH CARE CORP.

SUNBRIDGE REGENCY-NORTH CAROLINA, INC.

SUNBRIDGE REGENCY-TENNESSEE, INC.

SUNBRIDGE RETIREMENT CARE ASSOCIATES, LLC

SUNBRIDGE SALEM HEALTH CARE CORP.

SUNBRIDGE SHANDIN HILLS REHABILITATION CENTER

SUNBRIDGE STOCKTON REHABILITATION CENTER, INC.

SUNBRIDGE SUMMERS LANDING, INC.

SUNBRIDGE WEST TENNESSEE, INC.

SUNDANCE REHABILITATION AGENCY, INC.

SUNDANCE REHABILITATION CORPORATION

SUNDANCE SERVICES CORPORATION

SUNHEALTH SPECIALTY SERVICES, INC.

 

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

 

SUNMARK OF NEW MEXICO, INC.

THE MEDIPLEX GROUP, INC.

WAKEFIELD HEALTHCARE, LLC

WESTFIELD HEALTHCARE, LLC

WOODSPOINT LLC

 

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

 

EXHIBIT A

 

AMENDMENTS TO CREDIT AGREEMENT

 

See attached.

 

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

 

 

 

$325,000,000

 

TERM LOAN AGREEMENT
(as amended by First Amendment and as further amended by Second Amendment)

 

among

 

FC-GEN OPERATIONS INVESTMENT, LLC,

as LLC Parent,

 

GEN OPERATIONS I, LLC,

as Parent,

 

GEN OPERATIONS II, LLC,
as Holdings,

 

GENESIS HEALTHCARE LLC,

as Borrower Agent

 

and

SUN HEALTHCARE GROUP, INC.,
as Borrower,

 

The Several Lenders from Time to Time Parties Hereto,

 

BARCLAYS BANK PLC,
as Administrative Agent and Collateral Agent,

GENERAL ELECTRIC CAPITAL CORPORATION,
as Syndication Agent

 

and

 

BARCLAYS BANK PLC
and
GE CAPITAL MARKETS, INC.,
as Joint Lead Arrangers and Joint Book Running Managers

 

Dated as of December 3, 2012

 

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

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

SECTION 1.

DEFINITIONS

1

1.1

Defined Terms

1

1.2

Other Definitional Provisions

37

 

 

 

SECTION 2.

AMOUNT AND TERMS OF COMMITMENTS

38

2.1

Initial Commitments

38

2.2

[Reserved]

38

2.3

Procedure for Loan Borrowing

38

2.4

Repayment of Loans

38

2.5

Repayment of Loans

39

2.6

Fees, etc.

40

2.7

Optional Prepayments

40

2.8

Mandatory Prepayments

40

2.9

Conversion and Continuation Options

41

2.10

Minimum Amounts and Maximum Number of Eurodollar Tranches

42

2.11

Interest Rates and Payment Dates

42

2.12

Computations of Interest and Fees

42

2.13

Inability to Determine Interest Rate

43

2.14

Pro Rata Treatment and Payments

43

2.15

Requirements of Law

46

2.16

Taxes

48

2.17

Indemnity

50

2.18

Illegality

50

2.19

Mitigation of Costs; Change of Lending Office

51

2.20

Replacement of Lenders

51

2.21

Incremental Loans

51

2.22

Extensions of Loans and Commitments

53

2.23

Borrower Agent

55

2.24

Nature and Extent of Each Borrower’s Liability

56

 

 

 

SECTION 3.

REPRESENTATIONS AND WARRANTIES

56

3.1

Corporate Existence; Compliance with Law

56

3.2

Loan Documents and Lease Consent and Amendment Agreements

58

3.3

Financial Statements

58

3.4

Material Adverse Effect

59

3.5

Solvency

59

3.6

Litigation

59

3.7

Taxes

59

3.8

Margin Regulations

60

3.9

No Burdensome Obligations; No Defaults

60

3.10

Investment Company Act

60

3.11

Labor Matters

60

 

i

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

3.12

ERISA

60

3.13

Environmental Matters

61

3.14

Intellectual Property

61

3.15

Title; Real Property

62

3.16

Full Disclosure

62

3.17

Patriot Act; OFAC

62

3.18

No Default

63

3.19

Use of Proceeds

63

3.20

Insurance

63

3.21

Reportable Transactions

63

3.22

Security Documents

63

 

 

 

SECTION 4.

CONDITIONS PRECEDENT

64

 

 

 

SECTION 5.

REPORTING COVENANTS

67

5.1

Financial Statements

67

5.2

Other Events

69

5.3

ERISA Matters

69

5.4

Environmental Matters

70

5.5

Other Information

70

 

 

 

SECTION 6.

AFFIRMATIVE COVENANTS

70

6.1

Maintenance of Corporate Existence

70

6.2

Compliance with Laws, Etc.

70

6.3

Payment of Obligations

71

6.4

Maintenance of Property

72

6.5

Maintenance of Insurance

72

6.6

Keeping of Books

72

6.7

Access to Books and Property

72

6.8

Environmental

73

6.9

Post Closing Obligations

73

6.10

Additional Collateral, etc

73

6.11

Maintenance of Ratings

75

6.12

Further Assurances

75

6.13

Interest Rate Protection

76

6.14

Use of Proceeds

76

6.15

Annual Lenders Meeting

76

6.16

Material Master Leases

76

 

 

 

SECTION 7.

NEGATIVE COVENANTS

76

7.1

Indebtedness

76

7.2

Liens

79

7.3

Sale and Lease-Back Transactions

82

 

ii

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

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

7.4

Investments, Loans and Advances

83

7.5

Mergers, Consolidations, Sales of Assets and Acquisitions

85

7.6

Restricted Payments; Restrictive Agreements

87

7.7

Transactions with Affiliates

89

7.8

Business of the Borrowers and the Restricted Subsidiaries

90

7.9

Other Indebtedness and Agreements

90

7.10

[Reserved]

91

7.11

Account Changes; Fiscal Year

91

7.12

Capital Expenditures

91

7.13

Minimum Fixed Charge Coverage Ratio

92

7.14

Maximum Leverage Ratio

92

7.15

Minimum Interest Coverage Ratio

92

7.16

Certain Cure Rights

93

 

 

 

SECTION 8.

EVENTS OF DEFAULT

94

 

 

 

SECTION 9.

THE AGENTS

96

9.1

Appointment

96

9.2

Delegation of Duties

96

9.3

Exculpatory Provisions

97

9.4

Reliance by the Agents

97

9.5

Non-Reliance on Agents and Other Lenders

98

9.6

Indemnification

98

9.7

Agent in Its Individual Capacity

99

9.8

Successor Agents

99

9.9

Authorization to Release Liens and Guarantees

99

9.10

Lead Arrangers

100

9.11

Administrative Agent May File Proofs of Claim

100

 

 

 

SECTION 10.

MISCELLANEOUS

101

10.1

Amendments and Waivers

101

10.2

Notices

102

10.3

No Waiver; Cumulative Remedies

103

10.4

Survival of Representations and Warranties

103

10.5

Payment of Expenses; Indemnification; Limitation of Liability

103

10.6

Successors and Assigns; Participations and Assignments

105

10.7

Adjustments; Set-off

110

10.8

Counterparts

110

10.9

Severability

110

10.10

Integration

110

10.11

GOVERNING LAW

110

10.12

Submission to Jurisdiction; Waivers

111

10.13

Acknowledgments

111

10.14

Confidentiality

112

 

iii

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

10.15

Release of Collateral and Guarantee Obligations; Subordination of Liens

112

10.16

Accounting Changes

113

10.17

WAIVERS OF JURY TRIAL

113

10.18

USA PATRIOT ACT

113

10.19

Delivery of Lender Addenda

114

 

iv

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APPENDICES:

 

A                                                                                      
Initial Commitments

 

SCHEDULES:

 

1.1A        Subsidiary Guarantors

 

1.1B        Unrestricted Subsidiaries

 

1.1C        Approved Insurers

 

3.1(a)                                                  Corporate Existence,
Compliance with Law

 

3.1(b)                                                  Healthcare Facilities

 

3.1(c)                                                   Primary Licenses

 

3.1(e)                                                   Healthcare Facility
Violations

 

3.2                 Required Permits; Governmental Authority

 

3.3                 Material Indebtedness and Material Liabilities

 

3.6                 Litigation

 

3.7                 Taxes

 

3.11          Labor Matters

 

3.12(a)                                           ERISA

 

3.12(b)                                           Foreign Pension Plans

 

3.15          Title Real Property

 

3.20          Insurance

 

3.22(a)                                           UCC Filing Jurisdictions

 

6.2                 Provider Payment and Reimbursement Programs

 

6.9                 Post Closing Obligations

 

7.1                 Existing Indebtedness

 

7.2                 Existing Liens

 

7.4                 Existing Investments

 

7.7                 Transactions with Affiliates

 

7.10          Existing Negative Pledges

 

EXHIBITS:

 

A-1              Form of Notice of Borrowing

 

A-2              Form of Conversion/Continuation Notice

 

B                         Form of Guarantee and Collateral Agreement

 

C                         Form of Compliance Certificate

 

D                         Form of Closing Certificate

 

v

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

 

E-1               Form of Assignment and Assumption

 

E-2               Form of Affiliated Lender Assignment and Assumption

 

F                           Form of Exemption Certificate

 

G                         Form of Solvency Certificate

 

H                        Form of Prepayment Notice

 

I                             Form of Promissory Note

 

J                             Form of Joinder Agreement

 

K                        Form of Lender Addendum

 

L                          Form of Intercreditor Agreement

 

M                      Form of Intercompany Promissory Note

 

vi

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

 

TERM LOAN AGREEMENT, dated as of December 3, 2012, among FC-GEN OPERATIONS
INVESTMENT, LLC, a Delaware limited liability company (“LLC Parent”), GEN
OPERATIONS I, LLC, a Delaware limited liability company (“Parent”), GEN
OPERATIONS II, LLC, a Delaware limited liability company (“Holdings”), GENESIS
HEALTHCARE LLC, a Delaware limited liability company (the “Genesis Borrower”),
SUN HEALTHCARE GROUP, INC., a Delaware corporation (the “Sun Borrower” and,
together with the Genesis Borrower, the “Borrowers”), the several banks and
other financial institutions or entities from time to time parties to this
Agreement and BARCLAYS BANK PLC, as administrative agent (in such capacity,
together with its successors and permitted assigns, the “Administrative Agent”)
and collateral agent (in such capacity, together with its successors and
permitted assigns, the “Collateral Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Borrowers seek $325,000,000 in term loan financing (together with
proceeds from a $425,000,000 asset based revolving credit facility) to
consummate the acquisition, which became effective as of December 1, 2012, by
the Genesis Borrower of the business of the Sun Borrower (the “Acquisition”)
pursuant to and in accordance with the terms of the Acquisition Agreement (as
defined below) and the refinancing and termination in full of the Existing Sun
Credit Agreement (as defined below) and the discharge in full of all guarantees
and collateral provided in connection therewith (the “Refinancing”) and to pay
related fees and expenses associated with the foregoing; and

 

WHEREAS, the Lenders are willing to make the term loan facility described herein
available to the Borrowers upon and subject to the terms and conditions
hereinafter set forth.

 

NOW, THEREFORE, in consideration of the premises and the agreements hereinafter
set forth, the parties hereto hereby agree as follows:

 

SECTION 1.                            DEFINITIONS

 

1.1                               Defined Terms.  As used in this Agreement, the
terms listed in this Section shall have the respective meanings set forth in
this Section.

 

“ABL 5th Amendment”: the Amendment No. 5 to Credit Agreement, dated as of the
First Amendment Date, by and among, inter alios, the Borrowers (as defined
therein), the lenders party thereto and General Electric Capital Corporation, as
Administrative Agent (as defined therein).

 

“ABL Credit Agreements”: the Genesis ABL Credit Agreement and the Skilled ABL
Credit Agreement.

 

“ABL Loan Documents”: has the meaning assigned to the term “Loan Documents” in
each of the ABL Credit Agreements.

 

“ABL Obligations”: the “Obligations” under and as defined in the ABL Credit
Agreements.

 

“ABL Facility”: each of the asset-based revolving credit facilities incurred
pursuant to the ABL Loan Documents.

 

“ABR”: for any day, a fluctuating rate per annum equal to the greatest of
(x) the rate determined from time to time by the Administrative Agent as its
prime rate (“Prime Rate”) in effect at its principal office in New York City,
(y) the Federal Funds Effective Rate plus ½ of 1.00% and (z) the one-month

 

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

 

reserve adjusted Eurodollar Rate plus 1.00%; provided that, with respect to any
Interest Period, in no event shall the “ABR” with respect to any Loan that is a
ABR Loan, be less than 2.50%.

 

“ABR Loans”: Loans the rate of interest applicable to which is based upon the
ABR.

 

“Accounting Changes”: as defined in Section 10.16.

 

“Acquired EBITDA”: with respect to any Acquired Entity or Business for any
period, the amount for such period of Consolidated EBITDA of such Acquired
Entity or Business (determined as if references to Ultimate Parent and its
Subsidiaries in the definition of Consolidated EBITDA were references to such
Acquired Entity or Business and its Subsidiaries), all as determined on a
consolidated basis for such Acquired Entity or Business.

 

“Acquired Entity or Business”: as defined in the definition of “Consolidated
EBITDA”.

 

“Acquired Permitted CapEx Amount”: as defined in Section 7.12.

 

“Acquisition”: as defined in the recitals hereto.

 

“Acquisition Agreement”: that certain Agreement and Plan of Merger, dated as of
June 20, 2012, by and among the Genesis Borrower, JAM Acquisition LLC, a
Delaware limited liability company and the Sun Borrower.

 

“Administrative Agent”: as defined in the preamble hereto.

 

“Affiliate”: as to any Person, any other Person that, directly or indirectly, is
in control of, is controlled by, or is under common control with, such Person. 
No Secured Party shall be an Affiliate of any Borrower nor shall any Secured
Party be deemed to be an “Affiliate” of any Loan Party solely by virtue of being
a “Lender” or “Secured Party” under this Agreement.  For purposes of this
definition, “control” of a Person means (i) the power, directly or indirectly to
direct or cause the direction of the management and policies of such Person, in
either case whether by contract or otherwise or (ii) beneficial ownership of 10%
or more of the Voting Stock of such Person.

 

“Affiliated Lender”: a Lender that is a Permitted Investor or any other equity
holder of a Parent Company or an Affiliate of a Permitted Investor or such
equity holder (excluding, the Parent Companies, the Borrowers and their
Subsidiaries).

 

“Affiliated Lender Assignment and Assumption”: an Affiliated Lender Assignment
and Assumption, substantially in the form of Exhibit E-2

 

“Agent-Related Persons”: each Agent, together with its Related Parties.

 

“Agents”: the collective reference to the Collateral Agent and the
Administrative Agent.

 

“Agreed Purposes”: as defined in Section 10.14.

 

“Agreement”: this Term Loan Agreement.

 

“All-in Yield”: as to any Indebtedness, the yield thereof, whether in the form
of interest rate, margin, original issue discount, upfront fees, a Eurodollar
Rate floor or Base Rate floor greater than 1.50% or 2.50%, respectively, or
otherwise; provided that original issue discount and upfront fees shall be

 

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equated to interest rate assuming a 4-year life to maturity (or, if less, the
stated life to maturity at the time of its incurrence of the applicable
Indebtedness); and provided, further, that “All-In Yield” shall not include
arrangement fees, underwriting fees, structuring fees, commitment fees or other
fees not paid to all providers of such Indebtedness.

 

“Applicable Indebtedness”:  as defined in the definition of “Weighted Average
Life to Maturity”.

 

“Applicable Margin”: for any day, with respect to the Loans that are (i) ABR
Loans, 7.50% and (ii) Eurodollar Loans, 8.50%.

 

“Approved Fund”: as defined in Section 10.6(b).

 

“Approved Insurer”: each Person identified on Schedule 1.1C and any Insurer
(other than Medicaid, Medicare or TRICARE) as may be approved by Administrative
Agent from time to time in its sole discretion.

 

“Asset Sale”: the sale, transfer or other Disposition (by way of merger,
casualty, condemnation or otherwise) by Ultimate Parent or any of the Restricted
Subsidiaries to any person other than Ultimate Parent, the Borrowers or any
Subsidiary Guarantor of (a) any Capital Stock of any of the Subsidiaries (other
than directors’ qualifying shares) or (b) any other assets of Ultimate Parent or
any of the Restricted Subsidiaries (other than (i) inventory, damaged, no longer
useful or needed, obsolete or worn out assets, scrap, cash and Cash Equivalents,
in each case Disposed of in the ordinary course of business), (ii) Dispositions
between or among Foreign Subsidiaries, (iii) Dispositions of property to the
extent that (A) such property is exchanged for credit against the purchase price
of similar replacement property or (B) the proceeds of such Disposition are
applied to the purchase price of such replacement property (which replacement
property is actually promptly purchased), (iv) leases, subleases, licenses or
sublicenses (including the provision of software under an open source license),
in each case in the ordinary course of business and which do not materially
interfere with the business of Ultimate Parent and the Restricted Subsidiaries,
taken as a whole, (v) Dispositions of accounts receivable in connection with the
collection or compromise thereof in the ordinary course of business,
(vi) Dispositions of Investments in joint ventures to the extent required by, or
made pursuant to customary buy/sell arrangements between, the joint venture
parties set forth in joint venture arrangements and similar binding
arrangements, (vii) Dispositions permitted by Sections 7.4, 7.5 and 7.6 and
Liens permitted by Section 7.2, (viii) the unwinding of any Hedge Agreement,
(ix) any sale, transfer or other Disposition or series of related sales,
transfers or other Dispositions having a value not in excess of $1,500,000 and
(x) the assignment, cancellation, abandonment or other disposition of
Intellectual Property that is, in the reasonable judgment of Ultimate Parent, no
longer economically practicable to maintain or useful in the conduct of the
business of Ultimate Parent and the Restricted Subsidiaries taken as a whole).

 

“Assignee”: as defined in Section 10.6(b).

 

“Assignment and Assumption”: an Assignment and Assumption, substantially in the
form of Exhibit E-1

 

“Audited Financial Statements”: as applicable, (a) LLC Parent’s audited
Consolidated balance sheet as of December 31, 2011 and the related Consolidated
statements of income or operations, shareholders’ equity and cash flows,
including the notes thereto, each for the three fiscal years ended December 31,
2009, December 31, 2010 and December 31, 2011 and (b) the Sun Borrower’s audited
Consolidated balance sheet as of December 31, 2011 and the related Consolidated
statements of income

 

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or operations, shareholders’ equity and cash flows, including the notes thereto,
each for the three fiscal years ended December 31, 2009, December 31, 2010 and
December 31, 2011.

 

“Available Amount”: the aggregate cumulative amount, which shall in no event be
less than zero, of (i) the sum of (A) Excess Cash Flow of the Parent Companies,
the Borrowers and the Restricted Subsidiaries for fiscal 2013 and each full
fiscal year ending thereafter that is not required pursuant to the provisions of
Section 2.8(c) to be applied to the prepayment of Loans, plus (B) the Net Cash
Proceeds received after the First Amendment Date from any Excluded Issuance,
minus (b) any amount previously expended pursuant to Section 7.4(l),
Section 7.6(a)(vii) and/or Section 7.9(b)(iv).

 

“Bankruptcy Code”: the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et
seq.), as amended and in effect from time to time and the regulations issued
from time to time thereunder.

 

“Barclays”: Barclays Bank PLC.

 

“Benefit Plan”: any employee benefit plan as defined in Section 3(3) of ERISA
(whether governed by the laws of the United States or otherwise), other than a
Foreign Pension Plan or Multiemployer Plan, to which any Loan Party incurs or
otherwise has any obligation or liability, contingent or otherwise.

 

“Benefited Lender”: as defined in Section 10.7(a).

 

“Board”: the Board of Governors of the Federal Reserve System of the United
States (or any successor).

 

“Borrowers”: as defined in the preamble hereto.

 

“Borrower Agent”: as defined in Section 2.23.

 

“Borrowing Date”: any Business Day specified by the Borrowers as a date on which
the Borrower Agent requests the relevant Lenders to make Loans hereunder.

 

“Business”: the business and any services, activities or businesses incidental
or directly related or similar or complementary to any business or line of
business engaged in by Ultimate Parent or the Restricted Subsidiaries as of the
Second Amendment Date or any business or business activity that is a reasonable
extension, development or expansion thereof or ancillary thereto.

 

“Business Day”: a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close;
provided that, when used in connection with a Eurodollar Loan, the term
“Business Day” shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.

 

“Capital Expenditures”: for any period, the additions to property, plant and
equipment and other capital expenditures of Ultimate Parent and the Restricted
Subsidiaries that are (or should be) set forth in a Consolidated statement of
cash flows of LLC Parent (or, on or after the Second Amendment Date, Ultimate
Parent) for such period prepared in accordance with GAAP, but excluding (i) any
such expenditure made to restore, replace or rebuild property to the condition
of such property immediately prior to any damage, loss, destruction or
condemnation of such property, to the extent such expenditure is made with
insurance proceeds, condemnation awards or damage recovery proceeds relating to
any such damage, loss, destruction or condemnation, (ii) any such expenditure to
the extent that proceeds of Asset Sales, debt financings or lease financings are
used to make such expenditure, (iii) the purchase price of assets purchased
during such period to the extent the consideration therefor consists of

 

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any combination of (A) assets traded in at the time of such purchase and (B) the
proceeds of a concurrent sale of assets, in each case in the ordinary course of
business, (iv) expenditures which constitute consideration paid in respect of
Permitted Acquisitions and other Investments permitted under Section 7.4 (other
than Investments permitted under Section 7.4(j)), (v) any such expenditures made
with the proceeds of any Excluded Issuance or the incurrence of any Indebtedness
permitted under this Agreement, (vi) expenditures constituting interest
capitalized during such period, (vii) expenditures that are accounted for as
capital expenditures of such Person and that actually are paid for by a third
party and for which no Loan Party has provided or is required to provide or
incur, directly or indirectly, any consideration or obligation to such third
party or any other person and (viii) solely for purposes of determining
compliance with Section 7.12, any cash expenditure made in connection with any
Health Care REIT Asset Buyback.

 

“Capital Lease Obligations”: as to any Person, the obligations of such Person to
pay rent or other amounts under any lease of (or other arrangement conveying the
right to use) real or tangible personal property, or a combination thereof, to
the extent such obligations are required to be classified and accounted for as
capital leases or similar lease financing obligations on a balance sheet of such
Person under GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such time
determined in accordance with GAAP; provided that, notwithstanding the
foregoing, in no event will any lease that would have been categorized as an
operating lease as determined in accordance with GAAP as of the Closing Date, be
considered a capital lease for purposes of this definition as a result of any
changes in GAAP subsequent to the Closing Date.

 

“Capital Stock”: any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, and any and
all equivalent ownership interests in a Person (other than a corporation) and
any and all warrants, rights or options to purchase any of the foregoing, but
excluding Indebtedness convertible or exchangeable into Capital Stock.

 

“Cash Equivalents”: (a) any readily-marketable securities (i) issued by, or
directly, unconditionally and fully guaranteed or insured by the United States
federal government or (ii) issued by any agency or instrumentality of the United
States federal government the obligations of which are fully backed by the full
faith and credit of the United States federal government, (b) any
readily-marketable direct obligations issued by any other agency of the United
States federal government, any state of the United States or any political
subdivision of any such state or any public instrumentality thereof, in each
case having a rating of at least “A-2” from S&P or at least “P-2” from Moody’s,
(c) any commercial paper rated at least “A-2” by S&P or “P-2” by Moody’s and
issued by any Person organized under the laws of any state of the United States,
(d) any Dollar-denominated time deposit, insured certificate of deposit,
overnight bank deposit or bankers’ acceptance issued or accepted by (i) any
Lender or (ii) any commercial bank that is (A) organized under the laws of the
United States, any state thereof or the District of Columbia, (B) “adequately
capitalized” (as defined in the regulations of its primary federal banking
regulators) and (C) has Tier 1 capital (as defined in such regulations) in
excess of $250,000,000 and (e) shares of any United States money market fund
that (i) has substantially all of its assets invested continuously in the types
of investments referred to in clause (a), (b), (c) or (d) above with maturities
as set forth in the proviso below, (ii) has net assets in excess of $500,000,000
and (iii) has obtained from either S&P or Moody’s the highest rating obtainable
for money market funds in the United States; provided, however, that the
maturities of all obligations specified in any of clauses (a), (b), (c) and
(d) above shall not exceed 365 days.

 

“Cash Management Counterparty”: any Person that is a party to a Cash Management
Document that was a Lender or Agent at the time any such Cash Management
Document was entered into or an Affiliate of such a Lender or Agent, in each
case in its capacity as party to a Cash Management Document.

 

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“Cash Management Document”: any certificate, agreement or other document
executed by Ultimate Parent or any Restricted Subsidiary in respect of the Cash
Management Obligations of Ultimate Parent or any Restricted Subsidiary.

 

“Cash Management Obligation”: with respect to Ultimate Parent and the Restricted
Subsidiaries, any direct or indirect liability, contingent or otherwise, of any
such Person in respect of cash management services (including treasury,
depository, overdraft, credit or debit card, electronic funds transfer and other
cash management arrangements) provided after the date hereof (regardless of
whether these or similar services were provided prior to the date hereof by the
Administrative Agent, any Lender or any Affiliate of any of them) by the
Administrative Agent, any Lender or any Affiliate of any of them, including
obligations for the payment of fees, interest, charges, expenses, attorneys’
fees and disbursements in connection therewith.

 

“Certificated Security”: as defined in the Guarantee and Collateral Agreement.

 

“Change of Control”: (i) Ultimate Parent shall cease to own directly or
indirectly (x) no less than 50% of the Capital Stock of LLC Parent; or (y) 100%
of the Capital Stock of any other of the managing members of LLC Parent,
(ii) except to the extent expressly permitted by Section 7.5(a)(i)(D), LLC
Parent shall cease to own directly or indirectly 100% of the Capital Stock of
the Genesis Borrower, Parent or Holdings; (iii) Holdings (or, if Holdings is no
longer in existence in accordance with Section 7.5(a)(i)(D), Parent or LLC
Parent) shall cease to own  directly 100% of the Capital Stock of the Genesis
Borrower; (iv) (A) any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of
such person and its subsidiaries and any person acting in its capacity as
trustee, agent or other fiduciary or administrator of any such plan), other than
the Permitted Investors is or becomes the beneficial owner, directly or
indirectly, of more than 35% of the Voting Stock of Ultimate Parent and such
person or group is or becomes, directly or indirectly, the beneficial owner of a
greater percentage of the Voting Stock of Ultimate Parent than the percentage of
outstanding Voting Stock of Ultimate Parent owned by the Permitted Investors or
(B) for any reason whatsoever, a majority of the board of directors of Ultimate
Parent shall not be Continuing Directors or (v) a “change of control” or similar
concept under the ABL Loan Documents or any Material Master Leases shall have
occurred.

 

“Chattel Paper”: as defined in the Guarantee and Collateral Agreement.

 

“Closing Date”: the date on which the conditions precedent set forth in
Section 4 shall have been satisfied or waived and the initial Loans hereunder
shall have been funded.

 

“Closing Fee”: as defined in Section 2.1(b).

 

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

 

“Collateral”: as defined in the Guarantee and Collateral Agreement.

 

“Collateral Coverage Requirement”: at any date of determination, the requirement
that the licensed beds of the Loan Parties constitute at least 75.0% of the
licensed beds of the Borrowers and the Restricted Subsidiaries, taken as a whole
as of such date.

 

“Collateral Agent”: as defined in the preamble hereto.

 

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“Commitment”: as to any Lender, the Initial Commitment and/or Incremental
Commitment (if any) of such Lender.

 

“Committed Reinvestment Amount”: as defined in the definition of “Reinvestment
Prepayment Amount”.

 

“Company Material Adverse Effect”: any event, change, circumstance, development,
occurrence, condition, effect or state of facts, individually or in the
aggregate, that is materially adverse to the business, assets, financial
condition or results of operations of the Sun Borrower and its Subsidiaries,
taken as a whole; provided, however, that the determination of a Company
Material Adverse Effect shall exclude the following events, changes,
circumstances, developments, occurrences, conditions, effects and states of
fact: (a) the announcement, pendency or anticipated consummation of the
Acquisition (as defined in the Acquisition Agreement) or any of the other
transactions contemplated by the Acquisition Agreement; (b) changes in general
economic conditions or the credit, financial or capital markets, including
changes in interest or exchange rates; (c) changes in general conditions in any
industry in which any of the Sun Borrower and its Subsidiaries, taken as a
whole, operates or participates; (d) a change in the Sun Borrower’s stock price
or trading volume, in and of itself (provided, that the underlying factors
contributing to such change shall not be excluded unless such underlying factors
would otherwise be excepted from this definition); (e) any natural or man-made
disaster, pandemic, act of terrorism, sabotage, military action or war, or any
escalation or worsening thereof; (f) any failure, in and of itself, by the Sun
Borrower to meet any analyst projections or any internal or published
projections, forecasts, estimates or predictions of revenue, earnings or other
financial or operating metrics before, on or after the June 20, 2012 (provided,
that the underlying factors contributing to such failure shall not be excluded
unless such underlying factors would otherwise be excepted from this
definition); (g) changes in general legal, regulatory or political conditions
after June 20, 2012; (h) changes in GAAP or applicable laws or the
interpretation thereof after June 20, 2012  (except changes (that are not
proposed in the Federal Register through notice of public rulemaking or
equivalent state rulemaking notice prior to June 20, 2012) to reimbursement
rates or in methods or procedures for determining such rates by any governmental
entity that have general application to providers of such health services as are
provided by the facilities, the Sun Borrower or its Subsidiaries, as
applicable); (i) the Kentucky Court of Appeals’ (or the Kentucky Supreme
Court’s, if there is a further appeal) denial or dismissal in whole or in part
of the Sun Borrower’s appeal of, or affirmation of the trial court ruling with
respect to, the Offutt Litigation (as such term is defined in Section 2.12(a) of
the Company Disclosure Schedule attached to the Acquisition Agreement); or
(j) the taking of any action, or any failure to act, with the prior written
consent of the Genesis Borrower or required to be taken by the express terms of
the Acquisition Agreement, except with respect to clauses (b), (c), (e), (g) and
(h), to the extent, and only to the extent such event, change, circumstance,
development, occurrence, condition effect or state of facts is
disproportionately adverse to the Sun Borrower and its Subsidiaries, taken as a
whole, when compared to other persons operating in the geographies and
industries in which the Sun Borrower and its Subsidiaries operate.

 

“Commodity Exchange Act”: the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as
amended from time to time, and any successor statute.

 

“Compliance Certificate”: a certificate duly executed by a Responsible Officer
substantially in the form of Exhibit C.

 

“Confidential Information”: as defined in Section 10.14.

 

“Consolidated”: with respect to Ultimate Parent and its Subsidiaries,
consolidated in accordance with GAAP, excluding the revenues, expenses, assets
and liabilities of variable interest entities having Indebtedness that is
non-recourse to Ultimate Parent.

 

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“Consolidated Cash Interest Expense”: for any period, the Consolidated Interest
Expense for such period minus the sum of, in each case to the extent included in
the definition of Consolidated Interest Expense, (a) the amortized amount of
debt discount and debt issuance costs (including, without limitation,
amortization of financing fees and expenses paid in connection with the
transactions contemplated by the Loan Documents and Permitted Acquisitions),
(b) interest payable in evidences of Indebtedness or by addition to the
principal of the related Indebtedness and (c) other non-cash interest.

 

“Consolidated Current Assets”: at any date, the Consolidated current assets
(other than cash and Cash Equivalents) of the Parent Companies, the Borrowers
and the Restricted Subsidiaries.

 

“Consolidated Current Liabilities”: at any date, the Consolidated current
liabilities of the Parent Companies, the Borrowers and the Restricted
Subsidiaries at such time, but excluding, without duplication, (a) the current
portion of any long-term Indebtedness and (b) outstanding loans under the ABL
Facilities.

 

“Consolidated EBITDA”: for any period, Consolidated Net Income for such period
plus without duplication and to the extent deducted in determining such
Consolidated Net Income, the sum of (i) Consolidated Interest Expense for such
period, plus (ii) Consolidated income tax expense for such period, plus
(iii) all amounts attributable to the amount of the provision for depreciation
and amortization; plus (iv) the amount of any non-cash charges (other than the
write down of current assets), plus (v) the amount of any loss from unusual or
extraordinary items in excess of $100,000, including any related management
incentive or stay-pay plans in place as of the Closing Date, any restructuring
charges and any other non-recurring loss not to exceed $10,000,000 in the
aggregate for this clause (v) for any period, plus (vi) costs, fees and expenses
for such period paid in connection with the Transactions and Skilled
Transactions, plus (vii) any non-recurring fees, costs or expenses for such
period incurred in connection with a Permitted Acquisition or any Investment,
Disposition, incurrence of (or amendments or modifications to) Indebtedness or
issuance of Capital Stock, in each case, permitted under this Agreement (in each
case, including any such transaction undertaken but not completed), plus
(viii) the amount of cost savings and acquisition synergies projected by
Ultimate Parent in good faith to be realized within (x) 15 months of the date
such actions are first taken in connection with the Transactions or (y) 12
months of the date such actions are first taken in connection with any other
acquisition or Disposition or restructuring of the business by the Parent
Companies, the Borrowers or any Restricted Subsidiary, in each case, calculated
on a Pro Forma Basis as though such cost savings or acquisition synergies had
been realized on the first day of such period, net of the amount of actual
benefits realized during such period that are otherwise included in the
calculation of Consolidated EBITDA from such actions; provided that (A) such
cost savings and acquisition synergies are reasonably identifiable and factually
supportable, and (B) the aggregate amount of cost savings and acquisition
synergies added pursuant to this clause (viii) shall not exceed (x) $50,000,000
in the aggregate (and in no event shall the total amount of all cost savings and
acquisition synergies with respect to the Transactions exceed $50,000,000), in
the case of net cost savings and acquisition synergies with respect to the
Transactions; and (y) 15% of Consolidated EBITDA in any period, otherwise, plus
(ix) the amount of cost savings and acquisition synergies projected by Ultimate
Parent in good faith to be realized within 15 months of the date such actions
are first taken in connection with the Skilled Transactions, calculated on a Pro
Forma Basis as though such cost savings or acquisition synergies had been
realized on the first day of such period, net of the amount of actual benefits
realized during such period that are otherwise included in the calculation of
Consolidated EBITDA from such actions; provided that (A) such cost savings and
acquisition synergies are reasonably identifiable and factually supportable, and
(B) the aggregate amount of cost savings and acquisition synergies added
pursuant to this clause shall not exceed $30,000,000 in the aggregate, plus
(x) the amount of management, consulting, monitoring and advisory fees
(including termination fees and transaction fees) and related indemnities and
expenses paid or accrued in such period (and prior to the Second Amendment Date)
to

 

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the Sponsor pursuant to any management agreement permitted by
Section 7.6(a)(vi) and deducted (and not added back) in such period in computing
such Consolidated Net Income, in an aggregate amount not exceeding $3,000,000 in
any fiscal year, minus (y) the amount of any cash or non-cash unusual or
extraordinary gains that are in excess of $100,000 and any other non-recurring
gains.  Any non-cash expenses related to the management incentive or stay-pay
plans in place as of the Closing Date will be included in clause (v) above.  In
addition, (A) there shall be included on a Pro Forma Basis in determining
Consolidated EBITDA for any period, without duplication, Acquired EBITDA of any
Person acquired by Ultimate Parent or any of the Restricted Subsidiaries during
such period (but not the Acquired EBITDA of any related Person or business to
the extent not so acquired) in accordance with the terms of this Agreement, to
the extent not subsequently sold, transferred or otherwise Disposed of by
Ultimate Parent or such Restricted Subsidiary during such period (each such
Person or business acquired and not subsequently so Disposed of, an “Acquired
Entity or Business”), based on the actual Acquired EBITDA of such Acquired
Entity or Business for such period (including the portion thereof occurring
prior to such acquisition); (B) there shall be excluded on a Pro Forma Basis in
determining Consolidated EBITDA for any period the Disposed EBITDA of any
Person, property, business transferred or otherwise Disposed of, closed or
classified as discontinued operations as classified under GAAP by Ultimate
Parent or any of the Restricted Subsidiaries during such period (each such
Person, property, business so sold or Disposed of, a “Sold Entity or Business”),
based on the actual Disposed EBITDA of such Sold Entity or Business for such
period (including the portion thereof occurring prior to such sale, transfer or
Disposition); and (C) there shall be excluded on a Pro Forma Basis in
determining Consolidated EBITDA for any period the Consolidated EBITDA of any
newly constructed healthcare facilities for the twelve month period following
receipt of a Certificate of Occupancy for such properties, in an aggregate
amount not exceeding $5,000,000 in any four fiscal quarter period.  For purposes
of determining the Consolidated Senior Secured Leverage Ratio, the Consolidated
Total Leverage Ratio, and the Fixed Charge Coverage Ratio as of and for the
periods ended March 31, 2012 and June 30, 2012, Consolidated EBITDA for the
fiscal quarters ended on such dates shall be deemed to be equal to $35,600,000
and $40,900,000, respectively (as such amounts may be adjusted in accordance
with the immediately preceding sentences).

 

“Consolidated EBITDAR”: for any period, Consolidated EBITDA for such period
plus, to the extent deducted in determining Consolidated EBITDA for such period,
plus, without duplication, Consolidated Rental Expense.

 

“Consolidated Fixed Charges”: for any period, the sum of Consolidated Cash
Interest Expense and scheduled payments of principal on Consolidated Total Debt
(without giving effect to the netting of unrestricted cash and Cash Equivalents
pursuant to clause (d) of such definition) of the Parent Companies, the
Borrowers and the Restricted Subsidiaries for such period.

 

“Consolidated Interest Expense”: for any period, the sum of (a) the interest
expense (including imputed interest expense in respect of Capital Lease
Obligations (other than Real Property Financing Obligations)) of the Parent
Companies, the Borrowers and the Restricted Subsidiaries for such period,
determined on a Consolidated basis in accordance with GAAP, plus (b) any
interest accrued during such period in respect of Indebtedness of the Parent
Companies, the Borrowers or any Restricted Subsidiary that is required to be
capitalized rather than included in Consolidated Interest Expense for such
period in accordance with GAAP; provided, that Consolidated Interest Expense for
any period ending on any day prior to the first anniversary of the Closing Date
shall be deemed equal to the product of (i) Consolidated Interest Expense
computed in accordance with the requirements of this definition for the period
from and including the Closing Date to and including such day by (ii) a
fraction, the numerator of which is the number of days from and including the
Closing Date to and including such day and the denominator of which is 365.

 

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“Consolidated Net Income”: for any period, the net income or loss of the Parent
Companies, Borrowers and the Restricted Subsidiaries for such period determined
on a Consolidated basis in accordance with GAAP; provided that there shall be
excluded, without duplication, (a) the income of any Restricted Subsidiary to
the extent that the declaration or payment of dividends or similar distributions
by such Restricted Subsidiary of that income is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, statute, rule or governmental regulation applicable to such Restricted
Subsidiary), (b) the income or loss of any Person accrued prior to the date it
becomes a Restricted Subsidiary or is merged into or consolidated with Ultimate
Parent or any Restricted Subsidiary or the date that such Person’s assets are
acquired by Ultimate Parent or any Restricted Subsidiary, (c) any gains or
losses attributable to sales of assets outside of the ordinary course of
business, (d) earnings (or losses) resulting from any reappraisal, revaluation
or write-up (or write-down) of assets (other than current assets);
(e) unrealized gains and losses with respect to Hedge Agreements or other
derivative instruments for such period and (f) any gains or losses relating to
discontinued operations; provided further that the net income of any person in
which any other person (other than Ultimate Parent or a Wholly-Owned Restricted
Subsidiary or any director or foreign national holding qualifying shares in
accordance with applicable law) has a joint interest shall be included in
Consolidated Net Income only to the extent of the percentage interest of such
person owned by the Parent Companies, the Borrowers and the Restricted
Subsidiaries.  In addition, to the extent not already included in Consolidated
Net Income, notwithstanding anything to the contrary in the foregoing,
Consolidated Net Income shall include (i) any expenses and charges that are
reimbursed by indemnification or other reimbursement provisions in connection
with any Investment or any Asset Sale permitted hereunder and (ii) to the extent
covered by insurance and actually reimbursed, expenses with respect to liability
or casualty events or business interruption.

 

“Consolidated Rental Expense”: for any period, the total cash rental expense for
operating leases and Real Property Financing Obligations (including the imputed
interest expense with respect thereto) of the Parent Companies, the Borrowers
and the Restricted Subsidiaries (regardless of the accounting treatment
thereof), determined on a Consolidated basis for such period and adjusted, for
avoidance of doubt, to exclude the non-cash impact resulting from the
straight-lining of rents; provided that Consolidated Rental Expense shall be
reduced by any rental income.  For the purpose of determining the Consolidated
Fixed Charge Coverage Ratio as of and for the periods ended March 31, 2012 and
June 30, 2012, Consolidated Rental Expense for the fiscal quarters ended on such
dates shall be deemed to be equal to $99,300,000 and $100,900,000, respectively.

 

“Consolidated Senior Secured Debt”: as of any date of determination,
Consolidated Total Debt outstanding on such date that is secured by a Lien on
any asset or property of the Parent Companies, the Borrowers or any Restricted
Subsidiary but excluding such Indebtedness which is subordinated in right of
payment to the Obligations and the ABL Obligations.

 

“Consolidated Senior Secured Leverage Ratio”: as of any date of determination,
the ratio of Consolidated Senior Secured Debt as of such day to Consolidated
EBITDA of the Parent Companies, the Borrowers and the Restricted Subsidiaries
for the four fiscal quarter period ending on such date calculated on a Pro Forma
Basis.

 

“Consolidated Total Assets”: as of any date of determination, the total amount
of all assets of the Parent Companies, the Borrowers and the Restricted
Subsidiaries determined on a Consolidated basis in accordance with GAAP as of
the last day of the period for which the most recent financial statements were
delivered prior to such date of determination.

 

“Consolidated Total Debt”: as of any date of determination, the aggregate
principal amount of Indebtedness of the Parent Companies, the Borrowers and the
Restricted Subsidiaries less (a)

 

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Indebtedness of the type described in clause (e) of the definition of such term
to the extent related to Real Property Financing Obligations, (b) Indebtedness
of a type described in clauses (d) and (f) of the definition thereof (c) any
letters of credit, banker acceptances or similar instruments to the extent
undrawn and (d) unrestricted cash and Cash Equivalents as shown on the balance
sheet on a Consolidated basis of the Parent Companies, the Borrowers and the
Restricted Subsidiaries in an amount not to exceed $50,000,000 (it being
understood that cash and Cash Equivalents on deposit in an account in which the
Collateral Agent or the collateral agent under the ABL Facilities has a
perfected Lien constitutes unrestricted cash for purposes hereof).

 

“Consolidated Total Leverage Ratio”: as of any date of determination, the ratio
of Consolidated Total Debt as of such date to Consolidated EBITDA of the Parent
Companies, the Borrowers and the Restricted Subsidiaries for the four fiscal
quarter period ending on such date calculated on a Pro Forma Basis.

 

“Continuing Directors”: the directors of Ultimate Parent on the Second Amendment
Date and each other director of Ultimate Parent, if (a) such other director has,
as of the date of determination, been a director of Ultimate Parent for at least
the twelve preceding months, (b) such other director’s nomination for election
to the board of directors of Ultimate Parent is recommended by at least 51% of
the then Continuing Directors or (c) such other director receives the vote of a
Permitted Investor and its Affiliates (excluding any portfolio companies of the
Sponsor) in his or her nomination or election by the shareholders of Ultimate
Parent.

 

“Contractual Obligation”: as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which
such Person is a party or by which it or any of its Property is bound.

 

“Controlled Investment Affiliate”: means, as applied to any Person, any other
Person which directly or indirectly is in control of, is controlled by, or is
under common control with, such Person and that is organized by such Person (or
any Person controlling such Person) primarily for the purpose of making equity
or debt investments in Ultimate Parent or other portfolio companies.  For
purposes of this definition, “control” of a Person means the power, directly or
indirectly to direct or cause the direction of the management and policies of
such Person, in either case whether by contract or otherwise.

 

“Curable Period”: as defined in Section 7.16(a).

 

“Cure Amount”: as defined in Section 7.16(a).

 

“Cure Right”: as defined in Section 7.16(a).

 

“Debtor Relief Laws”: the Bankruptcy Code, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws of the United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.

 

“Declining Lender”: as defined in Section 2.22(c).

 

“Default”: any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

 

“Designated Jurisdiction”: any country or territory to the extent that such
country or territory itself is the subject of any Sanction.

 

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“Disposed EBITDA”: with respect to any Sold Entity or Business for any period,
the amount for such period of Consolidated EBITDA of such Sold Entity or
Business (determined as if references to the Parent Companies, the Borrowers and
the Restricted Subsidiaries in the definition of Consolidated EBITDA were
references to such Sold Entity or Business and their Subsidiaries), all as
determined on a consolidated basis for such Sold Entity or Business.

 

“Disposition”: with respect to any Property, any sale, sale and leaseback,
assignment, conveyance, transfer or other effectively complete Disposition
thereof.  The terms “Dispose” and “Disposed of” shall have correlative meanings.

 

“Disqualified Capital Stock”: any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, (a) matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable (other than solely for Qualified Capital Stock), pursuant
to a sinking fund obligation or otherwise (except as the result of a Change of
Control or asset sale so long as any rights of the holders thereof upon the
occurrence of a Change of Control or asset sale event shall be subject to the
prior repayment in full of the Loans and all Obligations that are accrued and
payable), or is redeemable at the option of the holder thereof, in whole or in
part (other than solely for Qualified Capital Stock), or requires the payment of
any cash dividend or any other scheduled payment constituting a return of
capital, in each case at any time on or prior to the date that is 91 days after
the Maturity Date, or (b) is convertible into or exchangeable (unless at the
sole option of the issuer thereof) for (i) debt securities or (ii) any Capital
Stock referred to in clause (a) above, in each case at any time prior to the
date that is 91 days after the Maturity Date; provided that if such Capital
Stock is issued to any plan for the benefit of employees of the Parent
Companies, the Borrowers, or the Restricted Subsidiaries or by any such plan to
such employees, such Capital Stock shall not constitute Disqualified Capital
Stock solely because it may be required to be repurchased by the Parent
Companies, the Borrowers, or the Restricted Subsidiaries in order to satisfy
applicable statutory or regulatory obligations; provided, further, that any
Capital Stock held by any present or former officers, consultants, directors or
employees (and their spouses, former spouses, heirs, estates and assigns) of the
Parent Companies, the Borrowers or any Restricted Subsidiary upon the death,
disability, engaging in competitive activity or termination of employment of
such officer, director, consultant or employee or pursuant to any equity
subscription, shareholder, employment or other agreement shall not constitute
Disqualified Capital Stock solely because it may be required to be repurchased
by the Parent Companies, the Borrowers or the Restricted Subsidiaries.

 

“Dollars” and “$”: dollars in lawful currency of the United States.

 

“Domestic Subsidiary”: any direct or indirect Subsidiary incorporated in or
organized under the laws of any jurisdiction within the United States.

 

“Environmental Claims”: any and all actions, suits, orders, decrees, demands,
demand letters, claims, liens, notices of noncompliance, violation or potential
responsibility or investigation (other than internal reports prepared by the
Parent Companies, the Borrowers or any of their Subsidiaries (a) in the ordinary
course of such Person’s business or (b) as required in connection with a
financing transaction or an acquisition or Disposition of real estate) or
proceedings pursuant to or in connection with any Environmental Law or any
permit issued, or any approval given, under any such Environmental Law
(hereinafter, “Claims”), including, without limitation, (i) any and all Claims
by governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, (ii) any and all Claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
relating to the presence, release or threatened release of Hazardous Materials
or arising from alleged injury or threat of

 

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injury to health or safety (to the extent relating to human exposure to
Hazardous Materials) or the environment including, without limitation, ambient
air, surface water, groundwater, land surface and subsurface strata and natural
resources such as wetlands, and (iii) any and all Claims by any third party
regarding environmental liabilities or obligations assumed or assigned by
contract or operation of law.

 

“Environmental Laws”: any applicable Federal, state, foreign or local statute,
law, rule, regulation, ordinance, code and rule of common law now or hereafter
in effect and in each case as amended, and any binding judicial or
administrative interpretation thereof, including any binding judicial or
administrative order, consent decree or judgment, relating to pollution, the
protection of the environment, including, without limitation, ambient air,
surface water, groundwater, land surface and subsurface strata and natural
resources such as wetlands, or human health or safety (to the extent relating to
human exposure to Hazardous Materials).

 

“Environmental Liabilities”: all Liabilities (including costs of Remedial
Actions, natural resource damages and costs and expenses of investigation and
feasibility studies) that may be imposed on, incurred by or asserted against any
Loan Party as a result of, or related to, any Environmental Claim and resulting
from the ownership, lease, sublease or other operation or occupation of property
by any Loan Party, whether on, prior or after the date hereof.

 

“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from
time to time.

 

“ERISA Affiliate” collectively, any Loan Party, and any Person under common
control, or treated as a single employer, with any Loan Party, within the
meaning of Section 414(b), (c), (m) or (o) of the Code.

 

“ERISA Event”: any of the following: (a) a reportable event described in
Section 4043(b) of ERISA or Section 4043(c) with respect to a Title IV Plan,
other than an event for which the notice requirement has been duly waived under
the applicable regulations, (b) the withdrawal of any ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA, (c) the
complete or partial withdrawal of any ERISA Affiliate from any Multiemployer
Plan, (d) with respect to any Multiemployer Plan, the filing of a notice of
reorganization, insolvency or termination (or treatment of a plan amendment as
termination) under Section 4041A of ERISA, (e) the filing of a notice of intent
to terminate a Title IV Plan (or treatment of a plan amendment as termination)
under Section 4041 of ERISA, (f) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC, (g) the failure to make any
required contribution to any Title IV Plan or Multiemployer Plan when due,
(h) the imposition of a lien under Section 412 of the Code or Section 302 or
4068 of ERISA on any property (or rights to property, whether real or personal)
of any ERISA Affiliate, (i) the failure of a Multiemployer Plan, Benefit Plan or
any trust thereunder intended to qualify for tax exempt status under Section 401
or 501 of the Code or other Requirements of Law to qualify thereunder, (j) any
other event or condition that might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of any liability upon any ERISA Affiliate under Title IV of ERISA
other than for PBGC premiums due but not delinquent and (i) the occurrence of a
Foreign Benefit Event.

 

“E-System”: any electronic system, including Intralinks®, ClearPar® and
SyndTrak® and any other Internet or extranet-based site, whether such electronic
system is owned, operated or hosted by the Administrative Agent, any of its
Affiliates or agents or any other Person, providing for access to data protected
by passcodes or other security system.

 

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“Eurocurrency Reserve Requirements”: with respect to any Interest Period and for
any Eurodollar Loan, a rate per annum equal to the aggregate, without
duplication, of the maximum rates (expressed as a decimal number) of reserve
requirements in effect two Business Days prior to the first day of such Interest
Period (including basic, supplemental, marginal and emergency reserves) under
any regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as “eurocurrency liabilities” in
Regulation D of the Board) maintained by a member bank of the United States
Federal Reserve System.

 

“Eurodollar Base Rate”: with respect to any Interest Period for any Eurodollar
Loan or any ABR Loan based upon the ABR determined pursuant to clause (z) of the
definition thereof (x) the rate determined by the Administrative Agent to be the
offered rate appearing on the page of the Reuters Screen which displays an
average British Bankers Association Interest Settlement Rate or, if the rate
mentioned in sub-clause (x) does not appear on such page or service or if such
page or service is not available, then (y) the rate per annum determined by the
Administrative Agent to be the offered rate on such other page or other service
which displays an average British Bankers Association Interest Settlement Rate
or, if the rates in clauses (ii)(x) and (ii)(y) are not available, the
Administrative Agent’s offered quotation rate to first class banks in the London
interbank market, in each case by 11:00 A.M. (London, England time) two Business
Days prior; provided that, with respect to any Interest Period, in no event
shall the “Eurodollar Base Rate” with respect to any Loan that is a Eurodollar
Loan or an ABR Loan based upon the ABR determined pursuant to clause (z) of the
definition thereof, be less than 1.50%.

 

“Eurodollar Loan”: Loans the rate of interest applicable to which is based upon
the Eurodollar Rate.

 

“Eurodollar Rate”: with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th of
1%):

 

Eurodollar Base Rate

1.00 - Eurocurrency Reserve Requirements

 

“Event of Default”: any of the events specified in Section 8; provided that any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

 

“Excess Cash Flow”: for any period, the excess of (a) the sum, without
duplication, of (i) Consolidated EBITDA for such fiscal year and (ii) reductions
to noncash working capital of the Parent Companies, the Borrowers and the
Restricted Subsidiaries for such period (i.e., the decrease, if any, in
Consolidated Current Assets minus Consolidated Current Liabilities from the
beginning to the end of such period) over (b) the sum, without duplication, of
(i) the amount of any Taxes payable in cash by the Parent Companies and the
Restricted Subsidiaries with respect to such period, (ii) Capital Expenditures
made in cash in accordance with Section 7.12 during such period, except to the
extent financed with the proceeds of Indebtedness, equity issuances, casualty
proceeds, condemnation proceeds or other proceeds that would not be included in
Consolidated EBITDA, (iii) permanent repayments of Indebtedness (other than
mandatory prepayments of Loans under Section 2.8) made in cash (including, the
aggregate amount of any premium, make-whole or penalty payments that are made in
connection with any prepayment of Indebtedness permitted hereunder to the extent
such payments are not deducted in calculating Consolidated Net Income) by
Ultimate Parent and the Restricted Subsidiaries during such fiscal year, but
only to the extent that the Indebtedness so prepaid by its terms cannot be
reborrowed or redrawn and such prepayments do not occur in connection with a
refinancing of

 

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all or any portion of such Indebtedness, (iv) additions to noncash working
capital for such fiscal year (i.e., the increase, if any, in Consolidated
Current Assets minus Consolidated Current Liabilities from the beginning to the
end of such fiscal year), (v) the amount of any Permitted Acquisitions or other
Investments made in cash during such period, except to the extent financed with
the proceeds of Indebtedness, equity issuances, casualty proceeds, condemnation
proceeds or other proceeds that would not be included in Consolidated EBITDA,
(vi) an amount equal to the amount of all non-cash credits included in arriving
at such Consolidated EBITDA and cash charges included in clauses (c), (d) and
(f) of the proviso in the definition of Consolidated Net Income, (vii) any
amounts paid in respect of earn-out arrangements in connection with the
Acquisition, (viii) an amount equal to any Restricted Payments made pursuant to
Sections 7.6(a)(x) and (xii) in such period and any amounts paid in respect of
management, consulting, monitoring and advisory fees (including termination fees
and transaction fees) and related indemnities and expenses paid or accrued in
such period to the Sponsor pursuant to any management agreement in accordance
with the terms of the Credit Agreement prior to the Second Amendment Date),
(ix) to the extent paid in cash, the amount of any loss from unusual or
extraordinary items in excess of $100,000, including any related management
incentive or stay-pay plans in place as of the Closing Date, any restructuring
charges and any other non-recurring loss not to exceed $10,000,000 in the
aggregate for this clause (ix) for any period, (x) to the extent paid in cash,
costs, fees and expenses for such period paid in connection with the
Transactions and the Skilled Transactions, (xi) to the extent paid in cash, any
non-recurring fees, costs or expenses for such period incurred in connection
with a Permitted Acquisition or any Investment, Disposition, incurrence of (or
amendments or modifications to) Indebtedness or issuance of Capital Stock, in
each case, permitted under this Agreement (in each case, including any such
transaction undertaken but not completed), (xii) any Consolidated Cash Interest
Expense of the Parent Companies, the Borrowers and the Restricted Subsidiaries
with respect to such period and (xiii) to extent unrealized during such period,
an amount equal to the amount of cost savings and acquisition synergies included
in clauses (viii) and (ix) of the definition of Consolidated EBITDA.

 

“Excess Cash Flow Application Date”: as defined in Section 2.8(c).

 

“Excess Cash Flow Percentage”: 50%; provided that the Excess Cash Flow
Percentage for any fiscal year with respect to which Excess Cash Flow is
measured shall be reduced to (a) 25% if the Consolidated Total Leverage Ratio as
of the last day of such fiscal year is equal to or less than 1.50 to 1.00 and
(b) zero if the Consolidated Total Leverage Ratio as of the last day of such
fiscal year is equal to or less than 0.75 to 1.00.

 

“Excluded Issuance”: a Qualified Equity Issuance (other than any Qualified
Equity Issuances utilized in connection with an exercise of Ultimate Parent’s
Cure Right under Section 7.16(a)); provided that, the Net Cash Proceeds
therefrom shall be reduced to the extent previously expended pursuant to clause
(v) of the definition of “Capital Expenditures”, Section 7.4(k) and/or
Section 7.9(b)(ii).

 

“Excluded Swap Obligations”: means any obligation to pay or perform under any
Swap Transaction if, and to the extent that, all or a portion of the guarantee
of any Guarantor of, or the grant by any Guarantor of a security interest to
secure, such Swap Transaction (or any guarantee thereof) is or becomes illegal
under the Commodity Exchange Act or rule, regulation or order of the Commodity
Futures Trading Commission (or the application or official interpretation of any
thereof) by virtue of any Guarantor’s failure for any reason to constitute an
“eligible contract participant” as defined in the Commodity Exchange Act and the
regulations thereunder at the time the guaranty or the grant of such security
interest becomes effective with respect to such Swap Transactions. If a Swap
Obligation arises under a master agreement governing more than one swap, such
exclusion shall apply only to the portion

 

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of such Swap Transaction that is attributable to swaps for which such guaranty
or security interest is or becomes illegal.

 

“Excluded Taxes”: as defined in Section 2.16(a).

 

“Existing Sun Credit Agreement”: the credit agreement, dated as of October 18,
2010, as amended by Amendment No. 1, dated as of December 13, 2011, by and among
Sun HealthCare Group, Inc., a Delaware corporation, the Sun Borrower, the
lenders party thereto, and Credit Suisse AG, as administrative agent and
collateral agent for the lenders.

 

“Extended Lender Loans”: as defined in Section 2.22(d).

 

“Extending Lender”: as defined in Section 2.22(c).

 

“Extension Amendment”: as defined in Section 2.22(e).

 

“Extension Date”: as defined in Section 2.22(f).

 

“Extension Election”: as defined in Section 2.22(c).

 

“Extension Request”: as defined in Section 2.22(a).

 

“Facility”: the Commitments and the Loans made hereunder.

 

“FATCA”: Sections 1471 through 1474 of the Code (effective as of the date
hereof) (or any amended or successor version that is substantially comparable
and not materially more onerous to comply with) and any current or future
regulations or official interpretations thereof and any agreements entered into
pursuant to Section 1471(b) of the Code.

 

“Federal Funds Effective Rate”: for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day; provided that (a) if such day is
not a Business Day, the Federal Funds Effective Rate for such day shall be such
rate on such transactions on the next preceding Business Day as so published on
the next succeeding Business Day and (b) if no such rate is so published on such
next succeeding Business Day, the Federal Funds Effective Rate for such day
shall be the average rate (rounded upwards, if necessary, to the next 1/100 of
1%) charged to the Person acting as the Administrative Agent on such day on such
transactions as determined by the Administrative Agent.

 

“Financial Condition Covenant”: the covenants set forth in Sections 7.13, 7.14
and 7.15.

 

“Financial Cure Covenant”: as defined in Section 7.16(a).

 

“First Amendment”: the Amendment No. 1 to this Agreement, dated as of
January 21, 2014, by and among, inter alios, the Borrowers, the Lenders party
thereto and the Administrative Agent.

 

“First Amendment Date”: January 21, 2014.

 

“Fixed Charge Coverage Ratio”: as of any date of determination, the ratio of
(i) Consolidated EBITDA minus Maintenance Capital Expenditures to
(ii) Consolidated

 

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Fixed Charges of the Parent Companies, the Borrowers and the Restricted
Subsidiaries for the four fiscal quarter periods ending on such date calculated
on a Pro Forma Basis.

 

“Foreign Benefit Event”: with respect to any Foreign Pension Plan, (a) the
failure of any such Foreign Pension Plan or any trust thereunder intended to
qualify for tax exempt status under any Requirements of Law, (b) the existence
of unfunded liabilities in excess of the amount permitted under any applicable
law, (c) the failure to make the required contributions or payments under any
applicable law on or before the due date for such contributions or payments,
(d) the receipt of a notice by a Governmental Authority relating to its
intention to terminate any such Foreign Pension Plan or to appoint a trustee or
similar official to administer any such Foreign Pension Plan, or alleging the
insolvency of any such Foreign Pension Plan, (e) the incurrence of any liability
in excess of $1,000,000 by the Parent Companies, the Borrowers or any Restricted
Subsidiary under applicable law on account of the complete or partial
termination of such Foreign Pension Plan or the complete or partial withdrawal
of any participating employer therein, or (f) the occurrence of any transaction
that is prohibited under any applicable law and that could reasonably be
expected to result in the incurrence of any liability by the Parent Companies,
the Borrowers or any of the Restricted Subsidiaries, or the imposition on the
Parent Companies, the Borrowers or any of the Restricted Subsidiaries of any
fine, excise tax or penalty resulting from any noncompliance with any applicable
law, in each case in excess of $1,000,000.

 

“Foreign Pension Plan”: any pension plan maintained outside the jurisdiction of
the United States that under applicable law is required to be funded through a
trust or other funding vehicle other than a trust or funding vehicle maintained
exclusively by a Governmental Authority to which the Parent Companies, the
Borrowers or any of the Restricted Subsidiaries incurs or otherwise has any
obligation or liability, contingent or otherwise.

 

“Foreign Subsidiary”: any direct or indirect Restricted Subsidiary that is not a
Domestic Subsidiary or a Domestic Subsidiary where substantially all of its
assets consist of stock of controlled foreign corporations, as defined in
Section 957 of the Code.

 

“Free Cash Flow”: for any period of four consecutive fiscal quarters, the excess
of (a) Consolidated EBITDA for such period over (b) the sum, without
duplication, of (i) the amount of any Taxes payable in cash by Ultimate Parent
and the Restricted Subsidiaries with respect to such period, (ii) Maintenance
Capital Expenditures for such period, (iii) repayments of Indebtedness pursuant
to Sections 2.4 and 2.5 made in cash by Ultimate Parent and the Restricted
Subsidiaries during such period and (iv) any Consolidated Cash Interest Expense
of the Parent Companies, the Borrowers and the Restricted Subsidiaries with
respect to such period.

 

“Funding Office”: the office specified from time to time by the Administrative
Agent as its funding office by notice to the Borrower Agent and the Lenders.

 

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

 

“Genesis ABL Credit Agreement”: the Second Amended and Restated Credit
Agreement, dated as of the Closing Date, among the Borrowers (as defined
therein), the lenders party thereto, General Electric Capital Corporation, as
Administrative Agent and the other agents party thereto, as amended and restated
(or otherwise replaced) on or about the Second Amendment Date and substantially
consistent with the terms set forth on the Genesis ABL Term Sheet (as defined in
the Second Amendment) without giving effect to any modifications or amendments
thereto that are materially adverse to the Lenders (in their capacity as such)
without the consent of the Required Lenders.

 

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“Genesis Borrower”: as defined in the preamble hereto.

 

“Governmental Authority”: any nation or government, any state, province or other
political subdivision thereof and any governmental entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and, as to any Lender, any securities exchange and any
self-regulatory organization (including the National Association of Insurance
Commissioners).

 

“Guarantee and Collateral Agreement”: the Guarantee and Collateral Agreement,
dated as of the Closing Date, to be executed and delivered by the Parent
Companies, the Borrowers and each Subsidiary Guarantor, substantially in the
form of Exhibit B, as the same may be amended, supplemented or otherwise
modified from time to time.

 

“Guarantee Obligation”: as to any Person (the “guaranteeing person”), any
obligation of the guaranteeing person guaranteeing or by which such Person
becomes contingently liable for any Indebtedness, net worth, working capital
earnings, leases, dividends or other distributions upon the stock or equity
interests (other than Real Property Financing Obligations) (the “primary
obligations”) of any other third Person (the “primary obligor”) in any manner,
whether directly or indirectly, including, without limitation, any obligation of
the guaranteeing person, whether or not contingent, (i) to purchase any such
primary obligation or any Property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or payment of any
such primary obligation or (2) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase Property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business and reasonable indemnity
obligations in effect on the Closing Date or entered into in connection with any
acquisition or Disposition of assets or any Investment permitted under this
Agreement.  The amount of any Guarantee Obligation of any guaranteeing Person
shall be deemed to be such guaranteeing Person’s maximum reasonably anticipated
liability in respect thereof as determined by the Borrowers in good faith.

 

“Guarantors”: the collective reference to the Parent Companies and the
Subsidiary Guarantors.

 

“Hazardous Materials”: (a) any petroleum or petroleum products, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, radon gas and medical waste; (b) any chemicals, wastes, materials or
substances defined as or included in the definition of “hazardous substances”,
“hazardous waste”, “hazardous materials”, “extremely hazardous waste”,
“restricted hazardous waste”, “toxic substances”, “toxic pollutants”,
“contaminants”, or “pollutants”, or words of similar import, under any
applicable Environmental Law; and (c) any other chemical, waste, material or
substance which is prohibited, limited or regulated by or with respect to which
liability is imposed under any Environmental Law.

 

“Healthcare Facilities”: collectively, each hospital, clinic, skilled nursing
facility, assisted living facility, independent living facility or mental health
facility (or state equivalent of such licensure categories) or other healthcare
facility owned, leased or managed by Ultimate Parent or any of its Subsidiaries,
as listed on Schedule 3.1(b) hereto.

 

“Healthcare Laws”: all federal, state, county, municipal and other governmental
statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and
injunctions or agreements, in each case, pertaining to  or concerned with the
establishment, construction, ownership, operation, use or occupancy of a
Healthcare Facility or any part thereof and all material Permits and Primary

 

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Licenses, including those relating to the quality and adequacy of care,
equipment, personnel, operating policies, additions to facilities and services,
medical care, distribution of pharmaceuticals, rate setting, kickbacks, fee
splitting, patient healthcare and/or patient healthcare information, including
the Health Insurance Portability and Accountability Act of 1996, as amended, and
the rules and regulations promulgated thereunder, and as amended by the Health
Information Technology for Economic and Clinical Health Act provisions of the
American Recovery and Reinvestment Act of 2009, and the rules and regulations
promulgated thereunder (collectively “HIPAA”).

 

“Health Care REIT Asset Buyback”: the purchase by Genesis Operations LLC or its
Subsidiaries from FC-Gen Real Estate, LLC of certain facilities pursuant to the
Health Care REIT (Genesis) Lease.

 

“Health Care REIT Intercreditor Agreement”: the Intercreditor Agreement, dated
as of the Closing Date, by and among the parties to the Health Care REIT (Sun)
Lease, the Landlord Parties (as defined in the Health Care REIT Lease Consent
and Amendment Agreement), the Administrative Agent, and General Electric Capital
Corporation, or administrative agent under the ABL Credit Agreement.

 

“Health Care REIT (Genesis) Lease”: the Ninth Amended and Restated Master Lease
Agreement, dated as of December 1, 2012, by and among FC-Gen Real Estate, LLC, a
Delaware limited liability company, as landlord, and Genesis Operations, LLC, a
Delaware limited liability company, as tenant.

 

“Health Care REIT Lease Consent and Amendment Agreement”: the consent and
amendment, dated as of June 20, 2012, by and among FC-Gen Real Estate, LLC, a
Delaware limited liability company, Health Care REIT, Inc., a Delaware
corporation, the Sun Landlords (as defined therein), the Lessor Parties (as
defined therein), Genesis Operations, LLC, a Delaware limited liability company,
and FC-Gen Operations Investment, LLC, a Delaware limited liability company.

 

“Health Care REIT (Sun) Lease”: the master lease agreement, dated as November 3,
2010, by and among Health Care REIT, Inc., a Delaware limited liability company,
HCRI Beachwood, Inc., HCRI Broadview, Inc., HCRI Westlake, Inc., HCRI Indiana
Properties, LLC, HCRI Kentucky Properties, LLC, and HH Florida, LLC,
collectively, as landlord and Sunbridge Healthcare, LLC, as tenant.

 

“Hedge Agreements”: all agreements with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by
reference to, one or more rates, currencies, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or any combination
of these transactions, in each case, entered into by Ultimate Parent or any of
its Subsidiaries.

 

“Hedge Counterparty”: any Person that is a party to a Hedge Agreement that was a
Lender or Agent at the time any such Hedge Agreement was entered into or an
Affiliate of such a Lender or Agent, in each case in its capacity as party to a
Hedge Agreement.

 

“HIPAA”: as defined in the definition of “Healthcare Laws”.

 

“Holdings”: as defined in the preamble hereto.

 

“Hospice Sale”: the acquisition by National Hospice Holdings, LLC or its
designee of the assets of SolAmor Hospice Corporation (together with its
subsidiaries and affiliates) or the assets of SolAmor Hospice Corporation’s
operating subsidiaries from the Sun Borrower or its designee pursuant to and in
accordance with the terms of that certain Asset Purchase Agreement, dated as of
November 15, 2012, as amended as of November 28, 2012, and as in effect on the
date hereof and without giving effect to any further amendments thereto.

 

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“Hospice Sale Prepayment Amount”: as defined in Section 7.5(b)(C).

 

“HUD”: the U.S. Department of Housing and Urban Development.

 

“HUD Sub-Facility Credit Agreement”: that certain Amended and Restated Credit
Agreement, dated as of July 26, 2013, by and among the HUD Sub-Facility
Entities, as borrowers, the Genesis Borrower and GHC Holdings LLC, each as a
guarantor, certain other Persons party thereto as guarantors, General Electric
Capital Corporation, as administrative agent, and the lenders party thereto, as
may be amended, restated, replaced or otherwise modified from time to time.

 

“HUD Sub-Facility Entities”: each of Genesis HealthCare of Maine, LLC, as
successor by merger with Genesis HealthCare of Maine, Inc., Belfast Operations,
LLC, Camden Operations, LLC, Falmouth Operations, LLC, Farmington Operations,
LLC, Kennebunk Operations, LLC, Lewiston Operations, LLC, Orono Operations, LLC,
Scarborough Operations, LLC, Skowhegan SNF Operations, LLC, Waterville SNF
Operations LLC, Westbrook Operations, LLC, One Price Drive Operations LLC and
each other Person, if any, from time to time becoming a party to the HUD
Sub-Facility Credit Agreement as a borrower.

 

“Increased Amount Date”: as defined in Section 2.21(a).

 

“Incremental Commitments”: as defined in Section 2.21(a).

 

“Incremental Joinder Agreement”: as defined in Section 2.21(a).

 

“Incremental Loans”: any loan made by any Incremental Lender pursuant to Section
2.21(b).

 

“Indebtedness”: of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of Property or services (other than (i)
trade payables, accrued expenses, current accounts and similar obligations
incurred in the ordinary course of such Person’s business, (ii) deferred
compensation accrued in the ordinary course of business and (iii) earn-outs and
other contingent payments in respect of acquisitions except as and to the extent
that the liability on account of any such earn-out or contingent payment appears
in the liabilities section of the balance sheet of such Person in accordance
with GAAP), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
Property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such Property, in which case only the lesser of the
amount of such obligation and the fair market value of such Property shall
constitute Indebtedness), (e) all Capital Lease Obligations of such Person, (f)
all obligations of such Person, contingent or otherwise, as an account party or
applicant under acceptance, letter of credit or similar facilities, (g) all
obligations of such Person in respect of Disqualified Capital Stock valued at,
in the case of redeemable preferred Capital Stock, the greater of the voluntary
liquidation preference and the involuntary liquidation preference of such
Capital Stock plus accrued and unpaid dividends, (h) all payments that would be
required to be made in respect of any Hedge Agreement with a counterparty other
than any Agent in the event of a termination (including an early termination) on
the date of determination, and (i) all Guarantee Obligations of such Person in
respect of obligations of the kind referred to in clauses (a) through (h) above.

 

“Indemnified Liabilities”: as defined in Section 10.5(a).

 

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“Indemnitee”: as defined in Section 10.5(a).

 

“Initial Commitment”: as to any Lender, the obligation of such Lender, if any,
to make a Loan to the Borrowers in a principal amount not to exceed the amount
set forth opposite such Lender’s name on Appendix A or under the heading
“Initial Commitment” opposite such Lender’s name on the Lender Addendum
delivered by such Lender, or, as the case may be, in the Assignment and
Assumption (or Incremental Joinder Agreement, as the case may be) pursuant to
which such Lender became a party hereto.  The original aggregate amount of the
Initial Commitments is $325,000,000.

 

“Instrument”: as defined in the Guarantee and Collateral Agreement.

 

“Insurance Captive”: Liberty Health Corporation, Ltd., a Bermuda company, or any
other insurance captive or other self insurance program established by Ultimate
Parent or a Restricted Subsidiary.

 

“Insurer”: a Person that insures a Patient against certain of the costs incurred
in the receipt by such Patient of Medical Services, or that has an agreement
with Ultimate Parent to compensate such Borrower for providing such goods or
services to a Patient, including but not limited to Medicaid,  Medicare and
TRICARE.

 

“Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, copyrights and copyright applications, domain names, patents and
patent applications, trademarks and trademark applications, trade names, rights
in technology, trade secrets, know-how and processes.

 

“Intercreditor Agreement”: the Intercreditor Agreement, dated as of the Closing
Date, in substantially the form of Exhibit L hereto, by and between the
Collateral Agent and the “Collateral Agent” as defined in the Genesis ABL Credit
Agreement and acknowledged by the Parent Companies, the Borrowers and the other
Loan Parties, and along with any joinders made a part thereof from time to time
(or any intercreditor amendment reasonably acceptable to the Agents, the
“Administrative Agent” as defined in the Genesis ABL Credit Agreement and the
Borrowers).

 

“Interest Coverage Ratio”: as of any date of determination, the ratio of
Consolidated EBITDA for such period to Consolidated Cash Interest Expense of the
Parent Companies, the Borrowers and the Restricted Subsidiaries for the four
fiscal quarter periods ending on such date calculated on a Pro Forma Basis.

 

“Interest Payment Date”: (a) as to any ABR Loan, the last Business Day each of
March, June, September and December to occur while such Loan is outstanding and
the final maturity date of such Loan, (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of such Interest Period,
(c) as to any Eurodollar Loan having an Interest Period longer than three
months, each date occurring at three month intervals and the last day of such
Interest Period, (d) as to any Loan, the date of any repayment or prepayment
made in respect thereof and (e) the day that such Loan is required to be repaid.

 

“Interest Period”: as to any Eurodollar Loan, (a) initially, the period
commencing on the borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three or six months thereafter, or
(with the consent of each affected Lender under the Facility) nine or twelve
months thereafter, as selected by the Borrowers in its notice of borrowing or
notice of

 

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conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six or (with
the consent of each affected Lender under the Facility) nine or twelve months
thereafter, as selected by the Borrowers by irrevocable notice to the
Administrative Agent not later than 1:00 P.M., New York City time, on the date
that is three Business Days prior to the last day of the then current Interest
Period with respect thereto; provided that all of the foregoing provisions
relating to Interest Periods are subject to the following:

 

(i)  if any Interest Period would otherwise end on a day that is not a Business
Day, such Interest Period shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on the
immediately preceding Business Day;

 

(ii)  any Interest Period that would otherwise extend beyond the date final
payment is due on the Loans shall end on such due date; and

 

(iii)  any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month.

 

“Investments”: as defined in Section 7.4.

 

“IRS”: the Internal Revenue Service.

 

“JER”: JER Partners.

 

“Joinder Agreement”: an agreement substantially in the form of Exhibit J.

 

“Laws”: collectively, federal, state, local or foreign law, statute or
ordinance, common law, or any rule, regulation, judgment, order, writ,
injunction, decree, arbitration award, agency requirement, license or permit of
any Governmental Authority.

 

“Lead Arrangers”: Barclays and General Electric Capital Corporation.

 

“Lease Consent and Amendment Agreement”: each of the Health Care REIT Lease
Consent and Amendment Agreement, Omega Lease Consent and Amendment Agreement and
Sabra Lease Consent and Amendment Agreement.

 

“Leases”: all leases and subleases or any similar document affecting the use,
enjoyment or occupancy of the real property, including resident care agreements
and service agreements that include an occupancy agreement, whether now existing
or hereafter arising.

 

“Lender”: each Lender that has an Initial Commitment or that holds a Loan.

 

“Lender Addendum”: with respect to any initial Lender, a Lender Addendum,
substantially in the form of Exhibit K, to be executed and delivered by such
Lender on the Closing Date as provided in Section 10.19.

 

“Liabilities”: all claims, actions, suits, judgments, damages, losses,
liability, obligations, responsibilities, fines, penalties, sanctions, costs,
fees, taxes, commissions, charges, disbursements and

 

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expenses, in each case of any kind or nature (including interest accrued thereon
or as a result thereto and fees, charges and disbursements of financial, legal
and other advisors and consultants), whether joint or several, whether or not
indirect, contingent, consequential, actual, punitive, treble or otherwise.

 

“Lien”: any mortgage, pledge, hypothecation, collateral assignment, encumbrance,
lien (statutory or other), charge or other security interest or any other
security agreement of any kind or nature whatsoever (including any conditional
sale or other title retention agreement and any capital lease having
substantially the same economic effect as any of the foregoing).

 

“Liquidity”: with respect to any Person, the sum of (i) unrestricted cash and
Cash Equivalents plus (ii) Borrowing Availability (as defined in the ABL Credit
Agreements).

 

“LLC Parent”: as defined in the preamble hereto.

 

“Loan”: as defined in Section 2.1.  Unless the context shall otherwise require,
“Loan” shall include any Loans under the Incremental Loans.

 

“Loan Documents”: the collective reference to this Agreement, the Security
Documents, the Notes (if any) and any Incremental Joinder Agreements.

 

“Loan Increase”: as defined in Section 2.21(a).

 

“Loan Parties”: the Parent Companies, the Borrowers and each Subsidiary
Guarantor.

 

“Loan Percentage”: as to any Lender at any time, the percentage which the sum of
such Lender’s Initial Commitments then constitutes of the aggregate Initial
Commitments (or, at any time after the Closing Date, the percentage which the
aggregate principal amount of such Lender’s Loans then outstanding constitutes
of the aggregate principal amount of the Loans then outstanding).

 

“Make Whole Amount”: with respect to any prepayment described in Section 2.7(a)
of all or any portion of the Loans hereunder on or prior to December 1, 2015,
the sum of (i) the present value at such date, computed using a discount rate
equal to the Treasury Rate plus 50 basis points, of all interest that would
accrue on the portion of such Loans being prepaid from such date to December 1,
2015 and (ii) 2.00% of the aggregate principal amount of the Loans prepaid.

 

“Maintenance Capital Expenditures”: for any period, an aggregate amount equal to
$800 for each weighted average licensed bed of the Loan Parties during such
period.

 

“Majority Controlled Affiliate”: means, with respect to any Person, each
officer, director, general partner or joint-venturer of such Person and any
other Person that directly or indirectly controls, is controlled by, or is under
common control with, such Person; provided, however, that no Secured Party shall
be a Majority Controlled Affiliate of the Borrowers.  For purpose of this
definition, “control” means the possession of either (a) the power to vote, or
the beneficial ownership of, 51% or more of the Voting Stock of such Person or
(b) the power to direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise.

 

“Master Leases”: the collective reference to the Health Care REIT (Genesis)
Lease, the Health Care REIT (Sun) Lease, the Sabra Lease and the Omega Lease.

 

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“Master Lease Intercreditor Agreements”: the collective reference to the Health
Care REIT Intercreditor Agreement, the Sabra Intercreditor Agreement and the
Omega Intercreditor Agreement.

 

“Material Adverse Effect”: a material adverse effect on (a) the business,
operations property or financial condition of the Parent Companies, the
Borrowers and the Restricted Subsidiaries, taken as a whole, or (b) the validity
or enforceability of the Loan Documents or the material rights and remedies of
the Agents and the Lenders thereunder, in each case, taken as a whole.

 

“Material Indebtedness”: Indebtedness (other than the Loans and Real Property
Financing Obligations), or obligations in respect of one or more Hedge
Agreements, of any one or more of the Parent Companies, the Borrowers or any of
the Restricted Subsidiaries in an aggregate principal amount exceeding,
$30,000,000.  For purposes of determining Material Indebtedness for all
Sections, the “principal amount” of the obligations of the Parent Companies, the
Borrowers or any of the Restricted Subsidiaries in respect of any Hedge
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that the Parent Companies, the Borrowers or any of the
Restricted Subsidiaries would be required to pay if such Hedge Agreement were
terminated at such time.

 

“Material Master Lease”: each Master Lease and each other facility master lease
agreement entered into by Ultimate Parent or any of the Restricted Subsidiaries
after the Closing Date if such facility master lease agreement represents
greater than 5% of the licensed beds of the Loan Parties, taken as a whole.

 

“Material Master Lease Intercreditor Agreement”: the collective reference to
each of the Master Lease Intercreditor Agreements and any other intercreditor or
similar agreement entered into pursuant to Section 6.16.

 

“Material Restricted Subsidiary”: at any date of determination, any Restricted
Subsidiary that would account for more than 5%, individually or 7.5%, with
respect to one or more Restricted Subsidiaries in the aggregate, of the
Consolidated Total Assets or gross revenue (as shown on the most recent
financial statements of Ultimate Parent delivered pursuant to Section 5.1(a) or
(b)) of the Parent Companies, the Borrowers and the Restricted Subsidiaries on a
Consolidated basis for such period, determined in accordance with GAAP; provided
that if, at any time and from time to time after the Closing Date, Domestic
Subsidiaries that are not Guarantors solely because they do not meet the
thresholds set forth above comprise in the aggregate more than 7.5% of the
Consolidated Total Assets or the gross revenue (as shown on the most recent
financial statements of Ultimate Parent delivered pursuant to Section 5.1(a) or
(b)) of the Parent Companies, the Borrowers and the Restricted Subsidiaries on a
Consolidated basis for such period, determined in accordance with GAAP, then the
Borrower Agent shall, not later than 45 days after the date by which financial
statements for such fiscal quarter are required to be delivered pursuant to
Section 5.1(b), (x) designate in writing to the Administrative Agent one or more
of such Domestic Subsidiaries as “Material Restricted Subsidiaries” so that
Domestic Subsidiaries that are not Guarantors do not comprise more than 7.5% in
the aggregate of the Consolidated Total Assets or the gross revenues (as shown
on the most recent financial statements of Ultimate Parent delivered pursuant to
Section 5.1(a) or (b)) of the Parent Companies, the Borrowers and the Restricted
Subsidiaries on a Consolidated basis for such period, determined in accordance
with GAAP and (y) comply with the provisions of Section 6.10 applicable to such
Subsidiary.

 

“Maturity Date”: the earliest to occur of (i) December 4, 2017 and (ii) if at
any time the facility under Skilled RE Credit Agreement or any successor
facility thereto has a then-applicable maturity date prior to the date set forth
in clause (i), the date that is 90 days prior to such then-applicable maturity
date of the facility under the Skilled RE Credit Agreement or such successor
facility, as applicable.

 

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“Medicaid”: (a) the United States of America acting under Title XIX of the
Social Security Act, (b) any state or the District of Columbia acting pursuant
to a health plan adopted pursuant to Title XIX of the Social Security Act, or
(c) any agent, carrier, administrator or intermediary for any of the foregoing.

 

“Medical Services”:  medical and health care services, performed or provided by
any Ultimate Parent or a Restricted Subsidiary to a Patient, which services
include, general medical and health care services, physician services, nurse and
therapist services, dental services, hospital services, skilled nursing facility
services, assisted living facility services, independent senior housing
services, Alzheimer’s services, comprehensive inpatient and outpatient
rehabilitation services, home health care services, hospice services,
residential and outpatient behavioral healthcare services, and medical or health
care equipment provided for a necessary or specifically requested valid and
proper medical or health purpose and any other service approved by the
Administrative Agent in its sole discretion.

 

“Medicare”: (a) the United States of America acting under the Medicare program
established pursuant to Title XVIII of the Social Security Act, or (b) any
agent, carrier, administrator or intermediary for any of the foregoing.

 

“Moody’s”: Moody’s Investors Service, Inc. or any successor to the rating agency
business thereof.

 

“Mortgage”: any mortgage, deed of trust, hypothec or other similar document made
by any Loan Party in favor of, or for the benefit of, the Collateral Agent for
the benefit of the Secured Parties, in form and substance reasonably
satisfactory to the Administrative Agent and the Borrowers (taking into account
the law of the jurisdiction in which such mortgage, deed of trust, hypothec or
similar document is to be recorded).

 

“Multiemployer Plan”: a pension plan  that is a “multiemployer plan” (as defined
in Section 4001(a)(3) of ERISA) subject to Title IV of ERISA to which any ERISA
Affiliate incurs or otherwise has any obligation or liability, contingent or
otherwise.

 

“Net Cash Proceeds”: (a) in connection with any Asset Sale or any Recovery
Event, the proceeds thereof in the form of cash and Cash Equivalents (including
any such proceeds received by way of deferred payment of principal pursuant to a
note or installment receivable or purchase price adjustment receivable or
otherwise, but only as and when received) of such Asset Sale or Recovery Event
received by the Parent Companies, the Borrowers or any of the Restricted
Subsidiaries, net of broker’s fees and commissions, attorneys’ fees,
accountants’ fees, investment banking fees, consulting fees, amounts (including
premiums or penalties, if any) required to be applied to the repayment of
Indebtedness secured by a Lien expressly permitted hereunder on any asset which
is the subject of such Asset Sale or Recovery Event (other than any Lien
pursuant to a Security Document) and other reasonable fees and expenses
(including legal fees and expenses) actually incurred by the Parent Companies,
the Borrowers or any of the Restricted Subsidiaries in connection therewith and
net of Taxes paid or reasonably estimated to be payable by such Parent Company,
such Borrower or such Restricted Subsidiary as a result thereof (after taking
into account any available tax credits or deductions and any tax sharing
arrangements) and any escrow or reserve for any adjustment in respect of the
sale price of such asset or assets and indemnification payments (fixed or
contingent) attributable to seller’s indemnities and representations and
warranties to purchaser in respect of the applicable Asset Sale undertaken by
the Parent Companies, the

 

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Borrowers or the Restricted Subsidiaries or other liabilities in connection with
such Asset Sale (provided that upon release of any such escrow or reserve, the
amount released shall be considered Net Cash Proceeds) and (b) in connection
with any (i) Qualified Equity Issuance or (ii) issuance or sale of debt
securities or instruments or the incurrence of Indebtedness, in each case, the
cash proceeds received from such issuance or incurrence, net of transaction
costs, attorneys’ fees, investment banking fees, accountants’ fees, consulting
fees, underwriting discounts and commissions, placement fees and other
reasonable fees and expenses (including legal fees and expenses) actually
incurred in connection therewith.

 

“New Extending Lender”: as defined in Section 2.22(c).

 

“New Lender”: as defined in Section 2.21(a).

 

“Non-Excluded Taxes”: as defined in Section 2.16(a).

 

“Non-Extended Lender Loans”: as defined in Section 2.22(b).

 

“Non-Extended Loans”: as defined in Section 2.22(b).

 

“Non-Guarantor Subsidiary”: any Restricted Subsidiary which is not a Subsidiary
Guarantor.

 

“Non-U.S. Lender”: as defined in Section 2.16(d).

 

“Note”: any promissory note evidencing any Loan.

 

“Notice of Intent to Cure”: as defined in Section 7.16(b).

 

“Obligations”: the unpaid principal of and interest on (including, without
limitation, interest accruing after the maturity of the Loans, and interest
accruing after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrowers,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) the Loans, and all other obligations and liabilities of the
Borrowers to the Administrative Agent, the Collateral Agent, or any Lender (or,
in the case of Specified Hedge Agreements and Cash Management Documents of the
Parent Companies, the Borrowers or any of the Restricted Subsidiaries to the
Administrative Agent, the Collateral Agent, any Lender, any Hedge Counterparty,
Cash Management Counterparty, or any of their Affiliates), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, any Specified Hedge Agreement, any Cash
Management Document, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without limitation,
all fees, charges and disbursements of counsel to the Administrative Agent, the
Collateral Agent, or any Lender that are required to be paid by the Borrowers
pursuant hereto) or otherwise; other than Excluded Swap Obligations; provided
that (a) obligations of the Parent Companies, the Borrowers or any of the
Restricted Subsidiaries under any Specified Hedge Agreement or Cash Management
Document shall be secured and guaranteed pursuant to the Security Documents only
to the extent that, and for so long as, the other Obligations are so secured and
guaranteed and (b) any release of Collateral or Guarantors effected in the
manner permitted by this Agreement shall not require the consent of holders of
obligations under any Specified Hedge Agreements or Cash Management Documents.

 

“OFAC”: the Officer of Foreign Assets Control of the United States Department of
the Treasury.

 

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“Omega Intercreditor Agreement”: the Intercreditor Agreement, dated as of the
Closing Date, by and among the Administrative Agent, General Electric Capital
Corporation, as administrative agent under the ABL Credit Agreement, the
Borrowers, Landlord (as defined therein) and Tenants (as defined therein).

 

“Omega Lease”: the consolidated amended and restated master lease agreement,
dated as of December 1, 2012, by and among Landlord (as defined in the Omega
Intercreditor Agreement) and Tenants (as defined in the Omega Intercreditor
Agreement).

 

“Omega Lease Consent and Amendment Agreement”:  the agreement to consent, dated
as of June 20, 2012, by and among Lessor (as defined therein) and Lessee (as
defined therein).

 

“Other Taxes”: all present or future stamp, court or documentary, intangible,
recording, filing or similar Taxes that arise from any payment made under, from
the execution, delivery, performance, enforcement or registration of, from the
receipt or perfection of a security interest under, or otherwise with respect
to, this Agreement or any other Loan Document.

 

“PATRIOT Act”: the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)).

 

“Parent”: as defined in the preamble hereto.

 

“Parent Company”: Ultimate Parent, LLC Parent, Parent and Holdings.

 

“Participant”: as defined in Section 10.6(h).

 

“Participant Register”: as defined in Section 10.6(h)(ii).

 

“Patient”: any Person receiving Medical Services from Ultimate Parent or a
Restricted Subsidiary and all Persons legally liable to pay Ultimate Parent or a
Restricted Subsidiary for such services other than Insurers.

 

“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA (or any successor).

 

“Permit”: with respect to any Person, any permit, approval, authorization,
license, registration, certificate (including certificates of occupancy),
concession, grant, franchise, variance or permission from any Governmental
Authority, in each case whether or not having the force of law and applicable to
or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

 

“Permitted Acquisition”: as defined in Section 7.4(g).

 

“Permitted Investor”: collectively, (i) any Person that is a member of LLC
Parent as of the Closing Date to the extent such Person, directly or indirectly,
owns or controls 10% or more of LLC Parent as of the Closing Date and to the
extent such Person has satisfied the requirements regarding OFAC, Anti-Terrorism
Laws, SEC, Healthcare Laws, and other similar regulations, (ii) GEN Management
LLC or GEN Management Investors, LLC and to the extent each such entity has
satisfied the requirements regarding OFAC, Anti-Terrorism Laws, SEC Healthcare
Laws, and other similar regulations, or (iii) any successor of the foregoing
pursuant to a Permitted Investor Transfer (which successors, to the extent such
successors will, directly or indirectly, own or control 10% or more of any

 

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Loan Party, must satisfy requirements regarding OFAC, Anti-Terrorism Laws, SEC,
Healthcare Laws, and other similar regulations).

 

“Permitted Investor Transfer”:  one or more of the following, and, in the case
of clauses (ii)  and (iii) below, with the prior consent of Administrative Agent
(which consent shall not be unreasonably withheld, conditioned or delayed
(provided that Borrower Agent provides timely information reasonably requested
by Administrative Agent with respect to such proposed transferee, including,
without limitation, information with respect to OFAC, Anti-Terrorism Laws, SEC,
Healthcare Laws, and other similar regulations and activities):

 

(i)                                     any Disposition by a Permitted Investor
to another Permitted Investor;

 

(ii)                                  any Disposition of a direct or indirect
interest in LLC Parent (or, on or after the Second Amendment Date, Ultimate
Parent) by a Permitted Investor to a family trust for estate planning purposes;
provided that such Permitted Investor does not Transfer the power to direct or
cause the direction of the management and policies of such Person, whether by
contract or otherwise;

 

(iii)                               any Disposition from any Permitted Investor
of any direct or indirect interest in LLC Parent (or, on or after the Second
Amendment Date, Ultimate Parent) to a Majority Controlled Affiliate, or the
admission of a new member into a Permitted Investor, provided the Persons that
had the power to direct or cause the direction of the management and policies of
such Permitted Investor on the Closing Date retain such power over such
Permitted Investor; or

 

(iv)                              the purchase by Health Care REIT, Inc. of
certain ownership interests in LLC Parent (or, on or after the Second Amendment
Date, Ultimate Parent) pursuant to that certain Amended and Restated Call and
Exchange Agreement, dated as of May 25, 2012 (as may be amended, supplemented or
otherwise modified from time to time).

 

“Permitted Refinancing”: with respect to any Person, any modification,
refinancing, refunding, renewal or extension of any Indebtedness of such Person;
provided that (a) the principal amount (or accreted value, if applicable)
thereof does not exceed the principal amount (or accreted value, if applicable)
of the Indebtedness so modified, refinanced, refunded, renewed or extended
except by an amount equal to any interest capitalized in connection with, any
premium or other reasonable amount paid, and fees and expenses reasonably
incurred, in connection with such modification, refinancing, refunding, renewal
or extension and by an amount equal to any existing commitments unutilized and
undrawn letters of credit thereunder or as otherwise permitted pursuant to
Section 7.1, (b) such modification, refinancing, refunding, renewal or extension
has a final maturity date equal to or later than the final maturity date of, and
has a Weighted Average Life to Maturity equal to or longer than the Weighted
Average Life to Maturity of, the Indebtedness being modified, refinanced,
refunded, renewed or extended, (c) if the Indebtedness being modified,
refinanced, refunded, renewed or extended is subordinated in right of payment to
the Obligations, such modification, refinancing, refunding, renewal or extension
is subordinated in right of payment to the Obligations on terms at least as
favorable on the whole to the Lenders as those contained in the documentation
governing the Indebtedness being modified, refinanced, refunded, renewed or
extended, (d) solely with respect to any Permitted Refinancing of the ABL
Facility or any Material Master Lease, the financial covenants and events of
default of any such modified, refinanced, refunded, renewed or extended
Indebtedness are not, taken as a whole, materially more restrictive to the Loan
Parties than the financial covenants and events of default of the Indebtedness

 

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being modified, refinanced, refunded, renewed or extended and (e) neither
Ultimate Parent nor any Restricted Subsidiary shall be an obligor or guarantor
of the Indebtedness being modified, refinanced, refunded, renewed or extended
except to the extent that such Person was such an obligor or guarantor in
respect of the Indebtedness being modified, refinanced, refunded, renewed or
extended.

 

“Person”: an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.

 

“Pledged Securities”: as defined in the Guarantee and Collateral Agreement.

 

“Pledged Stock”: as defined in the Guarantee and Collateral Agreement.

 

“Primary License”: with respect to any Healthcare Facility or Person operating
such Healthcare Facility, as the case may be, the certificate of need, Permit or
license to operate as an assisted living, skilled nursing or independent living
facility; provided, however, that (A) the Required Approvals as defined in the
Acquisition Agreement shall suffice as Primary Licenses where new Primary
Licenses are being issued as a result of and following the Acquisition and until
such new Primary Licenses are issued and (B) the Governmental Approvals, as
defined in the Skilled Purchase Agreement shall suffice as Primary Licenses
where new Primary Licenses are being issued as a result of and following the
Skilled Acquisition and until such new Primary Licenses are issued.

 

“Prime Rate”: as defined in the definition of “ABR”.

 

“Pro Forma Basis”: for any period, with respect to the Transactions, the Skilled
Transactions or any proposed acquisition, investment, distribution or any other
action which requires compliance with any test or covenant hereunder, compliance
as of the transaction date will be determined giving the following pro forma
effect to the Transactions, the Skilled Transactions or such proposed
acquisition investment, distribution or any such other action: (a) pro forma
effect will be given to any Indebtedness incurred during or after the relevant
period to the extent the Indebtedness is outstanding or is to be incurred on the
transaction date as if the Indebtedness had been incurred on the first day of
the relevant period; (b) pro forma calculations of interest on Indebtedness
bearing a floating interest rate will be made as if the rate in effect on the
transaction date (taking into account any Hedge Agreement applicable to the
Indebtedness if the Hedge Agreement has a remaining term of at least 12 months)
had been the applicable rate for the entire relevant period; (c) Consolidated
Interest Expense related to any Indebtedness no longer outstanding or to be
repaid or redeemed on the transaction date, except for Consolidated Interest
Expense accrued during the relevant period under this Agreement to the extent of
the Loans in effect on the transaction date, will be excluded; and (d) pro forma
effect will be given to (i) the creation, designation or redesignation of
Restricted and Unrestricted Subsidiaries, and (ii) the acquisition or
Disposition of companies, divisions or lines of businesses by Ultimate Parent
and the Restricted Subsidiaries, including any acquisition or Disposition of a
company, division or line of business since the beginning of the relevant period
by a Person that became a Restricted Subsidiary after the beginning of the
relevant period that have occurred since the beginning of the relevant period as
if such events had occurred, and, in the case of any Disposition, the proceeds
thereof applied, on the first day of the relevant period. For purposes of
determining Consolidated Interest Expense, Consolidated Cash Interest Expense,
Consolidated Fixed Charges, Consolidated Rental Expense, Consolidated EBITDA,
Consolidated EBITDAR and Consolidated Net Income, any discontinuation of
discontinued operations as defined under Financial Accounting Standards Board
Accounting Standards Codification 205-20 occurring during the relevant period
shall be given effect in accordance with that standard.  To the extent that pro
forma effect is to be given to an acquisition or Disposition of a company,
division or line of business, the pro

 

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forma calculation will be based upon the most recent four full fiscal quarters
for which the relevant financial information is available (including cost
savings to the extent such cost savings would be consistent with the definition
of “Consolidated EBITDA”).

 

“Property”: any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible, including,
without limitation, Capital Stock.

 

“Purchase Money Indebtedness”: as defined in Section 7.1(d).

 

“Purchasing Borrower Party”: Ultimate Parent or any of its Subsidiaries that
becomes an Assignee pursuant to Section 10.6(b).

 

“Qualified Capital Stock”: any Capital Stock that is not Disqualified Capital
Stock.

 

“Qualified Equity Issuance”: any issuance by Ultimate Parent of its Capital
Stock in a public or private offering or contribution to its capital (in each
case, other than in the form of Disqualified Capital Stock).

 

“Real Property Financing Obligations”: with respect to any Person, financing
obligations and Capital Lease Obligations of such Person, to the extent such
financing obligations or Capital Lease Obligations are related to real property.

 

“Recovery Event”: any settlement of or payment in respect of any property or
casualty insurance claim or any condemnation proceeding relating to any asset of
the Parent Companies, the Borrowers, or any of the Restricted Subsidiaries, in
an amount for each such event exceeding $1,500,000.

 

“Refinanced Loans”: as defined in Section 10.1(d).

 

“Refinancing”: as defined in the recitals hereto.

 

“Register”: as defined in Section 10.6(b)(iv).

 

“Regulation T”: Regulation T of the Board as in effect from time to time.

 

“Regulation U”: Regulation U of the Board as in effect from time to time.

 

“Regulation X” Regulation X of the Board as in effect from time to time.

 

“Reinvestment Deferred Amount”: with respect to any Reinvestment Event, the
aggregate Net Cash Proceeds received by the Parent Companies, the Borrowers or
any Restricted Subsidiary for its own account in connection therewith that are
not paid to the Administrative Agent pursuant to Section 2.8(b) as a result of
the delivery of a Reinvestment Notice.

 

“Reinvestment Event”: any Asset Sale or Recovery Event in respect of which a
Loan Party has delivered a Reinvestment Notice.

 

“Reinvestment Notice”: a written notice signed on behalf of the Parent
Companies, the Borrowers, or any of the Restricted Subsidiaries by a Responsible
Officer stating that the Parent Companies, the Borrowers, or such Restricted
Subsidiaries (directly or indirectly through a Subsidiary) intends and expects
to use all or a specified portion of the Net Cash Proceeds of an (x) Asset Sale
(which, for the avoidance of doubt, shall not include the Hospice Sale
Prepayment Amount) to acquire assets

 

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useful in its (or such Restricted Subsidiary’s) business or in connection with a
Permitted Acquisition or (y) Recovery Event to acquire or repair assets useful
in its (or such Restricted Subsidiary’s) business or in connection with a
Permitted Acquisition.

 

“Reinvestment Prepayment Amount”: with respect to any Reinvestment Event, the
Reinvestment Deferred Amount relating thereto less any amount contractually
committed to be expended prior to the relevant Reinvestment Prepayment Date (a
“Committed Reinvestment Amount”), or actually expended prior to such date, in
each case to acquire or repair assets useful in the Business or in connection
with a Permitted Acquisition.

 

“Reinvestment Prepayment Date”: with respect to any Reinvestment Event, the
earlier of (i) the date occurring 180 days after such Reinvestment Event and
(ii) with respect to any portion of a Reinvestment Deferred Amount, the date on
which the Parent Companies, the Borrowers, or any of the Restricted Subsidiaries
shall have determined not to acquire or repair assets useful in their or such
Restricted Subsidiary’s business or in connection with a Permitted Acquisition
with such portion of such Reinvestment Deferred Amount.

 

“Related Parties”: as to any Person, such Person’s Affiliates and the partners,
directors, officers, employees, agents, attorneys-in-fact, trustees,
administrators, managers, advisors and representatives of such Person and of
such Person’s Affiliates.

 

“Release” any release, threatened release, spill, emission, leaking, pumping,
pouring, emitting, emptying, escape, injection, deposit, disposal, discharge,
dispersal, dumping, leaching or migration of Hazardous Material into or through
the environment.

 

“Remedial Action”: all actions required to (a) clean up, remove, treat or in any
other way address any Hazardous Material Released into the indoor or outdoor
environment, (b) prevent or minimize any Release so that a Hazardous Material
does not migrate or endanger or threaten to endanger public health or welfare or
the indoor or outdoor environment or (c) perform pre-remedial studies and
investigations and post-remedial monitoring and care with respect to any
Hazardous Material.

 

“Replacement Loans”: as defined in Section 10.1(d).

 

“Representatives”: as defined in Section 10.14.

 

“Required Lenders”: at any time, the holders of more than 50% of the sum of the
aggregate unpaid principal amount of the Loans then outstanding.

 

“Required Prepayment Date”: as defined in Section 2.8(e).

 

“Requirement of Law”: as to any Person, the certificate of incorporation and
by-laws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation or determination of a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.

 

“Responsible Officer”: the chief executive officer, president, senior vice
president, chief financial officer (or similar title), chief operating officer,
controller or treasurer (or similar title) of the Parent Companies or the
Borrowers, as applicable, and, with respect to financial matters, the chief
financial officer (or similar title) or treasurer (or similar title) of Ultimate
Parent.

 

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“Restricted Payment”: any dividend or other distribution (whether in cash,
securities or other property (other than Qualified Capital Stock)) with respect
to any Capital Stock of Ultimate Parent or any Restricted Subsidiary, or any
payment (whether in cash, securities or other property (other than Qualified
Capital Stock)), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any Capital Stock in the Parent Companies, the Borrowers or any Restricted
Subsidiary.

 

“Restricted Subsidiary”: any Subsidiary that is not an Unrestricted Subsidiary.

 

“Sabra Intercreditor Agreement”: the Intercreditor Agreement, dated as of the
Closing Date, by and among the Landlords (as defined in the Sabra Lease Consent
and Amendment Agreement), the Administrative Agent and General Electric Capital
Corporation as administrative agent under the ABL Credit Agreement.

 

“Sabra Lease”: collectively, the Master Leases (as defined in the Sabra Lease
Consent and Amendment Agreement), as the same may have been or may be amended,
consolidated or otherwise modified.

 

“Sabra Lease Consent and Amendment Agreement”: the consent and agreement, dated
as of June 20, 2012, by and among the Landlords (as defined therein) and the
Genesis Borrower.

 

“Sale and Lease-Back Transaction”: any arrangement with any Person providing for
the leasing by Ultimate Parent or any of the Restricted Subsidiaries of real or
personal property which has been or is to be sold or transferred by Ultimate
Parent or such Restricted Subsidiary to such Person or from any other Person to
whom funds have been or are to be advanced by such Person based on a Lien on, or
an assignment of, such property and rental obligations of Ultimate Parent or
such Restricted Subsidiary.

 

“Sanctions”: any international economic sanction administered or enforced by
OFAC, the United Nations Security Council, the European Union, Her Majesty’s
Treasury or other relevant sanctions authority.

 

“S&P”: Standard & Poor’s Ratings Group, Inc., or any successor to the rating
agency business thereof.

 

“SEC”: the Securities and Exchange Commission (or successors thereto or an
analogous Governmental Authority).

 

“Second Amendment”: the Amendment No. 2 to this Agreement, dated as of
September 25, 2014, by and among, inter alios, the Borrowers, LLC Parent,
Parent, Holdings, the Lenders party thereto and the Administrative Agent.

 

“Second Amendment Date”: the Amendment No. 2 Effective Date (as defined in the
Second Amendment).

 

“Secured Parties”: collectively, the Lenders, the Administrative Agent, the
Collateral Agent, any Hedge Counterparty, any Cash Management Counterparty, any
other holder from time to time of any of the Obligations (in their capacities as
holders thereof) and, in each case, their respective successors and permitted
assigns.

 

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“Security Documents”: the collective reference to the Guarantee and Collateral
Agreement, the Intercreditor Agreement, the Skilled Intercreditor Agreement, the
Material Master Lease Intercreditor Agreements, the Mortgages and all other
security documents hereafter delivered to the Administrative Agent purporting to
grant a Lien on any Property of any Loan Party to secure the Obligations.

 

“Skilled ABL Credit Agreement”: the asset based revolving credit facility dated
on or about the Second Amendment Date and substantially consistent with the
terms set forth on the Skilled ABL Term Sheet (as defined in the Second
Amendment) without giving effect to any modifications or amendments thereto that
are materially adverse to the Lenders (in their capacity as such) without the
consent of the Required Lenders.

 

“Skilled ABL Loan Documents”: has the meaning assigned to the term “Loan
Documents” in the Skilled ABL Credit Agreement.

 

“Skilled ABL Priority Collateral”: the “Collateral” (as defined in the Skilled
ABL Credit Agreement) that is subject to a first priority perfected security
interest in favor of the agent and lenders under the Skilled ABL Credit
Agreement.

 

“Skilled Acquisition”: the indirect acquisition of Ultimate Parent in accordance
with the terms of the Skilled Purchase Agreement and the consummation of the
transactions described therein.

 

“Skilled HUD Credit Agreements”: one or more credit agreements, by and among the
Skilled HUD Entities as borrowers, one or more subsidiaries of Ultimate Parent
as guarantors, certain other Persons party thereto as guarantors, the
administrative agent party thereto, and the lenders party thereto.

 

“Skilled HUD Entities”: each of the subsidiaries of Ultimate Parent from time to
time a party to the Skilled HUD Credit Agreements as a borrower.

 

“Skilled Intercreditor Agreement”: the intercreditor agreement dated as of the
Second Amendment Date, among the Administrative Agent, the agent for the lenders
under the Genesis ABL Credit Agreement, the agent for the lenders under the
Skilled ABL Credit Agreement (the “Skilled ABL Agent”) and the agent for the
lenders under the Skilled RE Credit Agreement (the “Skilled RE Agent”), in form
and substance reasonably acceptable to the Collateral Agent and that provides,
among other things, that the security interests of the Collateral Agent for the
benefit of the Secured Parties in and to the Skilled ABL Priority Collateral,
shall be junior and subordinate to the security interests in the Skilled ABL
Priority Collateral granted in favor of the Skilled ABL Agent (which shall be
first priority) and the Skilled RE Agent (which shall be second priority).

 

“Skilled Loan Documents”: collectively, the Skilled ABL Loan Documents and the
Skilled RE Loan Documents.

 

“Skilled Priority Collateral”: collectively, the Skilled ABL Priority Collateral
and the Skilled RE Priority Collateral.

 

“Skilled Purchase Agreement”: has the meaning assigned to the term “Purchase
Agreement” in the Second Amendment.

 

“Skilled RE Credit Agreement”: the credit facility dated on or about the Second
Amendment Date and substantially consistent with the terms set forth on the
Skilled Real Estate Financing Term Sheet (as defined in the Second Amendment)
without giving effect to any modifications or amendments thereto that are
materially adverse to the Lenders (in their capacity as such) or on other terms
that are not, taken as a

 

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whole, materially less favorable to the Borrowers than those set forth in the
Skilled Real Estate Financing Term Sheet, without the consent of the Required
Lenders.

 

“Skilled RE Loan Documents”: has the meaning assigned to the term “Loan
Documents” in the Skilled RE Credit Agreement.

 

“Skilled RE Priority Collateral”: assets acquired as part of the Skilled
Acquisition pledged to secure the obligations under the Skilled RE Credit
Agreement that are subject to a first priority perfected security interest in
favor of the agent and lenders thereunder.

 

“Skilled Transactions”: collectively, (a) the Skilled Acquisition; (b) the
execution and delivery of the Skilled Loan Documents and the incurrence of the
obligations thereunder; and (c) the payment of all fees and expenses to be paid
in connection with the foregoing.

 

“Sold Entity or Business”: as set forth in the definition of the term
“Consolidated EBITDA”.

 

“Solvent”: with respect to any Person, as of any date of determination, (a) the
amount of the “present fair saleable value” of the assets of such Person will,
as of such date, exceed the amount of all “liabilities of such Person,
contingent or otherwise”, as of such date, as such quoted terms are determined
in accordance with applicable federal and state laws governing determinations of
the insolvency of debtors, (b) the present fair saleable value of the assets of
such Person will, as of such date, be greater than the amount that will be
required to pay the liability of such Person on its debts as such debts become
absolute and matured, (c) such Person will not have, as of such date, an
unreasonably small amount of capital with which to conduct its business and
(d) such Person will be able to pay its debts as they mature.  For purposes of
this definition, (i) “debt” means liability on a “claim”, (ii) “claim” means any
(x) right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (y) right to an equitable
remedy for breach of performance if such breach gives rise to a right to
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured and (iii) except as otherwise provided by applicable law, the
amount of “contingent liabilities” at any time shall be the amount thereof
which, in light of all the facts and circumstances existing at such time, can
reasonably be expected to become actual or matured liabilities.

 

“Specified Acquisition Agreement Representations”: the representations and
warranties made by the Sun Borrower in the Acquisition Agreement as are material
to the interest of the Lenders, but only to the extent that the Genesis Borrower
has the right to terminate its obligations under the Acquisition Agreement as a
result of a breach of such representation in the Acquisition Agreement.

 

“Specified Representations”: the representations and warranties made by any Loan
Party in or pursuant to Section 3.1(a), Section 3.2(a)(i), 3.2(a)(ii)(A),
3.2(a)(ii)(B), Section 3.5, Section 3.8, Section 3.10, Section 3.17, and
Section 3.22.

 

“Specified Hedge Agreement”: any Hedge Agreement (a) entered into by
(i) Ultimate Parent or any of the Restricted Subsidiaries and (ii) any Hedge
Counterparty at the time such Hedge Agreement was entered into, as counterparty
and (b) that has been designated by the Borrowers, by notice to the
Administrative Agent, as a Specified Hedge Agreement.  The designation of any
Hedge Agreement as a Specified Hedge Agreement shall not create in favor of the
Lender or Affiliate thereof that is a party thereto any rights in connection
with the management or release of any Collateral or of the obligations of any
Guarantor under the Guarantee and Collateral Agreement.

 

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“Sponsor”: Formation Capital LLC.

 

“Subordinated Indebtedness”: with respect to Obligations, any Indebtedness of
any Loan Party that is by its terms subordinated in right of payment to any of
the Obligations.

 

“Subsidiary”: as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, directly or indirectly
through one or more intermediaries, or both, by such Person.  Unless otherwise
qualified, all references to a “Subsidiary” or to “Subsidiaries” in this
Agreement shall refer to a direct or indirect Subsidiary or Subsidiaries of
Ultimate Parent; provided that in determining the percentage of ownership
interests of any Person controlled by another Person, no ownership interest in
the nature of a director’s “qualifying share” of the former Person shall be
deemed to be outstanding.

 

“Subsidiary Guarantors”: each Subsidiary listed on Schedule 1.1A, and each other
Restricted Subsidiary that is or becomes a party to this Agreement pursuant to
Section 6.10 or the Second Amendment.

 

“Subsidiary Redesignation”: as defined in the definition of “Unrestricted
Subsidiary”.

 

“Sun Borrower”: as defined in the preamble hereto.

 

“Syndication Agent”: General Electric Capital Corporation.

 

“Swap Transaction”: means any agreement, contract or transaction between the
Borrowers and any Secured Party that constitutes a “swap” within the meaning of
Section 1a(47) of the Commodity Exchange Act.

 

“Tax Affiliate”: (a) the Borrowers and (b) any Affiliate of any Borrower with
which such Borrower files or is eligible to file consolidated, combined or
unitary Tax Returns.

 

“Tax Distributions”: as defined in Section 7.6(a).

 

“Tax Return”: as defined in Section 3.7.

 

“Taxes”: all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

 

“Third-Party Payor Programs”: Medicare, Medicaid, TRICARE, Blue Cross/Blue
Shield or any other public program or private commercial insurance, managed
care, or employee assistance program providing reimbursement or coverage for
Medical Services and with which Ultimate Parent or any of its Subsidiaries has
entered into a participation agreement, provider agreement, or similar
arrangement for coverage of eligible Patients.

 

“Title IV Plan”: a pension plan subject to Title IV of ERISA, other than a
Multiemployer Plan, to which any ERISA Affiliate incurs or otherwise has any
obligation or liability, contingent or otherwise.

 

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“Transactions”: collectively, (a) the Acquisition; (b) the consummation of the
Refinancing; (c) the execution and delivery of the Loan Documents and the
incurrence of the obligations thereunder; and (d) the payment of all fees and
expenses to be paid in connection with the foregoing.

 

“Treasury Rate”: with respect to any date of determination, the yield to
maturity at such date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15(519) that has become publicly available at least two
Business Days prior to such date (or, if such Statistical Release is no longer
published, any publicly available source of similar market data)) most nearly
equal to the period from such date to the first anniversary of the Closing Date;
provided, however, that if the period from such date to the first anniversary of
the Closing Date is not equal to the constant maturity of a United States
Treasury security for which a weekly average yield is given, the Treasury Rate
shall be obtained using the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year.

 

“TRICARE” means (a) the United States of America acting under TRICARE, or
(b) any agent, carrier, administrator or intermediary for any of the foregoing.

 

“Trigger Date”: as defined in Section 2.8(b).

 

“Type”: as to any Loan, its classification as an ABR Loan or a Eurodollar Loan.

 

“UCC”: the Uniform Commercial Code of the State of New York, as in effect on the
date hereof.

 

“Ultimate Parent”: Skilled Healthcare Group, Inc., a Delaware corporation.

 

“United States”: the United States of America.

 

“Unrestricted Subsidiary”: (a) any Subsidiary of Ultimate Parent designated by
the Borrower Agent as an Unrestricted Subsidiary hereunder on Schedule 1.1B or
by written notice to the Administrative Agent; provided that the Borrower Agent
shall only be permitted to so designate a Subsidiary as an Unrestricted
Subsidiary so long as (i) immediately before and after such designation, (x) no
Event of Default shall have occurred and be continuing and (y) Ultimate Parent
and the Restricted Subsidiaries shall be in compliance with each Financial
Condition Covenant calculated on a Pro Forma Basis, (ii) no Subsidiary may be
designated as an Unrestricted Subsidiary if, after such designation, it would be
a “Restricted Subsidiary” for the purpose of any other Indebtedness of any Loan
Party, (iii) the designation of any Subsidiary as an Unrestricted Subsidiary
shall constitute an Investment by Ultimate Parent therein at the date of
designation in an amount equal to the fair market value as determined by
Ultimate Parent in good faith of Ultimate Parent or its Subsidiary’s (as
applicable) Investment therein, (iv) the designation of any Unrestricted
Subsidiary as a Restricted Subsidiary shall constitute the incurrence at the
time of designation of any Indebtedness or Liens of such Subsidiary existing at
such time and (v) the Borrower Agent shall have delivered to the Administrative
Agent an officer’s certificate executed by a Responsible Officer of Ultimate
Parent, certifying compliance with the requirements of preceding clauses
(i) through (iv), and (b) any Subsidiary of an Unrestricted Subsidiary. The
Borrower Agent may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary for purposes of this Agreement (each, a “Subsidiary Redesignation”);
provided that (A) immediately after such designation, no Default shall have
occurred and be continuing and (B) the Borrower Agent shall have delivered to
the Administrative Agent an officer’s certificate executed by a Responsible
Officer of Ultimate Parent, certifying compliance with the requirements of
preceding clause (A); provided, further, that no Unrestricted Subsidiary that
has been designated as a Restricted Subsidiary pursuant to a Subsidiary
Redesignation may again be designated as an Unrestricted

 

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

 

Subsidiary.  In no case shall any Borrower or any Parent Company be permitted to
be designated as an Unrestricted Subsidiary.

 

“U.S. Lender”: as defined in Section 2.16(e).

 

“Ventas”: Ventas, Inc., a Delaware corporation.

 

“Ventas Guaranty”: that certain Guaranty, dated December 1, 2010, by and from
the Genesis Borrower with respect to the master lease agreement entered into
with certain affiliates of Ventas as landlord.

 

“Voting Stock”: Capital Stock of any Person having ordinary power to vote in the
election of members of the board of directors, managers, trustees or other
controlling Persons, of such Person (irrespective of whether, at the time,
Capital Stock of any other class or classes of such entity shall have or might
have voting power by reason of the occurrence of any contingency).

 

“Waivable Mandatory Prepayment”: as defined in Section 2.8(e).

 

“Weighted Average Life to Maturity”: when applied to any Indebtedness at any
date, the number of years obtained by dividing: (a) the sum of the products
obtained by multiplying (i) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (ii) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment by (b) the then outstanding principal amount of such
Indebtedness; provided that for purposes of determining the Weighted Average
Life to Maturity of any Indebtedness being refinanced or any Indebtedness that
is being modified, refinanced, refunded, renewed, replaced or extended (the
“Applicable Indebtedness”), the effects of any amortization or prepayments made
on such Applicable Indebtedness prior to the date of the applicable
modification, refinancing, refunding, renewal, replacement or extension shall be
disregarded.

 

“Wholly-Owned”: as to any Person, a Subsidiary of such person all of the
outstanding Capital Stock of which (other than director’s qualifying shares) are
owned by such Person or by one or more Wholly-Owned Subsidiaries of such Person.

 

“Withdrawal Liability”: at any time, any liability incurred (whether or not
assessed) by any ERISA Affiliate and not yet satisfied or paid in full at such
time with respect to any Multiemployer Plan pursuant to Section 4201 of ERISA.

 

1.2                               Other Definitional Provisions.  (a)  Unless
otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the other Loan Documents or any certificate or
other document made or delivered pursuant hereto or thereto.

 

(b)                                 As used herein and in the other Loan
Documents, and any certificate or other document made or delivered pursuant
hereto or thereto, (i) accounting terms relating to the Parent Companies, the
Borrowers and their Subsidiaries not defined in Section 1.1 and accounting terms
partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP, (ii) the words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”, and (iii) references to agreements or other Contractual Obligations
shall, unless otherwise specified, be deemed to refer to such agreements or
Contractual Obligations as amended, supplemented, restated or otherwise modified
from time to time.  Notwithstanding any other provision contained herein, all
terms of an accounting or financial nature used herein shall be construed, and
all computations of amounts and ratios referred to in Section 7 shall be made,
without giving effect to any

 

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

 

election under Statement of Financial Accounting Standards 159 (or any other
Financial Accounting Standard having a similar result or effect) to value any
Indebtedness or other liabilities of any Loan Party or any Subsidiary of any
Loan Party at “fair value.”  To the extent that any provision of this Agreement
requires or tests compliance with (or with respect to) the Financial Condition
Covenants prior to the date that such covenants are first tested, such provision
shall be deemed to refer to the first covenant level set forth in each
applicable Financial Condition Covenant.

 

(c)                                  Unless otherwise specified herein, any
calculation of the Fixed Charge Coverage Ratio, Interest Coverage Ratio,
Consolidated Total Leverage Ratio, and Consolidated Senior Secured Leverage
Ratio shall be determined based on the most recently ended fiscal quarter for
which financial statements are required to be delivered pursuant to
Section 5.1(a) or (b), as applicable, prior to the applicable date of
determination and subject to pro forma adjustments to the extent specified in
any applicable provision.

 

(d)                                 The words “hereof”, “herein” and “hereunder”
and words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Annex, Section, Schedule and Exhibit references are to this Agreement unless
otherwise specified.

 

(e)                                  The term “license” shall include
sub-licenses.

 

(f)                                   The term “lease” shall include sub-leases.

 

(g)                                  The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such terms.

 

SECTION 2.                            AMOUNT AND TERMS OF COMMITMENTS

 

2.1                               Initial Commitments.  (a) Subject to the terms
and conditions hereof, each Lender severally agrees to make a term loan (a
“Loan”) in Dollars to the Borrowers on the Closing Date in an amount not to
exceed the amount of the Initial Commitment of such Lender.  The Loans may from
time to time be Eurodollar Loans or ABR Loans, as determined by the Borrower
Agent and notified to the Administrative Agent in accordance with Sections 2.3
and 2.9.

 

(b)                                 The Borrowers shall pay a closing fee equal
to 6.00% (the “Closing Fee”) of the Loans outstanding on the Closing Date, which
Closing Fee shall be payable to the Administrative Agent for the account of each
Lender in accordance with its pro rata share as of and on the Closing Date and
which Closing Fee may be paid as an additional upfront fee or original issue
discount. Such Closing Fee shall be fully earned when paid and shall not be
refundable for any reason whatsoever.

 

2.2                               [Reserved].

 

2.3                               Procedure for Loan Borrowing.  The Borrower
Agent shall give the Administrative Agent irrevocable notice, substantially in
the form of Exhibit A-1 hereto, (which notice must be received by the
Administrative Agent not later than 3:00 P.M., New York City time, one Business
Day prior to the anticipated Closing Date or, in the case the Loans on the
Closing Date shall be Eurodollar Loans, three Business Days prior to the
anticipated Closing Date) requesting that the Lenders make the Loans on the
Closing Date and specifying (i) the aggregate principal amount to be borrowed,
(ii) the requested Borrowing Date, (iii) whether such Loans being incurred are
to be made as ABR Loans or, to the extent permitted hereunder, Eurodollar Loans
and, if Eurodollar Loans, the initial Interest Period applicable thereto and
(iv) the appropriate Borrower or Borrowers.  Upon receipt of such borrowing
notice the

 

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

 

Administrative Agent shall promptly notify each Lender thereof.  Not later than
10:00 A.M., New York City time, on the Closing Date each Lender shall make
available to the Administrative Agent at the Funding Office an amount in
immediately available funds equal to the Loan or Loans to be made by such
Lender.

 

2.4                               Repayment of Loans.  The Loan of each Lender
shall be payable in equal consecutive quarterly installments, commencing on
December 31, 2012, on the last Business Day of each of December, March, June and
September following the Closing Date, as indicated below (as adjusted to reflect
any prepayments thereof in accordance with Section 2.14(h)):

 

Date of Payment

 

Amount of Loan Payment

 

December 31, 2012

 

$

2,708,333.33

 

March 31, 2013

 

$

4,062,500

 

June 30, 2013

 

$

4,062,500

 

September 30, 2013

 

$

4,062,500

 

December 31, 2013

 

$

4,062,500

 

March 31, 2014

 

$

4,062,500

 

June 30, 2014

 

$

4,062,500

 

September 30, 2014

 

$

4,062,500

 

December 31, 2014

 

$

4,062,500

 

March 31, 2015

 

$

4,062,500

 

June 30, 2015

 

$

4,062,500

 

September 30, 2015

 

$

4,062,500

 

December 31, 2015

 

$

4,062,500

 

March 31, 2016

 

$

4,062,500

 

June 30, 2016

 

$

4,062,500

 

September 30, 2016

 

$

4,062,500

 

December 31, 2016

 

$

4,062,500

 

March 31, 2017

 

$

4,062,500

 

June 30, 2017

 

$

4,062,500

 

September 30, 2017

 

$

4,062,500

 

Maturity Date

 

$

245,104,166.67

 

 

2.5                               Repayment of Loans.  (a)  Each Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
the appropriate Lender the principal amount of each outstanding Loan of such
Lender made to the Borrowers in installments according to the amortization
schedule set forth in Section 2.4 (or on such earlier date on which the Loans
become due and payable pursuant to Section 8).  Each Borrower hereby further
agrees to pay interest on the unpaid principal amount of the Loans made to the
Borrowers from time to time outstanding from the date hereof until payment in
full thereof at the rates per annum, and on the dates, set forth in
Section 2.11.

 

(b)                                 Notwithstanding anything herein to the
contrary, each Lender may, at its option, elect not to receive its pro rata
share of any scheduled installments of principal repayments made pursuant to
Section 2.4 and Section 2.5(a) (other than payments due on the Maturity Date or
such earlier date on which the Loans become due and payable pursuant to
Section 8), by giving written notice to the Borrower Agent and the
Administrative Agent of its election to do so at least five Business Days prior
to the next scheduled installment of principal repayments. Any Lender may revoke
such election at any time by giving written notice to the Borrower Agent and the
Administrative Agent of its election to do so no later than two Business Days
prior to the next scheduled installment of principal repayments.

 

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

 

(c)                                  Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing indebtedness of the
Borrowers to such Lender resulting from each Loan of such Lender from time to
time, including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement.

 

(d)                                 (i) The Administrative Agent, on behalf of
the Borrowers, shall maintain the Register pursuant to Section 10.6(b)(iv), and
a subaccount therein for each Lender, in which shall be recorded (A) the amount
of each Loan made hereunder and any Note evidencing such Loan, the Type of such
Loan and each Interest Period applicable thereto, (B) the amount of any
principal, interest and fees, as applicable, due and payable or to become due
and payable from the Borrowers to each Lender hereunder and (C) the amount of
any sum received by the Administrative Agent hereunder from the Borrowers and
each Lender’s share thereof.

 

(e)                                  The entries made in the Register and the
accounts of each Lender maintained pursuant to Section 2.5(d) shall, to the
extent permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Borrowers therein recorded (absent manifest
error); provided, however, that the failure of the Administrative Agent or any
Lender to maintain the Register or any such account, or any error therein, shall
not in any manner affect the obligation of the Borrowers to repay (with
applicable interest) the Loans made to the Borrowers by such Lender or the other
obligations of the Borrowers to such Lender in accordance with the terms of this
Agreement.

 

(f)                                   Any Lender may request that the Loans made
by it be evidenced by a promissory note.  In such event, the Borrowers shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in the form attached hereto as Exhibit I.  Thereafter,
the Loans evidenced by such promissory note and interest thereon shall at all
times (including after assignment pursuant to Section 10.6) be represented by
one or more promissory notes in such form payable to the order of the payee
named therein (or, if such promissory note is a registered note, to such payee
and its registered assigns).

 

2.6                               Fees, etc.  Each Borrower agrees to pay to the
Administrative Agent the fees in the amounts and on the dates as set forth in
any fee agreements.

 

2.7                               Optional Prepayments.  (a)  The Borrowers may
at any time prepay the Loans, in whole or in part, subject to Section 2.14(i),
but otherwise without premium or penalty, upon irrevocable notice (provided that
such notice may be conditioned on receiving proceeds of any refinancing or
Disposition) in substantially the form of Exhibit H hereto delivered to the
Administrative Agent no later than 3:00 P.M., New York City time, three Business
Days prior thereto, in the case of Eurodollar Loans, and no later than
3:00 P.M., New York City time, one Business Day prior to, in the case of ABR
Loans, which notice shall specify (i) the date and amount of prepayment, and
(ii) whether the prepayment is of Eurodollar Loans or ABR Loans; provided that
if a Eurodollar Loan is prepaid on any day other than the last day of the
Interest Period applicable thereto, the Borrowers shall also pay any amounts
owing pursuant to Section 2.17.  Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.  If any
such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to such
date on the amount prepaid.  Partial prepayments of Loans shall be in an
aggregate principal amount of $1,000,000 or a whole multiple of $100,000 in
excess thereof, and shall be subject to the provisions of Section 2.14.

 

(b)                                 Amounts to be applied in connection with
prepayments pursuant to this Section shall be applied to the Obligations in
accordance with Section 2.14.  Each prepayment of Loans under this Section shall
be accompanied by accrued interest to the date of such prepayment on the amount
prepaid.

 

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

 

2.8                               Mandatory Prepayments.  (a)  If any
Indebtedness (other than any Indebtedness permitted to be incurred in accordance
with Section 7.1) shall be incurred by the Parent Companies, the Borrowers or
any of the Restricted Subsidiaries, the Borrowers shall pay an amount equal to
100% of the Net Cash Proceeds of such Indebtedness within three Business Days of
the date of receipt thereof to the Administrative Agent to be applied to the
Obligations in accordance with Section 2.14.

 

(b)                                 If on any date any of the Parent Companies,
the Borrowers or any of the Restricted Subsidiaries shall for its own account
receive Net Cash Proceeds from any Asset Sale (other than any Asset Sale that is
of (i) ABL Priority Collateral (as defined in the Intercreditor Agreement) or
(ii) Skilled Priority Collateral) in excess of an aggregate amount of $5,000,000
per fiscal year or any Recovery Event (other than any Recovery Event that is of
(i) ABL Priority Collateral (as defined in the Intercreditor Agreement) or
(ii) Skilled Priority Collateral) in excess of an aggregate amount of $5,000,000
per fiscal year then, unless a Reinvestment Notice shall be delivered in respect
thereof, the Borrowers shall pay an amount equal to 100% of such Net Cash
Proceeds within three Business Days of the date of receipt thereof to the
Administrative Agent to be applied to the Obligations in accordance with
Section 2.14; provided that notwithstanding the foregoing, (i) on each
Reinvestment Prepayment Date, an amount equal to the Reinvestment Prepayment
Amount with respect to the relevant Reinvestment Event shall be paid to the
Administrative Agent to be applied to the Obligations in accordance with
Section 2.14 and (ii) on the date (the “Trigger Date”) that is 180 days after
any such Reinvestment Prepayment Date, an amount equal to the portion of any
Committed Reinvestment Amount with respect to the relevant Reinvestment Event
not actually expended by such Trigger Date shall be paid to the Administrative
Agent to be applied to the Obligations in accordance with Section 2.14.

 

(c)                                  If, for any fiscal year of Ultimate Parent
(or, in the case of any fiscal year prior to the fiscal year in which the Second
Amendment Date occurs, as applicable, the Borrowers) there shall be Excess Cash
Flow, the Borrowers shall, on the relevant Excess Cash Flow Application Date
thereafter, pay an amount equal to the Excess Cash Flow Percentage of such
Excess Cash Flow to the Administrative Agent to be applied to the Obligations in
accordance with Section 2.14.  Each such payment shall be made on a date (an
“Excess Cash Flow Application Date”) no later than five Business Days after the
date financial statements are required to be delivered pursuant to
Section 5.1(b); provided that, notwithstanding the foregoing, any Excess Cash
Flow of Ultimate Parent for any fiscal year prior to the fiscal year in which
the Skilled Acquisition occurs, as applicable, shall be excluded when
calculating the amount of such payment.

 

(d)                                 Amounts to be applied in connection with
prepayments pursuant to Section 2.8 shall be applied to the Obligations in
accordance with Section 2.14.

 

(e)                                  Anything contained herein to the contrary
notwithstanding, so long as any Loans are outstanding, in the event the
Borrowers are required to make any mandatory prepayment under Section 2.8(b) or
(c) (each, a “Waivable Mandatory Prepayment”), not less than five Business Days
prior to the date (the “Required Prepayment Date”) on which the Borrowers are
required to make such Waivable Mandatory Prepayment, the Borrower Agent shall
notify the Administrative Agent of the amount of such prepayment, and the
Administrative Agent will promptly thereafter notify each Lender holding an
outstanding Loan of the amount of such Lender’s pro rata share of such Waivable
Mandatory Prepayment and such Lender’s option to refuse such amount. Each such
Lender may exercise such option by giving written notice to the Borrower Agent
and the Administrative Agent of its election to do so on or before two Business
Days prior to the Required Prepayment Date (it being understood that any Lender
which does not notify the Borrower Agent and the Administrative Agent of its
election to exercise such option on or before two Business Days prior to the
Required Prepayment Date shall be deemed to have elected, as of such date, not
to exercise such option). On the Required Prepayment Date, the Borrowers shall
pay to the Administrative Agent the amount of the Waivable Mandatory Prepayment,
which amount

 

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

 

shall be applied (i) in an amount equal to that portion of the Waivable
Mandatory Prepayment payable to those Lenders that have elected not to exercise
such option, to prepay the Loans of such Lenders (which prepayment shall be
applied in accordance with Section 2.14), and (ii) to the extent of any excess,
to the Borrowers for working capital and general corporate purposes.

 

2.9                               Conversion and Continuation Options.  (a)  The
Borrower Agent may elect from time to time to convert Eurodollar Loans to ABR
Loans by giving the Administrative Agent prior irrevocable notice substantially
in the form of Exhibit A-2 hereto of such election no later than 12:00 P.M., New
York City time, on the third Business Day preceding the proposed conversion
date; provided that if any Eurodollar Loan is so converted on any day other than
the last day of the Interest Period applicable thereto, the Borrowers shall also
pay any amounts owing pursuant to Section 2.17.  The Borrower Agent may elect
from time to time to convert ABR Loans to Eurodollar Loans by giving the
Administrative Agent prior irrevocable notice substantially in the form of
Exhibit A-2 hereto of such election no later than 12:00 P.M., New York City
time, on the third Business Day preceding the proposed conversion date (which
notice shall specify the length of the initial Interest Period therefor);
provided that no ABR Loan under a particular Facility may be converted into a
Eurodollar Loan when any Event of Default has occurred and is continuing and the
Administrative Agent or the Required Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such conversions.  Upon
receipt of any such notice the Administrative Agent shall promptly notify each
relevant Lender thereof.

 

(b)                                 Any Eurodollar Loan may be continued as such
by the Borrowers giving irrevocable notice to the Administrative Agent, in
accordance with the applicable provisions of the term “Interest Period” set
forth in Section 1.1 and no later than 12:00 P.M., New York City time, on the
third Business Day preceding the proposed continuation date, of the length of
the next Interest Period to be applicable to such Loans; provided that if any
Eurodollar Loan is so continued on any day other than the last day of the
Interest Period applicable thereto, the Borrowers shall also pay any amounts
owing pursuant to Section 2.17 and; provided, further, that no Eurodollar Loan
under a particular Facility may be continued as such when any Event of Default
has occurred and is continuing and the Administrative Agent has or the Required
Lenders in respect of such Facility have determined in its or their sole
discretion not to permit such continuations, in which case, such Loans shall be
automatically converted to ABR Loans on the last day of such then expiring
Interest Period and; provided, further, that if the Borrower Agent shall fail to
give any required notice as described above in this paragraph such Loans shall
be automatically continued as Eurodollar Loans with an Interest Period of one
month on the last day of such then expiring Interest Period.  Upon receipt of
any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof.

 

2.10                        Minimum Amounts and Maximum Number of Eurodollar
Tranches.  Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations and optional prepayments of Eurodollar
Loans and all selections of Interest Periods shall be in such amounts and be
made pursuant to such elections so that (a) after giving effect thereto, the
aggregate principal amount of Eurodollar Loans comprising each tranche of
Eurodollar Loans shall be equal to a minimum of $1,000,000 or a whole multiple
of $100,000 in excess thereof and (b) no more than 10 tranches of Eurodollar
Loans shall be outstanding at any one time.

 

2.11                        Interest Rates and Payment Dates.  (a)  Each
Eurodollar Loan shall bear interest for each day during each Interest Period
with respect thereto at a rate per annum equal to the Eurodollar Rate determined
for such day plus the Applicable Margin.

 

(b)                                 Each ABR Loan shall bear interest at a rate
per annum equal to the ABR plus the Applicable Margin.

 

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

 

(c)                                  If (i) all or a portion of the principal
amount of any Loan shall not be paid when due (whether at the stated maturity,
by acceleration or otherwise) or (ii) all or a portion of any interest payable
on any Loan or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum equal to the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus 2%, from the date of such non-payment until such amount is paid in
full (as well after as before judgment).

 

(d)                                 Interest shall be payable by the Borrowers
in arrears on each Interest Payment Date; provided that interest accruing
pursuant to paragraph (c) of this Section shall be payable from time to time on
demand.

 

2.12                        Computations of Interest and Fees.  (a)  All
computations of interest and of fees shall be made by the Applicable Agent on
the basis of a year of 360 days and, in the case of ABR Loans 365/366 days, in
each case for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest and fees are
payable.  Each determination of an interest rate or the amount of a fee
hereunder shall be made by the Administrative Agent (including determinations of
a Eurodollar Rate or ABR in accordance with the definitions of “Eurodollar Rate”
and “ABR”, respectively) and shall be conclusive, binding and final for all
purposes, absent manifest error.

 

(b)                                 The Administrative Agent shall as soon as
practicable notify the Borrower Agent and the relevant Lenders of each
determination of a Eurodollar Rate.  Any change in the interest rate on a Loan
resulting from a change in the ABR or the Eurocurrency Reserve Requirements
shall become effective as of the opening of business on the day on which such
change becomes effective.  The Administrative Agent shall as soon as practicable
notify the Borrower Agent and the relevant Lenders of the effective date and the
amount of each such change in interest rate.  The Administrative Agent shall, at
the request of the Borrower Agent, deliver to the Borrower Agent a statement
showing the quotations used by the Administrative Agent in determining any
interest rate or fee pursuant to Section 2.11(a) and Section 2.11(b).

 

2.13                        Inability to Determine Interest Rate.  If prior to
the first day of any Interest Period for any Eurodollar Loan:

 

(a)                                 the Administrative Agent shall have
determined (which determination shall be conclusive absent manifest error) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or

 

(b)                                 the Administrative Agent shall have received
notice from the Required Lenders that by reason of any changes arising after the
date of this Agreement the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders (as certified by such Lenders) of making or maintaining their affected
Loans during such Interest Period, the Administrative Agent shall give telecopy
notice thereof to the Borrower Agent and the relevant Lenders as soon as
practicable thereafter.  If such notice is given (x) any Eurodollar Loans under
the relevant Facility requested to be made on the first day of such Interest
Period shall be made as ABR Loans, (y) any Loans under the relevant Facility
that were to have been converted on the first day of such Interest Period to
Eurodollar Loans shall be continued as ABR Loans and (z) any outstanding
Eurodollar Loans under the relevant Facility shall be converted, on the last day
of the then-current Interest Period with respect thereto, to ABR Loans.  Until
such notice has been withdrawn by the Administrative Agent (which action the
Administrative Agent will take promptly after the conditions giving rise to such
notice no longer exist), no further Eurodollar Loans under the relevant Facility
shall be made or continued as such, nor shall the Borrower Agent have the right
to convert Loans under the relevant Facility to Eurodollar Loans.

 

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

 

2.14                        Pro Rata Treatment and Payments.  (a)  Each
borrowing by the Borrowers from the Lenders hereunder and each payment by the
Borrowers shall be made pro rata according to the respective Loan Percentages of
the relevant Lenders in respect of each tranche of the Loans.  Subject to
Sections 2.21(d)(iv) and Section 2.22(b)(2), each payment (including
prepayments) in respect of principal, interest or fees in respect of Loans shall
be applied among tranches of Loans as directed by the Borrower Agent.  Each
payment (including prepayments) in respect of principal or interest in respect
of any tranche of the Loans and each payment in respect of fees payable
hereunder shall be applied to the amounts of such obligations owing to the
Lenders with respect to such tranche, pro rata according to the respective
amounts then due and owing to such Lenders; provided, the provisions of this
sentence shall not be construed to apply to any payment made pursuant to
Sections 2.21 or 2.22, or obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans to any assignee or
participant.

 

(b)                                 Payments.  The Borrowers shall make each
payment under any Loan Document not later than 2:00 P.M., New York City time, on
the day when due to the Administrative Agent by wire transfer to the following
account (or at such other account or by such other means to such other address
as Administrative Agent shall have notified the Borrower Agent in writing within
a reasonable time prior to such payment) in immediately available Dollars and
without setoff or counterclaim:

 

In the case of the Administrative Agent:

 

Bank
Name:                                                                         
Barclays Bank PLC

 

Address:                                                                                                
70 Hudson Street
Jersey City, NJ 07302

 

ABA
#:                                                                                                      
026 002 574

 

Account
#:                                                                                   
Clad Control Account

 

Account Name:                                                         
050-019104

 

(c)                                  Payment Dates.  If any payment hereunder
(other than payments on Eurodollar Loans) becomes due and payable on a day other
than a Business Day, such payment shall be extended to the next succeeding
Business Day.  If any payment on a Eurodollar Loan becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day unless the result of such extension would be to
extend such payment into another calendar month, in which event such payment
shall be made on the immediately preceding Business Day.  In the case of any
extension of any payment of principal pursuant to the preceding two sentences,
interest thereon shall be payable at the then applicable rate during such
extension.

 

(d)                                 Advancing Payments.  (i)  Unless the
Administrative Agent shall have been notified in writing by any Lender prior to
a borrowing that such Lender will not make the amount that would constitute its
share of such borrowing available to the Administrative Agent, the
Administrative Agent may assume that such Lender is making such amount available
to the Administrative Agent, and the Administrative Agent may, in reliance upon
such assumption, make available to the Borrowers a corresponding amount.  If
such amount is not made available to the Administrative Agent by the required
time on the Borrowing Date therefor, such Lender shall pay to the Administrative
Agent on demand, such amount with interest thereon, at a rate equal to the
greater of (i) the Federal Funds Effective Rate and (ii) a rate determined by
the Administrative Agent in accordance with banking industry rules on interbank
compensation, for the period until such Lender makes such amount immediately
available to the Administrative Agent.  A certificate of the Administrative
Agent submitted to any Lender with respect to

 

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any amounts owing under this paragraph shall be presumptively correct in the
absence of manifest error.  If such Lender’s share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
after such Borrowing Date, the Administrative Agent shall give notice of such
fact to the Borrower Agent and the Administrative Agent shall also be entitled
to recover such amount with interest thereon at the rate per annum applicable to
ABR Loans under the relevant Facility, on demand, from the Borrower Agent.  If
the Borrowers and such Lender shall pay such interest to the Administrative
Agent for the same or an overlapping period, the Administrative Agent shall
promptly remit to the Borrowers the amount of such interest paid by the
Borrowers for such period.  If such Lender pays its share of the applicable
borrowing to the Administrative Agent, then the amount so paid shall constitute
such Lender’s Loan included in such borrowing.

 

(ii)                                  Unless the Administrative Agent shall have
been notified in writing by the Borrower Agent prior to the date of any payment
due to be made by the Borrowers hereunder that such Borrower will not make such
payment to the Administrative Agent, the Administrative Agent may assume that
the Borrowers are making such payment, and the Administrative Agent may, but
shall not be required to, in reliance upon such assumption, make available to
the relevant Lenders their respective pro rata shares of a corresponding
amount.  If such payment is not made to the Administrative Agent by the
Borrowers within three Business Days after such due date, the Administrative
Agent shall be entitled to recover, on demand, from each relevant Lender to
which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate.  Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrowers.

 

(e)                                  Application of Voluntary Prepayments. 
Unless otherwise provided in this Section or elsewhere in any Loan Document, all
payments and any other amounts received by an Administrative Agent from or for
the benefit of the Borrowers shall be applied to repay the Obligations the
Borrower Agent designates.  Amounts repaid or prepaid pursuant to this clause
(e) or clause (f) below on account of the Loans may not be reborrowed.

 

(f)                                   Application of Mandatory Prepayments. 
Subject to the provisions of clause (g) below with respect to the application of
payments during the continuance of an Event of Default, any payment made by the
Borrowers to an Agent pursuant to Section 2.8 or any other prepayment of the
Obligations required to be applied in accordance with this clause (f) shall be
applied: first, to repay the outstanding principal balance of the Loans until
paid in full, and second, the excess (if any) shall be retained by the
Borrowers.

 

(g)                                  Application of Payments During an Event of
Default.  Notwithstanding anything herein to the contrary, following the
occurrence and during the continuance of an Event of Default, and notice thereof
to the Administrative Agent by the Borrower Agent or the Required Lenders, all
payments received on account of the Obligations shall be applied by the
Administrative Agent as follows:

 

first, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts payable to the Administrative Agent in
its capacity as such;

 

second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts payable to the Lenders (including fees and
disbursements and other charges of counsel) arising under the Loan Documents,
ratably among them in proportion to the respective amounts described in this
clause second payable to them;

 

third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause third payable to them;

 

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fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans and amounts owing with respect to Specified Hedge
Agreements and Cash Management Documents in each case ratably based upon the
respective aggregate amounts of all such Obligations owing in accordance with
the respective amounts thereof then due and payable;

 

fifth, to the payment in full of all other Obligations, in each case ratably
among the Administrative Agent and the Lenders based upon the respective
aggregate amounts of all such Obligations owing to them in accordance with the
respective amounts thereof then due and payable; and

 

finally, the balance, if any, after all Obligations have been paid in full, to
the Borrowers or as otherwise required by Law;

 

provided, that, notwithstanding anything to the contrary set forth above, in no
event shall the proceeds of any Collateral owned, or any Guarantee Obligations
provided, by any Loan Party under any Loan Document be applied to repay or cash
collateralized any Excluded Swap Obligation with respect to such Loan Party.

 

(h)                                 Application of Payments Generally.  All
repayments of any Loans shall be applied first, to repay such Loans outstanding
as ABR Loans or Loans subject to a fixed rate of interest and then, to repay
such Loans outstanding as Eurodollar Loans, with those Eurodollar Loans having
earlier expiring Interest Periods being repaid prior to those having later
expiring Interest Periods.  Each optional prepayment on account of principal of
and interest on the Loans pursuant to Section 2.7 shall be applied to any
installments thereof as the Borrowers shall determine.  Each mandatory
prepayment on account of principal of and interest on the Loans pursuant to
(x) Sections 2.8(a) and (c) shall be applied to the next succeeding scheduled
installments of principal in direct order of maturity and
(y) Section 2.8(b) shall be applied pro rata among the remaining scheduled
installments of principal.  If sufficient amounts are not available to pay in
cash all outstanding Obligations described in any priority level set forth in
this Section, the available amounts shall be applied, unless otherwise expressly
specified herein, to such Obligations ratably based on the proportion of the
Secured Parties’ interest in such Obligations.  Any priority level set forth in
this Section that includes interest shall include all such interest, whether or
not accruing after the filing of any petition in bankruptcy or the commencement
of any insolvency, reorganization or similar proceeding, and whether or not a
claim for post-filing or post-petition interest is allowed in any such
proceeding.  While an Event of Default is continuing, any payments or
prepayments received by Administrative Agent shall be applied under
Section 2.14(g).

 

(i)                                     Prepayment Premium.  (a)  If any
voluntary prepayment of principal of Loans is made pursuant to
Section 2.7(a) (and, for the avoidance of doubt, not with respect to any
mandatory prepayment of principal of Loans pursuant to Section 2.8 or any
prepayment of loans under any ABL Credit Facility), the Borrowers agree to pay
to the Administrative Agent, for the ratable account of each Lender with Loans
that are so prepaid, or any Lender so replaced, a fee in an amount equal to
(1) after the First Amendment Date and on or prior to December 1, 2015, the Make
Whole Amount, (2) if after December 1, 2015 and on or prior to December 1, 2016,
2.00% of the aggregate principal amount of the Loans prepaid and (3) if after
December 1, 2016 and on or prior to December 1, 2017, 1.00% of the aggregate
principal amount of the Loans prepaid, in each case, along with any fees due and
payable.

 

(b)                                 Notwithstanding anything in clause (a) above
to the contrary, if any voluntary prepayments of principal of the Loans is made
pursuant to Section 2.7(a) after the First Amendment Date and on or prior to
December 1, 2015 (up to, but not to exceed, 35% of the aggregate principal
amount of the Loans outstanding on the First Amendment Date) with the Net Cash
Proceeds received after the First Amendment Date from any Excluded Issuance, the
Borrowers shall pay a fee with respect to such voluntary prepayments equal to
7.00% of the aggregate principal amount of the Loans prepaid.

 

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2.15                        Requirements of Law.  (a)  If the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
or compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority first
made, in each case, subsequent to the date hereof:

 

(i)                                     shall impose, modify or hold applicable
any reserve, special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other acquisition of
funds by, any office of such Lender that is not otherwise included in the
determination of the Eurodollar Rate hereunder;

 

(ii)                                  shall subject any Lender to any Taxes
(other than (A) Non-Excluded Taxes imposed on or with respect to any payment
made by or on account of any obligation of the Borrowers hereunder, (B) Excluded
Taxes (including any change in rate of Excluded Taxes) and (C) Other Taxes) on
or with respect to this Agreement, or any Loan made by it or any letter of
credit or participation therein; or

 

(iii)                               shall impose on such Lender any other
condition affecting this Agreement or Eurodollar Loans made by such Lender
hereunder not otherwise contemplated hereunder (other than with respect to any
Taxes);

 

and the result of any of the foregoing is to increase the cost to such Lender by
an amount which such Lender reasonably deems in good faith to be material, of
making, converting into, continuing or maintaining Eurodollar Loans, or to
reduce any amount receivable hereunder in respect thereof, then, in any such
case, the Borrowers shall promptly pay such Lender, any additional amounts
necessary to compensate such Lender for such increased cost or reduced amount
receivable.  If any Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrower Agent (with a
copy to the Administrative Agent) of the event by reason of which it has become
so entitled.

 

(b)                                 If any Lender shall have determined that the
adoption of or any change in any Requirement of Law regarding capital adequacy
or liquidity or in the interpretation or application thereof or compliance by
such Lender or such Lender’s holding company with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
Governmental Authority made, in each case, subsequent to the date hereof shall
have the effect of reducing the rate of return on such Lender’s or such holding
company’s capital or liquidity as a consequence of its obligations hereunder to
a level below that which such Lender or such Lender’s holding company could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender’s or such holding company’s policies with respect to capital
adequacy) by an amount deemed in good faith by such Lender to be material, then
from time to time, after submission by such Lender to the Borrower Agent (with a
copy to the Administrative Agent) of a reasonably detailed written request
therefor (consistent with the detail provided by such Lender to similarly
situated borrowers), the Borrowers shall pay to such Lender such additional
amount or amounts as will compensate such Lender or such Lender’s holding
company for such reduction.

 

(c)                                  A certificate as to any additional amounts
payable pursuant to this Section submitted by any Lender to the Borrower Agent
(with a copy to the Administrative Agent) with reasonable detail demonstrating
how such amounts were derived shall be presumptively correct in the absence of
manifest error.  Notwithstanding anything to the contrary in this Section, the
Borrowers shall not be required to compensate a Lender pursuant to this
Section for any amounts incurred more than six months prior to the date that
such Lender notifies the Borrower Agent of such Lender’s intention to claim
compensation therefor; provided that if the circumstances giving rise to such
claim have a retroactive

 

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effect, then such six-month period shall be extended to include the period of
such retroactive effect.  The obligations of the Borrowers pursuant to this
Section shall survive the termination of this Agreement and the payment of the
Obligations.

 

(d)                                 Notwithstanding anything herein to the
contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines, requirements and directives thereunder, issued
in connection therewith or in implementation thereof and (ii) all requests,
rules, guidelines or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case, pursuant to Basel III, shall in each case be deemed to be a change in
a Requirement of Law, regardless of the date enacted, adopted, issued or
implemented.

 

2.16                        Taxes.  (a)  All payments made by or on behalf of
the Borrowers or any Guarantor under this Agreement shall be made free and clear
of, and without deduction or withholding for or on account of, any Taxes, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority responsible for administering taxes, excluding (i) Taxes imposed on or
measured by net income (however determined) and franchise Taxes (in lieu of net
income Taxes) imposed on the Administrative Agent or any Lender as a result of a
present, former or future connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such Tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document), (ii) any branch
profits Taxes imposed by the United States, (iii) any United States withholding
Tax that (A) is imposed on amounts payable to a Lender at the time such Lender
becomes a party to this Agreement or designates a new lending office (other than
pursuant to a request by the Borrower Agent under Sections 2.19 or 2.20 of this
Agreement), except to the extent that such Lender (or its assignor, if any) was
entitled at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrowers with respect to such withholding
Tax pursuant to this Section or (B) or is attributable, in the case of a
Non-U.S. Lender (as defined below), to such Non-U.S. Lender’s failure to comply
with Section 2.16(d) or is attributable, in the case of a U.S. Lender (as
defined below) to such U.S. Lender’s failure to comply with Section 2.16(e), and
(iv) any United States withholding Tax imposed under FATCA (together the amounts
described in clauses (i)-(iv) are the “Excluded Taxes”).  If any such Taxes that
are not Excluded Taxes (the “Non-Excluded Taxes”) or Other Taxes are required to
be withheld from any amounts payable by or on behalf of the Borrowers or any
Guarantor hereunder, the amounts payable by the Borrowers or such Guarantor
shall be increased to the extent necessary to yield the Administrative Agent or
such Lender (after deduction or withholding of all Non-Excluded Taxes and Other
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement.

 

(b)                                 The Borrowers shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law, or at the
option of the Administrative Agent, timely reimburse the Administrative Agent
for payment of any Other Taxes.

 

(c)                                  Whenever any Non-Excluded Taxes or Other
Taxes are payable by the Borrowers, as promptly as possible thereafter the
Borrowers shall send to the Administrative Agent for the account of the
Administrative Agent or the relevant Lender, as the case may be, a certified
copy of an original official receipt received by the Borrowers showing payment
thereof if such receipt is obtainable, or, if not, other reasonable evidence of
payment satisfactory to the Administrative Agent.

 

(d)                                 Each Lender that is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code) (a “Non-U.S.
Lender”) shall deliver to the Borrower Agent and the Administrative Agent (or,
in the case of a Participant, to the Borrower Agent and to the Lender from

 

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which the related participation shall have been purchased) (i) two accurate and
complete original, signed copies of IRS Form W-8ECI, W-8EXP, W-8BEN (claiming
benefits under an applicable treaty) or W-8IMY (together with any applicable
underlying forms), whichever is applicable, (ii) in the case of a Non-U.S.
Lender claiming exemption from United States federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of “portfolio
interest”, a statement substantially in the form of Exhibit F and two accurate
and complete original, signed copies of IRS Form W-8BEN, or any subsequent
versions or successors to such forms, in each case properly completed and duly
executed by such Non-U.S. Lender.  Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement (or,
in the case of any Participant, on or before the date such Participant purchases
the related participation).  In addition, each Non-U.S. Lender shall deliver
such forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender.  Notwithstanding any other provision of this
paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant
to this paragraph that such Non-U.S. Lender is not legally able to deliver.

 

(e)                                  Each Lender that is a United States person
(as such term is defined in Section 7701(a)(30) of the Code) (a “U.S. Lender”)
shall deliver to the Borrower Agent and the Administrative Agent two accurate
and complete original, signed copies of IRS Form W-9, or any subsequent versions
or successors to such form.  Such forms shall be delivered by each U.S. Lender
on or before the date it becomes a party to this Agreement.  In addition, each
U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such U.S. Lender.

 

(f)                                   The Borrowers shall indemnify the
Administrative Agent and any Lender, within 30 days after the written demand
therefor, the full amount of any Non-Excluded Taxes or Other Taxes (including
any Non-Excluded Taxes or Other Taxes imposed or asserted on amounts payable
under this Section) payable or paid by the Administrative Agent or Lender
whether or not such Taxes are correctly or legally asserted by the relevant
Governmental Authority.  A certificate as to the amount of such amount or
liability delivered to the Borrower Agent by a Lender (with a copy to the
Administrative Agent) or by the Administrative Agent on its behalf of on behalf
of a Lender, shall be conclusive absent manifest error.

 

(g)                                  If any Secured Party determines, in good
faith, that it has received a refund of any Non-Excluded Taxes or Other Taxes as
to which it has been indemnified by the Borrowers or with respect to which the
Borrowers have paid additional amounts pursuant to this Section, it shall
promptly pay over such refund to the Borrowers (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrowers under this
Section with respect to the Non-Excluded Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of the Administrative Agent or
such Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided that the
Borrowers, upon the request of the Administrative Agent or such Lender, agree to
repay the amount paid over to the Borrowers (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental Authority. 
Notwithstanding anything to the contrary in this paragraph (g), in no event will
the Administrative Agent or Lender be required to pay any amount to the
Borrowers pursuant to this paragraph (g) the payment of which would place the
Lender in a less favorable net after-Tax position than the Lender would have
been in if the indemnification payments or additional amounts giving rise to
such refund had never been paid.  This paragraph shall not be construed to
require the Administrative Agent or any Lender to make available its Tax Returns
(or any other information relating to its Taxes which it deems confidential) to
the Borrowers or any other Person.

 

(h)                                 Each Lender shall severally indemnify the
Administrative Agent, within 10 days after demand therefor, for (i) any
Non-Excluded Taxes attributable to such Lender (but only to the extent that the
Borrowers have not already indemnified the Administrative Agent for such
Non-Excluded Taxes

 

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and without limiting the obligation of the Borrowers to do so), (ii) any Taxes
attributable to such Lender’s failure to comply with the provisions of
Section 10.6 relating to the maintenance of a Participant Register and (iii) any
Excluded Taxes attributable to such Lender, in each case, that are payable or
paid by the Administrative Agent in connection with any Loan Document, and any
reasonable expenses arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority.  A certificate as to the amount of such payment or
liability delivered to any Lender by the Administrative Agent shall be
conclusive absent manifest error.  Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due
to the Administrative Agent under this paragraph (h).  The agreements in this
paragraph (h) shall survive the resignation and/or replacement of the
Administrative Agent.

 

(i)                                     If a payment made to a Lender under any
Loan Document would be subject to U.S. Federal withholding Tax imposed by FATCA
if such Lender were to fail to comply with the applicable reporting requirements
of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code,
as applicable), such Lender shall deliver to the Borrower Agent and the
Administrative Agent at the time or times prescribed by Law and at such time or
times reasonably requested by the Borrower Agent or the Administrative Agent
such documentation prescribed by applicable Law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower Agent or the Administrative Agent as may be
necessary for the Borrowers and the Administrative Agent to comply with their
obligations under FATCA and to determine that such Lender has complied with such
Lender’s obligations under FATCA or to determine the amount to deduct and
withhold from such payment.  Solely for purposes of this paragraph, FATCA shall
include any amendments made to FATCA after the date of this Agreement.

 

(j)                                    At or prior to the Closing Date (and from
time to time thereafter upon the request of the Borrower Agent), the
Administrative Agent will provide the Borrower Agent with an original United
States Internal Revenue Service Form W-8IMY certifying on Part I and Part IV of
such Form W-8IMY that it is a U.S. branch that has agreed to be treated as a
U.S. person for United States federal withholding tax purposes with respect to
payments received by it from the Borrower Agent.  The Administrative Agent shall
promptly notify the Borrowers at any time it determines that it is no longer in
a position to provide the certification described in the prior sentence.

 

(k)                                 The agreements in this Section shall survive
the termination of this Agreement and the payment of the Obligations.

 

2.17                        Indemnity.  The Borrowers agree to indemnify each
Lender for, and to hold each Lender harmless from, any loss or expense (other
than lost profits, including the Applicable Margin) that such Lender may
actually sustain or incur as a consequence of (a) default by the Borrowers in
making a borrowing of, conversion into or continuation of Eurodollar Loans after
the Borrower Agent has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrowers in making any
prepayment of or conversion from Eurodollar Loans after the Borrower Agent has
given a notice thereof in accordance with the provisions of this Agreement or
(c) the making of a prepayment, conversion or continuation of Eurodollar Loans
on a day that is not the last day of an Interest Period with respect thereto.  A
reasonably detailed certificate as to (showing in reasonable detail the
calculation of) any amounts payable pursuant to this Section submitted to the
Borrower Agent by any Lender shall be presumptively correct in the absence of
manifest error.  This covenant shall survive the termination of this Agreement
and the payment of the Obligations.

 

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2.18                        Illegality.  Notwithstanding any other provision
herein, if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof, in each case, made after the date hereof,
shall make it unlawful for any Lender to make or maintain Eurodollar Loans as
contemplated by this Agreement, such Lender shall promptly give notice thereof
to the Administrative Agent and the Borrower Agent, and (a) the commitment of
such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as
such and convert ABR Loans to Eurodollar Loans shall be suspended during the
period of such illegality and (b) such Lender’s Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to ABR Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law.

 

If any such conversion of a Eurodollar Loan occurs on a day which is not the
last day of the then current Interest Period with respect thereto, the Borrowers
shall pay to such Lender such amounts, if any, as may be required pursuant to
Section 2.17.

 

2.19                        Mitigation of Costs; Change of Lending Office.  Each
Lender agrees that, upon the occurrence of any event giving rise to the
operation of Section 2.15, 2.16(a), 2.17 or 2.18 with respect to such Lender, it
will, if requested by the Borrower Agent, use reasonable efforts (subject to
overall policy considerations of such Lender) to designate another lending
office for any Loans affected by such event with the object of avoiding the
consequences of such event; provided that no such designation is made on terms
that, in the sole judgment of such Lender, subject such Lender and its lending
office(s) to any unreimbursed costs or are otherwise disadvantageous to such
Lender and its lending office(s); provided, further, that nothing in this
Section shall affect or postpone any of the obligations of the Borrowers or the
rights of any Lender pursuant to Section 2.15, 2.16(a) or 2.18.

 

2.20                        Replacement of Lenders.  The Borrowers shall be
permitted to replace with a financial institution any Lender that (a) requests
reimbursement for amounts owing pursuant to Section 2.15, 2.16 or 2.17 (to the
extent a request made by a Lender pursuant to the operation of Section 2.17 is
materially greater than requests made by other Lenders) or gives a notice of
illegality pursuant to Section 2.18, (b) defaults in its obligation to make
Loans hereunder, or (c) that has refused to consent to any waiver or amendment
with respect to any Loan Document that requires the consent of each Lender
directly affected thereby or of each Lender and has been consented to by the
Required Lenders; provided that (i) such replacement does not conflict with any
Requirement of Law, (ii) the replacement financial institution shall purchase,
at par, all Loans and other amounts owing to such replaced Lender on or prior to
the date of replacement, (iii) the Borrowers shall be liable to such replaced
Lender under Section 2.17 (as though Section 2.17 were applicable) if any
Eurodollar Loan owing to such replaced Lender shall be purchased other than on
the last day of the Interest Period relating thereto, (iv) the replacement
financial institution, if not already a Lender, shall be reasonably satisfactory
to the Administrative Agent to the extent that an assignment to such replacement
financial institution of the rights and obligations being acquired by it would
otherwise require the consent of the Administrative Agent pursuant to
Section 10.6(b), (v) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of Section 10.6, (vi) the
Borrowers shall pay all additional amounts (if any) required pursuant to
Section 2.15 or 2.16, as the case may be, in respect of any period prior to the
date on which such replacement shall be consummated, (vii) if applicable, the
replacement financial institution shall consent to such amendment or waiver and
(viii) any such replacement shall not be deemed to be a waiver of any rights
that the Borrowers, the Administrative Agent or any other Lender shall have
against the replaced Lender.

 

2.21                        Incremental Loans.  (a)  At any time or from time to
time after the Closing Date, the Borrower Agent may by written notice to the
Administrative Agent elect to request prior to the Maturity Date, the
establishment of one or more new term loan commitments which may be of the same
tranche as such existing Loans (a “Loan Increase”) or a separate tranche of new
term loans (collectively with any Loan Increase, the “Incremental
Commitments”).  Each Incremental Commitment shall be in an aggregate principal
amount that is not less than $5,000,000 individually and in integral multiples
of $1,000,000 in

 

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excess of that amount.  Notwithstanding anything to the contrary herein, the
Incremental Commitments shall not exceed, $75,000,000.  Each such notice shall
specify (A) the date (each, an “Increased Amount Date”) on which the Borrower
Agent proposes that such Incremental Commitments shall be effective, which shall
be a date after the date on which such notice is delivered to the Administrative
Agent and (B) the identity of each existing Lender or other Person that is an
Assignee (each, a “New Lender,” as applicable) to whom the Borrower Agent
proposes any portion of such Incremental Commitments, be allocated and the
amounts of such allocations; provided that (x) any Lender approached to provide
all or a portion of the Incremental Commitments may elect or decline, in its
sole discretion, to provide an Incremental Commitment (it being understood that
there is no obligation to approach any existing Lenders to provide any
Incremental Commitment), (y) the Administrative Agent shall have consented (such
consent not to be unreasonably withheld) to such Person’s providing such
Incremental Commitments if such consent of the Administrative Agent would be
required under Section 10.6 for an assignment of Loans or Commitments to such
Person and (z) any Affiliated Lender providing an Incremental Commitment shall
be subject to the same restrictions set forth in Section 10.6(c) as they would
otherwise be subject to with respect to any purchase by or assignment to such
Affiliated Lender of Loans.  Such Incremental Commitments shall become
effective, as of such Increased Amount Date; provided that (1) no Default or
Event of Default shall exist on or prior to such Increased Amount Date after
giving effect to such Incremental Commitments; (2) the Incremental Commitments,
as applicable, shall be effected pursuant to one or more Joinder Agreements
(each, an “Incremental Joinder Agreement”) executed and delivered by the
Borrowers, the New Lender, and the Administrative Agent, or another form of
incremental amendment, each of which shall be recorded in the Register;
(3) Ultimate Parent shall be in pro forma compliance with the Financial
Condition Covenants, and in any event, after giving effect to any acquisitions,
Dispositions or repayments of Indebtedness during the relevant determination
period or simultaneously with the borrowing of the Incremental Loans; (4) the
Consolidated Senior Secured Leverage Ratio of Ultimate Parent and the Restricted
Subsidiaries shall be less than 2.25 to 1.00 calculated on a Pro Forma Basis as
of the most recently completed period of four consecutive fiscal quarters ending
prior to such transaction for which the financial statements and certificates
required by Section 5.1(a) or 5.1(b), as the case may be, and 5.1(c) have been
delivered, as if such transaction had occurred as of the first day of such
period, (5) the Borrowers shall pay, or cause to be paid, all fees and expenses
owing in respect of such Incremental Loans to the Administrative Agent, the
Collateral Agent and the Lenders, (6) the representations and warranties of the
Parent Companies, the Borrowers and their respective Subsidiaries set forth in
this Agreement and the other Loan Documents shall be true and correct in all
material respects (or, in the case of any such representation or warranty
already qualified as to materiality, in all respects) on and as of such
Increased Amount Date as if made on and as of such date (or, in the case of any
such representation or warranty expressly stated to have been made as of a
specific date, as of such specific date) and (7) the Administrative Agent shall
have received such legal opinions and other documents reasonably requested by
the Administrative Agent in connection therewith.

 

(b)                                 Any Incremental Loans effected through the
establishment of one or more new Loans made on an Increased Amount Date shall be
designated a separate tranche of Incremental Loans, for all purposes of this
Agreement.  On any Increased Amount Date on which Incremental Commitments of any
tranche are effected (including through any Loan Increase), subject to the
satisfaction of the foregoing terms and conditions, (i) each New Lender of such
tranche shall make a Loan to the Borrowers (a “Incremental Loan”) in an amount
equal to its Incremental Commitment of such tranche, and (ii) each New Lender of
such tranche shall become a Lender hereunder with respect to the Incremental
Commitment of such tranche and the Incremental Loans of such tranche made
pursuant thereto.  Notwithstanding the foregoing, Incremental Loans may have
identical terms to the Loans and be treated as the same tranche as the Loans.

 

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(c)                                  The Administrative Agent shall notify
Lenders promptly upon receipt of the Borrower Agent’s notice of each Increased
Amount Date and in respect thereof the tranche of Incremental Commitments and
the New Lenders of such tranche.

 

(d)                                 The terms, provisions and documentation of
the Incremental Loans and Incremental Commitments, as the case may be, of any
tranche shall be as agreed between the Borrowers and the New Lenders, providing
such Incremental Loans and Incremental Commitments, and except as otherwise set
forth herein, to the extent not identical to the Loans, shall be reasonably
satisfactory to Administrative Agent.  In any event:

 

(i)                                     the Weighted Average Life to Maturity of
all Incremental Loans of any tranche shall be no shorter than the Weighted
Average Life to Maturity of the then outstanding Loans on the date of incurrence
of such Incremental Loans;

 

(ii)                                  the final maturity date of any tranche of
the Incremental Loans shall be no earlier than the original Maturity Date;

 

(iii)                               in the case of a Loan Increase, any
Incremental Loans shall be on the same terms and pursuant to the same
documentation as the Loans increased thereby;

 

(iv)                              the Incremental Loans may participate on a pro
rata basis or less than pro rata basis (but not on a greater than pro rata
basis) in any voluntary or mandatory prepayments of Loans hereunder, as
specified in the applicable Incremental Joinder Agreement;

 

(v)                                 with regards to any Incremental Loan, if the
All-in Yield relating to such Incremental Loan exceeds the All-in Yield of the
initial Facility by more than 50 basis points, the All-in Yield relating to the
initial Facility shall be adjusted to be equal to the All-in Yield relating to
such Incremental Loan minus 50 basis points; provided, that in determining such
All-in Yield, any amendments to the applicable margin on the initial Facility
that became effective subsequent to the Closing Date but prior to the time of
such Incremental Loan shall also be included in such calculations; and

 

(vi)                              the Incremental Loans will rank either pari
passu with, or junior to, the existing Loans in right of payment (and to the
extent subordinated in right of payment or security, shall be subject to
subordination and intercreditor agreements reasonably satisfactory to the
Administrative Agent) and the liens securing the Incremental Loans will rank
pari passu with, or junior to, the liens securing the existing Loans.

 

(e)                                  Each Incremental Joinder Agreement may,
without the consent of any other Lenders, effect such amendments to this
Agreement and the other Loan Documents as may be necessary or appropriate, in
the reasonable opinion of the Administrative Agent and the Borrowers to effect
the provisions of this Section, and for the avoidance of doubt, this
Section shall supersede any provisions in Section 10.7 or 10.1 to the contrary.

 

(f)                                   The Loans and Commitments extended or
established pursuant to this paragraph shall constitute Loans and Commitments
under, and shall be entitled to all the benefits afforded by, this Agreement and
the other Loan Documents, and shall, without limiting the foregoing, benefit
equally and ratably from the Guarantee Obligations and security interests
created by the Security Documents.  The Loan Parties shall take any actions
reasonably required by the Administrative Agent to ensure and/or

 

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demonstrate that the Lien granted by the Collateral Documents continue to be
perfected under the UCC or otherwise after giving effect to the extension or
establishment of any such Loans or any such Commitments.

 

2.22                        Extensions of Loans and Commitments.  (a) 
Notwithstanding anything to the contrary in this Agreement, the Borrower Agent
may request that the Lenders extend the maturity of their Loans, to a date to be
agreed by the Extending Lenders.  In order to exercise such right, the Borrower
Agent shall provide a notice to the Administrative Agent (who shall provide a
copy of such notice to each of the Lenders) (the “Extension Request”).

 

(b)                                 The Borrowers may provide an Extension
Request to the Administrative Agent no more than 120, and no fewer than 45, days
prior to the then effective Maturity Date.  The Extension Request shall set
forth the proposed terms of any Extended Lender Loans to be established, which
terms shall be identical to those applicable to the tranche from which they are
to be extended (such non-extended Loans, the “Non-Extended Loans”, and
collectively, the “Non-Extended Lender Loans”) except (x) the maturity date of
any Extended Lender Loan shall be at least one year later than the Maturity
Date, (y) additional fees, premiums and different interest rates may be payable
to the Lenders providing any Extended Lender Loans and (z) Extended Lender Loans
may be subject to covenants or other provisions applicable only to periods after
the Maturity Date; provided that, notwithstanding anything to the contrary in
this Section or otherwise in this Agreement, (1) no Extended Lender Loans shall
be secured by or receive the benefit of any collateral, credit support or
security that does not secure or support the applicable Non-Extended Lender
Loans; (2) the repayment (other than in connection with a permanent repayment),
the mandatory prepayment of any Loans applicable to any Extended Lender Loan of
any tranche shall be made on a pro rata basis with all other outstanding Loans
(including all Extended Lender Loans) of such tranche (provided that Extended
Lender Loans may, if the Extending Lenders making or committing to any such
Extended Lender Loans so agree, participate on a less than pro rata basis in any
voluntary or mandatory repayment or prepayment or commitment reduction
hereunder); (3) no Extended Lender Loans may be optionally prepaid prior to the
date on which the related Non-Extended Loans are repaid unless such optional
prepayment is accompanied by a pro rata optional prepayment of the related
Non-Extended Loans; (4) each Lender holding Loans of any tranche shall be
permitted to participate in the related tranche of Extended Lender Loans in
accordance with its pro rata share of the Loans of such tranche; (5) no Default
shall exist on the Extension Date before or after giving effect to any Extended
Lender Loans; and (6) Extended Lender Loans shall be treated as a separate
tranche from Non-Extended Loans.  No Lender shall have any obligation to convert
any Non-Extended Lender Loans held by it into Extended Lender Loans pursuant to
the Extension Request.

 

(c)                                  The Borrowers shall provide the Extension
Request at least 10 Business Days prior to the date on which Lenders under the
applicable tranche of Loans are requested to respond.  Any Lender (an “Extending
Lender”) wishing to have all or a portion of its Loans converted into Extended
Lender Loans pursuant thereto shall notify the Administrative Agent (an
“Extension Election”) on or prior to the date specified in such Extension
Request of the amount of its applicable Loans that it has elected to convert
into Extended Lender Loans.  In the event that the aggregate amount of Loans
subject to Extension Elections exceeds the amount of Extended Lender Loans
requested pursuant to the Extension Request, Loans shall be converted to
Extended Lender Loans on a pro rata basis. The Borrowers shall have the right to
seek and accept Extended Lender Loans from (i) Lenders and/or (ii) third party
financial institutions that are not then Lenders (each a “New Extending
Lender”), in each case in an amount equal to the amount of the Loans of any
Lender that declines to become an Extending Lender (a “Declining Lender”);
provided that each Lender shall have the right to increase its Loans up to the
amount of the Declining Lenders’ Loans before the Borrowers will be permitted to
replace a New Extending Lender for any Declining Lender. Each replacement of a
New Extending Lender for a Declining Lender shall be effected in accordance with
Section 2.20.  Each New Extending Lender under the Facility shall be subject

 

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to the prior written approval of the Administrative Agent to the extent such
approval is required pursuant to Section 10.6.  Notwithstanding anything herein
to the contrary, no Lender shall have any obligation to extend any of its
Commitments and any election to do so shall be in the sole discretion of such
Lender.  Any Lender not responding by 5:00 p.m. (New York City time) on the date
five (5) Business Days prior to the date on which the Borrower Agent proposes
that the Extended Lender Loans shall be effective (which such date shall be at
least 15 Business Days after the date the Borrower Agent has provided the
applicable Extension Request) shall be deemed to have declined to extend its
Commitments.

 

(d)                                 Loans whose maturity is extended pursuant to
this Section are referred to as “Extended Lender Loans”.

 

(e)                                  Extended Lender Loans shall be established
pursuant to an amendment (the “Extension Amendment”) to this Agreement (which
may include the amendments to provisions related to maturity, interest margins,
fees or prepayments referenced in Section 2.22(b)) executed by the Loan Parties,
the Administrative Agent, and the Extending Lenders.  Notwithstanding anything
to the contrary set forth in Section 10.1, no Extension Amendment shall require
the consent of any Lender other than the Extending Lenders with respect to the
Extended Lender Loans established thereby.  In connection with the Extension
Amendment, the Guarantors shall reaffirm their respective obligations under the
Guarantee and Collateral Agreement pursuant to an agreement reasonably
satisfactory to the Administrative Agent and the Borrowers shall, if requested
by the Administrative Agent, deliver an opinion of counsel reasonably acceptable
to the Administrative Agent as to the enforceability of the Extension Amendment,
this Agreement as amended thereby, the reaffirmation of the Guarantee and
Collateral Agreement and such of the other Loan Documents (if any) as may be
amended thereby.  In addition, the Extension Amendment shall contain a
representation and warranty by the Parent Companies and the Borrowers that the
representations and warranties of (i) the Parent Companies and the Borrowers
contained in Section 3 and (ii) each Loan Party contained in each other Loan
Document or in any document furnished at any time under or in connection
herewith or therewith are true and correct in all material respects (or, if such
representation or warranty is itself modified by materiality or Material Adverse
Effect, it shall be true and correct in all respects) on and as of the date of
such Extension Amendment, except (A) to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct as of such earlier date.  This Section shall supersede any
provisions in Section 10.1 or Section 10.7 to the contrary.  Following the
execution of the Extension Amendment, the Administrative Agent shall notify the
Lenders of the Facility that has been extended pursuant to this Section.

 

(f)                                   Notwithstanding anything to the contrary
contained in this Agreement, on any date on which any tranche of Loans are
converted to extend the scheduled maturity date in accordance with this
Section (the “Extension Date”), the aggregate principal amount of Loans of such
tranche of each Extending Lender shall be deemed reduced by an amount equal to
the aggregate principal amount of Extended Lender Loans relating to such tranche
so converted by such Lender on such date.

 

2.23                        Borrower Agent.  Each Borrower hereby designates the
Genesis Borrower (the “Borrower Agent”) as its representative and agent for all
purposes under the Loan Documents, including requests for Loans, designation of
interest rates, delivery or receipt of communications, preparation and delivery
of financial reports, receipt and payment of Obligations, requests for waivers,
amendments or other accommodations, actions under the Loan Documents (including
in respect of compliance with covenants), and all other dealings with the
Administrative Agent and the Lenders.  The Borrower Agent hereby accepts such
appointment.  The Administrative Agent shall be entitled to rely upon, and shall
be fully protected in relying upon, any notice or communication (including any
Notice of Borrowing and Conversion/Continuation Notice) delivered by the
Borrower Agent on behalf of any Borrower. The Administrative Agent may give any
notice or communication with a Borrower hereunder to the Borrower Agent on
behalf of such Borrower.  The Administrative Agent shall have the right, in its
discretion, to

 

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deal exclusively with the Borrower Agent for any or all purposes under the Loan
Documents.  Each Borrower agrees that any notice, election, communication,
representation, agreement or undertaking made on its behalf by the Borrower
Agent shall be binding upon and enforceable against it.

 

2.24                        Nature and Extent of Each Borrower’s Liability. 
(a)  Each Borrower agrees that it is jointly and severally liable for the prompt
payment and performance of, all Obligations and all agreements under the Loan
Documents.  The Loans constitute one general obligation of Borrowers and (unless
otherwise expressly provided in any Loan Document) shall be secured by a Lien
upon all Collateral; provided, however, that each Lender shall be deemed to be a
creditor of, and the holder of a separate claim against, each Borrower to the
extent of any Obligations jointly or severally owed by such Borrower.

 

(b)                                 Each Borrower hereby subordinates any
claims, including any rights at law or in equity to payment, subrogation,
reimbursement, exoneration, contribution, indemnification or set off, that it
may have at any time against any other Loan Party, howsoever arising, to the
satisfaction in full of all Obligations (other than contingent indemnification
obligations not yet due and payable).

 

SECTION 3.                            REPRESENTATIONS AND WARRANTIES

 

To induce the Agents and the Lenders to enter into this Agreement and to make
the Loans, the Parent Companies and each Borrower hereby jointly represents and
warrants (as to itself and each of its Subsidiaries) to the Agents and each
Lender, which representations and warranties shall be deemed made on the Closing
Date (immediately after giving effect to the Transactions) and on the date of
each borrowing of Loans hereunder, that:

 

3.1                               Corporate Existence; Compliance with Law. 
(a)  Except as set forth on Schedule 3.1(a), each Loan Party and each of its
Restricted Subsidiaries (i) is duly and solely organized, validly existing and
in good standing under the laws of the jurisdiction of its organization, (ii) is
duly qualified to do business as a foreign entity and in good standing under the
laws of each jurisdiction where such qualification is necessary, except where
the failure to be so qualified or in good standing would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect, (iii) has all
requisite power and authority and the legal right to own, pledge, mortgage and
operate its property, to lease or sublease any property it operates under a
Lease or sublease, as applicable, and to conduct its business as now or
currently proposed to be conducted, except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect, (iv) is in compliance
with all applicable Requirements of Law and Healthcare Laws, except where the
failure to be in compliance would not reasonably be expected to have a Material
Adverse Effect, and (v) has all necessary Permits and Primary Licenses from or
by, has made all necessary filings with, and has given all necessary notices to,
each Governmental Authority having jurisdiction, to the extent required for such
ownership, lease, sublease, operation, occupation or conduct of business, except
where the failure to obtain such Permits and Primary Licenses, make such filings
or give such notices, in the aggregate, could not reasonably be expected to have
a Material Adverse Effect.

 

(b)                                 Except as set forth on Schedule 3.1(b), each
Healthcare Facility (i) is being operated as an assisted living, skilled nursing
or independent living facility, as set forth on Schedule 3.1(b), (ii) is in
conformance in all material respects with all insurance, reimbursement and cost
reporting requirements, and (iii) is in compliance with all applicable
Requirements of Law and Healthcare Laws (giving effect to any waivers thereof
currently in place), including all Primary Licenses, except, in each case, where
the failure to be in conformance or compliance would not reasonably be expected
to have a Material Adverse Effect. Notwithstanding the foregoing, each
Healthcare Facility has a provider agreement that is in full force and effect
under Medicare and/or Medicaid, except where the failure to do so would be
limited to one or more Healthcare Facilities accounting in the aggregate for
less than 5% of Consolidated EBITDAR of the Genesis Borrower.  There is no
threatened in writing, existing or pending

 

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revocation, suspension, termination, probation, restriction, limitation, or
nonrenewal proceeding by any Third-Party Payor Program, to which any Loan Party
or any Restricted Subsidiary may presently be subject, except as could not
reasonably be expected to have a Material Adverse Effect.

 

(c)                                  Except as set forth on Schedule 3.1(c), all
Primary Licenses necessary for using and operating the Healthcare Facilities for
the uses described in clause (b), above, are either held by the Loan Parties or
the Subsidiaries, or in the name of the applicable Loan Party or Subsidiary, as
required under applicable Requirements of Law, and are in full force and effect,
unless failure to have same could not reasonably be expected to have a Material
Adverse Effect.

 

(d)                                 To the Loan Parties’ knowledge, with respect
to any Healthcare Facility, there are no proceedings by any Governmental
Authority or notices thereof that are reasonably likely directly or indirectly,
or with the passage of time (i) to have a material adverse impact on the Loan
Parties’ or the Subsidiaries’ ability to accept and/or retain patients or
residents or operate such Healthcare Facility for its current use or result in
the imposition of a fine, a sanction, a lower rate certification or a lower
reimbursement rate for services rendered to eligible patients or residents,
except to the extent that the same could not reasonably be expected to have a
Material Adverse Effect, and, with respect to the Loan Parties’ or the
Subsidiaries’ ability to accept and/or retain patients or residents or operate
such Healthcare Facility, reimbursement for which is provided under Medicare or
Medicaid, except to the extent that the same could not be reasonably likely to
have an adverse impact on one or more Healthcare Facilities accounting in the
aggregate for more than 5% of the Consolidated EBITDAR of the Genesis Borrower,
(ii) to modify, limit or result in the transfer, suspension, revocation or
imposition of probationary use of any of the Permits or Primary Licenses, other
than a transfer of such Permit or Primary License to a new location or to any
Loan Party if such Permit or Primary License is not already held by such Loan
Party, except to the extent same would not be reasonably likely to have a
Material Adverse Effect, or (iii) to affect any Loan Party’s or Subsidiary’s
continued participation in the applicable Third-Party Payor Programs, or any
successor programs thereto, except to the extent that the same could not
reasonably be expected to have a Material Adverse Effect, and, with respect to
any Loan Party’s or Subsidiary’s continued participation in Medicare or
Medicaid, except to the extent that the same could not reasonably be expected to
affect one or more Healthcare Facilities accounting in the aggregate for more
than 5% of the Consolidated EBITDAR of the Genesis Borrower.

 

(e)                                  With respect to any Healthcare Facility,
except as set forth on Schedule 3.1(e), no Healthcare Facility currently has
outstanding any violation, and no statement of charges or deficiencies has been
made or penalty enforcement action has been undertaken each that remain
outstanding against any Healthcare Facility, any Loan Party, any Subsidiary or
against any officer, director, partner, member or stockholder of any Borrower,
by any Governmental Authority, and there have been no violations threatened in
writing against any Healthcare Facility’s, or any Loan Party’s or any
Subsidiary’s certification for participation in applicable Third-Party Payor
Programs that remain open or unanswered except to the extent same could not
reasonably be expected to have a Material Adverse Effect and, with respect to
any Healthcare Facility’s or any Loan Party’s certificate for participation in
Medicare or Medicaid, except to the extent that the same could not reasonably be
expected to affect one or more Healthcare Facilities accounting in the aggregate
for more than 5% of the Consolidated EBITDAR of the Genesis Borrower.

 

(f)                                   With respect to any Healthcare Facility,
(i) there are no current, pending or outstanding Third-Party Payor Programs
reimbursement audits, appeals or recoupment efforts actually pending at any
Healthcare Facility and (ii) to the Loan Parties’ knowledge, there are no years
that are subject to an open audit in respect of any Third-Party Payor Program,
other than customary audit rights pursuant to an Approved Insurer’s program,
which, in the case of clauses (i) and (ii), could reasonably be

 

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expected to have a Material Adverse Effect and, with respect to any such open
audit in respect of Medicare or Medicaid (other than customary audit rights
pursuant to Medicare or Medicaid), could reasonably be expected to adversely
affect one or more Healthcare Facilities accounting in the aggregate for more
than 5% of the Consolidated EBITDAR of the Genesis Borrower. No Loan Party nor
any Subsidiary (i) has received federal funds authorized under the Hill-Burton
Act (42 U.S.C. 291, et seq.), as it may be amended or (ii) is a participant in
any federal or state program whereby any governmental agency may have the right
to recover funds by reason of the advance of federal or state funds.

 

3.2                               Loan Documents and Lease Consent and Amendment
Agreements.  (a)  The execution, delivery and performance by each Loan Party of
the Loan Documents and Lease Consent and Amendment Agreements to which it is a
party and the consummation of the other transactions contemplated therein
(i) are within such Loan Party’s corporate or similar powers and, at the time of
execution thereof, have been duly authorized by all necessary corporate and
similar action, (ii) do not (A) contravene such Loan Party’s organizational or
governing documents, (B) violate any applicable Requirement of Law in any
material respect, (C) conflict with, contravene, constitute a default or breach
under, or result in or permit the termination or acceleration of, any material
Contractual Obligation (including the Material Master Leases) of any Loan Party
or any of their Restricted Subsidiaries other than those that (x) have been
permanently waived or consented to in writing by the applicable counterparty or
(y) would not, in the aggregate, have a Material Adverse Effect or (D) result in
the imposition of any Lien (other than a Lien permitted by Section 7.2) upon any
property of any Loan Party or any of their Restricted Subsidiaries and (iii) do
not require any Permit of, or filing with, any Governmental Authority or any
consent of, or notice to, any Person, other than (A) with respect to the Loan
Documents, the filings required to perfect the Liens created by the Loan
Documents, (B) those listed on Schedule 3.2 and that have been, or will be prior
to the Closing Date, obtained or made, copies of which have been, or, upon
request, will be, prior to the Closing Date, made available or delivered to the
Administrative Agent, and each of which on the Closing Date, will be in full
force and effect, and (C) those which the failure to obtain would not result in
a Material Adverse Effect. The Material Master Leases are valid, binding and
enforceable according to their terms.

 

(b)                                 From and after its delivery to the
Administrative Agent, each Loan Document that has been duly executed and
delivered to the other parties thereto by each Loan Party thereto, is the legal,
valid and binding obligation of such Loan Party and is enforceable against such
Loan Party in accordance with its terms except to the extent limited by general
principles of equity and by bankruptcy, insolvency, fraudulent conveyance or
other similar laws affecting creditors’ rights generally.

 

3.3                               Financial Statements.  (a)  The Audited
Financial Statements with respect to LLC Parent, and, to LLC Parent’s knowledge,
the Audited Financial Statements with respect to the Sun Borrower (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein; and (ii) fairly
present in all material respects the financial condition of LLC Parent and its
Subsidiaries or the Sun Borrower and its Subsidiaries, as the case may be, as of
the date thereof and their results of operations for the period covered thereby
in accordance with GAAP consistently applied throughout the periods covered
thereby, except as otherwise expressly noted therein.

 

(b)                                 The unaudited Consolidated balance sheets
with respect to the LLC Parent dated March 31, 2012 and June 30, 2012, and, to
Parent’s knowledge, the unaudited Consolidated balance sheets with respect to
the Sun Borrower dated March 31, 2012 and June 30, 2012, and the related
Consolidated statements of income or operations and cash flows for the fiscal
quarter ended on that date, in each case, (x) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, and (y) fairly present in all material
respects

 

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the financial condition of LLC Parent and its Subsidiaries or the Sun Borrower
and its Subsidiaries, as the case may be, as of the date thereof and their
results of operations for the period covered thereby, subject, in the case of
clauses (x) and (y), to the absence of footnotes and to normal year-end audit
adjustments.  Schedule 3.3 sets forth all Material Indebtedness of LLC Parent
and its Consolidated Subsidiaries and the Acquired Business and its Consolidated
Subsidiaries as of the date of such financial statements.

 

(c)                                  The Consolidated pro forma balance sheet of
LLC Parent and its Subsidiaries as at June 30, 2012, and the related
Consolidated pro forma statements of income and cash flows of LLC Parent and its
Subsidiaries for the twelve months then ended, certified by the chief financial
officer or treasurer of LLC Parent, copies of which have been furnished to each
Lender, fairly present in all material respects the Consolidated pro forma
financial condition of LLC Parent and its Subsidiaries as at such date and the
Consolidated pro forma results of operations of LLC Parent and its Subsidiaries
for the period ended on such date, in each case giving effect to the
Transactions, all in accordance with GAAP.

 

(d)                                 The annual business plan and the
Consolidated forecasted projections of LLC Parent and its Subsidiaries were
prepared in good faith on the basis of the assumptions stated therein, which
assumptions were believed to be reasonable in light of the conditions existing
at the time of delivery of such forecasts, it being understood that actual
results may vary from such forecasts and that such variations may be material.

 

3.4                               Material Adverse Effect.  Since December 31,
2012, there has been no events, circumstances, developments or other changes in
facts that would, in the aggregate, have a Material Adverse Effect.

 

3.5                               Solvency.  Both before and after giving effect
to (a) the disbursement of the proceeds of such Loans, (b) the consummation of
the Transactions and (c) the payment and accrual of all transaction costs in
connection with the foregoing and any contribution and indemnification between
such Person, the Parent Companies, the Borrowers and the Restricted
Subsidiaries, on a Consolidated basis, are Solvent.

 

3.6                               Litigation.  Except as disclosed on Schedule
3.6, there are no pending (or, to the knowledge of any Loan Party, threatened)
actions, investigations, suits, proceedings, audits, claims, demands, orders or
disputes affecting the Loan Parties or any Restricted Subsidiary with, by or
before any Governmental Authority other than those that could not reasonably be
expected to, in the aggregate, have a Material Adverse Effect.

 

3.7                               Taxes.  Except as set forth on Schedule 3.7
for which reserves shall be established upon the reasonable request of the
Administrative Agent, or for such matters as would not reasonably be expected
individually or in the aggregate to cause a Material Adverse Effect, all
federal, state, local and foreign income and franchise and other material tax
returns, reports and statements (collectively, the “Tax Returns”) required to be
filed by any Loan Party or any Restricted Subsidiary have been filed in its own
name with the appropriate Governmental Authorities in all jurisdictions in which
such Tax Returns are required to be filed, all such Tax Returns are true and
correct in all material respects, and all Taxes, charges and other impositions
reflected therein or otherwise due and payable have been paid prior to the date
on which any Liability may be added thereto for non-payment thereof except for
those contested in good faith by appropriate proceedings diligently conducted
and for which adequate reserves are maintained on the books of the appropriate
Loan Party or any Restricted Subsidiary in accordance with GAAP. Other than as
set forth on Schedule 3.7, no material Tax Return is under audit or examination
by any Governmental Authority and no written notice of such an audit or
examination or any written assertion of any claim for material Taxes has been
given or made by any Governmental Authority. Except as set forth on Schedule
3.7, or for such matters as would not reasonably be expected individually

 

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or in the aggregate to cause a Material Adverse Effect, proper and accurate
amounts have been withheld by each Loan Party or any Restricted Subsidiary from
their respective employees for all periods in full and complete compliance with
the Tax, social security and unemployment withholding provisions of applicable
Requirements of Law and such withholdings have been timely paid to the
respective Governmental Authorities. No Tax Affiliate has participated in a
“reportable transaction” within the meaning of Treasury Regulation
Section 1.6011-4(b) or has been a member of an affiliated, combined or unitary
group other than the group of which a Tax Affiliate is the common parent.

 

To the extent required to be paid on or prior to the Closing Date, all Other
Taxes required to be paid in connection with the granting of the security
interest under the Loan Documents have been paid or will be paid on the Closing
Date.

 

3.8                               Margin Regulations.  No Loan Party is engaged
in the business of extending credit for the purpose of, and no proceeds of any
Loan or other extensions of credit hereunder will be used for the purpose of,
buying or carrying margin stock (within the meaning of Regulation U of the
Board) or extending credit to others for the purpose of purchasing or carrying
any such margin stock, in each case in contravention of Regulation T, U or X of
the Board.

 

3.9                               No Burdensome Obligations; No Defaults.  No
Loan Party nor any Restricted Subsidiary is a party to any Contractual
Obligation, no Loan Party nor any Restricted Subsidiary has organizational or
governing documents containing obligations, and, to the knowledge of the Loan
Parties, there are no applicable Requirements of Law, in each case the
compliance with which would have, in the aggregate, a Material Adverse Effect. 
No Loan Party nor any Restricted Subsidiary (and, to the knowledge of each Loan
Party, no other party thereto) is in default under or with respect to any
Contractual Obligation of any Loan Party or any Restricted Subsidiary, other
than those that would not, in the aggregate, have a Material Adverse Effect.

 

3.10                        Investment Company Act.  No Loan Party nor any
Restricted Subsidiary is an “investment company” or an “affiliated person” of,
or “promoter” or “principal underwriter” for, an “investment company”, as such
terms are defined in the Investment Company Act of 1940.

 

3.11                        Labor Matters.  There are no strikes, work
stoppages, slowdowns or lockouts existing, pending (or, to the knowledge of any
Loan Party, threatened) against or involving any Loan Party or any Restricted
Subsidiary, except, for those that would not, in the aggregate, have a Material
Adverse Effect.  Except as set forth on Schedule 3.11, as of the Closing Date,
(a) there is no collective bargaining or similar agreement with any union, labor
organization, works council or similar representative covering any employee of
any Loan Party, (b) no petition for certification or election of any such
representative is existing or pending with respect to any employee of any Loan
Party or any Restricted Subsidiary and (c) no such representative has sought
certification or recognition with respect to any employee of any Loan Party or
any Restricted Subsidiary.

 

3.12                        ERISA.  (a)  Schedule 3.12(a) sets forth, as of the
Closing Date, a complete and correct list of, and that separately identifies,
(i) all Title IV Plans and (ii) all Multiemployer Plans. Each Benefit Plan and
Multiemployer Plan, and each trust thereunder, intended to qualify for tax
exempt status under Section 401 or 501 of the Code or other Requirements of Law
so qualifies. Except for those that would not, in the aggregate, have a Material
Adverse Effect, (x) each Benefit Plan is in compliance with applicable
provisions of ERISA, the Code and other Requirements of Law, (y) there are no
existing or pending (or to the knowledge of any Loan Party, threatened) claims
(other than routine claims for benefits in the normal course), sanctions,
actions, lawsuits or other proceedings or (to the knowledge of any Loan Party)
investigation involving any Benefit Plan and, to the knowledge of any Loan
Party, Multiemployer Plan, to which any Loan Party or any Restricted Subsidiary
incurs or otherwise has or could have an obligation or any Liability and (z) no
ERISA Event is reasonably expected to occur. On the Closing Date,

 

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no ERISA Event has occurred in connection with which obligations and liabilities
(contingent or otherwise) remain outstanding.  Except for such liabilities that
would not, in the aggregate, have a Material Adverse Effect, no ERISA Affiliate
would have any Withdrawal Liability as a result of a complete withdrawal, as of
the Closing Date, from any Multiemployer Plan.

 

(b)                                 Schedule 3.12(b) sets forth, as of the
Closing Date, a complete and correct list of, and that separately identifies all
Foreign Pension Plans.  Each Foreign Pension Plan, and each trust thereunder,
intended to qualify for tax exempt status under any Requirements of Law so
qualifies.  Except for those that would not, in the aggregate, have a Material
Adverse Effect, each Foreign Pension Plan is in compliance with all requirements
of law applicable thereto and the respective requirements of the governing
documents for such plan.   No Loan Party has engaged in a transaction which
would subject any Loan Party, directly or indirectly, to a tax or civil penalty
that could reasonably be expected to result in a Material Adverse Effect.  With
respect to each Foreign Pension Plan, reserves have been established in the
financial statements furnished to Lenders in respect of any unfunded liabilities
in accordance with applicable law and prudent business practice or, where
required, in accordance with ordinary accounting practices in the jurisdiction
in which such Foreign Pension Plan is maintained. The aggregate unfunded
liabilities with respect to such Foreign Pension Plans will not result in
liability of the Borrower that could reasonably be expected to result in a
Material Adverse Effect.

 

3.13                        Environmental Matters.  Except for such matters as
would not reasonably be expected individually or in the aggregate to cause a
Material Adverse Effect, (i) the operations of each Loan Party and each
Restricted Subsidiary are and have been in compliance with all applicable
Environmental Laws, including obtaining, maintaining and complying with all
Permits required by any applicable Environmental Law, (ii) no Loan Party nor any
Restricted Subsidiary is subject to or has received written notice of any
Environmental Claim, or to its knowledge been threatened with any potential
Environmental Claim, excluding any Environmental Claim which has been fully
resolved with no further obligations on the part of said Loan Party or
Restricted Subsidiary, (iii) no Loan Party or Restricted Subsidiary has received
notice from a Governmental Authority that a Lien in favor of such Governmental
Authority has attached to any Property of any Loan Party or Restricted
Subsidiary, securing, in whole or part, Environmental Liabilities, (iv) there
has been no Release, or to the knowledge of any Loan Party, threatened Release,
on, under or migrating to or from any real property currently, or to the
knowledge of any Loan Party, formerly, owned, leased, subleased, operated, or
otherwise occupied by any Loan Party or any Restricted Subsidiary that is likely
to result in any Loan Party or Restricted Subsidiary incurring Environmental
Liabilities, and (v) to the knowledge of any Loan Party, there are no facts,
circumstances or conditions arising out of or relating to the operations of any
Loan Party or any Restricted Subsidiary or real property currently or, to the
knowledge of any Loan Party, formerly owned, leased, subleased, operated or
otherwise occupied by or for any Loan Party or any Restricted Subsidiary that
would be reasonably expected to result in any Loan Party or any Restricted
Subsidiary incurring Environmental Liabilities.

 

3.14                        Intellectual Property.  To the knowledge of each
Loan Party, except as could not reasonably be expected individually or in the
aggregate to cause a Material Adverse Effect, (a) each Loan Party and each
Restricted Subsidiary owns or licenses all Intellectual Property that is 
necessary for the operations of its businesses, (b) the conduct and operations
of the businesses of each Loan Party and each Restricted Subsidiary does not
infringe, misappropriate, dilute, violate or otherwise impair any Intellectual
Property owned by any other Person and (c) no other Person has contested any
right, title or interest of any Loan Party or any Restricted Subsidiary in or to
any Intellectual Property, other than, in each case, as cannot reasonably be
expected to affect the Loan Documents and the transactions contemplated therein.
Except for matters which are not reasonably expected to, in the aggregate, have
a Material Adverse Effect, there are (x) no pending (or, to the knowledge of any
Loan Party, threatened) actions, investigations, suits, proceedings, audits,
claims, demands, orders or disputes affecting any Loan

 

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Party or any Restricted Subsidiary, (y) no judgment or order rendered by any
competent Governmental Authority, and (z) no settlement agreement or similar
Contractual Obligation entered into by any Loan Party or any Restricted
Subsidiary, in each case, with respect to Intellectual Property owned by any
Loan Party or any Restricted Subsidiary and/or based on a claim of infringement,
misappropriation, dilution, violation or impairment or contest of Intellectual
Property owned by a third party, and no Loan Party knows of any valid bases for
any such claim.

 

3.15                        Title; Real Property.  (a)  Set forth on Schedule
3.15 is, as of the Closing Date, (i) a complete and accurate list of all
material Healthcare Facilities and other material real property in which any
Loan Party and any Restricted Subsidiary owns a leasehold, joint venture or
other interest setting forth, for each such real property, the current street
address (including, where applicable, county/city, state and other relevant
jurisdictions), the record owner thereof, the interest of the Loan Parties and
the Restricted Subsidiaries in such real property and, where applicable, each
landlord, lessee and sublessee thereof, and (ii) each Contractual Obligation
made by a Loan Party or a Restricted Subsidiary, whether contingent or
otherwise, to Dispose of such real property on or after the date hereof.

 

(b)                                 Each Loan Party and each Restricted
Subsidiary has good and marketable, valid, and binding and enforceable leasehold
interests in all leased real property that is purported to be leased by it as
set forth on Schedule 3.15 and owns or leases all of its personal property
(other than Intellectual Property) regardless of the location of such personal
property, in each case, free and clear of all Liens other than Liens permitted
under Section 7.2 (other than Section 7.2(c)) and such real property and
personal property constitutes all property (other than Intellectual Property)
necessary to conduct the business as currently conducted.

 

3.16                        Full Disclosure.  The information (other than
projections and statements of a general economic or general industry nature)
prepared or furnished in writing by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with any Loan Document or any
other transaction contemplated therein (in each case, as modified or
supplemented by other information so furnished), taken as a whole, does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein, in light of the
circumstances when made, not materially misleading, when considered in their
entirety; provided, however, that projections contained therein are not to be
viewed as factual and that actual results during the periods covered thereby may
differ from the results set forth in such projections by a material amount.

 

3.17                        Patriot Act; OFAC. (a)  To the extent applicable,
each Loan Party and its Subsidiaries are in compliance in all material respects
with (i) the Trading with the Enemy Act, as amended, and each of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended), and any other enabling legislation or
executive order relating thereto, and (ii) the PATRIOT Act.

 

(b)                                 No Loan Party or any of its Subsidiaries (or
officer or director thereof) and, to the knowledge of the Loan Parties, no
direct or indirect parent or joint venture thereof (or director or officer of
such direct and indirect parent or joint venture), (i) is currently the subject
of any Sanctions, (ii) is located, organized or residing in any Designated
Jurisdiction, or (iii) is or has been (within the previous five years) engaged
in any transaction with any Person who is now or was then the subject of
Sanctions or who is located, organized or residing in any Designated
Jurisdiction.  No Loan, nor the proceeds from any Loan, is being or has been
used, directly or, to the knowledge of the Loan Parties, indirectly, to lend,
contribute, provide or has otherwise made available to fund any activity or
business in any Designated Jurisdiction or to fund any activity or business of
any Person located, organized or residing in any Designated Jurisdiction or who
is the subject of any Sanctions, or in any other manner that will result in any
violation by any Person (including any Lender or the Administrative Agent) of
Sanctions.  No part of

 

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the proceeds of the Loans made hereunder will be used by any Loan Party or its
Affiliates, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office or anyone else acting in an official capacity in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

3.18                        No Default.  No Default or Event or Default has
occurred and is continuing.

 

3.19                        Use of Proceeds.  The Borrowers shall use the
proceeds (i) to finance the Acquisition; (ii) to finance the Refinancing;
(iii) to pay all related fees and expenses associated with the foregoing and
(iv) for working capital and general corporate purposes.

 

3.20                        Insurance.  Schedule 3.20 sets forth, as of the
Closing Date, a true, complete and correct description of all insurance
maintained by each Loan Party for itself or for the Restricted Subsidiaries as
of the Closing Date.  As of the Closing Date, such insurance is in full force
and effect and all premiums have been duly paid.  As of the date hereof, the
Loan Parties and the Restricted Subsidiaries have insurance in such amounts and
covering such risks and liabilities as is customary with companies in the same
or similar businesses operating in the same or similar locations.

 

3.21                        Reportable Transactions.  Neither the Borrower nor
any of its Restricted Subsidiaries expects to identify one or more of the Loans
under this Agreement as a “reportable transaction” on IRS Form 8886 filed with
the U.S. Tax Returns for purposes of Section 6011, 6111 or 6112 of the Code or
the Treasury regulations promulgated thereunder.

 

3.22                        Security Documents.  (a)  The Guarantee and
Collateral Agreement is effective to create in favor of the Collateral Agent for
the benefit of the Secured Parties, a legal and valid security interest (with
the priority specified in the Intercreditor Agreement) in the Collateral as
provided in the Guarantee and Collateral Agreement described therein (including
any proceeds of any item of Collateral), subject to no Liens other than
Permitted Liens.  In the case of (i) the Pledged Securities described in the
Guarantee and Collateral Agreement, when any stock certificates or notes, as
applicable, representing such Pledged Securities are delivered to the Collateral
Agent and (ii) the other Collateral described in the Guarantee and Collateral
Agreement, when financing statements in appropriate form are filed in the
offices specified on Schedule 3.22(a) (which financing statements have been duly
completed and delivered to the Collateral Agent), recordation of the security
interest of the Collateral Agent on behalf of the Secured Parties has been made
in the United States Patent and Trademark Office or the Copyright Office, and
such other filings as are specified on Schedule 3.22(a) are made, the Collateral
Agent shall have a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Collateral (including any
proceeds of any item of Collateral) (solely to the extent a security interest in
such Collateral can be perfected through the filing of financing statements in
the offices specified on Schedule 3.22(a), the recordation of the security
interest of the Collateral Agent on behalf of the Secured Parties in the United
States Patent and Trademark Office and the other filings specified on Schedule
3.22(a), and through the delivery of the Pledged Securities required to be
delivered on the Closing Date), as security for the Obligations, in each case
prior and superior in right to any other Person (except with respect to Liens
permitted by Section 7.2).

 

(b)                                 Upon the execution and delivery of any
Mortgage to be executed and delivered pursuant to Section 6.10(b), such Mortgage
shall be effective to create in favor of the Collateral Agent for the benefit of
the Secured Parties a legal and valid Lien on the mortgaged property described
therein and proceeds thereof; and when such Mortgage is filed in the recording
office designated by the Borrowers, such Mortgage shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in such mortgaged property and the proceeds thereof, as
security for the Obligations

 

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(as defined in the relevant Mortgage), in each case prior and superior in right
to any other Person (except with respect to Liens permitted by Section 7.2).

 

SECTION 4.                            CONDITIONS PRECEDENT

 

The obligation of each Lender to make the Loans on the Closing Date is subject
to the satisfaction (or waiver) of each of the following conditions precedent on
or prior to the Commitment Termination Date:

 

(a)                                 Credit Agreement.  The Administrative Agent
shall have received this Agreement, executed and delivered by the Administrative
Agent, the Parent Companies, the Borrowers and each Lender whose name appears on
the signature pages hereof (or, with respect to each Person which shall be a
Lender as of the Closing Date, a duly completed, executed and delivered Lender
Addendum).

 

(b)                                 Security Documents.  The Administrative
Agent shall have received (i) the Guarantee and Collateral Agreement, executed
and delivered by the parties thereto, (ii) the Intercreditor Agreement, executed
and delivered by the parties thereto and (iii) the Master Lease Intercreditor
Agreements, executed and delivered by the parties thereto, in form reasonably
satisfactory to the Administrative Agent and on terms consistent with those
provided in each Lease Consent and Amendment Agreement, as applicable.

 

(c)                                  ABL Loan Documents.  Prior to or
substantially simultaneously with the making of Loans on the Closing Date,
(x) the Administrative Agent shall be reasonably satisfied with the terms and
conditions of the ABL Credit Agreement, (y) all conditions to the closing of the
ABL Credit Agreement shall have been satisfied or waived and (z) LLC Parent and
its Subsidiaries shall have Liquidity, after giving effect to borrowings and
letters of credit made or issued on or prior to the Closing Date, of at least
$100,000,000.

 

(d)                                 Consummation of the Refinancing;
Extinguishment of Liens.  On or prior to the Closing Date and concurrently with
the incurrence of the Loans, Indebtedness under the Existing Sun Credit
Agreement shall have been repaid in full, together with all fees and other
amounts owing thereon and all commitments thereunder shall have been terminated
and all liens securing the obligations under the Existing Sun Credit Agreement
shall have been terminated (or arrangements reasonably satisfactory to the
Administrative Agent for such termination shall have been made).  The Parent
Companies, the Borrower and its Restricted Subsidiaries shall have no
Indebtedness for borrowed money outstanding as of the Closing Date other than
under the Facility and the other Indebtedness permitted by Sections 7.1(a), (f),
(j) and (k).

 

(e)                                  Solvency Certificate.  The Administrative
Agent shall have received a solvency certificate signed by a Responsible Officer
of LLC Parent, substantially in the form of Exhibit G hereto.

 

(f)                                   Lien Searches.  The Collateral Agent shall
have received the results of a recent lien search in each of the jurisdictions
in which UCC financing statements will be made to evidence or perfect security
interests in the assets of the Loan Parties that form part of the Collateral,
and such search shall reveal no Liens on any of the assets of the Loan Parties,
except for Liens permitted by Section 7.2 or Liens to be discharged on or prior
to the Closing Date.

 

(g)                                  Closing Certificate.  The Administrative
Agent shall have received a certificate of each of the Parent Companies, the
Borrowers and each Subsidiary Guarantor dated the Closing Date, substantially in
the form of Exhibit D, with appropriate insertions and attachments.

 

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(h)                                 Insurance Certificates.  The Borrowers shall
have used commercially reasonable efforts to deliver to the Administrative Agent
a certificate in form and substance reasonably satisfactory to the
Administrative Agent from the Borrowers’ insurance broker demonstrating that the
insurance required to be maintained by Section 6.5 are in full force and effect,
together with endorsements naming the Collateral Agent, on behalf of the Secured
Parties, as additional insured or loss payee thereunder to the extent required
by such Section 6.5.

 

(i)                                     Financial Statements.  The
Administrative Agent shall have received (i) audited Consolidated balance sheets
of LLC Parent and the Sun Borrower, respectively, and the related statements of
income, changes in equity and cash flows of LLC Parent and the Sun Borrower,
respectively, for the three most recently completed fiscal years, (x) in the
case of LLC Parent, ended at least 90 days before the Closing Date and (y) in
the case of the Sun Borrower, ended at least 75 days before the Closing Date and
(ii) unaudited Consolidated balance sheets and related statements of income,
changes in equity and cash flows of LLC Parent and the Sun Borrower,
respectively, for each subsequent fiscal quarter after December 31, 2011, (x) in
the case of LLC Parent, ended at least 45 days before the Closing Date and
(y) in the case of the Sun Borrower, ended at least 40 days before the Closing
Date.

 

(j)                                    Pro Forma Financial Statements.  The
Administrative Agent shall have received a pro forma Consolidated balance sheet
and related pro forma Consolidated statement of income of the Parent Companies,
the Borrowers and their respective Restricted Subsidiaries as of and for the
twelve-month period ending on the last day of the most recently completed
four-fiscal quarter period ended at least 45 days prior to the Closing Date,
prepared after giving effect to the Transactions as if the Transactions had
occurred as of such date (in the case of such balance sheet) or at the beginning
of such period (in the case of such other financial statements).

 

(k)                                 Consummation of the Acquisition.  The
Administrative Agent shall be satisfied that (i) the Acquisition shall have been
consummated in material compliance with the terms and provisions of the
Acquisition Agreement and (ii) the terms and conditions of the Acquisition
Agreement shall not have been amended or waived, and no consent shall have been
given without the approval of the Lead Arrangers (such consent not to be
unreasonably withheld, delayed or conditioned) (other than amendments, waivers,
modifications and consents to such terms that are not materially adverse to the
Lenders).

 

(l)                                     Legal Opinions.  The Administrative
Agent shall have received an executed legal opinion of (i) Skadden, Arps, Slate,
Meagher & Flom LLP, counsel to the Loan Parties, (ii) Williams Mullen, Maryland,
North Carolina and Virginia counsel to the Loan Parties, (iii) Dinsmore & Shohl
LLP, New Jersey, Pennsylvania and West Virginia counsel to the Loan Parties,
(iv) Hinkley, Allen & Snyder LLP, Connecticut counsel to the Loan Parties and
(v) Miles & Peters, P.C., Colorado counsel to the Loan Parties, in each case,
covering such customary matters incident to the transactions contemplated by
this Agreement as the Administrative Agent may reasonably require and in form
and substance reasonably satisfactory to the Administrative Agent.

 

(m)                             Pledged Stock; Stock Powers; Pledged Notes.  The
Collateral Agent shall have received (i) the certificates representing the
shares, if any, of Capital Stock of each Parent Company (other than LLC Parent)
and each Borrower and (to the extent required by the terms of the Guarantee and
Collateral Agreement) each of the Borrowers’ Subsidiaries pledged to the
Collateral Agent pursuant to (and, in the case of the Capital Stock of any
Foreign Subsidiary, subject to the limitations of) the Guarantee and Collateral
Agreement, together with an undated stock power for each such certificate
executed in blank by a duly authorized officer of the pledgor thereof and
(ii) each promissory note (if any) required to be pledged to the Collateral
Agent pursuant to the Guarantee and Collateral Agreement

 

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endorsed (without recourse) in blank (or accompanied by an executed transfer
form in blank) by the pledgor thereof.

 

(n)                                 Filings, Registrations and Recordings.  Each
document (including, without limitation, any UCC financing statement) required
by the Security Documents to be filed, registered or recorded in order to create
in favor of the Collateral Agent for the benefit of the Secured Parties, a Lien
(with the priority specified in the Intercreditor Agreements) on the Collateral
described therein (subject to Liens permitted by Section 7.2), shall have been
delivered to the Collateral Agent in proper form for filing, registration or
recordation.

 

(o)                                 Company Material Adverse Effect.  (x) Since
December 31, 2011 through June 20, 2012, no event, change, circumstance,
development, occurrence, condition, effect or state of facts that has occurred
has had or would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect and (y) since June 20, 2012, there
shall have been no event, change, circumstance, development, occurrence,
condition, effect or state of facts that, individually or in the aggregate, has
had and continues to have, or would reasonably be expected to have, a Company
Material Adverse Effect.

 

(p)                                 Master Lease Material Adverse Effect.  The
Master Leases (including the Health Care REIT Lease Consent and Amendment
Agreement, the Omega Lease Consent and Amendment Agreement, and the Sabra Lease
Consent and Amendment Agreement) shall not have been modified in any manner that
would reasonably be expected to (i) materially adversely affect the tenant or
the tenant’s business or (ii) materially adversely affect the rights of the
Lenders as provided in Master Lease Intercreditor Agreements; it being
understood that any amendments made to (a) the Health Care REIT (Sun) Lease in
connection with the transactions contemplated by Section 1(b) of the Health Care
Lease Consent and Amendment Agreement and (b) the Sabra Lease in connection with
the transactions contemplated by Sections 1(d) and 1(e) of the Sabra Lease
Consent and Amendment Agreement, in each case, shall be deemed not to materially
adversely affect such tenant or such tenant’s business or the Master Lease
Intercreditor Agreements.

 

(q)                                 Ventas Consent.  Either (x) the guarantor
under the Ventas Guaranty shall, after giving effect to the Transactions, be in
pro forma compliance with the tangible net worth covenants contained in the
Ventas Guaranty as of its most recently ended fiscal quarter or (y) Ventas shall
have consented in writing to the consummation of the Acquisition and such
consent shall provide that the Genesis Borrower shall, after giving effect to
the Transactions, be deemed to be in pro forma compliance with the tangible net
worth covenants contained in the Ventas Guaranty and each default and event of
default that may have occurred and be continuing as a result of such failure to
comply with the tangible net worth covenant shall have been waived.

 

(r)                                    Fees.  All fees and reasonable
out-of-pocket expenses, to the extent invoiced at least 1 Business Day prior to
the Closing Date, shall have been paid.

 

(s)                                   Representations and Warranties.  On the
Closing Date, each of the Specified Acquisition Agreement Representations and
the Specified Representations shall be true and correct in all respects.

 

(t)                                    Borrowing Notice.  The Administrative
Agent shall have received an irrevocable notice of borrowing in accordance with
Section 2.3 and substantially in the form of Exhibit A-1 hereto.

 

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(u)                                 Attestation Certificate.  The Administrative
Agent shall have received a certificate attesting to the compliance with clauses
(c), (k), (o), (p), (q) and (s) of this Section on the Closing Date from a
Responsible Officer of LLC Parent.

 

(v)                                 USA Patriot Act.  The Administrative Agent
shall have received, at least 3 days prior to the Closing Date, from each of the
Loan Parties documentation and other information reasonably requested in writing
by the Administrative Agent in connection with applicable “know your customer”
and anti-money laundering rules and regulations, including the USA PATRIOT Act,
to the extent requested in writing by the Administrative Agent at least 3 days
prior to the Closing Date.

 

Notwithstanding anything in the contrary contained in this Section, to the
extent any security interest in any Collateral or any deliverable related to the
perfection of security interests in or Liens upon the Collateral is not or
cannot be perfected on the Closing Date (other than the pledge and perfection of
the security interests (1) in stock certificates and other possessory collateral
and (2) in other assets with respect to which a lien may be perfected by the
filing of a UCC financing statement) after the Borrowers’ commercially
reasonable efforts to do so, then the perfection of a security interest in such
Collateral shall not constitute a condition precedent to the availability of the
Facility on the Closing Date, but instead shall be required to be delivered
after the Closing Date pursuant to arrangements and timing to be mutually agreed
by the Administrative Agent and the Borrowers acting reasonably (and in any
event within 90 days after the Closing Date or such longer period as may be
reasonably agreed by the Administrative Agent).

 

SECTION 5.                            REPORTING COVENANTS

 

Each of Ultimate Parent and the Borrowers (on behalf of itself and each of the
Subsidiaries) hereby agrees that, beginning on the Closing Date and so long as
the Commitments remain in effect or any Loan or other amount is owing to any
Lender or any Agent hereunder (other than contingent or indemnification
obligations not then asserted or due), the Parent Companies and the Borrowers
shall and (to the extent relevant) shall cause each of the Restricted
Subsidiaries to:

 

5.1                               Financial Statements.  Deliver to the
Administrative Agent each of the following:

 

(a)                                 Quarterly Reports.  As soon as available,
and in any event within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, the Consolidated unaudited balance sheet of LLC
Parent and its Subsidiaries (or, in the case of any such fiscal quarter ending
on or after the Second Amendment Date, Ultimate Parent and its Subsidiaries) in
each case, as of the close of such fiscal quarter and related Consolidated
statements of income and cash flow for such fiscal quarter and that portion of
the fiscal year ending as of the close of such fiscal quarter, setting forth in
comparative form the figures for the corresponding period in the prior fiscal
year and the figures contained in the latest projections, in each case certified
by a Responsible Officer of LLC Parent (or, in the case of any such fiscal
quarter ending on or after the Second Amendment Date, Ultimate Parent) in each
case, as fairly presenting in all material respects the Consolidated financial
position, results of operations and cash flow of LLC Parent and its
Subsidiaries, or Ultimate Parent and its Subsidiaries, as applicable, in each
case, as at the dates indicated and for the periods indicated in accordance with
GAAP (subject to the absence of footnote disclosure and normal year-end audit
adjustments.  The financial statements delivered under this clause (a) shall
include an unaudited schedule reflecting the adjustments necessary to eliminate
the accounts of the Unrestricted Subsidiaries (if any).

 

(b)                                 Annual Reports.  As soon as available, and
in any event within 120 days after the end of each fiscal year, the Consolidated
balance sheet of LLC Parent and its Subsidiaries (or, in the case of any such
fiscal year ending on or after the Second Amendment Date, Ultimate Parent and
its

 

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Subsidiaries) in each case, of the end of such year and related Consolidated
statements of income, stockholders’ equity and cash flow for such fiscal year,
each prepared in accordance with GAAP, together with a certification by LLC
Parent’s (or, in the case of any such fiscal year ending on or after the Second
Amendment Date, Ultimate Parent’s) in each case, nationally-recognized
independent registered public accountants that such Consolidated financial
statements fairly present in all material respects the Consolidated financial
position, results of operations and cash flow of LLC Parent and its
Subsidiaries, or Ultimate Parent and its Subsidiaries, as applicable, in each
case, as at the dates indicated and for the periods indicated therein in
accordance with GAAP without qualification as to the scope of the audit or as to
going concern and without any other similar qualification.  The financial
statements delivered under this clause (b) shall include an unaudited schedule
reflecting the adjustments necessary to eliminate the accounts of the
Unrestricted Subsidiaries (if any).

 

(c)                                  Compliance Certificate.  Together with each
delivery of any financial statement pursuant to clause (a) or (b) above, a
Compliance Certificate substantially in the form attached hereto as Exhibit C,
duly executed by a Responsible Officer of LLC Parent (or, in the case of any
such fiscal quarter or fiscal year ending on or after the Second Amendment Date,
Ultimate Parent) in each case, that, among other things, (i) shows in reasonable
detail the calculations used in determining each financial covenant,
(ii) demonstrates compliance with each Financial Condition Covenant that is
tested at least on a quarterly basis and (iii) states that no Default is
continuing as of the date of delivery of such Compliance Certificate or, if a
Default is continuing, states the nature thereof and the action that the
Borrowers propose to take with respect thereto.

 

(d)                                 Projections.  As soon as available, but in
any event not later than 30 days after the end of each fiscal year (commencing
with the fiscal year ending December 31, 2013), a reasonably detailed
Consolidated budget for the following fiscal year in a form reasonably
acceptable to the Administrative Agent including a projected Consolidated
balance sheet of the Parent Companies, the Borrowers and the Restricted
Subsidiaries as of the end of the following fiscal year and the related
Consolidated statements of projected cash flows and projected income.

 

(e)                                  Management Discussion and Analysis. 
Together with each delivery of any Compliance Certificate pursuant to clause
(c) above, a discussion and analysis of the financial condition and results of
operations of the Loan Parties for the portion of the fiscal year then elapsed
and discussing the reasons for any significant variations from the projections
for such period and the figures for the corresponding period in the previous
fiscal year.

 

(f)                                   Audit Reports, Management Letters, Etc. 
Together with each delivery of any financial statement for any fiscal year
pursuant to clause (b) above, copies of each management letter, audit report or
similar letter or report received by LLC Parent (or, in the case of any such
fiscal year ending on or after the Second Amendment Date, Ultimate Parent) in
each case, from any independent registered certified public accountant
(including LLC Parent’s accountants or Ultimate Parents’ accountants, as
applicable) in connection with such financial statements or any audit thereof,
each certified to be complete and correct copies by a Responsible Officer of LLC
Parent (or, in the case of any such fiscal year ending on or after the Second
Amendment Date, Ultimate Parent) in each case, as part of the Compliance
Certificate delivered in connection with such financial statements.

 

(g)                                  Insurance.  Together with each delivery of
any financial statement for any fiscal year pursuant to clause (b) above, each
in form and substance satisfactory to the Administrative Agent and certified as
complete and correct by a Responsible Officer of LLC Parent (or, in the case of
any such fiscal year ending on or after the Second Amendment Date, Ultimate
Parent) in each case, as part of the Compliance Certificate delivered in
connection with such financial statements, a summary of all material insurance
coverage maintained as of the date thereof by any Loan Party and any Restricted
Subsidiary and

 

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including a representation that all improvements on any parcel of real property
that are within a special flood hazard area as defined under the U.S. Flood
Disaster Protection Act of 1973, as amended or as a wetlands area by any
governmental entity having jurisdiction over any real property, are covered by
flood insurance, together with such other related documents and information as
the Administrative Agent may require.

 

Information required to be delivered pursuant to Sections 5.1(a), 5.1(b) and
5.1(e) shall be deemed to have been delivered if such information, or one or
more annual, quarterly or other periodic reports containing such information,
shall be available on the website of the SEC at http://www.sec.gov; provided
that, for the avoidance of doubt, LLC Parent or Ultimate Parent, as applicable,
shall be required to provide copies of the compliance certificates required by
clause (c) of this Section 5.1 to the Administrative Agent.

 

5.2                               Other Events.  Give the Administrative Agent
notice of each of the following (which may be made by telephone if promptly
confirmed in writing) promptly but in any event within 5 days after any
Responsible Officer of any Loan Party knows or has reason to know of it:
(a)(i) any Default under this Agreement, any Material Master Lease and (ii) any
event that would have a Material Adverse Effect, specifying, in each case, the
nature and anticipated effect thereof and any action proposed to be taken in
connection therewith, (b) any event reasonably expected to result in a mandatory
payment of the Obligations pursuant to the ABL Credit Agreements, including
without limitation any Recovery Event over $1,500,000, which notice shall state
the material terms and conditions of such transaction and estimating the Net
Cash Proceeds thereof, (c) any potential, threatened or existing material
litigation or material proceeding against, or material investigation by or
before any Governmental Authority of (or any agent, contractor, employee,
designee of any Governmental Authority, including any private contractors
retained by and/or acting on behalf of any Governmental Authority), any Loan
Party, any Restricted Subsidiary or any Healthcare Facility, that could
reasonably be expected to have a Material Adverse Effect, or to materially and
adversely affect the right to operate any Healthcare Facility, (d) to the extent
not already disclosed, the entering into any Material Master Lease, and (e) the
closing of, or loss or non-renewal (or written threat of loss) of Primary
License related to, any Healthcare Facility, or withdrawal from Medicare,
Medicaid or TRICARE or any of the next five largest Third-Party Payor Programs
based on the reimbursements from such Third-Party Payor Programs to Ultimate
Parent and its Subsidiaries on a Consolidated basis.

 

5.3                               ERISA Matters.  Give the Administrative Agent
(a) on or prior to any filing by any ERISA Affiliate of any notice of intent to
terminate any Title IV Plan, a copy of such notice, provided, that when such a
notice is filed by an ERISA Affiliate that is not a Loan Party, such notice must
only be given to the Administrative Agent where such termination would
reasonably be expected to have a material impact on a Loan Party, and
(b) promptly, and in any event within 10 days, after any Responsible Officer of
any ERISA Affiliate knows or has reason to know that a request for a minimum
funding waiver under Section 412 of the Code has been filed with respect to any
Title IV Plan or Multiemployer Plan, a notice (which may be made by telephone if
promptly confirmed in writing) describing such waiver request and any action
that any ERISA Affiliate proposes to take with respect thereto, together with a
copy of any notice filed with the PBGC or the IRS pertaining thereto.

 

5.4                               Environmental Matters.  (a)  Provide the
Administrative Agent notice of each of the following (which may be made by
telephone if promptly confirmed in writing) promptly but in any event no later
than 14 days after any Responsible Officer of any Loan Party knows of it (and,
upon reasonable request of the Administrative Agent, documents and information
in connection therewith): (i)(A) unpermitted Releases, (B) the receipt by any
Loan Party of any written notice of violation of or potential liability or
similar notice under, or the existence of any condition that could reasonably be
expected to result in violations of or liabilities under, any Environmental Law
or (C) the commencement of, or any

 

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material change to, any action, investigation, suit, proceeding, audit, claim,
demand, dispute alleging a violation of or liability under any Environmental
Law, that, for each of clauses (A), (B) and (C) above (and, in the case of
clause (C), if adversely determined), in the aggregate for each such clause,
could reasonably be expected to result in a Material Adverse Effect, and
(ii) the receipt by any Loan Party of notification that any property of any Loan
Party is subject to any Lien in favor of any Governmental Authority securing, in
whole or in part, Environmental Liabilities.

 

(b)                                 Upon request of the Administrative Agent,
provide the Administrative Agent a report containing an update as to the status
of any matter as to which notice has been provided to the Administrative Agent
pursuant to Section 5.4(a).

 

5.5                               Other Information.  Provide the Administrative
Agent with such other documents and information with respect to the business,
property, condition (financial or otherwise), legal, financial or corporate or
similar affairs or operations of any Loan Party as the Administrative Agent or
such Lender through the Administrative Agent may from time to time reasonably
request, including, without limitation, if requested by the Administration
Agent, copies of field audits and appraisals that are delivered to the
administrative agent under the ABL Facility.

 

SECTION 6.                            AFFIRMATIVE COVENANTS

 

Each of the Parent Companies and the Borrowers (on behalf of itself and each of
their Restricted Subsidiaries) hereby agrees that, beginning on the Closing Date
and so long as the Commitments remain in effect or any Loan or other amounts
owing to any Lender or any Agent hereunder (other than contingent or
indemnification obligations not then asserted or due), the Parent Companies and
the Borrowers shall and (to the extent relevant) shall cause each of their
Restricted Subsidiaries to:

 

6.1                               Maintenance of Corporate Existence. 
(i) Preserve and maintain its legal existence, including doing all the things
necessary to observe organizational formalities (except to the extent expressly
permitted by Section 7.5); (ii) preserve and maintain its rights (charter and
statutory), privileges, franchises and Permits necessary or desirable in the
conduct of its business, except, in the case of clause (ii), the failure to do
so would not, in the aggregate, have a Material Adverse Effect.

 

6.2                               Compliance with Laws, Etc.  (a)  Comply in all
material respects with and cause each of its employees, and use commercially
reasonable efforts to cause each of its, contractors and its tenants or
operators under any Lease to comply in all material respects with all applicable
Requirements of Law including Healthcare Laws, Permits and the Primary
Licenses.  Each Loan Party and Restricted Subsidiary shall maintain in all
material respects all records required to be maintained by any Governmental
Authority or otherwise under the Healthcare Laws.  No Loan Party or Restricted
Subsidiary shall transfer any Permit to any location other than in compliance
with Healthcare Laws or pledge any Permit as collateral security for any
Indebtedness (except as permitted under the Loan Documents), and each Loan Party
and Restricted Subsidiary shall hold each Permit free from restrictions or known
conflicts, which, in each case, would materially impair the use or operation of
the related Facility for the uses described in Section 3.1(b).  No Borrower
shall (i) subject to Section 6.4, rescind, withdraw or revoke the Permit for any
Healthcare Facility or amend, modify, supplement or otherwise alter the nature,
tenor or scope of the Permit for any Healthcare Facility to the extent that such
change, revocation or alteration in the Permit would have a Material Adverse
Effect; or (ii) voluntarily transfer or encourage the transfer of any resident
of a Healthcare Facility to any other facility, unless such transfer is
permitted or required by Requirements of Law or Healthcare Laws, is for reasons
relating to the welfare, health or safety of the resident to be transferred or
other individuals or residents at the facility or is due to good faith concerns
that the resident will not be able to pay his or her bills owed to the
Healthcare Facility.

 

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(b)                                 If required under applicable Requirements of
Law, maintain in full force and effect all Permits and Primary Licenses for the
Healthcare Facilities, and a provider agreement or participation agreement for
each Third-Party Payor Program listed in Schedule 6.2, except to the extent that
any such failure to maintain such Permits, Primary Licenses, provider agreements
or participation agreements could not be reasonably likely to result in a
Material Adverse Effect. True and complete copies of the Permits, including any
certificates of occupancy, the Primary Licenses, and provider agreement or
participation agreement shall be delivered to the Administrative Agent promptly
upon its reasonable request to the extent such copies are available.

 

(c)                                  To the extent applicable, and except as
could not be reasonably expected to have a Material Adverse Effect, operate each
Healthcare Facility in substantial compliance with all requirements for
participation in all Third-Party Payor Programs; provided, however, that, each
Loan Party and Restricted Subsidiary may withdraw from Third-Party Payor
Programs (other than from Medicare, Medicaid or TRICARE) in the ordinary course
of business.

 

(d)                                 Other than in the normal course of business,
and except as could not be reasonably expected to have a Material Adverse
Effect, with respect to each Healthcare Facility, not change the terms of any
Third-Party Payor Program now or hereinafter in effect or their normal billing
payment or reimbursement policies and procedures with respect thereto (including
the amount and timing of finance charges, fees and write-offs). All cost reports
and financial reports submitted by any Borrower to any third party payor shall
be materially accurate and complete and shall not be misleading in any material
respects and all patient or resident records, including patient or resident
trust fund accounts, shall remain true and correct in all material respects.

 

(e)                                  Comply with all obligations under the
contracts and leases with residents of each Healthcare Facility, and no Loan
Party or Restricted Subsidiary shall commit or permit any default by a Loan
Party or a Restricted Subsidiary thereunder except, in any case, where the
failure to do so, either individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect.

 

(f)                                   Make all payments and otherwise perform
all obligations in respect of all Material Master Leases to which Ultimate
Parent or any of its Restricted Subsidiaries is a party, keep such leases in
full force and effect and not allow such leases to lapse or be terminated other
than in accordance with their terms or any rights to renew such leases to be
forfeited or cancelled, notify the Administrative Agent of any default by any
party with respect to such leases and cooperate with the Administrative Agent in
all respects to cure any such default, and cause each of its Restricted
Subsidiaries to do so, except, in any case, where the failure to do so, either
individually or in the aggregate, would not be reasonably likely to have a
Material Adverse Effect.

 

6.3                               Payment of Obligations.  Pay or discharge
before they become delinquent (a) all material claims, Taxes, assessments,
charges and levies imposed by any Governmental Authority and (b) all other
lawful claims that if unpaid would, by the operation of applicable Requirements
of Law, become a Lien upon any property of any Loan Party, except, in each case,
for those whose amount or validity is being contested in good faith by proper
proceedings diligently conducted and for which adequate reserves are maintained
on the books of the appropriate Loan Party or Restricted Subsidiary in
accordance with GAAP or with respect to which failure to do so would not have a
Material Adverse Effect.

 

6.4                               Maintenance of Property.  Maintain and
preserve, in its own name, (a) in good working order and condition all of its
property necessary in the conduct of its business, and (b) all rights, permits,
licenses, approvals and privileges (including all Permits and Primary Licenses)

 

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necessary, used or useful, whether because of its ownership, lease, sublease or
other operation or occupation of property or other conduct of its business, and
shall make all necessary or appropriate filings with, and give all required
notices to, Governmental Authorities, except for such failures to maintain and
preserve the items set forth in clauses (a) and (b) or to make such necessary or
appropriate filings above that would not, in the aggregate, have a Material
Adverse Effect.

 

6.5                               Maintenance of Insurance.  (a)  Maintain or
cause to be maintained in full force and effect all policies of insurance of the
kinds customarily insured against by Persons engaged in the same or similar
business (including self insurance) with respect to the property and businesses
of the Loan Parties and the Restricted Subsidiaries with financially sound and
reputable insurance companies or associations of similar nature.

 

(b)                                 With respect to the Insurance Captive,
Borrowers shall (i) upon request, provide to the Administrative Agent any and
all actuarial reports, opinions and studies performed by actuaries or insurance
advisors related to its business, including information related to the
professional and general liability claims and other claims covered by the
Insurance Captive and (ii) cause the Insurance Captive to at all times be in
good standing under the statutes of the jurisdiction of its organization and in
compliance with all applicable Requirements of Law, including establishing and
maintaining assets of the Insurance Captive in an amount necessary to comply
with the self-insurance retention program requirements in accordance with
applicable Requirements of Law.

 

6.6                               Keeping of Books.  Keep proper books of record
and account, in which full, true and correct entries in all material respects
shall be made in accordance with GAAP and in substantial compliance in all
material respects with all other applicable Requirements of Law of all financial
transactions and the assets and business of each Loan Party and each Restricted
Subsidiary.

 

6.7                               Access to Books and Property.  Permit the
Administrative Agent (and, after an Event of Default, the Lenders and any
Related Person of any of them accompanying the Administrative Agent) at any
reasonable time during normal business hours and with reasonable advance notice
to the Borrower Agent (during the continuance of an Event of Default, 1 Business
Day shall be deemed to be reasonable advance notice) to (a) visit and inspect
the property of each Loan Party and each Restricted Subsidiary and examine and
make copies of and abstracts from, the corporate (and similar), financial,
operating and other books and records of each Loan Party and each Restricted
Subsidiary, (b) discuss the affairs, finances and accounts of such Loan Party or
such Restricted Subsidiary with any officer or director of any Loan Party or any
Restricted Subsidiary and (c) communicate with an officer of any Loan Party or
any Restricted Subsidiary and upon receipt of prior approval, directly with any
registered certified public accountants (including Ultimate Parent’s
accountants) of any Loan Party or any Restricted Subsidiary; provided, that,
excluding any such visits and inspections during the continuation of an Event of
Default the Administrative Agent and the Lenders shall not exercise such rights
more than one time (in the aggregate) in any calendar year. Each Loan Party and
each Restricted Subsidiary shall authorize their respective registered certified
public accountants (including Ultimate Parent’s accountants) to communicate
directly with the Administrative Agent, the Lenders, their respective Related
Persons and such officer contemporaneously, and to disclose to the
Administrative Agent, the Lenders and their respective Related Persons all
financial statements and other documents and information as they might have and
are available to a Loan Party or a Restricted Subsidiary and the Administrative
Agent or any Lender reasonably requests with respect to any Loan Party or any
Restricted Subsidiary.  The Administrative Agent and the Lenders shall give the
Parent Companies and the Borrowers the opportunity to participate in any
discussions with Ultimate Parent’s independent public accountants.

 

6.8                               Environmental.  Comply with, and maintain its
real property, whether owned, leased, subleased or otherwise operated or
occupied, in compliance with, all applicable Environmental Laws

 

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(including by implementing any Remedial Action necessary to achieve such
compliance or that is required by orders and directives of any Governmental
Authority) except for failures to comply that would not, in the aggregate, have
a Material Adverse Effect. Without limiting the foregoing, if the Administrative
Agent at any time has a reasonable basis to believe that there exist material
violations of Environmental Laws by any Loan Party or that there exist any
material Environmental Liabilities, in each case, then each Loan Party shall
promptly upon receipt of request from the Administrative Agent, cause the
performance of environmental audits and assessments, including subsurface
sampling of soil and groundwater, and cause the preparation of such reports, in
each case as the Administrative Agent may from time to time reasonably request.
In the event (a) the Loan Party does not commence such work within thirty (30)
days of such request and diligently pursue such work or (b) there is an Event of
Default, the Administrative Agent, upon written notice to such Loan Party, shall
have access to such real property to undertake the work, provided, that the
Administrative Agent shall only be allowed to do so under the following
conditions: (i) that it provide written notice at least five (5) business days
in advance prior to the intended entrance onto the real property; (ii) that the
work be conducted during normal business hours; (iii) that the Administrative
Agent indemnify and hold harmless said Loan Party for any damages or losses
resulting from the performance of the work by the Administrative Agent or its
representatives; (iv) that the Administrative Agent ensure that the real
property is restored to its pre-work condition, including, without limitation,
restoring any surfaces that were disturbed during the performance of the work
and properly closing any wells or boreholes installed during the performance of
the work; and (v) abiding by all other health and safety requirements of the
Loan Party that would typically be imposed on a visitor to the real property. 
Such audits, assessments and reports, to the extent not conducted by the
Administrative Agent, shall be conducted and prepared by reputable environmental
consulting firms reasonably acceptable to the Administrative Agent and shall be
in form and substance reasonably acceptable to the Administrative Agent.

 

6.9          Post Closing Obligations.  Cause to be performed and completed, to
the Administrative Agent’s reasonable satisfaction, all of the obligations set
forth on Schedule 6.9 hereto within the time periods set forth on Schedule 6.9
or such longer period as the Administrative Agent shall permit in its reasonable
discretion.

 

6.10        Additional Collateral, etc.  (a)  Subject to the Skilled
Intercreditor Agreement (if applicable), with respect to any personal property
or registered Intellectual Property (other than assets expressly excluded from
the Collateral pursuant to the Security Documents) located in the United States
acquired or created after the Closing Date by any Loan Party that is required by
the terms of this Agreement and the other Loan Documents to become Collateral
(other than any property subject to a Lien expressly permitted by
Section 7.2(c) and any Skilled RE Priority Collateral) as to which the
Collateral Agent for the benefit of the Secured Parties does not have a
perfected Lien, except as otherwise provided in the Security Documents promptly,
but in any case within 45 days (which period may be extended by the
Administrative Agent in its reasonable discretion), (i) give notice of such
property to the Collateral Agent and execute and deliver to the Collateral Agent
such amendments to the Guarantee and Collateral Agreement or such other
documents as the Collateral Agent reasonably requests to grant to the Collateral
Agent for the benefit of the Secured Parties a security interest in such
Property (with the priority specified in the Intercreditor Agreement and the
Skilled Intercreditor Agreement) and (ii) take all actions reasonably requested
by the Collateral Agent to grant to the Collateral Agent for the benefit of the
Secured Parties a perfected security interest (to the extent required by the
Security Documents and with the priority required by the Intercreditor Agreement
and the Skilled Intercreditor Agreement) in such property (with respect to
property of a type owned by a Loan Party as of the Closing Date to the extent
the Collateral Agent for the benefit of the Secured Parties, has a perfected
security interest in such property as of the Closing Date), including, without
limitation, the filing of UCC financing statements in

 

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such jurisdictions as may be required by the Guarantee and Collateral Agreement
or by law or as may be reasonably requested by the Collateral Agent.

 

(b)           Subject to the Skilled Intercreditor Agreement (if applicable),
with respect to any fee owned real property located in the United States having
a value (together with improvements thereof) of at least $1,000,000 acquired
after the Closing Date by any Loan Party (other than any such real property
subject to a Lien expressly permitted by Section 7.2(c), (i), (o) or (p);
provided, however, that with respect to Liens permitted by Section 7.2(c) or
(i), this exception shall apply to the extent such Liens expressly restrict the
granting of a Mortgage) (i) within 45 days of such acquisition, give notice of
such acquisition to the Collateral Agent and, if requested by the Collateral
Agent promptly thereafter execute and deliver a Mortgage (subject to Liens
permitted by Section 7.2) in favor of the Collateral Agent for the benefit of
the Secured Parties, covering such real property (provided that no Mortgage nor
survey shall be obtained if the Collateral Agent reasonably determines in
consultation with the Borrowers that the costs of obtaining such Mortgage or
survey are excessive in relation to the value of the security to be afforded
thereby), (ii) if reasonably requested by the Collateral Agent (A) provide the
Lenders with a lenders’ title insurance policy with extended coverage covering
such real property in an amount at least equal to the purchase price of such
real property as well as a current ALTA survey thereof, together with a
surveyor’s certificate unless the title insurance policy referred to above shall
not contain an exception for any matter shown by a survey (except to the extent
an existing survey has been provided and specifically incorporated into such
title insurance policy), each in form and substance reasonably satisfactory to
the Collateral Agent, and (B) use commercially reasonable efforts to obtain any
consents or estoppels reasonably deemed necessary by the Collateral Agent in
connection with such Mortgage, each of the foregoing in form and substance
reasonably satisfactory to the Collateral Agent and (iii) if requested by the
Collateral Agent deliver to the Collateral Agent legal opinions relating to the
matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Collateral Agent.

 

(c)           Except as otherwise permitted in the Security Documents, with
respect to any (x) new Domestic Subsidiary that is created or acquired after the
Closing Date by any Loan Party that is a Material Restricted Subsidiary or
(y) any Unrestricted Subsidiary designated as a Restricted Subsidiary after the
Closing Date, promptly, but in any case within 45 days of such creation, 
acquisition or designation (which period may be extended by the Administrative
Agent in its reasonable discretion), (i) give notice of such acquisition,
creation or designation to the Collateral Agent, (ii) if such Subsidiary is a
Material Restricted Subsidiary, (A) execute and deliver to the Collateral Agent
such amendments to the Guarantee and Collateral Agreement or such other Security
Documents or other documents as the Collateral Agent reasonably deems necessary
to grant to the Collateral Agent for the benefit of the Secured Parties a
perfected security interest (to the extent required by the Security Documents
and with the priority specified in the Intercreditor Agreement) in the Capital
Stock of such new Material Restricted Subsidiary that is owned by such Loan
Party and (B) deliver to the Collateral Agent the certificates, if any,
representing such Capital Stock, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of such Loan Party, and
(iii) if such new Material Restricted Subsidiary is a Wholly-Owned Domestic
Subsidiary, cause such new Subsidiary (A) to become a party to the Guarantee and
Collateral Agreement and (B) to take such actions necessary or advisable to
grant to the Collateral Agent for the benefit of the Secured Parties a perfected
security interest (to the extent required by the Security Documents and with the
priority specified in the Intercreditor Agreement) in the Collateral described
in the Guarantee and Collateral Agreement with respect to such new Subsidiary
(to the extent the Collateral Agent, for the benefit of the Secured Parties, has
a perfected security interest in the same type of Collateral as of the Closing
Date), including, without limitation, the filing of UCC financing statements in
such jurisdictions as may be required by the Guarantee and Collateral Agreement
or by law or as may be reasonably requested by the Collateral Agent; provided
that, notwithstanding

 

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anything to the contrary in this Section 6.10(c), the provisions of this
Section 6.10(c) shall not apply to any Material Restricted Subsidiary that is a
HUD Sub-Facility Entity or a Skilled HUD Entity.

 

(d)           With respect to any new Foreign Subsidiary directly owned by a
Parent Company, the Borrowers or a Domestic Subsidiary that is created or
acquired after the Closing Date by any Loan Party, promptly, but in any case
within 45 days of such acquisition (which period may be extended by the
Administrative Agent in its sole discretion), (i) give notice of such
acquisition or creation to the Collateral Agent and, if requested by the
Collateral Agent, execute and deliver to the Collateral Agent such amendments to
the Guarantee and Collateral Agreement or such other documents as the Collateral
Agent deems necessary or reasonably advisable in order to grant to the
Collateral Agent, for the benefit of the Secured Parties, a perfected security
interest (to the extent required by the Security Documents and with the priority
specified in the Intercreditor Agreement and the Skilled Intercreditor
Agreement) in the Capital Stock of such new Subsidiary that is owned by such
Loan Party (provided that (x) in no event shall more than 65% of the total
outstanding voting Capital Stock of any Foreign Subsidiary treated as a
controlled foreign corporation for U.S. federal income tax purposes be required
to be so pledged and (y) 100% of non-voting stock of any Foreign Subsidiary, if
any, shall be required to be so pledged) and (ii) to the extent permitted by
applicable law, deliver to the Collateral Agent the certificates, if any,
representing such Capital Stock, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of such Loan Party, and take
such other action as may be necessary in the reasonable opinion of the
Collateral Agent, to perfect or ensure appropriate priority of the Lien of the
Collateral Agent thereon.

 

(e)           Notwithstanding anything to the contrary in any Loan Document,
this Section shall not apply with respect to any collateral (i) to the extent
the Administrative Agent has reasonably determined that the value of such
collateral to which this Section would otherwise apply is insufficient to
justify the difficulty, time and/or expense of obtaining a perfected Lien
therefrom and (ii) if so provided in any Security Document.

 

6.11        Maintenance of Ratings.  Use commercially reasonable efforts to
maintain a public corporate family rating and a public rating on the Loans from
Moody’s and a public corporate rating and a public rating on the Loans from S&P.

 

6.12        Further Assurances.  Maintain the security interest created by the
Security Documents as a perfected security interest having at least the priority
specified in the Intercreditor Agreement and the Skilled Intercreditor Agreement
(to the extent such security interest can be perfected through the filing of
UCC-1 financing statements, the Intellectual Property filings to be made
pursuant to Schedule 4 of the Guarantee and Collateral Agreement, the execution
of control agreements, or the delivery of Pledged Securities required to be
delivered under the Guarantee and Collateral Agreement), subject to the rights
of the Loan Parties under the Loan Documents to Dispose of the Collateral.  From
time to time the Loan Parties shall execute and deliver, or cause to be executed
and delivered, such additional instruments, certificates or documents, and take
all such actions, as the Collateral Agent may reasonably request for the
purposes of implementing or effectuating the provisions of this Agreement and
the other Loan Documents, or of renewing the rights of the Secured Parties with
respect to the Collateral as to which the Collateral Agent, for the ratable
benefit of the Secured Parties, has a perfected Lien pursuant hereto or thereto,
including, without limitation, filing any financing or continuation statements
or financing change statements under the UCC (or other similar laws) in effect
in any United States jurisdiction with respect to the security interests created
hereby.

 

6.13        Interest Rate Protection.  Enter into within 90 days after the
Closing Date and maintain, from the Closing Date to the date that is the two
year anniversary of the Closing Date, interest rate Hedging Agreements, to the
extent necessary, that result in at least 50% of the aggregate consolidated

 

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outstanding Indebtedness for borrowed money of Ultimate Parent and the
Restricted Subsidiaries being effectively subject to a fixed interest rate for
the period ending on the second anniversary of the Closing Date.

 

6.14        Use of Proceeds.  The proceeds of the Loans shall be used to effect
the Transactions and for general corporate (including working capital) purposes
of the Parent Companies and their Subsidiaries not prohibited by this Agreement.

 

6.15        Annual Lenders Meeting.  Participate in an annual telephonic
conference call with the Administrative Agent and the Lenders at such time as
may be reasonably agreed to by the Borrowers and the Administrative Agent.

 

6.16        Material Master Leases.  With respect to any Material Master Lease
(other than the Master Leases), cause the parties to such Material Master Lease
to execute an intercreditor or similar agreement satisfactory to the
Administrative Agent, on terms substantially similar to those set forth in the
Master Lease Intercreditor Agreements or on terms no less favorable to the
Lenders than those set forth in the Master Lease Intercreditor Agreements, as
reasonably determined by the Administrative Agent.

 

SECTION 7.         NEGATIVE COVENANTS

 

Each of the Parent Companies and the Borrowers (on behalf of itself and each of
their Restricted Subsidiaries) hereby agree that, beginning on the Closing Date
and so long as the Commitments remain in effect or any Loan or other amount is
owing to any Lender or the Agents hereunder (other than contingent or
indemnification obligations not then asserted or due), the Parent Companies and
the Borrowers shall not, and shall not permit any of their Restricted
Subsidiaries to:

 

7.1          Indebtedness.  Incur, create, assume or permit to exist any
Indebtedness, except:

 

(a)           Indebtedness existing on the date hereof and set forth in Schedule
7.1, and any Permitted Refinancing thereof;

 

(b)           Indebtedness created hereunder and under the other Loan Documents;

 

(c)           intercompany Indebtedness of Ultimate Parent and the Restricted
Subsidiaries to the extent permitted by Section 7.4(c); provided that (i) each
item of intercompany Indebtedness consisting of intercompany loans and advances
made by a Restricted Subsidiary that is not a Subsidiary Guarantor to a Parent
Company, a Subsidiary Guarantor or the Borrowers which exceeds $5,000,
individually, or $1,000,000, in the aggregate, shall be evidenced by a
promissory note (which shall be substantially in the form of Exhibit M hereto)
with customary subordination provisions, (ii) each item of intercompany
Indebtedness consisting of intercompany loans and advances made by a Subsidiary
that is a Borrower, to the extent required to be pledged under the Security
Agreement, shall be evidenced by a promissory note, and (iii) each such
promissory note under clause (ii) hereof shall be pledged to the Collateral
Agent pursuant to the Security Agreement to the extent required thereby;

 

(d)           Indebtedness of Ultimate Parent or any Restricted Subsidiary
incurred to finance the acquisition, construction or improvement of any fixed or
capital assets, and extensions, renewals, replacements, modifications,
refundings and refinancing of any such Indebtedness that do not increase the
outstanding principal amount thereof (other than to the extent of any premiums,
interest or costs and expenses incurred in connection therewith) (“Purchase
Money Indebtedness”); provided that (i) such Indebtedness is incurred prior to
or within 180 days after such acquisition or the completion of such construction
or improvement and (ii) the aggregate principal amount of Indebtedness

 

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permitted by this Section 7.1(d), when combined with the aggregate principal
amount of all Capital Lease Obligations incurred pursuant to Section 7.1(e),
shall not exceed $35,000,000 at any time outstanding;

 

(e)           Capital Lease Obligations in an aggregate principal amount, when
combined with the aggregate principal amount of all Indebtedness incurred
pursuant to Section 7.1(d), not in excess of $35,000,000 at any time outstanding
and Permitted Refinancings thereof;

 

(f)            Indebtedness in respect of bid, workers’ compensation claims,
self-insurance obligations, bankers’ acceptances, performance or surety, appeal
or similar bonds issued for the account of and completion guarantees and other
similar obligations provided by Ultimate Parent or any Restricted Subsidiary in
the ordinary course of business, including guarantees or obligations with
respect to letters of credit supporting such bid bonds, performance bonds,
surety bonds and similar obligations;

 

(g)           Indebtedness assumed in connection with a Permitted Acquisition
and any Permitted Refinancing thereof; provided that (i) such Indebtedness is
not incurred in contemplation of, or in connection with, such Permitted
Acquisition, (ii) both immediately prior and after giving effect thereto, no
Event of Default shall exist or result therefrom, (iii) the Consolidated Total
Leverage Ratio calculated on a Pro Forma Basis as of the most recently completed
period of four consecutive fiscal quarters ending prior to such incurrence for
which the financial statements and certificates required by Section 5.1(a) or
5.1(b), as the case may be, and 5.1(c) have been delivered as if such incurrence
had occurred as of the first day of such period shall be 0.25:1.00 less than the
Consolidated Total Leverage Ratio required pursuant to Section 7.14 and
(iv) Ultimate Parent shall have delivered to the Administrative Agent a
certificate of a Responsible Officer to the effect set forth in clauses (ii) and
(iii) above setting forth reasonably detailed calculations demonstrating
compliance with subclauses (ii) and (iii) above;

 

(h)           unsecured Indebtedness of Ultimate Parent or any of the Restricted
Subsidiaries, so long as at the time of the incurrence thereof and after giving
effect thereto, the Consolidated Total Leverage Ratio shall be less than 2.50 to
1.00 calculated on a Pro Forma Basis as of the most recently completed period of
four consecutive fiscal quarters ending prior to such incurrence for which the
financial statements and certificates required by Section 5.1(a) or 5.1(b), as
the case may be, and 5.1(c) have been delivered, and Permitted Refinancings
thereof; provided, that such Indebtedness does not mature or have scheduled
amortization or payments of principal and is not subject to mandatory redemption
or prepayment (except customary asset sale or change of control provisions), in
each case prior to the date that is 91 days after the Maturity Date at the time
such Indebtedness is incurred;

 

(i)            Guarantee Obligations by Ultimate Parent or the Restricted
Subsidiaries of Indebtedness of Ultimate Parent and the Restricted Subsidiaries
so long as Ultimate Parent or the Restricted Subsidiaries incurring such
Indebtedness are permitted to incur such Indebtedness represented by such
Guarantee Obligation hereunder;

 

(j)            Indebtedness of Ultimate Parent and its Subsidiaries in respect
of the ABL Loan Documents (including the HUD Sub-Facility Credit Agreement) in
an aggregate principal amount not exceeding $475,000,000 at any time outstanding
(and any Permitted Refinancing thereof permitted by the Intercreditor
Agreement);

 

(k)           the guaranty by the Borrowers or the Restricted Subsidiaries, as
the case may be, of the HUD

 

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Sub-Facility Entities’ obligations under the HUD Sub-Facility Credit Agreement
in an aggregate principal amount not exceeding $20,000,000;

 

(l)            other Indebtedness of Ultimate Parent or the Restricted
Subsidiaries in an aggregate principal amount not exceeding $40,000,000 at any
time outstanding;

 

(m)          Indebtedness arising from agreements of Ultimate Parent or any
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case entered into in connection with
Permitted Acquisitions or other Investments and the disposition of any business,
assets or Capital Stock permitted hereunder;

 

(n)           Indebtedness consisting of (A) trade obligations or (B) accrued
current liabilities for services rendered to Ultimate Parent or any Restricted
Subsidiary, in each case, arising in the ordinary course of business;

 

(o)           Indebtedness in respect of netting services, automatic
clearinghouse arrangements, overdraft protections, employee credit card programs
and other cash management and similar arrangements in the ordinary course of
business;

 

(p)           Indebtedness representing deferred compensation to employees of
the Parent Companies, the Borrowers or any of their Subsidiaries incurred in the
ordinary course of business consistent with past practice;

 

(q)           Guarantees incurred in the ordinary course of business in respect
of obligations to suppliers, customers, franchisees, lessors and licensees;

 

(r)            Indebtedness incurred in the ordinary course of business in
respect of obligations of Ultimate Parent or any Restricted Subsidiary to pay
the deferred purchase price of goods or services or progress payments in
connection with such goods and services;

 

(s)            Indebtedness consisting of (A) the financing of insurance
premiums or (B) take-or-pay obligations contained in supply arrangements, in
each case, in the ordinary course of business consistent with past practice;

 

(t)            Indebtedness incurred by Ultimate Parent or any of the Restricted
Subsidiaries in respect of letters of credit, bank guarantees, bankers’
acceptances, warehouse receipts or similar instruments issued or created in the
ordinary course of business or consistent with past practice, including in
respect of workers compensation claims, health, disability or other employee
benefits or property, casualty or liability insurance or self-insurance or other
Indebtedness with respect to reimbursement-type obligations regarding workers
compensation claims;

 

(u)           Indebtedness of Ultimate Parent and the Restricted Subsidiaries
under any Hedge Agreement permitted under Section 7.4(f);

 

(v)           Indebtedness of any Loan Parties owed to former or current
management, directors, officers or employees (or their transferees, estates or
beneficiaries under their estates) of the Parent Companies, the Borrowers or any
of the Restricted Subsidiaries in lieu of any cash payment permitted to be made
under Section 7.6(a)(iii); provided that all such Indebtedness shall be
unsecured;

 

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(w)          Guarantees in respect of Indebtedness of directors, officers and
employees of the Parent Companies, the Borrowers or the Restricted Subsidiaries
in respect of expenses of such Persons in connection with relocations and other
ordinary course of business purposes, if the aggregate amount of Indebtedness so
guaranteed, when added to the aggregate amount of loans and advances then
outstanding under Section 7.4(e), shall not at any time exceed $5,000,000;

 

(x)           Indebtedness in respect of Real Property Financing Obligations,
including but not limited to, Indebtedness of Ultimate Parent and its
Subsidiaries in respect of the Skilled RE Loan Documents in an aggregate
principal amount not exceeding $360,000,000 at any time outstanding (and any
Permitted Refinancing thereof);

 

(y)           Indebtedness of Restricted Subsidiaries that are not Loan Parties
in an aggregate principal amount not exceeding $10,000,000 at any time
outstanding, so long as such Indebtedness is non-recourse to the Loan Parties;

 

(z)           Indebtedness the net proceeds of which are used to fund the
purchase of Healthcare Facilities in connection with the Health Care REIT Asset
Buyback, so long as (i) at the time of the incurrence thereof and after giving
effect thereto, Ultimate Parent would be in compliance with the Financial
Condition Covenants, (ii) the Fixed Charge Coverage Ratio at the time of
incurrence thereof and after giving effect thereto shall not be less than the
Fixed Charge Coverage Ratio immediately prior to such incurrence and after
giving effect thereto, in each case, calculated on a Pro Forma Basis as of the
most recently completed period of four consecutive fiscal quarters ending prior
to such incurrence for which the financial statements and certificates required
by Section 5.1(a) or 5.1(b), as the case may be, and 5.1(c) have been delivered
and (iii) such Indebtedness has a final maturity date equal to or later than 90
days after the Maturity Date;

 

(aa)         Indebtedness of Ultimate Parent and its Subsidiaries in respect of
the Skilled ABL Loan Documents in an aggregate principal amount not exceeding
$75,000,000 at any time outstanding (and any Permitted Refinancing thereof); and

 

(bb)         Indebtedness of Ultimate Parent and its Subsidiaries in respect of
the Skilled HUD Entities’ obligations under the Skilled HUD Credit Agreements in
an aggregate principal amount not exceeding $90,000,000.

 

The accrual of interest, the accretion of accreted value and the payment of
interest in the form of additional Indebtedness shall not be deemed to be an
incurrence of Indebtedness for purposes of this Section. The principal amount of
any non-interest bearing Indebtedness or other discount security constituting
Indebtedness at any date shall be the principal amount thereof that would be
shown on a balance sheet of LLC Parent (or, on or after the Second Amendment
Date, Ultimate Parent) in each case, dated such date prepared in accordance with
GAAP.

 

7.2          Liens.  Create, incur, assume or permit to exist any Lien on any
property or assets (including Capital Stock or other securities of any person,
including Ultimate Parent or any Restricted Subsidiary) now owned or hereafter
acquired by it or on any income or revenues or rights in respect of any thereof,
except:

 

(a)           Liens on property or assets of the Borrowers and the Restricted
Subsidiaries existing on the date hereof and set forth in Schedule 7.2; provided
that such Liens shall secure only those obligations which they secure on the
date hereof other than newly created improvements thereon or proceeds from the
disposition of such property and extensions, renewals and replacements thereof
permitted hereunder;

 

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(b)           any Lien created under the (i) Loan Documents and (ii) ABL Loan
Documents related to the Genesis ABL Credit Agreement (or any Permitted
Refinancing thereof); provided that such Liens are subject to the terms of the
Intercreditor Agreement and, if applicable, the Skilled Intercreditor Agreement
;

 

(c)           any Lien existing on any property or asset prior to the
acquisition thereof by the Borrowers or any Restricted Subsidiary (or, on or
after the Second Amendment Date, Ultimate Parent or any Restricted Subsidiary)
or existing on any property or assets of any person that becomes a Restricted
Subsidiary after the date hereof (or, in the case of Ultimate Parent, at such
time Ultimate Parent becomes a party to this Agreement), in each case, prior to
the time such person becomes a Restricted Subsidiary, as the case may be;
provided that (i) such Lien is not created in contemplation of or in connection
with such acquisition or such person becoming a Restricted Subsidiary, (ii) such
Lien does not apply to any other property or assets of the Borrowers or any
Restricted Subsidiary (or, on or after the Second Amendment Date, Ultimate
Parent or any Restricted Subsidiary) other than newly created improvements
thereon or proceeds from the disposition of such property and (iii) such Lien
secures only those obligations which it secures on the date of such acquisition
or the date such person becomes a Restricted Subsidiary, as the case may be, and
extensions, renewals and replacement of any such Liens securing Indebtedness
permitted under Section 7.1(g) hereof;

 

(d)           Liens for Taxes not yet due or which are being contested in
compliance with Section 6.3;

 

(e)           Liens in respect of property of Ultimate Parent or the Restricted
Subsidiaries imposed by Requirements of Law, which were incurred in the ordinary
course of business and do not secure Indebtedness for borrowed money, such as
carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like
Liens arising in the ordinary course of business and securing obligations that
are not due or payable or which are being contested in compliance with
Section 6.3;

 

(f)            pledges and deposits made in the ordinary course of business in
compliance with workmen’s compensation, unemployment insurance and other social
security laws or regulations;

 

(g)           deposits to secure the performance of bids, trade contracts (other
than for Indebtedness), leases (other than Capital Lease Obligations), statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business;

 

(h)           zoning restrictions, easements, rights-of-way, restrictions on use
of real property and other similar encumbrances incurred in the ordinary course
of business which, in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of Ultimate Parent or any of the
Restricted Subsidiaries;

 

(i)            purchase money security interests in real property, improvements
thereto or equipment hereafter acquired (or, in the case of improvements,
constructed) by Ultimate Parent or any Restricted Subsidiary; provided that
(i) such security interests secure Indebtedness permitted by Section 7.1(d),
(ii) such security interests are incurred, and the Indebtedness secured thereby
is created, within 180 days after such acquisition (or construction) and
(iii) such security interests do not apply to any other Property or assets of
Ultimate Parent or any Restricted Subsidiary;

 

(j)            Liens securing judgments that have not resulted in an Event of
Default under clause (i) of Section 8;

 

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(k)           licenses (with respect to Intellectual Property and other
property), leases or subleases granted to third parties not interfering in any
material respect with the ordinary conduct of the business of Ultimate Parent or
any Restricted Subsidiary or resulting in a material diminution in the value of
any Collateral as security for the Obligations;

 

(l)            any (i) interest or title of a lessor or sublessor under any
lease not prohibited by this Agreement, (ii) Lien or restriction that the
interest or title of such lessor or sublessor may be subject to, or
(iii) subordination of the interest of the lessee or sublessee under such lease
to any Lien or restriction referred to in the preceding clause (ii), so long as
the holder of such Lien or restriction agrees to recognize the rights of such
lessee or sublessee under such lease;

 

(m)          Liens arising from filing UCC financing statements relating solely
to Leases not prohibited by this Agreement;

 

(n)           Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or similar
agreements entered into in the ordinary course of business of Ultimate Parent
and the Restricted Subsidiaries;

 

(o)           Liens on the property subject to any Sale and Lease-Back
Transactions, securing obligations thereunder in an aggregate principal amount
outstanding at any time not to exceed $5,000,000;

 

(p)           Liens incurred in connection with (i) Capital Lease Obligations
securing obligations permitted to be incurred pursuant to Section 7.1(e) and
(ii) Real Property Financing Obligations permitted to be incurred pursuant to
Section 7.1(x), including (x) any Lien created under the Skilled RE Loan
Documents (including junior Liens in the ABL Priority Collateral subject to the
Skilled Intercreditor Agreement) and any Permitted Refinancing thereof and
(y) any Lien incurred in connection with Indebtedness permitted to be incurred
pursuant to Section 7.1(bb);

 

(q)           pledges and deposits in the ordinary course of business and
consistent with past practices securing liability for reimbursement or
indemnification obligations of (including obligations in respect of letters of
credit or bank guarantees for the benefit of) insurance carriers providing
property, casualty or liability insurance to Ultimate Parent or any of the
Restricted Subsidiaries;

 

(r)            Liens (i) of a collection bank arising under Section 4-210 of the
Uniform Commercial Code on the items in the course of collection and (ii) in
favor of a banking or other financial institution arising as a matter of law or
under customary general terms and conditions encumbering deposits or other funds
maintained with a financial institution (including the right of set off) and
that are within the general parameters customary in the banking industry;
provided that, to the extent that such collection bank, banking or other
financial institution has executed and delivered a control agreement, such Lien
will be subordinated or waived to the extent set forth in such control
agreement;

 

(s)            Liens (i) on cash advances in favor of the seller of any property
to be acquired in an Investment permitted pursuant to Section 7.4 to be applied
against the purchase price for such Investment or (ii) consisting of an
agreement to Dispose of any property in a Disposition permitted under
Section 7.5, in each case, solely to the extent such Investment or Disposition,
as the case may be, would have been permitted on the date of the creation of
such Lien;

 

(t)            Liens that are contractual rights of setoff (i) relating to the
establishment of depository relations with banks or other financial institutions
not given in connection with the issuance of Indebtedness, (ii) relating to
pooled deposit or sweep accounts of Ultimate Parent or any of

 

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the Restricted Subsidiaries to permit satisfaction of overdraft or similar
obligations incurred in the ordinary course of business of Ultimate Parent and
the Restricted Subsidiaries or (iii) relating to purchase orders and other
agreements entered into with customers of Ultimate Parent or any of the
Restricted Subsidiaries, in each case, in the ordinary course of business;
provided that, to the extent that such collection bank, banking or other
financial institution has executed and delivered a control agreement, such Lien
will be subordinated or waived to the extent set forth in such control
agreement;

 

(u)           (i) Liens solely on any cash earnest money deposits made by
Ultimate Parent or any of the Restricted Subsidiaries in connection with any
letter of intent or purchase agreement permitted hereunder and (ii) the filing
of UCC financing statements solely as a precautionary measure in connection with
operating leases or consignment of goods and similar arrangements;

 

(v)           Liens in favor of a Loan Party on assets of a Subsidiary that is
not required to be a Subsidiary Guarantor;

 

(w)          in the case of any joint venture, any put and call arrangements
related to its Capital Stock set forth in its organizational documents or any
related joint venture or similar agreement;

 

(x)           Liens incurred in connection with Indebtedness permitted to be
incurred pursuant to Section 7.1(z);

 

(y)           other Liens with respect to property or assets of Ultimate Parent
or any Restricted Subsidiary securing obligations in an aggregate principal
amount outstanding at any time not to exceed $10,000,000;

 

(z)           Liens granted in connection with the pledge or transfer of the
Capital Stock of a joint venture permitted hereunder

 

(aa)         any Lien created under the Skilled ABL Loan Documents (and any
Permitted Refinancing thereof); provided that, such Liens are limited to the
“Collateral” under and as defined in the Skilled ABL Loan Documents as of the
Second Amendment Date; and

 

(bb)         any second priority Lien granted in favor of the lender or lenders
(or an agent on its or their behalf) under the Skilled ABL Facility in the real
estate assets and other collateral securing the obligations under the Skilled RE
Loan Documents; provided that (A) a third priority Lien in such collateral shall
be granted in favor of the Collateral Agent securing the Obligations and
(B) such second priority and third priority Liens shall be subject to the
Skilled Intercreditor Agreement or a customary intercreditor agreement in form
and substance reasonably acceptable to the Collateral Agent and the Borrower
Agent.

 

7.3          Sale and Lease-Back Transactions.  Enter into any arrangement,
directly or indirectly, with any person (other than Ultimate Parent or any
Restricted Subsidiary) whereby it shall Dispose of any property, real or
personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property which it
intends to use for substantially the same purpose or purposes as the property
being sold or transferred (a “Sale and Lease-Back Transaction”) unless (a) the
Disposition of such property is permitted by Section 7.5, (b) any Capital Lease
Obligations or Liens arising in connection therewith are permitted by Sections
7.1 and 7.2, as the case may be and either (1) consist of Real Property
Financing Obligations and Liens granted in connection therewith or (2) are in an
aggregate principal amount not exceeding $25,000,000 at any time

 

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outstanding and (c) Ultimate Parent shall be in compliance with the Financial
Condition Covenants calculated on a Pro Forma Basis as of the most recently
completed period of four consecutive fiscal quarters ending prior to such
incurrence for which the financial statements and certificates required by
Section 5.1(a) or 5.1(b), as the case may be, and 5.1(c) have been delivered as
if such Sale and Lease-Back Transaction had occurred as of the first day of such
period; provided that, the Net Cash Proceeds of such Sale and Lease-Back
Transaction shall be applied in accordance with Section 2.8(b);

 

7.4          Investments, Loans and Advances.  Purchase, hold or acquire any
Capital Stock, evidences of Indebtedness or other securities of, make or permit
to exist any loans or advances to, or make or permit to exist any investment or
any other interest in, any other person (all of the foregoing, “Investments”),
except:

 

(a)           (i) Investments by the Borrowers and the Restricted Subsidiaries
existing on the date hereof or Investments by Ultimate Parent and its Restricted
Subsidiaries existing on the Second Amendment Date, in each case, in the Capital
Stock of their subsidiaries and (ii) additional investments by Ultimate Parent
and the Restricted Subsidiaries in the Capital Stock of the Restricted
Subsidiaries; provided that, (A) except as permitted by Section 6.10, any such
Capital Stock held by  Ultimate Parent or a Subsidiary Guarantor shall be
pledged pursuant to the Guarantee and Collateral Agreement to the extent
required thereby and (B) after the date hereof, the aggregate amount of
investments made pursuant to this Section 7.4(a) and Section 7.4(c) by Loan
Parties in, and loans and advances made pursuant to this Section 7.4(a) and
Section 7.4(c) by Loan Parties to, Restricted Subsidiaries that are not Loan
Parties (determined without regard to any write-downs or write-offs of such
investments, loans and advances) shall not exceed $10,000,000 at any time
outstanding;

 

(b)           Investments in cash and Cash Equivalents;

 

(c)           Investments made by Ultimate Parent in any Restricted Subsidiary
and made by any Restricted Subsidiary in Ultimate Parent or any other Restricted
Subsidiary; provided that (i) any such Investments made by a Loan Party shall be
pledged pursuant to the Guarantee and Collateral Agreement to the extent
required thereby and (ii) the amount of such Investments made by Loan Parties in
Restricted Subsidiaries that are not Loan Parties shall be subject to the
limitation set forth in clause (a) above;

 

(d)           Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
provided that, the Borrower Representative shall provide prompt written notice
to the Administrative Agent of any such settlement of accounts for which the
face value is greater than or equal to $1,000,000 individually (or for a group
of related accounts) and for each such settlement if the aggregate face value of
such accounts is greater than or equal to $10,000,000;

 

(e)           Ultimate Parent and the Restricted Subsidiaries may make loans and
advances in the ordinary course of business to employees, directors and officers
of the Parent Companies, the Borrowers and the Restricted Subsidiaries in an
aggregate principal amount at any time outstanding, when added to the aggregate
amount of guarantees under Section 7.1(w), not to exceed $5,000,000 (i) for
reasonable and customary business-related travel, entertainment, relocation and
analogous ordinary business purposes, (ii) in connection with such person’s
purchase of Capital Stock of LLC Parent (or, on or after the Second Amendment
Date, of Ultimate Parent) and (iii) for any other purpose;

 

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(f)                                   Ultimate Parent and the Restricted
Subsidiaries may enter into Hedging Agreements that (i) are required by Section
6.13 or (ii) are not speculative in nature and are made in the ordinary course
of business;

 

(g)                                  to the extent that such assets or Capital
Stock are transferred to Ultimate Parent or a Restricted Subsidiary
contemporaneously with such acquisition and such acquisition is consensual and
approved by the board of directors of such Acquired Entity or Business, Ultimate
Parent and the Restricted Subsidiaries may acquire all or substantially all the
assets of a Person or line of business of such Person, or not less than 75% of
the Capital Stock (other than directors’ qualifying shares) of a Person;
provided that (i) the Acquired Entity or Business shall be in a line of Business
permitted by Section 7.8(a); (ii) at the time of such transaction (A) after
giving effect thereto, no Event of Default shall have occurred and be
continuing; (B) Ultimate Parent would be in compliance with the Financial
Condition Covenants calculated on a Pro Forma Basis as of the most recently
completed period of four consecutive fiscal quarters ending prior to such
transaction for which the financial statements and certificates required by
Section 5.1(a) or 5.1(b), as the case may be, and 5.1(c) have been delivered, as
if such transaction had occurred as of the first day of such period;
(C) Ultimate Parent’s Consolidated Total Leverage Ratio does not exceed the
lesser of (x) 2.50:1.00 and (y) 0.25:1.00 less than the applicable maximum
Consolidated Total Leverage Ratio set forth in Section 7.14, in each case,
calculated on a Pro Forma Basis as of the most recently completed period of four
consecutive fiscal quarters ending prior to such transaction for which the
financial statements and certificates required by Section 5.1(a) or 5.1(b), as
the case may be, and 5.1(c) have been delivered and (D) Ultimate Parent shall
comply, and shall cause the Acquired Entity or Business to comply, with the
applicable provisions of Section 6.10 and the Security Documents to the extent
required thereby; and (iii) on a Pro Forma Basis as of the most recently
completed period of four consecutive fiscal quarters ending prior to such
transaction for which the financial statements and certificates required by
Section 5.1(a) or 5.1(b), as the case may be, and 5.1(c) have been delivered, as
if such transaction had occurred as of the first day of such period, the
aggregate of the Acquired EBITDA of any Persons acquired in accordance with this
Section 7.4(g) during the term of this Agreement that are not at such time
Guarantors shall not exceed 10% of pro forma Consolidated EBITDA of Ultimate
Parent and the Restricted Subsidiaries (any acquisition of an Acquired Entity or
Business meeting all the criteria of this Section 7.4(g) being referred to
herein as a “Permitted Acquisition”);

 

(h)                                 Investments set forth in Schedule 7.4;

 

(i)                                     Ultimate Parent and the Restricted
Subsidiaries may receive and hold promissory notes and other non-cash
consideration received in connection with Asset Sales permitted under
Section 7.5;

 

(j)                                    Ultimate Parent and the Restricted
Subsidiaries may make Capital Expenditures permitted under Section 7.12;

 

(k)                                 other Investments in an aggregate amount at
any time outstanding not exceeding (x) the greater of (A) $50,000,000 and
(B) 20% of Consolidated EBITDA calculated on a Pro Forma Basis as of the most
recently completed period of four consecutive fiscal quarters ending prior to
such transaction for which the financial statements and certificates required by
Section 5.1(a) or 5.1(b), as the case may be, and 5.1(c) have been delivered, as
if such transaction had occurred as of the first day of such period, plus
(y) the Net Cash Proceeds received after the Closing Date from any Excluded
Issuance (other than the proceeds of any Excluded Issuance made in connection
with an exercise of Ultimate Parent’s Cure Right under Section 7.16(a));

 

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(l)                                     so long as no Default or Event of
Default shall have occurred and be continuing at the time thereof or would
result therefrom, other Investments at any time outstanding not exceeding the
Available Amount, if, after giving effect to such Investment, calculated on a
Pro Forma Basis, (i) the Consolidated Total Leverage Ratio shall not be greater
than 2.25:1.00 and (ii) Ultimate Parent and the Restricted Subsidiaries shall be
in compliance with the Financial Condition Covenants, in each case, as of the
most recently completed period of four consecutive fiscal quarters ending prior
to such incurrence for which the financial statements and certificates required
by Section 5.1(a) or 5.1(b), as the case may be, and 5.1(c) have been delivered
as if such incurrence had occurred as of the first day of such period;

 

(m)                             Investments made directly to the Insurance
Captive in the amounts required by the actuarial analysis or statutory
requirement, copies of which are provided to the Administrative Agent pursuant
to Section 6.5;

 

(n)                                 to the extent constituting Investments,
transactions permitted by Sections 7.1, 7.2, 7.3, 7.5, and 7.6;

 

(o)                                 Investments to the extent financed solely
with the Qualified Capital Stock of LLC Parent (or, on or after the Second
Amendment Date, Ultimate Parent);

 

(p)                                 Guarantees incurred by Ultimate Parent or
any Restricted Subsidiary with respect to operating leases or of other
obligations that do not constitute Indebtedness, in each case entered into by
Ultimate Parent or any Restricted Subsidiary in the ordinary course of business;

 

(q)                                 Investments of any Person in existence at
the time such Person becomes a Restricted Subsidiary (or, in the case of
Ultimate Parent, at such time Ultimate Parent becomes a party to this Agreement)
in accordance with the terms hereof; provided that such Investment was not made
in connection with or anticipation of such Person becoming a Restricted
Subsidiary and any modification, replacement, renewal or extension thereof on
terms at least as favorable on the whole to the Lenders;

 

(r)                                    loans and advances to any Parent Company
in lieu of, and not in excess of the amount of (after giving effect to any other
such loans or advances), Restricted Payments to the extent permitted to be made
to such Parent Company in accordance with Section 7.6(a);

 

(s)                                   so long as no Default or Event of Default
shall have occurred and be continuing or result therefrom, Investments in
Healthcare Facilities guaranteed by or otherwise subject to a mortgage, deed of
trust or similar encumbrance in favor of HUD, which Investments shall not
exceed, in the aggregate, $200,000 per such Healthcare Facility; and

 

(t)                                    so long as no Default or Event of Default
shall have occurred and be continuing at the time thereof or would result
therefrom, Investments in joint ventures in an amount not to exceed $25,000,000
at any time outstanding.

 

For purposes of covenant compliance with this Section, the amount of any
Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment, less any
amount paid, repaid, returned, distributed or otherwise received in cash in
respect of such Investment not to exceed the original amount of such Investment.

 

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7.5                               Mergers, Consolidations, Sales of Assets and
Acquisitions.

 

(a)                                 Consummate any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of all or substantially all of its
Property or business, except that:

 

(i)                                     (A) any Restricted Subsidiary may be
merged, amalgamated, liquidated or consolidated with or into and may Dispose of
all or substantially all of its assets to the Borrowers (provided that, in the
case of such merger, amalgamation, liquidation or consolidation, the Borrowers
shall be the continuing or surviving corporation), (B) any Restricted Subsidiary
may be merged, amalgamated, liquidated or consolidated with or into and may
Dispose of all or substantially all of its assets to any Restricted Subsidiary
(other than the Borrowers and provided that if one of the parties to such
merger, amalgamation, liquidation or consolidation or Disposition is a
Subsidiary Guarantor, either (x) such Subsidiary Guarantor shall be the
continuing or surviving corporation or the recipient of such assets or
(y) simultaneously with such transaction, the continuing or surviving
corporation shall become a Subsidiary Guarantor and the Borrowers shall comply
with Section 6.10 in connection therewith); provided that, neither LLC Parent
nor any of its Subsidiaries may be merged, amalgamated, liquidated or
consolidated with or into nor may Dispose of all or substantially all of its
assets to Ultimate Parent or any of its Subsidiaries (other than LLC Parent and
its Subsidiaries), (C) any Restricted Subsidiary (other than LLC Parent and its
Subsidiaries) may be merged, amalgamated, liquidated or consolidated with or
into and may Dispose of all or substantially all of its assets to LLC Parent and
its Restricted Subsidiaries (provided that LLC Parent or any of its Restricted
Subsidiaries shall be the continuing or surviving corporation or the recipient
of such assets) or (D) Parent and Holdings may be dissolved or merged with or
into LLC Parent (provided that LLC Parent shall be the continuing or surviving
corporation);

 

(ii)                                  any Non-Guarantor Subsidiary that is a
Foreign Subsidiary may be merged or consolidated with or into, or be liquidated
into, any other Non-Guarantor Subsidiary, and any Non-Guarantor Subsidiary that
is a Domestic Subsidiary may be merged or consolidated with or into, or be
liquidated into, any other Non-Guarantor Subsidiary that is a Domestic
Subsidiary;

 

(iii)                               any Non-Guarantor Subsidiary that is a
Foreign Subsidiary may Dispose of all or substantially all of its assets (upon
voluntary liquidation, dissolution, winding-up or otherwise) to any Loan Party
or any other Non-Guarantor Subsidiary, and any Non-Guarantor Subsidiary that is
a Domestic Subsidiary may Dispose of all or substantially all of its assets
(upon voluntary liquidation dissolution, winding-up or otherwise) to any Loan
Party or any other Non-Guarantor Subsidiary that is a Domestic Subsidiary;

 

(iv)                              any Restricted Subsidiary (other than the
Borrowers) may liquidate or dissolve if (i) the Borrowers determine in good
faith that such liquidation or dissolution is in the best interests of the
Borrowers and is not materially disadvantageous to the Lenders and (ii) to the
extent such Restricted Subsidiary is a Loan Party, any assets or business not
otherwise Disposed of or transferred in accordance with Section 7.5(b) or, in
the case of any such business, discontinued, shall be transferred to, or
otherwise owned or conducted by, a Loan Party after giving effect to such
liquidation or dissolution; and

 

(v)                                 any Restricted Subsidiary may merge or
consolidate in order to consummate an Asset Sale permitted by Section 7.5(b);
and

 

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(vi)                              Permitted Acquisitions permitted by
Section 7.4(g) may be consummated.

 

(b)                                 Make any Asset Sale (other than an
involuntary Asset Sale, such as casualty, condemnation or similar events) not
otherwise permitted under paragraph (a) above (A) except for sales or other
dispositions of non-core assets acquired in a Permitted Acquisition; provided
that (1) such sales shall be consummated within 360 days of such Permitted
Acquisition and (2) the consideration received for such assets shall be in an
amount at least equal to the fair market value thereof (determined in good faith
by the Borrowers), (B) unless (i) such Asset Sale is between Restricted
Subsidiaries that are not Loan Parties or (ii) such Asset Sale is from a Loan
Party to a Restricted Subsidiary that is not a Loan Party; provided that the
fair market value of all assets sold, transferred, leased, or Disposed of
pursuant to this paragraph (b)(B)(ii) shall not exceed $10,000,000 in the
aggregate, (C) unless such Asset Sale is from a Loan Party to a Restricted
Subsidiary that is a HUD Sub-Facility Entity or Skilled HUD Entity, in each
case, to the extent (1) necessary to comply with requirements of Law related to
HUD and (2) the Loan Parties are in compliance with the Collateral Coverage
Requirement after giving effect to such Asset Sale or (D) unless (i) such Asset
Sale is for consideration at least 75% of which is cash, (ii) consideration for
such Asset Sale is at least equal to the fair market value of the assets being
sold, transferred, leased or Disposed of, (iii) the fair market value of all
assets sold, transferred, leased, or Disposed of pursuant to this paragraph (b)
shall not exceed $100,000,000 in any fiscal year; provided that for purposes of
this clause (iii), (x) the amount of any liabilities of Ultimate Parent or any
Restricted Subsidiary that are assumed by the transferee of any such assets and
(y) involuntary Asset Sales, such as casualty, condemnation or similar events
shall be excluded, (iv) no Event of Default shall have occurred and be
continuing or result therefrom and (v) Ultimate Parent shall be in compliance
with the Financial Condition Covenants, in each case, calculated on a Pro Forma
Basis as of the most recently completed period of four consecutive fiscal
quarters ending prior to such Asset Sale for which the financial statements and
certificates required by Section 5.1(a) or 5.1(b), as the case may be, and
5.1(c) have been delivered, as if such Asset Sale had occurred as of the first
day of such period; provided that, (x) if the Parent Companies, the Borrowers or
the Restricted Subsidiaries consummate the Hospice Sale within nine months after
the Closing Date, the consideration for the Hospice Sale must be greater than or
equal to $85,000,000, of which $75,000,000 thereof must be in cash and (y) all
cash proceeds of the Hospice Sale (the “Hospice Sale Prepayment Amount”) shall
be used to prepay the Loans in accordance with Section 2.14 and may not be used
in any Reinvestment Event.   Notwithstanding the foregoing, any Asset Sale of
non-core assets acquired as part of the Skilled Acquisition made after the
Second Amendment Date may not be sold unless (i) the aggregate consideration
received for such Asset Sale is equal to or greater than the average appraisal
value for such assets determined by each of an appraiser selected by the
Borrowers and an appraiser selected by the Administrative Agent (provided that
if the appraisal value of such assets determined by the Borrowers’ appraiser is
more than 10% less than that determined by the Administrative Agent’s appraiser,
then the aggregate consideration received for such Asset Sale shall in no case
be less than the appraisal value of such assets determined by the Administrative
Agent’s appraiser), (ii) no less than 75% of the consideration for such Asset
Sale is received in the form of cash and (iii) the Net Cash Proceeds of such
Asset Sale shall be applied in accordance with Section 2.14.

 

7.6                               Restricted Payments; Restrictive Agreements. 
(a) Declare or make, any Restricted Payment; provided that (i) (A) the
Restricted Subsidiaries (other than LLC Parent) may declare and pay dividends or
make other distributions ratably to their equity holders and (B) LLC Parent may
declare and pay dividends or make other distributions to Ultimate Parent and its
Subsidiaries that are managing members of LLC Parent (it being understood and
agreed that this clause (i)(B) shall not permit any Restricted Payments to be
made by LLC Parent to any Person other than Ultimate Parent and its Subsidiaries
that are managing members of LLC Parent); (ii) the Borrowers may acquire shares
of Ultimate Parent delivered or to be delivered to a director, officer or
employee of the Parent

 

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Companies, the Borrowers or a Restricted Subsidiary in connection with the
grant, vesting, exercise or payment of a stock option, warrant or other equity
or equity-based award granted by the Parent Companies, the Borrowers or a
Restricted Subsidiary and the Loan Parties may make distributions in order to
satisfy the exercise or purchase price of the award and/or any Tax withholding
obligations arising in connection with such event; (iii) the repurchase or
redemption of Capital Stock of Ultimate Parent and LLC Parent owned by former or
current management, directors, officers or employees (or their transferees,
estates or beneficiaries under their estates) of any Parent Company, the
Borrowers or any of the Restricted Subsidiaries or to make payments (including
on promissory notes issued to pay the purchase price) with respect to such
repurchases or redemptions upon death, disability, retirement, severance or
termination of employment or service or pursuant to any employee, management or
director equity plan, employee, management or director stock option plan or any
other employee, management or director benefit plan or any agreement (including
any stock subscription or shareholder agreement) or similar equity incentives or
equity-based incentives in an aggregate amount not to exceed $4,000,000 in any
fiscal year; (iv) payments of customary fees to members of its or any Parent
Company’s board of directors and in respect of insurance coverage or for
indemnification obligations under any law, indenture, contract or agreement to
any director or officer of any Parent Company or any of its Restricted
Subsidiaries shall be permitted; (v) the Borrowers may make Restricted Payments
to satisfy obligations existing on the Closing Date owing to affiliates of JER
not to exceed $5,200,000; (vi) [reserved]; (vii) Restricted Payments up to the
Available Amount shall be permitted; provided, that the Available Amount shall
only be available for Restricted Payments if, Consolidated Total Leverage Ratio
shall not exceed the lesser of (x) 1.85:1.00 and (y) 0.50:1.00 less than the
Consolidated Total Leverage Ratio required pursuant to Section 7.14, in each
case, calculated on a Pro Forma Basis as of the most recently completed period
of four consecutive fiscal quarters ending prior to such transaction for which
the financial statements and certificates required by Section 5.1(a) or 5.1(b),
as the case may be, and 5.1(c) have been delivered, as if such transaction had
occurred as of the first day of such period; (viii) any Parent Company may make,
payments in cash, in lieu of the issuance of fractional shares, upon the
exercise of warrants or upon the conversion or exchange of Capital Stock of
Ultimate Parent and LLC Parent; (ix)

 

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[reserved]; (x) LLC Parent may pay cash distributions in respect of taxes owing
by LLC Parent’s direct or indirect investors in respect of Genesis Borrower and
the Restricted Subsidiaries (“Tax Distributions”); (xi) the Borrowers may make
Restricted Payments to satisfy obligations to current employees existing on the
Closing Date not to exceed $6,000,000; and (xii) Ultimate Parent and LLC Parent
may make other Restricted Payments so long as (A) no Event of Default has
occurred and is continuing and (B) the Consolidated Total Leverage Ratio shall
not exceed the lesser of (x) 1.85:1.00 and (y) 1.00:1.00 less than the
Consolidated Total Leverage Ratio required pursuant to Section 7.14, in each
case, calculated on a Pro Forma Basis as of the most recently completed period
of four consecutive fiscal quarters ending prior to such transaction for which
the financial statements and certificates required by Section 5.1(a) or 5.1(b),
as the case may be, and 5.1(c) have been delivered, as if such transaction had
occurred as of the first day of such period.  Notwithstanding the foregoing, no
Restricted Payments shall be made pursuant to clauses (vii) or (xii) of this
Section 7.6(a) if the aggregate amount of such Restricted Payments, together
with the aggregate amount of Restricted Payments previously made pursuant to
clauses (vii) and (xii) of this Section 7.6(a), (x) during the most recently
completed period of four consecutive fiscal quarters for which the financial
statements and certificates required by Section 5.1(a) or 5.1(b), as the case
may be, and 5.1(c) have been delivered and (y) after such recently completed
period of four consecutive fiscal quarters, would exceed 90% of Free Cash Flow
of the Parent Companies, the Borrowers and the Restricted Subsidiaries for such
recently completed period of four consecutive fiscal quarters.

 

(b)                                 Enter into, incur or permit to exist any
agreement or other arrangement that prohibits, restricts or imposes any
condition upon (i) the ability of Ultimate Parent or any Restricted Subsidiary
to create, incur or permit to exist any Lien upon any of its property or assets
to secure the Obligations, or (ii) the ability of any Subsidiary to pay
dividends or other distributions with respect to any of its Capital Stock or to
make or repay loans or advances to Ultimate Parent or any Restricted Subsidiary
or to guarantee Indebtedness of Ultimate Parent or any Restricted Subsidiary;
provided that (A) the foregoing shall not apply to restrictions and conditions
imposed by law or regulations or by any Loan Document, the ABL Loan Documents,
the Skilled Loan Documents, any Material Master Lease entered into prior to the
Closing Date, or such other Indebtedness as is set forth on Schedule 7.1,
(B) the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary or any other
permitted asset sale pending such sale; provided such restrictions and
conditions apply only to the Subsidiary or other asset that is to be sold and
such sale is permitted hereunder, (C) the foregoing shall not apply to
restrictions and conditions imposed on any Foreign Subsidiary by the terms of
any Indebtedness of such Foreign Subsidiary permitted to be incurred hereunder,
(D) clause (i) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement creating Liens permitted by Section 7.2 prohibiting
further Liens on the properties encumbered thereby, (E) clause (i) of the
foregoing shall not apply to (x) customary provisions in Leases and other
contracts restricting the subletting or assignment thereof or (y) any Material
Master Leases entered into after the Closing Date; provided, however, in each
case, such restrictions shall not be more adverse to the Lenders and Borrowers
than the equivalent restrictions set forth in these Material Master Leases
existing as of the Closing Date, as modified by the Master Lease Intercreditor
Agreements, (F) the foregoing shall not apply to customary provisions in joint
venture agreements, partnership agreements, limited liability organizational
governance documents, asset sale agreements, sale and leaseback agreements and
other similar agreements, (G) the foregoing shall not apply to restrictions and
conditions in any other agreement that does not restrict in any manner (directly
or indirectly) Liens created pursuant to the Loan Documents on any Collateral
securing the Secured

 

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Obligations and does not require the direct or indirect granting of any Lien
securing any Indebtedness or other obligation by virtue of the granting of Liens
on or pledge of property of any Loan Party to secure the Secured Obligations,
(H) the foregoing shall not apply to restrictions and conditions in any
Indebtedness permitted pursuant to Section 7.1 to the extent such restrictions
or conditions are no more restrictive than the restrictions and conditions in
the Loan Documents, (I) the foregoing shall not apply to customary provisions
restricting assignment of any agreement entered into by Ultimate Parent or any
Restricted Subsidiary in the ordinary course of business, (J) the foregoing
shall not apply to any agreement assumed in connection with any Permitted
Acquisition, which encumbrance or restriction is not applicable to any person,
or the properties or assets of any person, other than the person or the
properties or assets of the person so acquired and (K) the foregoing shall not
apply to restrictions and conditions that (x) exist in any agreement in effect
at the time any Restricted Subsidiary becomes a Subsidiary of Ultimate Parent
(or, in the case of Ultimate Parent, at the time Ultimate Parent becomes a party
to this Agreement) in each case, so long as such agreement was not entered into
in contemplation of such person becoming a Subsidiary, (y) is imposed by any
amendments or refinancings that are otherwise permitted by the Loan Documents of
the contracts, instruments or obligations referred to above; provided that such
amendments and refinancings are no more materially restrictive with respect to
such prohibitions and limitations than those prior to such amendment or
refinancing and such restrictions are limited solely to such Restricted
Subsidiary.

 

7.7                               Transactions with Affiliates.  Except for
transactions between or among Ultimate Parent and the Restricted Subsidiaries,
sell or transfer any property or assets to, or purchase or acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except that Ultimate Parent or any of the Restricted Subsidiaries
may engage in any of the foregoing transactions on terms and conditions not less
favorable to Ultimate Parent or such Restricted Subsidiary than could be
obtained on an arm’s-length basis from unrelated third parties; provided that
with respect to any such transaction or series of transactions involving
aggregate consideration in excess of $20,000,000, a majority of the board of
directors of LLC Parent (or, on or after the Second Amendment Date, a majority
of the board of directors of Ultimate Parent) in each case, shall have
determined in good faith that the criteria set forth above are satisfied and
have approved the relevant transaction as evidenced by a resolution of the board
of directors of LLC Parent or Ultimate Parent, as applicable; provided, further,
the following transactions shall be permitted;

 

(a)                                 Investments permitted under Section 7.4(e),
(p) and (q);

 

(b)                                 employment and severance arrangements
between the Parent Companies, the Borrowers or any of the Restricted
Subsidiaries and their respective officers and employees in the ordinary course
of business and transactions pursuant to stock option plans and employee benefit
plans and arrangements;

 

(c)                                  the payment of customary fees and
reasonable out-of-pocket costs to, and indemnities provided on behalf of,
directors, officers, employees and consultants of the Parent Companies, the
Borrower and the Restricted Subsidiaries in the ordinary course of business to
the extent attributable to the ownership or operation of Ultimate Parent and the
Restricted Subsidiaries;

 

(d)                                 any agreement, instrument or arrangement as
in effect as of the date hereof and set forth on Schedule 7.7, or any amendment
thereto (so long as any such amendment is not materially disadvantageous to the
Lenders when taken as a whole as compared to the applicable agreement as in
effect on the date hereof as reasonably determined in good faith by the
Borrower);

 

(e)                                  Restricted Payments permitted under
Section 7.6;

 

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(f)                                   the issuance or transfer of Equity
Interests of LLC Parent (or, on or after the Second Amendment Date, of Ultimate
Parent) in each case to any Permitted Investor or to any former, current or
future director, manager, officer, employee or consultant (or any Controlled
Investment Affiliate or immediate family member of any of the foregoing) of the
Borrower, any of its Subsidiaries or any direct or indirect parent thereof;

 

(g)                                  entry into a tax sharing agreement with any
Parent Company providing for (in each case subject to compliance with
Section 7.6) the payment of Taxes (including interest and penalties) and
expenses, control of tax filings and contests, and other normal, usual and
customary provisions, but only to the extent such taxes are attributable to the
income or business of Ultimate Parent and its Subsidiaries; and

 

(h)                                 transactions entered into in the ordinary
course of business that are consistent with past practices.

 

7.8                               Business of the Borrowers and the Restricted
Subsidiaries.  (a)  Engage at any time in any Business or Business activity
other than the Business currently conducted by it and, in the good faith
judgment of Ultimate Parent, Business activities reasonably incidental,
complementary or related thereto.

 

(b)                                 Amend, modify or otherwise change, or
consent or agree to any amendment, modification, waiver or other change to any
organizational documents of any Loan Party in any manner that is materially
adverse to the Lenders, without the prior consent of the Administrative Agent
(with approval of the Required Lenders).

 

(c)                                  Sell, lease, transfer or otherwise convey,
in one or a series of related transactions, all or substantially all of the
assets of Ultimate Parent and the Restricted Subsidiaries, taken as a whole.

 

7.9                               Other Indebtedness and Agreements. 
(a)(i) Permit any waiver, supplement, modification, amendment, termination or
release of any indenture, instrument or agreement pursuant to which any
Subordinated Indebtedness or unsecured Material Indebtedness (for the avoidance
of doubt, excluding Real Property Financing Obligations) of Ultimate Parent or
any Restricted Subsidiary is outstanding if the effect of such waiver,
supplement, modification, amendment, termination or release would materially
increase the obligations of the obligor or confer additional material rights on
the holder of such Indebtedness in a manner materially adverse to Ultimate
Parent, such Restricted Subsidiary or the Lenders or (ii) permit any waiver,
supplement, modification, amendment, termination or release of any Material
Master Lease, any Material Master Lease Intercreditor Agreement or any Lease
Consent and Amendment Agreement in any manner that is materially adverse to the
Lenders without the prior written consent of Administrative Agent, which shall
not be unreasonably withheld.

 

(b)                                 Make any distribution, whether in cash,
property, securities or a combination thereof, in respect of, or pay, or commit
to pay, or directly or indirectly redeem, repurchase, retire or otherwise
acquire for consideration, other than regular scheduled payments of principal
and interest as and when due (to the extent not prohibited by applicable
subordination provisions), or set apart any sum for the aforesaid purposes, any
Subordinated Indebtedness or unsecured Material Indebtedness  (excluding Real
Property Financing Obligations for the avoidance of doubt) (other than (i) the
Loans, (ii) with proceeds of any Excluded Issuance made after the Closing Date
(other than proceeds of any Excluded Issuance made in connection with an
exercise of Ultimate Parent’s Cure Right under Section 7.16(a)), (iii) the
conversion or exchange into Equity Interests of any Parent Company and
(iv) provided that no Default or Event of Default shall have occurred and be
continuing or result therefrom, an aggregate principal amount up to the
Available Amount, if, after giving effect thereto, (A)

 

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the Consolidated Total Leverage Ratio shall not be greater than 2.25:1.00 and
(B) Ultimate Parent and the Restricted Subsidiaries shall be in compliance with
the Financial Condition Covenants, in each case, calculated on a Pro Forma Basis
as of the most recently completed period of four consecutive fiscal quarters
ending prior to such transaction for which the financial statements and
certificates required by Section 5.1(a) or 5.1(b), as the case may be, and
5.1(c) have been delivered, as if such transaction had occurred as of the first
day of such period).

 

7.10                        [Reserved]

 

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7.11                        Account Changes; Fiscal Year.  Change its fiscal
year or its method for determining fiscal quarters or fiscal months.

 

7.12                        Capital Expenditures.  Permit the aggregate amount
of Capital Expenditures made by Ultimate Parent or the Restricted Subsidiaries
in any period set forth below to exceed the amount set forth below for such
period; provided, that such amount for any fiscal year shall be increased by, to
the extent that a Permitted Acquisition is consummated during or prior to such
fiscal year (but after the Closing Date), an amount equal to $1,000 per licensed
bed of such Acquired Entity or Business (the “Acquired Permitted CapEx Amount”)
(provided, that with respect to the fiscal year during which any such Permitted
Acquisition occurs, the amount of additional Capital Expenditures permitted as a
result of this proviso shall be an amount equal to the product of (x) the
Acquired Permitted CapEx Amount and (y) a fraction, the numerator of which is
the number of days remaining in such fiscal year after the date such Permitted
Acquisition is consummated and the denominator of which is the actual number of
days in such fiscal year):

 

Period

 

Amount

 

January 1, 2013 through December 31, 2013

 

$

90,000,000

 

January 1, 2014 through December 31, 2014

 

$

92,000,000

 

January 1, 2015 through December 31, 2015

 

$

94,000,000

 

January 1, 2016 through December 31, 2016

 

$

96,000,000

 

January 1, 2017 through Maturity Date

 

$

98,000,000

 

 

The amount of permitted Capital Expenditures set forth above in respect of any
fiscal year commencing with the fiscal year ending on December 31, 2013, shall
be increased by an amount equal to the unused permitted Capital Expenditures for
the immediately preceding fiscal year (including the portion thereof (if any) of
the unused permitted Capital Expenditures carried forward to such preceding
fiscal year pursuant to this sentence).

 

7.13                        Minimum Fixed Charge Coverage Ratio.  Permit the
Fixed Charge Coverage Ratio as of the last day of each fiscal quarter ending
during a period set forth below to be less than the ratio set forth opposite
such period below:

 

Period

 

Ratio

 

October 1, 2013 through December 31, 2013

 

1.70 to 1.00

 

January 1, 2014 through March 31, 2014

 

1.70 to 1.00

 

April 1, 2014 through June 30, 2014

 

2.00 to 1.00

 

 

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Period

 

Ratio

 

July 1, 2014 through September 30, 2014

 

2.00 to 1.00

 

October 1, 2014 through December 31, 2014

 

2.00 to 1.00

 

January 1, 2015 through March 31, 2015

 

2.00 to 1.00

 

April 1, 2015 through June 30, 2015

 

2.00 to 1.00

 

July 1, 2015 through September 30, 2015

 

2.00 to 1.00

 

Thereafter

 

2.25 to 1.00

 

 

7.14                        Maximum Leverage Ratio.  Permit the Consolidated
Total Leverage Ratio as of the last day of each fiscal quarter ending during a
period set forth below to be greater than the ratio set forth opposite such
period below:

 

Period

 

Ratio

 

October 1, 2013 through December 31, 2013

 

3.25 to 1.00

 

January 1, 2014 through March 31, 2014

 

3.25 to 1.00

 

April 1, 2014 through June 30, 2014

 

4.75 to 1.00

 

July 1, 2014 through September 30, 2014

 

4.75 to 1.00

 

October 1, 2014 through December 31, 2014

 

4.75 to 1.00

 

January 1, 2015 through March 31, 2015

 

4.50 to 1.00

 

April 1, 2015 through June 30, 2015

 

4.50 to 1.00

 

July 1, 2015 through September 30, 2015

 

4.25 to 1.00

 

Thereafter

 

4.25 to 1.00

 

 

7.15                        Minimum Interest Coverage Ratio.  Permit the
Interest Coverage Ratio as of the last day of each fiscal quarter ending during
a period set forth below to be less than the ratio set forth opposite such
period below:

 

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Period

 

Amount

 

October 1, 2013 through December 31, 2013

 

3.00 to 1.00

 

January 1, 2014 through March 31, 2014

 

3.00 to 1.00

 

April 1, 2014 through June 30, 2014

 

3.00 to 1.00

 

July 1, 2014 through September 30, 2014

 

3.00 to 1.00

 

October 1, 2014 through December 31, 2014

 

3.25 to 1.00

 

January 1, 2015 through March 31, 2015

 

3.25 to 1.00

 

April 1, 2015 through June 30, 2015

 

3.25 to 1.00

 

July 1, 2015 through September 30, 2015

 

3.50 to 1.00

 

Thereafter

 

3.50 to 1.00

 

 

7.16                        Certain Cure Rights.

 

(a)                                 Notwithstanding anything to the contrary
contained herein, in the event Ultimate Parent fails to comply with the
requirements of either covenant as set forth in Section 7.13, Section 7.14 or
Section 7.15 (each, a “Financial Cure Covenant”) as at the last day of any
fiscal quarter (a fiscal quarter ending on such day, a “Curable Period”), after
the Closing Date until the expiration of the 5th Business Day subsequent to the
date the certificate calculating the Financial Cure Covenants is required to be
delivered pursuant to Section 5.1(c) with respect to the period ending on the
last day of such fiscal quarter, Ultimate Parent shall have the right (the “Cure
Right”) to include any cash equity contribution made to Ultimate Parent or LLC
Parent after the beginning of such fiscal quarter and prior to the end of the
Curable Period in the

 

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calculation of Consolidated EBITDA, with respect to Sections 7.13, 7.14 and
7.15, and unrestricted cash and Cash Equivalents, with respect to Section 7.15
(the “Cure Amount”).  Upon the receipt by Ultimate Parent or LLC Parent of cash
equity (other than Disqualified Capital Stock) in an amount equal to the Cure
Amount pursuant to the exercise of such Cure Right, the Financial Cure Covenants
shall be recalculated giving effect to the following pro forma adjustments:

 

(i)                                     Consolidated EBITDA, unrestricted cash
or Cash Equivalents, as applicable, for the Curable Period shall be increased,
solely for the purpose of measuring the Financial Cure Covenants for such fiscal
quarter and for applicable subsequent periods which include such fiscal quarter,
and disregarded for any other purpose under this Agreement (including
determining the availability of any baskets and step-downs), by an amount equal
to the Cure Amount; and

 

(ii)                                  if, after giving effect to the foregoing
recalculations, Ultimate Parent shall then be in compliance with the
requirements of the Financial Cure Covenants, Ultimate Parent shall be deemed to
have satisfied the requirements of the Financial Cure Covenants as of the
relevant date of determination with the same effect as though there had been no
failure to comply therewith at such date, and the applicable breach or default
of the Financial Cure Covenants which had occurred shall be deemed cured for all
purposes of this Agreement.

 

(b)                                 Limitations on Exercise of Cure Right, etc. 
Notwithstanding anything herein to the contrary, (A) in no event shall Ultimate
Parent be entitled to exercise the Cure Right more than twice in any consecutive
four quarter period or more than three times during the term of this Agreement;
(B) the Cure Amount shall be no greater than the amount which, if added to
Consolidated EBITDA, unrestricted cash or Cash Equivalents, as applicable, for
the Curable Period, would cause Ultimate Parent to be in compliance with the
Financial Cure Covenants for the relevant determination period ending on the
last day of such Curable Period (it being understood and agreed that for
purposes of calculating such amount no effect shall be given to any pricing,
financial ratio-based conditions or any baskets with respect to covenants under
this Agreement on account of receipt of such proceeds) and (C) such proceeds
shall not result in any reduction of Indebtedness for purposes of calculating
compliance with any of the financial covenants for such fiscal quarter and for
applicable subsequent periods which include such fiscal quarter.  Upon the
Administrative Agent’s receipt of an irrevocable notice from the Borrower Agent
that Ultimate Parent intends to exercise the Cure Right with respect to the
Financial Cure Covenants as of the last day of any fiscal quarter (the “Notice
of Intent to Cure”), then, until the 10th day subsequent to the date the
certificate calculating such Financial Cure Covenants is required to be
delivered pursuant to Section 5.1(c) to which such Notice of Intent to Cure
relates, neither the Administrative Agent nor any Lender shall exercise the
right to accelerate the Loans or terminate the Commitments and neither the
Administrative Agent nor any Lender shall exercise any right to foreclose on or
take possession of the Collateral solely on the basis of an Event of Default
having occurred and being continuing under Section 7.13, Section 7.14 or
Section 7.15, as applicable, in respect of the period ending on the last day of
such fiscal quarter.

 

SECTION 8.                            EVENTS OF DEFAULT

 

In case of the happening of any of the following events (“Events of Default”):

 

(a)                                 any representation or warranty made or
deemed made in or in connection with any Loan Document hereunder, or any
representation, warranty, statement or information contained in any report,
certificate, financial statement or other instrument furnished in connection
with or pursuant to

 

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any Loan Document, shall prove to have been incorrect, false or misleading in
any material respect when so made, deemed made or furnished;

 

(b)                                 default shall be made in the payment of any
principal of any Loan when and as the same shall become due and payable, whether
at the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;

 

(c)                                  default shall be made in the payment of any
interest on any Loan or any fee or any other amount (other than an amount
referred to in (b) above) due under any Loan Document, when and as the same
shall become due and payable, and such default shall continue unremedied for a
period of 3 Business Days;

 

(d)                                 default shall be made in the due observance
or performance by any Loan Party of any covenant, condition or agreement
contained in Section 5.1, Section 5.2(a)(i), Section 6.1 (solely with respect to
the Borrowers), Section 6.9, Section 6.14 or in Section 7;

 

(e)                                  default shall be made in the due observance
or performance by any Loan Party of any covenant, condition or agreement
contained in any Loan Document (other than those specified in (b), (c) or
(d) above) and such default shall continue unremedied for a period of 30 days
after the earlier of (i) the date on which a Responsible Officer of any Loan
Party becomes aware of such failure and (ii) the date on which notice thereof
shall have been given to any Borrower from the Administrative Agent or the
Required Lenders;

 

(f)                                   (i) the Parent Companies, the Borrowers or
any of the Restricted Subsidiaries shall fail to pay any principal or interest,
regardless of amount, due beyond any grace period in respect of any Material
Indebtedness, when and as the same shall become due and payable, or (ii) any
other event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (ii) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness if such sale or transfer is permitted
hereunder and under the documents providing for such Indebtedness;

 

(g)                                  an involuntary proceeding shall be
commenced or an involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Parent Companies, the
Borrowers, or any of the Material Restricted Subsidiaries, or of a substantial
part of the property or assets of the Parent Companies, the Borrowers, or any of
the Material Restricted Subsidiaries, under Title 11 of the Bankruptcy Code, as
now constituted or hereafter amended, or any other federal, state or foreign
bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Parent Companies, the Borrowers, or any of the Material Restricted
Subsidiaries or for a substantial part of the property or assets of the Parent
Companies, the Borrowers, or any of the Material Restricted Subsidiaries or
(iii) the winding-up or liquidation of the Parent Companies, the Borrowers, or
any of the Material Restricted Subsidiaries, and in the case of clauses (i),
(ii) and (iii), such proceeding or petition shall continue undismissed or
unstayed for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered;

 

(h)                                 the Parent Companies, the Borrowers, or any
of the Material Restricted Subsidiaries shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the Bankruptcy
Code, as now constituted or hereafter amended, or any other federal, state or
foreign

 

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bankruptcy, insolvency, receivership or similar law, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in (g) above, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Parent Companies, the Borrowers, or any
of the Material Restricted Subsidiaries or for a substantial part of the
property or assets of the Parent Companies, the Borrowers, or any of the
Material Restricted Subsidiaries, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become due or
(vii) take any action for the purpose of effecting any of the foregoing;

 

(i)                                     one or more judgments, orders or decrees
shall be rendered against the Parent Companies, the Borrowers, or any of the
Material Restricted Subsidiaries, or any combination thereof and the same shall
remain undischarged for a period of 60 consecutive days during which execution
shall not be effectively vacated, discharged, bonded or stayed, or any writ or
warrant of attachment or similar process shall be entered or filed upon assets
or properties of the Parent Companies, the Borrowers, or any of the Subsidiaries
to enforce any such judgment, order or decree and such judgment, order and
decree is for the payment of money in an aggregate amount in excess of
$30,000,000 (net of any amounts covered by applicable insurance or
self-insurance);

 

(j)                                    an ERISA Event shall have occurred that
when taken together with all other such ERISA Events, could reasonably be
expected to result in a liability of the Parent Companies, the Borrowers or any
of the Restricted Subsidiaries in an aggregate amount exceeding $30,000,000;

 

(k)                                 except pursuant to a valid, binding and
enforceable termination or release permitted under the Loan Documents and
executed by the Administrative Agent or as otherwise expressly permitted under
any Loan Document, (i) as a result of any action or inaction by a Loan Party,
any material provision of any Loan Document shall, at any time after the
delivery of such Loan Document, fail to be valid and binding on, or enforceable
against, any Loan Party that is a party thereto, (ii) as a result of any action
or inaction by a Loan Party, any Loan Document purporting to grant a Lien to
secure any Obligation shall, at any time after the delivery of such Loan
Document, fail to create a valid and enforceable Lien on any material portion of
the Collateral purported to be covered thereby or such Lien shall fail or cease
to be a perfected Lien with the priority required in the relevant Loan Document,
or (iii) any Loan Party shall state in writing that any of the events described
in clause (i) or (ii) above shall have occurred;

 

(l)                                     there shall have occurred a Change of
Control;

 

(m)                             the formal written revocation or termination by
any Governmental Authority of any Primary License related to Healthcare
Facilities to the extent any such revocations or terminations, in the aggregate,
could reasonably be expected to result in a Material Adverse Effect; or

 

(n)                                 there shall have occurred any event of
default under any Material Master Lease;

 

then, and in every such event (other than an event with respect to the Borrowers
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Borrowers, take either or both of
the following actions, at the same or different times: (i) terminate forthwith
the Commitments and (ii) declare the Loans then outstanding to be forthwith due
and payable in whole or in part, whereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the Borrowers accrued hereunder
and under any other Loan Document, shall become forthwith due and payable,
without presentment, demand, protest or any other

 

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

 

notice of any kind, all of which are hereby expressly waived by the Borrowers,
anything contained herein or in any other Loan Document to the contrary
notwithstanding; and in any event with respect to the Borrowers described in
paragraph (g) or (h) above, the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest
thereon and any unpaid accrued fees and all other liabilities of the Borrowers
accrued hereunder and under any other Loan Document, shall automatically become
due and payable, without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by the Borrowers, anything
contained herein or in any other Loan Document to the contrary notwithstanding.

 

SECTION 9.                            THE AGENTS

 

9.1                               Appointment.  Each Lender hereby irrevocably
appoints Barclays to act on its behalf as the Administrative Agent hereunder and
under the other Loan Documents and authorizes the Administrative Agent to take
such actions on its behalf and to exercise such powers as are delegated to the
Administrative Agent by the terms hereof or thereof, together with such actions
and powers as are reasonably incidental thereto.  Barclays hereby accepts such
appointment.  The provisions of this Article are solely for the benefit of the
Agents and the Lenders, and the Borrowers shall not have rights as a third-party
beneficiary of any of such provisions.  It is understood and agreed that the use
of the term “agent” herein or in any other Loan Documents (or any other similar
term) with reference to any Agent is not intended to connote any fiduciary or
other implied (or express) obligations arising under agency doctrine of any
applicable Law.  Instead such term is used as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties.

 

9.2                               Delegation of Duties.  The Administrative
Agent may perform any and all of its duties and exercise its rights and powers
hereunder or under any other Loan Document by or through any one or more
sub-agents appointed by the Administrative Agent.  The Administrative Agent and
any such sub-agent may perform any and all of its duties and exercise its rights
and powers by or through their respective Related Parties.  The exculpatory
provisions of this Article shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the Facility
as well as activities as the Administrative Agent.  The Administrative Agent
shall not be responsible for the negligence or misconduct of any sub-agents
except to the extent that a court of competent jurisdiction determines in a
final and non-appealable judgment that the Administrative Agent acted with gross
negligence or willful misconduct in the selection of such sub-agents.

 

9.3                               Exculpatory Provisions.  (a)  No Agent shall
have any duties or obligations except those expressly set forth herein and in
the other Loan Documents, and its duties hereunder shall be administrative in
nature.  Without limiting the generality of the foregoing, no Agent shall:
(i) be subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing; (ii) have any duty to take any
discretionary action or exercise any discretionary powers, except (in the case
of the Administrative Agent) discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents); provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or applicable Law, including for the avoidance of
doubt any action that may be in violation of the automatic stay under any Debtor
Relief Law; and (iii) except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrowers or any of its Affiliates
that is communicated to or obtained by such Agent or any of its Affiliates in
any capacity.

 

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(b)                                 The Administrative Agent shall not be liable
for any action taken or not taken by it (i) with the consent or at the request
of the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary, or as the Administrative Agent shall believe in good faith
shall be necessary, under the circumstances as provided in Section 8 and
Section 10.1), or (ii) in the absence of its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction by final and
non-appealable judgment.  The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default unless and until the
Administrative Agent shall have received written notice from a Lender or the
Borrower Agent referring to this Agreement, describing such Default and stating
that such notice is a “notice of default.”

 

(c)                                  No Agent-Related Person shall be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with this Agreement or any
other Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document or (v) the satisfaction of any condition set forth in
Section 4 or elsewhere herein, other than (in the case of the Administrative
Agent) to confirm receipt of items expressly required to be delivered to it

 

9.4                               Reliance by the Agents.  Each Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting
or other distribution) believed by it to be genuine and to have been signed,
sent or otherwise authenticated by the proper Person.  Each Agent also may rely
upon any statement made to it orally or by telephone and believed by it to have
been made by the proper Person, and shall not incur any liability for relying
thereon.  In determining compliance with any condition hereunder to any
Borrowing that by its terms shall be fulfilled to the satisfaction of a Lender,
the Administrative Agent may presume that such condition is satisfactory to such
Lender unless the Administrative Agent shall have received notice to the
contrary from such Lender prior to any such Borrowing.  The Administrative Agent
may consult with legal counsel (who may be counsel for the Borrowers),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.

 

9.5                               Non-Reliance on Agents and Other Lenders. 
Each Lender expressly acknowledges that neither the Agents nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates have
made any representations or warranties to it and that no act by the Agents
hereafter taken, including any review of the affairs of a Loan Party or any
affiliate of a Loan Party, shall be deemed to constitute any representation or
warranty by any Agent to any Lender.  Each Lender represents to the Agents that
it has, independently and without reliance upon any Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement.  Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under the applicable Loan Documents, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition and creditworthiness of the Loan Parties and their
affiliates.  Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Agents hereunder, the Agents shall not
have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition

 

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(financial or otherwise), prospects or creditworthiness of any Loan Party or any
affiliate of a Loan Party that may come into the possession of either Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.

 

9.6                               Indemnification.  Whether or not the
transactions contemplated hereby are consummated, each Lender shall indemnify
upon demand each Agent-Related Person (to the extent not reimbursed by or on
behalf of the Borrowers and without limiting the obligations of any Loan Party
to do so) on a pro rata basis (determined as of the time that the applicable
payment is sought based on each Lender’s ratable share at such time) and hold
harmless each Agent-Related Person against any and all Indemnified Liabilities
incurred by it; provided that no Lender shall be liable for payment to any
Agent-Related Person of any portion of such Indemnified Liabilities to the
extent determined in a final, non-appealable judgment of a court of competent
jurisdiction to have resulted from such Agent-Related Person’s own gross
negligence or willful misconduct (and no action taken in accordance with the
directions of the Required Lender shall be deemed to constitute gross negligence
or willful misconduct for purposes of this Section).  In the case of any
investigation, litigation or proceeding giving rise to any Indemnified
Liabilities, this Section applies whether any such investigation, litigation or
proceeding is brought by any Lender or any other Person.  Without limitation of
the foregoing, each Lender shall reimburse the Administrative Agent upon demand
for its ratable share of any costs or out-of-pocket expenses (including the
fees, disbursements and other charges of counsel) incurred by the Administrative
Agent in connection with preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights and
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Administrative
Agent is not reimbursed for such costs or expenses by or on behalf of the
Borrower.

 

To the extent required by any applicable Law, the Administrative Agent may
withhold from any payment to any Lender an amount equivalent to any U.S. federal
income Tax.  If the IRS or any other Governmental Authority asserts a claim that
the Administrative Agent did not properly withhold U.S. federal income Tax from
amounts paid to or for the account of any Lender because the appropriate form
was not delivered or was not properly executed or because such Lender failed to
notify the Administrative Agent of a change in circumstance which rendered the
exemption from, or reduction of, U.S. federal income Tax ineffective or for any
other reason, or if the Administrative Agent reasonably determines that a
payment was made to a Lender pursuant to this Agreement without deduction of
applicable withholding tax from such payment, such Lender shall indemnify the
Administrative Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as Tax or otherwise, including any penalties or interest
and together with all reasonable costs and out-of-pocket expenses (including
reasonable fees and expenses of counsel) incurred in connection therewith.

 

9.7                               Agent in Its Individual Capacity.  Any Agent
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not an Agent hereunder, and
the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or
unless the context otherwise requires, include the Person serving as such Agent
hereunder in its individual capacity.  Such Person and its Affiliates may accept
deposits from, lend money to, own securities of, act as the financial advisor or
in any other advisory capacity for, and generally engage in any kind of business
with, Ultimate Parent or any Subsidiary or other Affiliate thereof as if such
Person were not an Agent hereunder and without any duty to account therefor to
the Lenders.

 

9.8                               Successor Agents.  The Administrative Agent
may resign as Administrative Agent upon 30 days’ notice to the Lenders and the
Borrowers.  Upon receipt of any such notice of resignation, the Required Lenders
shall appoint from among the Lenders a successor agent (which may be an
Affiliate of a Lender), with the consent of the Borrowers at all times other
than during the existence of an Event of Default under Sections 8.1(b), (c),
(g) or (h) (which consent shall not be unreasonably withheld or

 

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delayed).  If no such successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment prior to the effective date of
the resignation of the Administrative Agent, then the Administrative Agent may
(but shall not be obligated to), on behalf of the Lenders, appoint a successor
Administrative Agent meeting the qualifications set forth above.  Whether or not
a successor has been appointed, such resignation shall become effective in
accordance with such notice on such effective date, where (i) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
collateral security held by the Administrative Agent on behalf of the Lenders
under any of the Loan Documents, the retiring Administrative Agent may (but
shall not be obligated to) continue to hold such collateral security until such
time as a successor Administrative Agent is appointed) and (ii) all payments,
communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender directly, until
such time, if any, as the Required Lenders appoint a successor Administrative
Agent as provided for above.  Upon the acceptance of a successor’s appointment
as Administrative Agent hereunder, such successor shall succeed to and become
vested with all of the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from all of its duties and obligations hereunder or under the other Loan
Documents.  The fees payable by the Borrowers to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise
agreed between the Borrowers and such successor.  After the retiring
Administrative Agent’s resignation hereunder and under the other Loan Documents,
the provisions of this Section and Section 9.3 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent.

 

9.9                               Authorization to Release Liens and
Guarantees.  The Agents are hereby irrevocably authorized by each of the Lenders
to effect any release or subordination of Liens or Guarantee Obligations
contemplated by Section 10.15 without further action or consent by the Lenders. 
The Agents are hereby irrevocably authorized by each of the Lenders to (and to
execute any documents or instruments necessary to) enter into any intercreditor
agreement contemplated by the terms hereof (including, without limitation, the
Intercreditor Agreement, the Skilled Intercreditor Agreement and the Material
Master Lease Intercreditor Agreements) (and in the case of any such
intercreditor agreement entered into prior to the Second Amendment Date, the
Lenders hereby ratify and confirm such authority), and the parties hereto
acknowledge that such intercreditor agreements are binding upon them.  Each
Lender (a) hereby agrees that it will be bound by and will take no actions
contrary to the provisions of any such intercreditor agreement, (b) hereby
authorizes and instructs the Agents to enter into any such intercreditor
agreement and to subject the Liens on the Collateral securing the Obligations to
the provisions thereof and (c) without any further consent of the Lenders,
hereby authorizes and instructs the Agents to negotiate, execute and deliver on
behalf of the Secured Parties any intercreditor agreement or any amendment to
(or amendment and restatement of) the Security Documents. In addition, each
Lender hereby authorizes the Agents to enter into (i) any amendments to any
intercreditor agreement, and (ii) any other intercreditor arrangement, in the
case of clauses (i) and (ii), to the extent required to give effect to the
establishment of intercreditor rights and privileges as contemplated and
required or permitted pursuant to this Agreement. Each Lender waives any
conflict of interest, now contemplated or arising hereafter, in connection
therewith and agrees not to assert against any Agent or any of its affiliates
any claims, causes of action, damages or liabilities of whatever kind or nature
relating thereto.

 

9.10                        Lead Arrangers.  None of the Lead Arrangers or
Syndication Agent (other than the Administrative Agent) identified on the cover
page or signature pages of this Agreement shall have any rights, powers,
obligations, liabilities, responsibilities or duties under this Agreement or any
of the other Loan Documents, except in its capacity, as applicable, as the
Administrative Agent, the Collateral Agent, or a Lender hereunder.  Without
limiting any other provision of this Article, none of the Lead Arrangers

 

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or Syndication Agent in their respective capacities as such shall have or be
deemed to have any fiduciary relationship with any Lender or any other Person by
reason of this Agreement or any other Loan Document.

 

9.11                        Administrative Agent May File Proofs of Claim.  In
case of the pendency of any proceeding under any Debtor Relief Law or any other
judicial proceeding relative to the Borrowers, the Administrative Agent
(irrespective of whether the principal of any Loan shall then be due and payable
as herein expressed or by declaration or otherwise and irrespective of whether
the Administrative Agent shall have made any demand on the Borrowers) shall be
entitled and empowered (but not obligated) by intervention in such proceeding or
otherwise:

 

(a)                                 to file and prove a claim for the whole
amount of the principal and interest owing and unpaid in respect of the Loans
and all other Obligations that are owing and unpaid and to file such other
documents as may be necessary or advisable in order to have the claims of the
Lenders, and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders, and the
Administrative Agent and their respective agents and counsel and all other
amounts due to the Lenders, and the Administrative Agent under Sections 2.6 and
10.5(a)) allowed in such judicial proceeding; and

 

(b)                                 to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.6 and 10.5(a).

 

SECTION 10.                     MISCELLANEOUS

 

10.1                        Amendments and Waivers.

 

(a)                                 Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section.  The Required
Lenders and each Loan Party to the relevant Loan Document may, or, with the
written consent of the Required Lenders, the Administrative Agent and each Loan
Party to the relevant Loan Document may, from time to time, (a) enter into
written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding or deleting any provisions to this Agreement
or the other Loan Documents or otherwise changing in any manner the rights or
obligations of the Agents, the Lenders or of the Loan Parties hereunder or
thereunder or (b) waive, on such terms and conditions as the Required Lenders or
the Administrative Agent may specify in such instrument, any of the requirements
of this Agreement or the other Loan Documents or any Default or Event of Default
and its consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (i) forgive or reduce the principal
amount or extend the final scheduled date of maturity of any Loan or the
Commitment Termination Date, extend the scheduled date or reduce the amount of
any amortization payment in respect of any Loan, reduce the stated rate of any
interest or fee payable hereunder (except that any amendment or modification of
defined terms used in the financial ratios in this Agreement, waiver (or
amendment to the terms) of any mandatory prepayment or waiver of post-default
rates of interest shall not constitute a reduction in the rate of interest or
fees or the forgiveness or reduction of principal or interest for purposes of
this clause (i)) or extend the scheduled date of any payment thereof, in each
case without the written consent of each Lender directly and adversely affected

 

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thereby; (ii) eliminate or reduce the voting rights of any Lender under this
Section without the written consent of such Lender; (iii) reduce any percentage
specified in the definition of “Required Lenders”, consent to the assignment or
transfer by the Borrowers of any of its rights and obligations under this
Agreement and the other Loan Documents, release all or substantially all of the
Collateral or release all or substantially all of the Guarantors from their
obligations under the Guarantee and Collateral Agreement, in each case without
the written consent of all Lenders; (iv) amend, modify or waive any provision of
paragraph (a) or (b) of Section 2.14 without the written consent of each Lender
directly and adversely affected thereby; (v) amend, modify or waive any
provision of Section 9 without the written consent of the Agents; or (vi) amend
the assignment provisions of Section 10.6 to make such provisions more
restrictive without the written consent of each Lender directly and adversely
affected thereby.

 

(b)                                 Each waiver or consent under any Loan
Document shall be effective only in the specific instance and for the specific
purpose for which it was given.  No notice to or demand on any Loan Party shall
entitle any Loan Party to any notice or demand in the same, similar or other
circumstances.  No failure on the part of any Secured Party to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.

 

(c)                                  Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Loan Parties, the Lenders, the Agents and all future holders
of the Loans.  In the case of any waiver, the Loan Parties, the Lenders and the
Agents shall be restored to their former position and rights hereunder and under
the other Loan Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing unless limited by the terms of such
waiver, but no such waiver shall extend to any subsequent or other Default or
Event of Default, or impair any right consequent on any such subsequent or other
Default or Event of Default

 

(d)                                 Notwithstanding the foregoing, this
Agreement may be amended upon the request of the Borrowers, and without the
consent of any other Lender to provide for relevant Replacement Loans (as
defined below) in order to permit the refinancing of all outstanding Loans
(“Refinanced Loans”) with a replacement term loan tranche hereunder
(“Replacement Loans”); provided that (i) the aggregate principal amount of such
Replacement Loans shall not exceed the aggregate principal amount of such
Refinanced Loans plus interest and fees and the amount of any reasonable fees
and expenses incurred in connection with such refinancing, (ii) the Applicable
Margin for such Replacement Loans during the period prior to the maturity of
such Refinanced Loans shall not be higher than the Applicable Margin for such
Refinanced Loans, (iii) the Weighted Average Life to Maturity of such
Replacement Loans shall not be shorter than the Weighted Average Life to
Maturity of such Refinanced Loans at the time of such refinancing, (iv) until
the non-extended Loans have been paid in full, all other terms applicable to
such Replacement Loans shall be substantially identical to, or less favorable to
the Lenders providing such Replacement Loans than, those applicable to such
Refinanced Loans, except to the extent necessary to provide for covenants and
other terms applicable to any period after the latest final maturity of the
Loans in effect immediately prior to such refinancing (and subject to the terms
of the Intercreditor Agreement) and (v) each Lender under the applicable tranche
or tranches of Loans being extended shall have the opportunity to participate in
such extension on the same terms and conditions as each other Lender in such
tranche or tranches; provided that no existing Lender will have any obligation
to commit to any such extension.

 

(e)                                  In addition, notwithstanding anything in
this Section to the contrary, if the Administrative Agent and the Borrowers
shall have jointly identified an obvious error or any error or omission of a
technical nature, in each case, in any provision of the Loan Documents, then the
Administrative Agent and the Borrowers shall be permitted to amend such
provision or provision, and, in

 

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each case, such amendment shall become effective without any further action or
consent of any other party to any Loan Document if the same is not objected to
in writing by the Required Lenders to the Administrative Agent within 10
Business Days following receipt of notice thereof.

 

10.2                        Notices.  All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in writing
(including by telecopy), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered, or 3 Business Days
after being deposited in the mail, postage prepaid, or, in the case of telecopy
notice or, subject to the last sentence of this Section, email notice, when
received, addressed as follows in the case of the Parent Companies, the
Borrowers, the Agents, and as set forth in an administrative questionnaire
delivered to the Administrative Agent in the case of the Lenders, or to such
other address as may be hereafter notified by the respective parties hereto:

 

The Parent Companies and the Borrowers:

 

Genesis Healthcare LLC

101 East State Street

 

 

Kennett Square, PA 19348 USA

 

 

Attention: Michael Sherman, Senior Vice President and General Counsel

 

 

Telephone: 610-444-6350

 

 

Facsimile: 484-733-5449

 

 

E-mail: michael.sherman@genesishcc.com

 

 

 

Administrative Agent and Collateral Agent:

 

Barclays

745 7th Avenue, 27th Floor

 

 

New York, NY, 10019

 

 

Attention: Diane Rolfe, Lisa Minigh

 

 

Telephone: 212-526-1109; 212-526-1524

 

 

Facsimile: 646-758-5957; 212-526-5115

 

 

E-mail: diane.rolfe@barclays.com;

lisa.minigh@barclays.com

 

 

 

 

 

For Administrative Requests:

 

 

Barclays

 

 

1301 Avenue of the Americas, 9th Floor

 

 

New York, NY 10019

 

 

Attention: Sookie Siew

 

 

Phone: 212-320-7205

 

 

Fax: 917-522-0569

 

 

Email: xrausloanops5@barclays.com

 

provided that any notice, request or demand to or upon the Agents, the Lenders,
the Parent Companies or the Borrowers shall not be effective until received.

 

Notices and other communications to the Lenders hereunder may be delivered or
furnished by electronic communications pursuant to procedures approved by the
Agents; provided that the foregoing shall not apply to notices pursuant to
Section 2 unless otherwise agreed by the Agents and the applicable Lender.  Each
of the Agents may, in their discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

 

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10.3                        No Waiver; Cumulative Remedies.  No failure to
exercise and no delay in exercising, on the part of any Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.  The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

 

10.4                        Survival of Representations and Warranties.  All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder.

 

10.5                        Payment of Expenses; Indemnification; Limitation of
Liability.  (a)  The Borrowers agree (i) to pay or reimburse each Agent and the
Lead Arrangers for all their respective reasonable and documented out-of-pocket
costs and expenses incurred in connection with the syndication of the Facility
(other than fees payable to syndicate members) and the development, preparation,
execution and delivery of this Agreement and the other Loan Documents and any
other documents prepared in connection herewith or therewith and any amendment,
supplement or modification thereto, and, as to the Agents only, the
administration of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable and documented fees and disbursements and
other charges of counsel to the Agents (including one primary counsel and such
local counsel as the Agents may reasonably require in connection with collateral
matters, but no more than one counsel in any jurisdiction) in connection with
all of the foregoing, (ii) to pay or reimburse each Lender, the Agents and the
Lead Arrangers for all their documented out-of-pocket costs and expenses
incurred in connection with the enforcement of any rights under this Agreement,
the other Loan Documents and any such other documents, including, without
limitation, the fees and disbursements of one primary counsel to the Lead
Arrangers, each Lender and the Agents, taken as a whole (and, if necessary, one
firm of local counsel in each appropriate jurisdiction (which may include a
single special counsel acting in multiple jurisdictions) and in the case of an
actual or perceived conflict of interest, of another firm of counsel for such
affected Person), and other advisors and professionals engaged by the
Administrative Agent or the Lead Arrangers in connection with enforcement
proceedings, (iii) to pay, indemnify, or reimburse each Lender and the Agents
for, and hold each Lender and the Agents harmless from, any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, stamp, excise and similar other Taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents and (iv) to pay, indemnify or reimburse each Lender,
each Agent, the Lead Arrangers and their respective affiliates, and their
respective officers, directors, trustees, employees, advisors, agents and
controlling Persons (each, an “Indemnitee”) for, and hold each Indemnitee
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, costs, expenses or disbursements arising out of any actions,
judgments or suits of any kind or nature whatsoever, arising out of or in
connection with any actual or prospective claim, action or proceeding (including
any investigation of, preparation for, or defense of any pending or threatened
claim, action or proceeding) relating to or otherwise with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, any of the foregoing relating to the making of any Loan, the
use of proceeds of the Loans or the violation of, noncompliance with or
liability under, any Environmental Law applicable to, or any Environmental
Claims related to, the operations of the Parent Companies, the Borrowers, any of
their Subsidiaries or any of the Properties and the fees and disbursements and
other charges of one legal counsel for all such Indemnitees, taken as a whole
(and, if necessary, one firm of local counsel in each appropriate jurisdiction
(which may include a single special counsel acting in

 

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multiple jurisdictions) and in the case of an actual or perceived conflict of
interest, of another firm of counsel for such affected Indemnitee) in connection
therein (all the foregoing in this clause (iv), collectively, the “Indemnified
Liabilities”) regardless of whether such Indemnitee is a party thereto, and
whether or not any such claim, litigation, investigation or proceeding is
brought by the Borrowers, their equity holders, their respective Affiliates,
their respective creditors or any other Person; provided that neither the Parent
Companies nor the Borrowers shall have any obligation hereunder to any
Indemnitee with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities have resulted from gross negligence or willful
misconduct of such Indemnitee or material breach in bad faith of this Agreement
by such Indemnitee, in each case, as determined in a final non-appealable
judgment of a court of competent jurisdiction.  All amounts due under this
Section shall be payable promptly after receipt of a reasonably detailed invoice
therefor.  Statements payable by the Borrowers pursuant to this Section shall be
submitted to the Borrowers at the address thereof set forth in Section 10.2, or
to such other Person or address as may be hereafter designated by the Borrowers
in a written notice to the Administrative Agent.  The agreements in this
Section shall survive repayment of the Obligations.

 

(b)                                 In no event shall any Agent-Related Person
have any liability to any Loan Party, any Lender, or any other Person for
losses, claims, damages, liabilities or expenses of any kind (whether in tort or
contract or otherwise) arising out of any Loan Party’s or any Agent-Related
Person’s transmission of approved electronic communications through the internet
or any use of any E-System, except to the extent such liability of any
Agent-Related Person is found in a final non-appealable judgment by a court of
competent jurisdiction to have resulted primarily from such Agent-Related
Person’s gross negligence or willful misconduct; provided that in no event shall
any party hereto have any liability to any other Person for indirect, special,
incidental, consequential damages or punitive damages (as opposed to direct or
actual damages); provided, further, that the foregoing shall not limit the
Borrowers’ indemnification obligations to the Indemnitees pursuant to
Section 10.5(a) in respect of damages incurred or paid by an Indemnitee to a
third party.  .

 

10.6                        Successors and Assigns; Participations and
Assignments.  (a)  The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that (i) the Borrowers may not assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of each Lender (and any attempted assignment or transfer by the
Borrowers without such consent shall be null and void) and (ii) no Lender may
assign or otherwise transfer its rights or obligations hereunder except in
accordance with this Section.

 

(b)                                 (i)  Subject to the conditions set forth in
paragraphs (b)(ii) and (c) below, any Lender may assign to one or more assignees
(each, an “Assignee”), all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitments and the Loans at the
time owing to it) with the prior written consent (such consent not to be
unreasonably withheld or delayed) of:

 

(A)                               the Borrowers; provided that no consent of the
Borrowers shall be required for (x) an assignment to a Lender, an Affiliate of a
Lender, an Approved Fund (as defined below); (y) if an Event of Default pursuant
to Sections 8.1(b), (c), (g) or (h) has occurred and is continuing, any other
Person; or (z) in connection with the primary syndication of the Facility
hereunder; provided, further, that the Borrowers shall be deemed to have
consented to any such assignment unless it shall object thereto by written
notice to the Administrative Agent within 5 Business Days after having received
notice thereof; and

 

(B)                               the Administrative Agent; provided that no
consent of the Administrative Agent shall be required for an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund (provided that the
Administrative Agent shall acknowledge any such assignment).

 

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(ii)                                  Assignments shall be subject to the
following additional conditions:

 

(A)                               except in the case of an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the
entire remaining amount of the assigning Lender’s Commitments or Loans under the
Facility, the amount of the Commitments or Loans of the assigning Lender subject
to each such assignment (determined as of (I) the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent or (II) if earlier, the “trade date” (if any) specified in such Assignment
and Assumption) shall not be less than $1,000,000 in the case of any assignment
in respect of the Facility, unless the Borrowers and the Administrative Agent
otherwise consent; provided that such amounts shall be aggregated in respect of
each Lender and its Affiliates or Approved Funds, if any;

 

(B)                               the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee of $3,500 (which shall not be payable by
the Parent Companies or any of their Affiliates); provided that only one such
fee shall be payable in the case of contemporaneous assignments to or by two or
more related Approved Funds; and

 

(C)                               the Assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an administrative questionnaire.

 

For the purposes of this Section, “Approved Fund” means any Person (other than a
natural person) that is engaged in making, purchasing, holding or investing in
bank loans and similar extensions of credit in the ordinary course and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or
(c) (i) an entity or an Affiliate of an entity that administers or manages a
Lender or (ii) an entity or an Affiliate of an entity that is the investment
advisor to a Lender.

 

(iii)                               Subject to acceptance and recording thereof
pursuant to paragraph (b)(iv) below, from and after the effective date specified
in each Assignment and Assumption the Assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15, 2.16, 2.17 and 10.5(a)).  Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply
with this Section shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.

 

(iv)                              (i) The Administrative Agent, acting as agent
of the Borrowers solely for tax purposes and solely with respect to the actions
described in this Section 10.6(b) and Section 2.5, shall establish and maintain
at its address referred to in Section 10.2 (or at such other address as the
Administrative Agent may notify the Borrowers) (A) a record of ownership (the
“Register”) in which the Administrative Agent agrees to register by book entry
the interests (including any rights to receive payment hereunder) of the
Administrative Agent and each Lender in the Obligations, each of their
obligations under this Agreement to participate in each Loan and any assignment
of any such interest, obligation or right and (B) accounts in the applicable
Register in accordance with its usual practice in which it shall record (1) the
names and addresses of the Lenders (and each change thereto pursuant to Section
2.20 and Section 10.6), (2) the Commitments of

 

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each applicable Lender, (3) the amount of each Loan and each funding of any
participation described in clause (A) above, for Eurodollar Loans, the Interest
Period applicable thereto, (4) the amount of any principal or interest due and
payable or paid with respect to Loans recorded in the applicable Register and
(5) any other payment received by the Administrative Agent from the Borrowers
and its application to the Obligations.

 

(v)                                 Upon its receipt of a duly completed
Assignment and Assumption executed by an assigning Lender and an Assignee, the
Assignee’s completed administrative questionnaire (unless the Assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) of this Section and any written consent to such assignment
required by paragraph (b) of this Section, the Administrative Agent shall accept
such Assignment and Assumption and record the information contained therein in
the Register.  No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this paragraph.  This
Section 10.06(b) shall be construed so that the Loans are at all times
maintained in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations.

 

(c)                                  (i)  Notwithstanding anything else to the
contrary contained in this Agreement, (x) any Lender may assign all or a portion
of its Loans to any Person who, after giving effect to such assignment, would be
an Affiliated Lender or a Purchasing Borrower Party in accordance with
Section 10.6(b) and (y) the Parent Companies, the Borrowers and any Restricted
Subsidiary may, from time to time, purchase or prepay Loans, in each case, on a
non-pro rata basis through Dutch auction procedures open to all applicable
Lenders on a pro rata basis in accordance with customary procedures to be agreed
between the Borrowers and the Administrative Agent (or other applicable agent
managing such auction); provided that:

 

(ii)                                  no Default or Event of Default has
occurred and is continuing or would result therefrom;

 

(iii)                               the assigning Lender and Affiliated Lender
or Purchasing Borrower Party purchasing such Lender’s Loans, as applicable,
shall execute and deliver to the Administrative Agent an assignment and
assumption agreement substantially in the form of Exhibit E-2 hereto (an
“Affiliated Lender Assignment and Assumption”) in lieu of an Assignment and
Acceptance;

 

(iv)                              any Loans assigned to any Purchasing Borrower
Party (or purchased or prepaid by the Parent Companies, the Borrowers or any
Restricted Subsidiary acting in accordance with this Section 10.6(c)) shall be
automatically and permanently cancelled upon the effectiveness of such
assignment and will thereafter no longer be outstanding for any purpose
hereunder;

 

(v)                                 no Loan may be assigned to an Affiliated
Lender pursuant to this Section 10.6(c), if after giving effect to such
assignment, Affiliated Lenders together in the aggregate would own in excess of
20% of the aggregate principal amount of the Loans then outstanding and any
assignments to Affiliated Lenders that would cause the Affiliated Lenders in the
aggregate to hold in excess of 20% of the aggregate principal amount of the
Loans then outstanding shall be deemed void ab initio and the Register shall be
modified to reflect a reversal of such assignment;

 

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(vi)                              such Affiliated Lender or Purchasing Borrower
Party represents and warrants that it is not in possession of material
non-public information within the meaning of the United States federal
securities laws with respect to the Parent Companies, the Borrowers or any of
the Restricted Subsidiaries, or the respective securities of any of the
foregoing, at the time of such purchase that has not been disclosed to the
Lenders (other than Lenders that do not wish to receive material non-public
information with respect to the Parent Companies, the Borrowers or any of the
Restricted Subsidiaries) prior to such time; and

 

(vii)                           any assignment to a Purchasing Borrower Party or
any purchase or prepayment of the Loans to the Parent Companies, the Borrowers
and the Restricted Subsidiaries through Dutch auction procedures, in each case,
shall be in an amount of no more than $5,000,000 and no more than $10,000,000 of
the Loans may be assigned to a Purchasing Borrower Party or purchased or prepaid
through Dutch auction procedures in the aggregate.

 

(d)                                 Notwithstanding anything to the contrary in
this Agreement, no Affiliated Lender shall have any right to (I) attend
(including by telephone) any meeting or discussions (or portion thereof) among
the Administrative Agent or any Lender to which representatives of the Loan
Parties are not invited, (II) receive any information or material prepared by
the Administrative Agent or any Lender or any communication by or among the
Administrative Agent and/or one or more Lenders, except to the extent such
information or materials have been made available to any Loan Party or its
representatives (and in any case, other than the right to receive notices of
prepayments and other administrative notices in respect of its Loans required to
be delivered to Lenders) or (III) make or bring (or participate in, other than
as a passive participant in or recipient of its pro rata benefits of) any claim,
in its capacity as a Lender, against the Administrative Agent, the Collateral
Agent or any other Lender with respect to any duties or obligations or alleged
duties or obligations of such Agent or any other such Lender under the Loan
Documents.

 

(e)                                  Notwithstanding anything in Section 10.1 or
the definition of “Required Lenders” to the contrary, for purposes of
determining whether the “Required Lenders” have (I) consented (or not consented)
to any amendment, modification, waiver, consent or other action with respect to
any of the terms of any Loan Document or any departure by any Loan Party
therefrom, (II) otherwise acted on any matter related to any Loan Document or
(III) directed or required the Administrative Agent, the Collateral Agent or any
Lender to undertake any action (or refrain from taking any action) with respect
to or under any Loan Document, all Loans held by any Affiliated Lender shall be
deemed to have voted in the same proportion as the allocation of voting with
respect to such matter by Lenders who are not Affiliated Lenders for all
purposes of calculating whether the Required Lenders have taken any actions;
provided that this clause (e) shall not apply with respect to any amendment,
modification, waiver or consent (x) described in clauses (i) — (iv) of
Section 10.1(a) or (y) that disproportionately, directly and adversely affects
such Affiliated Lender.

 

(f)                                   Each Affiliated Lender hereby agrees that
if a case under Title 11 of the Bankruptcy Code is commenced against any Loan
Party, each such Affiliated Lender shall consent to provide that the vote of
such Affiliated Lender (in its capacity as a Lender) with respect to any plan of
reorganization of such Loan Party shall be deemed to be without discretion in
the same proportion as the allocation of voting with respect to such matter by
Lenders who are not Affiliated Lenders, except that such Affiliated Lender’s
vote (in its capacity as a Lender) may be counted to the extent any such plan of
reorganization proposes to treat the Obligations held by such Affiliated Lender
in a manner that is less favorable in any respect to such Affiliated Lender than
the proposed treatment of similar Obligations held by Lenders that are not
Affiliates of the Borrowers.  Each Affiliated Lender hereby irrevocably appoints

 

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the Administrative Agent (such appointment being coupled with an interest) as
such Affiliated Lender’s attorney-in-fact, with full authority in the place and
stead of such Affiliated Lender and in the name of such Affiliated Lender, from
time to time in the Administrative Agent’s discretion to take any action and to
execute any instrument that the Administrative Agent may deem reasonably
necessary to carry out the provisions of this clause (f).

 

(g)                                  In no event shall the Administrative Agent
be obligated to ascertain, monitor or inquire as to whether any Lender is an
Affiliated Lender nor shall the Administrative Agent be obligated to monitor the
number of Affiliated Lenders or the aggregate amount of Loans or Incremental
Loans held by Affiliated Lenders.

 

(h)                                 Any Lender may, without the consent of the
Borrowers or the Administrative Agent sell participations to one or more banks
or other entities (a “Participant”), but in any event not to the Borrowers or
any of its Affiliates or Subsidiaries, or certain Persons identified to the
Administrative Agent by the Borrowers prior to the Closing Date, in all or a
portion of such Lender’s rights and obligations under this Agreement (including
all or a portion of its Commitments and the Loans owing to it); provided that
such Lender’s obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (C) the Borrowers, the Administrative Agent,
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement.  Any agreement pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement may provide that such Lender
will not, without the consent of the Participant, agree to any amendment,
modification or waiver that (1) requires the consent of each Lender directly and
adversely affected thereby pursuant to the proviso to the second sentence of
Section 10.1 and (2) directly affects such Participant.  Subject to paragraph
(c)(ii) of this Section, the Borrowers agrees that each Participant shall be
entitled to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent as
if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section (but, with respect to any particular Participant,
to no greater extent than the Lender that sold the participation to such
participant except to the extent such participation is made with the Borrowers’
prior written consent).  Each Lender having sold a participation shall maintain
a register on which it records the name and address of each Participant and the
amounts of such Participant’s participation interest in the Loan and/or the
Commitment.

 

(i)                                     A Participant shall not be entitled to
receive any greater payment under Sections 2.15 or 2.16 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrowers’ prior written consent to such greater
amounts.  No Participant shall be entitled to the benefits of Section 2.16
unless such Participant complies with Section 2.16(d) or (e), as (and to the
extent) applicable, as if such Participant were a Lender.

 

(ii)                                  Each Lender that sells a participation
shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers,
maintain a register on which it enters the name and address of each Participant
and the principal amounts (and stated interest) of each Participant’s interest
in the Loans or other obligations under the Loan Documents (the “Participant
Register”); provided that no Lender shall have any obligation to disclose all or
any portion of the Participant Register (including the identity of any
Participant or any information relating to a Participant’s interest in any
commitments, loans, letters of credit or its other obligations under any Loan
Document) to any Person except to the extent that such disclosure is necessary
to establish that such commitment, loan, letter of

 

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credit or other obligation is in registered form under Section 5f.103-1(c) of
the United States Treasury Regulations.  The entries in the Participant Register
shall be conclusive absent manifest error, and such Lender shall treat each
Person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to
the contrary.  For the avoidance of doubt, the Administrative Agent (in its
capacity as Administrative Agent) shall have no responsibility for maintaining a
Participant Register.

 

(i)                                     Any Lender may, without the consent of
or notice to the Administrative Agent or the Borrowers, at any time pledge or
assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to (i) a Federal Reserve Bank or (ii) any
holder of, or trustee for the benefit of the holders of, such Lender’s Capital
Stock, voting trust certificates, bonds, debentures, instruments and other
evidence of Indebtedness, and all warrants, options and other rights to acquire
the foregoing, and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or Assignee for such Lender as a party hereto.  The
Borrowers, upon receipt of written notice from the relevant Lender, agrees to
issue Notes to any Lender requiring Notes to facilitate transactions of the type
described in this paragraph (i).

 

10.7                        Adjustments; Set-off.  (a)  Except to the extent
that this Agreement provides for payments to be allocated to a particular Lender
or to the Lenders under a particular Facility, if any Lender (a “Benefited
Lender”) shall at any time receive any payment of all or part of the Obligations
owing to it, or receive any collateral in respect thereof (whether voluntarily
or involuntarily, by setoff, pursuant to events or proceedings of the nature
referred to in Sections 8(g) or (h), or otherwise), other than in connection
with assignments hereunder, in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other
Lender’s Obligations, such Benefited Lender shall purchase for cash from the
other Lenders a participating interest in such portion of each such other
Lender’s Obligations, or shall provide such other Lenders with the benefits of
any such collateral, as shall be necessary to cause such Benefited Lender to
share the excess payment or benefits of such collateral ratably with each of the
Lenders; provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefited Lender, such purchase shall
be rescinded, and the purchase price and benefits returned, to the extent of
such recovery, but without interest.

 

(b)                                 In addition to any rights and remedies of
the Lenders provided by law, each Lender shall have the right after an Event of
Default has occurred and is continuing, without prior notice to the Borrower
Agent, any such notice being expressly waived by the Borrowers to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrowers hereunder (whether at the stated maturity, by acceleration or
otherwise) after the expiration of any cure or grace periods, to set off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final but excluding trust accounts,
employee benefit accounts, payroll, petty cash, tax and withholding accounts and
the like), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or any branch or
agency thereof to or for the credit or the account of the Borrowers.  Each
Lender agrees promptly to notify the Borrower and the Administrative Agent after
any such setoff and application made by such Lender.  Each Lender agrees
promptly to notify the Borrower Agent and the Administrative Agent after any
such setoff and application made by such Lender; provided that the failure to
give such notice shall not affect the validity of such setoff and application.

 

10.8                        Counterparts.  This Agreement may be executed by one
or more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be

 

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deemed to constitute one and the same instrument.  Delivery of an executed
signature page of this Agreement or Lender Addendum by facsimile transmission or
by electronic mail in “portable document format” shall be effective as delivery
of a manually executed counterpart hereof.  A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrowers and the
Administrative Agent.

 

10.9                        Severability.  Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

10.10                 Integration.  This Agreement and the other Loan Documents
represent the entire agreement of the Parent Companies, the Borrowers, the
Agents and the Lenders with respect to the subject matter hereof and thereof.

 

10.11                 GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

10.12                 Submission to Jurisdiction; Waivers.  Each of the Parent
Companies and the Borrowers hereby irrevocably and unconditionally:

 

(a)                                 agrees that it will not commence any action,
litigation or proceeding of any kind or description, whether in law or equity,
whether in contract or tort or otherwise, against the Administrative Agent, any
Lender, any Related Party of any of the foregoing, in any way relating to this
Agreement or any other Loan Document or the transactions relating hereto or
thereto, in a forum other than the courts of the State of New York sitting in
New York County, and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, and each of the
parties hereto irrevocably and unconditionally submits to the jurisdiction of
such courts and agrees that all claims in respect of any such action, litigation
or proceeding may be heard and determined in such New York State court or, to
the fullest extent permitted by applicable Law, in such Federal court.  Each of
the parties hereto agrees that a final judgment in any such action, litigation
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by Law.  Nothing in this
Agreement or in any other Loan Document shall affect any right that the
Administrative Agent, the Collateral Agent, any Lender may otherwise have to
bring any action or proceeding relating to this Agreement or any other Loan
Document against the Borrowers or its properties in the courts of any
jurisdiction;

 

(b)                                 waives, to the fullest extent permitted by
applicable Law, any objection that it may now or hereafter have to the laying of
venue of any action or proceeding arising out of or relating to this Agreement
or any other Loan Document in any court referred to in paragraph (a) of this
Section.  Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by applicable Law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court;

 

(c)                                  agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
it at its address set forth in Section 10.2 or at such other address of which
the Administrative Agent shall have been notified pursuant thereto;

 

(d)                                 agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and

 

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(e)                                  waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover in any legal action
or proceeding referred to in this Section any special, exemplary, punitive or
consequential damages.

 

10.13                 Acknowledgments.  Each of the Parent Companies and the
Borrowers hereby acknowledges that:

 

(a)                                 it has been advised by counsel in the
negotiation, execution and delivery of this Agreement and the other Loan
Documents;

 

(b)                                 (i) neither the Agents nor any Lender has
any fiduciary relationship with or duty to either the Parent Companies or the
Borrowers arising out of or in connection with this Agreement or any of the
other Loan Documents, (ii) the relationship between the Agents and Lenders, on
one hand, and the Parent Companies and the Borrowers, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor and
(iii) waives, to the fullest extent permitted by applicable law, any claims it
may have against any Agent or Lender in respect of such fiduciary relationship
claim; and

 

(c)                                  no joint venture is created hereby or by
the other Loan Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Parent Companies, the
Borrowers and the Lenders.

 

10.14                 Confidentiality.  The Agents and the Lenders agree to
treat any and all information, regardless of the medium or form of
communication, that is disclosed, provided or furnished, directly or indirectly,
by or on behalf of the Parent Companies or any of their affiliates, whether in
writing, orally, by observation or otherwise and whether furnished before or
after the Closing Date (“Confidential Information”), strictly confidential and
not to use Confidential Information for any purpose other than evaluating the
Transactions and negotiating, making available, syndicating and administering
this Agreement (the “Agreed Purposes”).  Without limiting the foregoing, each
Agent and each Lender agrees to maintain the confidentiality of all Confidential
Information, and each Agent and each Lender agrees not to disclose Confidential
Information, at any time, in any manner whatsoever, directly or indirectly, to
any other Person whomsoever, except (1) to its directors, officers, employees,
counsel, trustees, agents and other advisors (collectively, the
“Representatives”), to the extent necessary to permit such Representatives to
assist in connection with the Agreed Purposes, and in each case who are informed
of the confidential nature of the information and agree to observe and be bound
by this Section, (2) to prospective Lenders and participants in connection with
the syndication (including secondary trading) of the Facility and Commitments
and Loans hereunder, in each case who are informed of the confidential nature of
the information and agree to observe and be bound by standard confidentiality
terms, (3) upon the request or demand of any Governmental Authority having or
purporting to have jurisdiction over it, (4) in response to any order of any
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (5) in connection with any litigation or similar proceeding
relating to the Facility, (6) that has been publicly disclosed other than in
breach of this Section, (7) to any nationally recognized rating agency that
requires access to information about a Lender’s investment portfolio in
connection with ratings issued with respect to such Lender, (8) to the extent
necessary or customary for inclusion in league table measurements or (9) to the
extent reasonably required or necessary, in connection with the exercise of any
remedy under the Loan Documents.  Notwithstanding the foregoing provisions
herein to the contrary, no protected health information, as defined under HIPAA,
shall be used or disclosed hereunder in compliance with the HIPAA.

 

10.15                 Release of Collateral and Guarantee Obligations;
Subordination of Liens.  (a)  Notwithstanding anything to the contrary contained
herein or in any other Loan Document, (i) in connection with any Disposition of
Property permitted by the Loan Documents or permitted by the

 

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Required Lenders the security interest in any Collateral being Disposed of in
such Disposition under clause (a)(i) shall be automatically released, (ii) in
connection with any transaction permitted by the Loan Documents, which results
in any Subsidiary Guarantor becoming a HUD Sub-Facility Entity and/or a Skilled
HUD Entity, in each case, (x) to the extent necessary to comply with
requirements of Law related to HUD and (y) to the extent the Loan Parties are in
compliance with the Collateral Coverage Requirement after giving effect to such
transaction, the security interest in any Collateral owned by such Subsidiary
Guarantor shall be automatically released (and its Guarantee Obligations shall
be terminated) and (iii) upon the request of the Borrowers, the Collateral Agent
shall (without notice to, or vote or consent of, any Lender, any Hedge
Counterparty that is a party to any Specified Hedge Agreement or any Cash
Management Counterparty that is a party to any Cash Management Document) take
such additional actions as shall be required to evidence release of its security
interest in any Collateral being released pursuant to this Section 10.15, and to
release any Guarantee Obligations under any Loan Document of any Person being
Disposed of in such Disposition under clause (a)(i), to the extent necessary to
permit consummation of such Disposition; provided that, the Borrower Agent or
the applicable Loan Party shall provide the Administrative Agent such
certifications as the Administrative Agent shall reasonably request in order to
demonstrate compliance with the Collateral Coverage Requirement with respect to
any release or termination under clause (a)(ii).  Any execution and delivery of
documents pursuant to the preceding sentence of this Section 10.15 shall be
without recourse to or warranty by the Administrative Agent (other than as to
the Administrative Agent’s authority to execute and deliver such documents). 
Any representation, warranty or covenant contained in any Loan Document relating
to any such Property so Disposed of (other than Property Disposed of to Ultimate
Parent or any of its Subsidiaries) shall no longer be deemed to be repeated once
such Property is so Disposed of.

 

(b)                                 Notwithstanding anything to the contrary
contained herein or any other Loan Document, when all Obligations (other than
(x) obligations in respect of any Specified Hedge Agreement or Cash Management
Document and (y) any contingent or indemnification obligations not then asserted
or due) have been paid in full, all Commitments have terminated or expired, the
security interest in the Collateral and the Guarantee Obligations under the Loan
Document shall be automatically released and, upon request of the Borrowers, the
Collateral Agent shall (without notice to, or vote or consent of, any Lender, or
any affiliate of any Lender that is a party to any Specified Hedge Agreement or
Cash Management Document) take such actions as shall be required to evidence the
release of its security interest in all Collateral, and the release of all
Guarantee Obligations under any Loan Document, whether or not on the date of
such release there may be outstanding Obligations in respect of Specified Hedge
Agreements or Cash Management Documents or contingent or indemnification
obligations not then asserted or due.  Any such release of Guarantee Obligations
shall be deemed subject to the provision that such Guarantee Obligations shall
be reinstated if after such release any portion of any payment in respect of the
Obligations guaranteed thereby shall be rescinded or must otherwise be restored
or returned upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrowers or any Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrowers or any Guarantor or any substantial part of its
property, or otherwise, all as though such payment had not been made.

 

10.16                 Accounting Changes.  In the event that any Accounting
Change (as defined below) shall occur and such change results in a change in the
method of calculation of the financial ratios, standards or terms in this
Agreement, then the Parent Companies, the Borrowers and the Agents agree to
enter into negotiations in order to amend such provisions of this Agreement so
as to equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Parent Companies’ financial condition shall be the
same after such Accounting Changes as if such Accounting Changes had not been
made.  Until such time as such an amendment shall have been executed and
delivered by the Parent Companies, the Borrowers, the Agents and the Required
Lenders, the financial ratios and all

 

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standards and terms in this Agreement shall continue to be calculated or
construed as if such Accounting Changes had not occurred.  “Accounting Changes”
refers to changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC and shall include changes in the determination of whether a
lease is a capital lease or an operating lease under GAAP.

 

10.17                 WAIVERS OF JURY TRIAL.  EACH OF THE PARENT COMPANIES, THE
BORROWERS, THE AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

10.18                 USA PATRIOT ACT.  Each Lender hereby notifies the Loan
Parties that pursuant to the requirements of the PATRIOT Act, it is required to
obtain, verify and record information that identifies the Loan Parties, which
information includes the name and address of the Borrowers and other information
that will allow such Lender to identify the Loan Parties in accordance with the
Act.

 

10.19                 Delivery of Lender Addenda.  Each Lender (other than any
Lender whose name appears on the signature pages to this Agreement) shall become
a party to this Agreement by delivering to the Agents a Lender Addendum duly
executed by such Lender.

 

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