SECOND AMENDED AND RESTATED TERM LOAN AND SECURITY AGREEMENT
dated as of February 26, 2016
by and among
Certain Affiliates of Diversicare Healthcare Services, Inc., Identified on
Schedule 1.1(a) Attached Hereto, collectively, Borrower,
THE PRIVATEBANK AND TRUST COMPANY,
as Administrative Agent for the Lenders,
CIT BANK N.A.,
as Collateral Agent,
and
The Financial Institutions Parties Hereto as the Lenders

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SECOND AMENDED AND RESTATED TERM LOAN AND SECURITY AGREEMENT
This SECOND AMENDED AND RESTATED TERM LOAN AND SECURITY AGREEMENT (this
“Agreement”), dated as of February 26, 2016, is by and among certain Affiliates
of Diversicare Healthcare Services, Inc., identified on Schedule 1.1(a) attached
hereto, each a Delaware limited liability company (individually and
collectively, the “Borrower” and/or “Borrowers”), THE PRIVATEBANK AND TRUST
COMPANY, an Illinois banking corporation in its individual capacity
(“PrivateBank”), and the other financial institutions parties hereto (together
with PrivateBank, the “Lenders”), and THE PRIVATEBANK AND TRUST COMPANY, an
Illinois banking corporation in its capacity as administrative agent for the
Lenders (together with its successors and assigns, the “Administrative Agent”).
RECITALS
WHEREAS, certain of the Borrowers, certain of the Lenders, and the
Administrative Agent are parties to that certain Amended and Restated Term Loan
and Security Agreement dated as of April 30, 2013 (as amended, the “Original
Term Loan Agreement”);
WHEREAS, certain of the Borrowers and their Affiliates are parties to that
certain Amended and Restated Revolving Loan and Security Agreement dated as of
April 30, 2013 by and among Borrowers and such Affiliates, certain of the
Lenders, and Administrative Agent (as amended, the “Original Revolving Loan
Agreement”), which is being amended and restated in connection herewith pursuant
to the Revolving Loan Agreement (as defined below); and
WHEREAS, the parties hereto desire to amend and restate the Original Term Loan
Agreement (and the Borrowers have agreed to continue to secure all of their
Liabilities under the Original Term Loan Agreement and the “Financing
Agreements” entered into in connection therewith by continuing their grant of a
security interest in and lien upon the Collateral described herein), upon the
terms and provisions and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements contained herein, and
of the term loan and acquisition loans to be made to or for the benefit of the
Borrower by the Lenders, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto
(intending to be legally bound) hereby agree as follows:
1.DEFINITIONS.
1.1    General Terms. When used herein, the following terms shall have the
following meanings:
“ACH Transactions” means any cash management or related services (including the
Automated Clearing House processing of electronic fund transfers through the
direct Federal Reserve Fedline system) provided by any Lender for the account of
Borrower or its Subsidiaries.
“Acquisition” means, individually or collectively as the context requires, any
transaction or series of related transactions for the purpose of or resulting,
directly or indirectly, in (a) the

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acquisition of all or substantially all of the assets of a Person, or of all or
substantially all of any business or division of a Person, including, without
limitation, the acquisition of any leasehold interest of a Person, (b) the
acquisition of in excess of fifty percent (50%) of the Stock of any Person, or
otherwise causing any Person to become a Subsidiary, (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is already a Subsidiary), or (d) the acquisition of fee ownership of any
parcel of real estate.
“Acquisition Agreement” means, individually and collectively as the context
requires, each purchase agreement entered into by one or more Borrowers in
connection with any Acquisition (whether an asset purchase agreement, stock
purchase agreement, contribution agreement, merger agreement, real estate
purchase agreement or otherwise).
“Acquisition Documents” means, collectively, each Acquisition Agreement, bill of
sale, assignment and assumption agreement, real estate contract, special
warranty deed, escrow agreement, assignment of intellectual property, consulting
agreement, management agreement, employment agreement, noncompete agreement,
transition services agreement, and any and all of the other documents,
instruments and agreements executed or delivered in connection therewith or
otherwise in connection with any Acquisition.
“Acquisition Loan(s)” shall have the meaning ascribed to such term in Section
2.2 hereof.
“Acquisition Loan Availability” means the Maximum Acquisition Loan Facility
minus the Acquisition Loan Outstandings.
“Acquisition Loan Borrowing Notice” shall have the meaning ascribed to such term
in Section 5.2(a) hereof.
“Acquisition Loan Commitment” means, as to any Lender, such Lender’s commitment
to make an Acquisition Loan under this Agreement. The initial amount of each
Lender’s Acquisition Loan Commitment is set forth on Annex A attached hereto and
made a part hereof.
“Acquisition Loan Note” shall have the meaning ascribed to such term in Section
2.2 hereof.
“Acquisition Loan Outstandings” means, at any time, the sum of the aggregate
principal amount of all outstanding Acquisition Loans.
“Administrative Agent” means The PrivateBank and Trust Company, an Illinois
banking corporation, in its capacity as administrative agent for the Lenders
hereunder and any successor thereto in such capacity.
“Advocat Finance” means Advocat Finance, Inc., a Delaware corporation.
“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling (including, without limitation, all shareholders,
members, directors, partners, managers, and officers of such Person), controlled
by, or under direct or indirect common control with, such Person. A Person shall
be deemed to control another Person if such first Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such other

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Person, whether through ownership of voting securities, by contract or
otherwise; provided, however, neither Administrative Agent nor any Lender shall
be deemed an Affiliate of any Credit Party.
“Affiliate Revolving Loan Financing Agreement” means each “Financing Agreement”
as defined in the Revolving Loan Agreement, as any of the same may be restated,
modified, supplemented or amended from time to time.
“Affiliate Revolving Loan Liabilities” means the “Liabilities” as defined in the
Revolving Loan Agreement.
“Affiliated Revolving Borrowers” means each of the entities identified on
Schedule 1.1(c) attached hereto.
“Agreement” means this Second Amended and Restated Term Loan and Security
Agreement as the same may be restated, modified, supplemented or amended from
time to time.
“Allocable Amount” shall have the meaning ascribed to such term in Section
12.21(g) hereof.
“Applicable Libor Margin” means, with respect to Libor Loans (a) that are any
portion of the Term Loan, an amount equal to four percent (4.00%) per annum and
(b) that are Acquisition Loans, an amount equal to four and three-quarters of
one percent (4.75%) per annum.
“Appraisal” means a complete, self-contained appraisal of the Property performed
in accordance with FIRREA and the Administrative Agent’s appraisal requirements
by an independent appraiser MAI licensed in the state in which the Property is
located and selected and retained by the Administrative Agent.
“Asset Disposition” means the sale, lease, assignment or other transfer for
value of greater than Fifty Thousand Dollars ($50,000) by Borrower to any Person
of any personal property of Borrower, other than (a) the sale of any personal
property asset which is to be replaced, and is in fact replaced, within sixty
(60) days thereof with another of equal or substantially similar value and used
in the ordinary course of business of Borrower, (b) the sale or lease of
Inventory in the ordinary course of business, (c) sales in the ordinary course
of business of personal property that is obsolete, unmerchantable or otherwise
unsalable, unusable or unnecessary to Borrower’s business, (d) sales, leases or
assignments of personal property between one Borrower to another Borrower, and
(e) in connection with a Permitted Disposition in accordance with Section 9.6.
“Assignment Agreement” shall have the meaning ascribed to such term in Section
12.15 hereof.
“Assignment of Rents and Leases” means each of those certain Amended and
Restated Assignment of Rents and Leases or Assignment of Rents and Leases each
dated of even date herewith made by Propco Borrower and each other Borrower that
is also an Operator, respectively, in favor of the Administrative Agent, with
respect to each parcel of Property, respectively, in form and

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substance reasonably satisfactory to the Administrative Agent, as the same may
be amended, supplemented, and modified from time to time.
“Bank Product” means any service provided to, facility extended to, or
transaction entered into with, any Credit Party by any Lender or its Affiliates
consisting of, (a) deposit accounts, (b) cash and treasury management services,
including, controlled disbursement, lockbox, electronic funds transfers
(including, book transfers, fedwire transfers, ACH transfers), online reporting
and other services relating to accounts maintained with any Lender or its
Affiliates, (c) debit cards, purchase cards, and credit cards, (d) Hedging
Agreements, or (e) so long as prior written notice thereof is provided by Lender
(or its Affiliate) providing such service, facility or transaction and
Administrative Agent consents in writing to its inclusion as a Bank Product, any
other service provided to, facility extended to, or transaction entered into
with, any Credit Party by a Lender or its Affiliates; provided that consistent
with Section 8.9 hereof the Deposit Accounts specified therein shall be
maintained with PrivateBank and not any other Lender.
“Bank Product Agreements” means those agreements entered into from time to time
between any Credit Party and a Lender or its Affiliates in connection with the
obtaining of any of the Bank Products, including, without limitation, Hedging
Agreements.
“Bank Product Obligations” means all obligations, liabilities, reimbursement
obligations, contingent reimbursement obligations, fees, or expenses owing by
any Credit Party to any Lender or its Affiliates pursuant to or evidenced by a
Bank Product Agreement and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all such amounts that a Credit
Party is obligated to reimburse to Administrative Agent or any Lender as a
result of Administrative Agent or such Lender purchasing participations or
executing indemnities or reimbursement obligations with respect to the Bank
Products provided to the Credit Parties pursuant to the Bank Product Agreements.
“Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. § 101 et
seq.), as amended from time to time, and any successor statute.
“Base Rate” means, solely with respect to Sections 2.7(b), 3.2, 3.6 and 3.7
hereof, the sum of (a) the corporate base rate of interest per annum identified
from time to time by the Administrative Agent, as its base or prime rate, which
rate shall not necessarily be the lowest rate of interest which the
Administrative Agent charges its customers, and (b)(i), with respect to any Loan
that is a Term Loan, one percent (1.00%) per annum and (ii), with respect to any
Loan that is an Acquisition Loan, one and three-quarters of one percent (1.75%)
per annum; provided, however, at no time shall the Base Rate hereunder (x), with
respect to any Loan that is a Term Loan, be less than four and one-half of one
percent (4.50%) per annum and (y), with respect to any Loan that is an
Acquisition Loan, be less than five and one-quarter of one percent (5.25%) per
annum. Any change in the Base Rate shall be effective as of the effective date
of such change.
“Base Rate Loan” means a Loan that bears interest at an interest rate based upon
the Base Rate, solely with respect to Sections 2.7(b), 3.2, 3.6 and 3.7 hereof.
“Blocked Persons List” shall have the meaning ascribed to such term in Section
7.29 hereof.

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“Borrower Agent” means Diversicare Property.
“Borrower Cash Management Program” means the business practice of Guarantor and
Borrowers whereby cash receipts for Guarantor, Borrowers and the Affiliated
Revolving Borrowers are transferred/swept into a central concentration account
and all cash disbursements are funded by transfers from such central
concentration account.
“Borrowing Date” shall have the meaning ascribed to such term in Section 2.2
hereof.
“Business Day” means (a) with respect to any borrowing, payment or rate
selection of Libor Loans, a day other than Saturday or Sunday on which banks are
open for business in Chicago, Illinois and on which dealings in United States
dollars are carried on in the London interbank market, and (b) for all other
purposes, a day other than Saturday or Sunday on which banks are open for
business in Chicago, Illinois.
“Capital Expenditures” means, as to any Person, any and all expenditures of such
Person for fixed or capital assets, equipment, real property or improvements to
other capital assets, including, without limitation, the incurrence of
Capitalized Lease Obligations, all as determined in accordance with GAAP, except
that Capital Expenditures shall not include (i) expenditures for fixed or
capital assets to the extent such expenditures are paid for or reimbursed from
the proceeds of insurance, condemnation awards and other settlements in respect
of lost, destroyed, damaged, condemned or stolen assets, (ii) expenditures for
assets purchased substantially concurrently with the trade-in of existing assets
to the extent of the trade-in credit thereof; and (iii) any incurrence of
Indebtedness comprising the purchase price for the acquisition, whether by
purchase, merger, consolidation or otherwise, by Borrower of the assets of, or
the equity interest in, a Person or a division, line of business or other
business unit of a Person engaged in a business of the type conducted by
Borrower as of the date hereof or in a business reasonably related thereto.
“Capitalized Lease Obligations” means any amount payable with respect to any
lease of any tangible or intangible property (whether real, personal or mixed),
however denoted, which either (a) is required by GAAP to be reflected as a
liability on the face of the balance sheet of the lessee thereunder, or (b)
based on actual circumstances existing and ascertainable, either at the
commencement of the term of such lease or at any subsequent time at which any
property becomes subject thereto, can reasonably be anticipated to impose on
such lessee substantially the same economic risks and burdens, having regard to
such lessee’s obligations and the lessor’s rights thereunder both during and at
the termination of such lease, as would be imposed on such lessee by any lease
which is required to be so reflected or by the ownership of the leased property.
For avoidance of doubt, prepaid leases shall not be deemed “Capital Lease
Obligations” except to the extent required under GAAP.
“Cash Cost of Self-Insured Professional and General Liability” means the total
cash expenditures associated with professional and general liability related
settlements, legal fees and administration costs for all facilities owned or
leased by the Borrower. For purposes of measuring the Cash Cost of Self-Insured
Professional and General Liability for individual facilities or groups of
facilities, these amounts shall be allocated on the basis of licensed beds of
the facility or group

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of facilities in relation to the total number of licensed beds for all
facilities owned or leased by the Borrower.
“CERCLA” means the Comprehensive Environmental Release Compensation and
Liability Act, 42 U.S.C. § 9601 et seq., as amended.
“Certificates” shall have the meaning ascribed to such term in Section 5.1(e)(7)
hereof.
“CHAMPUS” means the Civilian Health and Medical Program of the Uniformed
Service, a part of TRICARE, a medical benefits program supervised by the U.S.
Department of Defense.
“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule,
regulation, policy, guideline, directive or treaty, (b) any change in any law,
rule, regulation, policy, guideline, directive or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority or (c) the making or issuance of any rule, guideline or
directive (whether or not having the force of law) by any Governmental
Authority; provided that notwithstanding anything herein to the contrary, (x)
the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines or directives thereunder or issued in connection therewith and
(y) 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 Law,” regardless of the date enacted, adopted or issued.
“Change of Control” means the occurrence of any one or more of the following
events or conditions, except as the result of a merger or consolidation with, or
merger into, a Borrower (and such Borrower is the surviving entity) or the
dissolution of an inactive subsidiary as permitted in accordance with Section
9.3: (a) Guarantor shall at any time after the Closing Date have control and
voting power over less than all of the issued and outstanding Stock of
Diversicare Management Services Co., (b) Diversicare Management Services Co.
shall at any time after the Closing Date have control and voting power over less
than all of the issued and outstanding Stock of Advocat Finance, (c) Advocat
Finance shall at any time after the Closing Date have control and voting power
over less than all of the issued and outstanding Stock of Diversicare Leasing,
Diversicare Holding and Diversicare Property, (d) Diversicare Holding shall at
any time after the Closing Date have control and voting power over less than all
of the issued and outstanding Stock of Diversicare Kansas, Diversicare of
Glasgow, LLC, a Delaware limited liability company, and Diversicare of Fulton,
LLC, a Delaware limited liability company, (e) Diversicare Kansas shall at any
time after the Closing Date have control and voting power over less than all of
the issued and outstanding Stock of the Kansas Opco Borrowers, (f) Diversicare
Leasing shall at any time after the Closing Date have control and voting power,
directly or indirectly, over less than all of the issued and outstanding Stock
of the Diversicare Leasing Subsidiaries, (g) Diversicare Property shall at any
time after the Closing Date have control and voting power over less than all of
the issued and outstanding Stock of the Propco Borrowers, or (h) Guarantor shall
cease to directly or indirectly possess the right to elect (through contract,
ownership of voting securities or otherwise) at all times a majority of the
board of directors or managers (or similar governing body) of each Borrower and
Pledgor and to direct the management policies and decisions of each Borrower and
Pledgor.

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“Clinton Acquisition” means the sale/purchase transaction intended to be
consummated on the Closing Date pursuant to and in accordance with the Clinton
Acquisition Documents.
“Clinton Acquisition Agreement” means that certain Lease Agreement (With Option
to Purchase) dated as of April 17, 2012, by and among Clinton Seller and Clinton
Opco, the right of Clinton Opco to acquire the Facility leased thereunder having
been assigned to Clinton Propco.
“Clinton Acquisition Documents” means, collectively, the Clinton Acquisition
Agreement, and any and all of the other material documents, instruments and
agreements executed or delivered in connection therewith, in each case as the
same may be amended or modified in conformity with Section 9.16 of this
Agreement.
“Clinton Opco” means Diversicare of Clinton, LLC, a Delaware limited liability
company and the lessee-operator of the Clinton, Kentucky Facility.
“Clinton Propco” means Diversicare Clinton Property, LLC, a Delaware limited
liability company and a wholly-owned Subsidiary of Diversicare Property Co.,
LLC.
“Clinton Seller” means Arbor Place, L.L.C., a Missouri limited liability
company.
“Closing Date” means February 26, 2016.
“Closing Fee” shall have the meaning ascribed to such term in Section 2.16
hereof.
“CMS” means the Centers for Medicare and Medicaid Services of HHS and any Person
succeeding to the functions thereof.
“Collateral” shall have the meaning ascribed to such term in Section 6.1 hereof.
“Collateral Agent” shall mean CIT Bank N.A.
“Commercial Leases” means the collective reference to all Leases other than
admission agreements or residency agreements.
“Commitment” means, collectively, the Term Loan Commitment and the Acquisition
Loan Commitment.
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute.
“Compliance Certificate” shall have the meaning ascribed to such term in Section
8.1(c) hereof.
“CON” shall have the meaning ascribed to such term in Section 10.2 hereof.

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“Credit Party” means each Borrower, the Guarantor, and each other Person that is
or becomes primarily or secondarily liable for the Liabilities, whether as a
principal, surety, guarantor, endorser or otherwise.
“Credit Termination Date” means the earlier of (i) the Stated Maturity Date,
(ii) such other date on which the Acquisition Loan Commitments shall terminate
pursuant to Section 11.2 hereof, or (iii) such other date as is mutually agreed
in writing between the Borrower and the Administrative Agent (with the consent
of the Required Lenders).
“Default” means (a) an event, circumstance or condition which through the
passage of time or the service of notice or both would (assuming no action is
taken to cure the same) mature into an Event of Default or (b) an Event of
Default.
“Default Rate” shall have the meaning ascribed to such term in Section 2.7(a)
hereof.
“Defaulting Lender” means any Lender that (a) has failed to fund its portion of
the Loan required to be funded by it hereunder at Closing, (b) has otherwise
failed to pay over to the Administrative Agent or any other Lender any other
amount required to be paid by it hereunder within one Business Day of the date
when due, unless the subject of a good faith dispute or unless such failure has
been cured, or (c) has been deemed insolvent or become the subject of a
bankruptcy or insolvency proceeding.
“Deposit Accounts” means any deposit, securities, operating, lockbox, blocked or
cash collateral account, together with any funds, instruments or other items
credited to any such account from time to time, and all interest earned thereon.
“Diversicare Holding” means Diversicare Holding Company, a limited liability
company.
“Diversicare Kansas” means Diversicare Kansas, LLC, a Delaware limited liability
company.
“Diversicare Leasing” means Diversicare Leasing Corp., a Tennessee corporation.
“Diversicare Leasing Subsidiaries” means Diversicare Afton Oaks, LLC,
Diversicare Briarcliff, LLC, Diversicare Chisolm, LLC, Diversicare Hartford,
LLC, Diversicare Windsor House, LLC, Diversicare Hillcrest, LLC, Diversicare
Lampasas, LLC, Diversicare Yorktown, LLC and Diversicare Clinton, LLC, each a
Delaware limited liability company and each a wholly-owned Subsidiary of
Diversicare Leasing.
“Diversicare Property” means Diversicare Property Co., LLC, a Delaware limited
liability company and a wholly-owned Subsidiary of Advocat Finance, Inc.
“Dollars”, “dollars” or “$”each means lawful money of the United States of
America.
“Duly Authorized Officer” means the Chief Executive Officer, the President, the
Chief Operating Officer, the Chief Financial Officer and the Assistant Secretary
of the Borrower.

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“EBITDA” means with respect to the Borrower, for any period of determination,
the sum of the net earnings of the consolidated Borrower before nonrecurring
items (in accordance with GAAP and as reasonably agreed to by the Administrative
Agent), interest, taxes, depreciation, and amortization (including amortized
transaction expense), in each case without duplication and all as determined in
accordance with GAAP, consistently applied.
“EBITDAR” means with respect to the Borrower, for any period of determination,
the sum of the net earnings of the consolidated Borrower before nonrecurring
items (in accordance with GAAP and as reasonably agreed to by the Administrative
Agent), interest, taxes, depreciation, amortization (including amortized
transaction expense) and rent, in each case without duplication and all as
determined in accordance with GAAP, consistently applied.
“Environmental Indemnity Agreement” means that certain Environmental Indemnity
Agreement of even date herewith made by the Borrower in favor of the
Administrative Agent, in form and substance acceptable to the Administrative
Agent, as the same may be amended or modified from time to time.
“Environmental Laws” means all federal, state, local, and foreign statutes,
regulations, ordinances, and similar provisions having the force or effect of
law, all judicial and administrative orders and determinations, and all common
law concerning public health and safety, worker health and safety, pollution, or
protection of the environment, including all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances,
or wastes, chemical substances, or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise, or radiation, including, without limitation,
the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., as
amended; CERCLA; the Toxic Substance Act, 15 U.S.C. § 2601 et seq., as amended;
the Clean Water Act, 33 U.S.C. § 466 et seq., as amended; the Clean Air Act, 42
U.S.C. § 7401 et seq., as amended; state and federal superlien and environmental
cleanup programs; and U.S. Department of Transportation regulations.
“Environmental Notice” means any summons, citation, directive, information
request, notice of potential responsibility, notice of violation or deficiency,
order, claim, complaint, investigation, proceeding, judgment, letters or other
communication, written or oral to the Borrower or any officer thereof, actual or
threatened, from the United States Environmental Protection Agency or other
federal, state or local agency or authority, or any other entity or individual,
public or private, concerning any intentional or unintentional act or omission
which involves Management of Hazardous Substances on or off the property of the
Borrower which could result in the Borrower incurring a material liability or
which could have a Material Adverse Effect, or the imposition of any Lien on
property, or any alleged violation of or responsibility under Environmental Laws
which could result in the Borrower incurring a material liability or which could
have a Material Adverse Effect, and, after due inquiry and investigation, any
knowledge of any facts which could give rise to any of the foregoing.
“Equipment” means “equipment” as defined in the Code, including, without
limitation, any and all of the Borrower’s machinery, equipment, vehicles,
fixtures, furniture, computers, appliances,

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tools, and other tangible personal property (other than Inventory), whether
located on the Borrower’s premises or located elsewhere, together with any and
all accessions, parts and appurtenances thereto, whether presently owned or
hereafter acquired by the Borrower.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
together with the regulations thereunder.
“ERISA Affiliate” means any corporation, trade or business, which together with
the Borrower would be treated as a single employer under Section 4001 of ERISA.
“Event of Default” shall have the meaning ascribed to such term in Section 11.1
hereof.
“Excluded Swap Obligation” means any Swap Obligation that arises from any
guaranty or collateral pledge with respect to the Liabilities that becomes
illegal under the Commodity Exchange Act or any rule, regulation or order of the
Commodity Futures Trading Commission (or the application or official
interpretation of any thereof) by virtue of any guarantor’s or pledgor’s failure
for any reason not to constitute an “eligible contract participant” as defined
in the Commodity Exchange Act at the time any applicable guaranty or pledge
agreement or similar collateral document becomes effective with respect to such
related Swap Obligation, but such exclusion shall only be effective for so long
as it would otherwise be so illegal.
“Facility” or “Facilities” shall mean any one or more of the skilled nursing
homes, assisted living facilities, retirement homes, rehabilitation centers or
senior adult care homes or facilities located on the Property as further
identified on Schedule 1.1(d).
“FATCA” means Sections 1471 - 1474 of the Tax Code, as enacted as of the date
hereof (or any amendment or successor to any such Section so long as such
amendment or successor is substantially similar to the purpose and obligations
of and not more onerous to comply with than such Sections as such Sections were
in effect as of the date of this Agreement) and any Treasury Regulation
promulgated thereunder implementing such Sections.
“FCPA” means the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq., as
amended, and the rules and regulations thereunder.
“Federal Funds Rate” shall have the meaning ascribed to such term in Section
13.13 hereof.
“Fee Letter” means that certain letter agreement dated as of even date herewith
by and between PrivateBank and Borrower, pursuant to which, among other things,
the arrangement relating to compensation for certain services rendered by the
Administrative Agent is set forth (together with any similar letter from
Administrative Agent to the Lenders regarding their respective share of any
particular fee payable by Borrower).
“Financing Agreements” means any and all agreements, instruments, certificates
and documents, including, without limitation, security agreements, loan
agreements, notes, guarantees, keep well agreements, landlord waivers,
mortgages, deeds of trust, subordination agreements, intercreditor agreements,
pledges, powers of attorney, consents, assignments, collateral

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assignments, perfection certificates, interest rate protection agreements,
reimbursement agreements, contracts, notices, leases, subordination and
attornment agreement, collateral assignments of key man life insurance policies,
financing statements and all other written matter (including, without
limitation, this Agreement, the Term Loan Notes, the Acquisition Loan Notes, the
Mortgages, the Assignment of Rents and Leases, the Environmental Indemnity
Agreement, the Subordination of Management Agreements, the Guaranty, the Pledge
Agreement, the Certificates, the Fee Letter, each Hedging Agreement and any
other Bank Product Agreement), in each case evidencing, securing or relating to
the Loan and the Liabilities, whether heretofore, now, or hereafter executed by
or on behalf of the Borrower, any Affiliate, or any other Person, and delivered
to or in favor of the Administrative Agent or any Lender, together with all
agreements and documents referred to therein or contemplated thereby, as each
may be amended, modified or supplemented from time to time.
“FIRREA” means the Financial Institutions Reform, Recovery And Enforcement Act
of 1989, as amended from time to time.
“Fiscal Quarter” means the three (3) month period ending on March 31, June 30,
September 30 and December 31 of each calendar year.
“Fiscal Year” means the twelve (12) month period commencing on January 1 and
ending on December 31 of each calendar year.
“GAAP” means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board (or any successor authority) that are
applicable to the circumstances as of the date of determination.
“General Intangibles” means “general intangibles” as defined in the Code,
including, without limitation, any and all general intangibles, choses in
action, causes of action, rights to the payment of money (other than Accounts),
and all other intangible personal property of the Borrower of every kind and
nature wherever located and whether currently owned or hereafter acquired by the
Borrower (other than Accounts), including, without limitation, corporate or
other business records, inventions, designs, patents, patent applications,
service marks, service mark applications, trademark applications, brand names,
trade names, trademarks and all goodwill symbolized thereby and relating
thereto, trade styles, trade secrets, registrations, domain names, websites,
computer software, advertising materials, distributions on certificated and
uncertificated securities, investment property, securities entitlements,
goodwill, operational manuals, product formulas for industrial processes,
blueprints, drawings, copyrights, copyright applications, rights and benefits
under contracts, licenses, license agreements, permits, approvals,
authorizations which are associated with the operation of the Borrower’s
business and granted by any Person, franchises, customer lists, deposit
accounts, tax refunds, tax refund claims, and any letters of credit, guarantee
claims, security interests or other security held by or granted to the Borrower
to secure payment by an Account Debtor of any of Borrower’s Accounts, and, to
the maximum extent permitted by applicable Law, any recoveries or amounts
received in connection with any litigation or settlement of any litigation.

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“Glasgow Property” means Diversicare Glasgow Property, LLC, a Delaware limited
liability company and a wholly-owned Subsidiary of Diversicare Property Co.,
LLC.
“Governing Documents” shall have the meaning ascribed to such term in Section
9.14 hereof.
“Governmental Approvals” means, collectively, all consents, licenses, and
permits and all other authorizations or approvals required from any Governmental
Authority to operate the Locations.
“Governmental Authority” means and includes any federal, state, District of
Columbia, county, municipal, or other government and any political subdivision,
department, commission, board, bureau, agency or instrumentality thereof,
whether domestic or foreign.
“Guarantor” means Diversicare Healthcare Services, Inc., a Delaware corporation
in its capacity as the guarantor pursuant to the Guaranty or as otherwise
provided in this Agreement.
“Guaranty” means that certain Amended and Restated Guaranty of even date
herewith by Guarantor in favor of the Administrative Agent, in form and
substance reasonable satisfactory to the Administrative Agent, as the same may
be amended, restated, reaffirmed, modified or supplemented from time to time.
“Hazardous Substances” means hazardous substances, materials, wastes, and waste
constituents and reaction by-products, pesticides, oil and other petroleum
products, and toxic substances, including, without limitation, asbestos and
PCBs, as those terms are defined pursuant to Environmental Laws.
“Healthcare Laws” means all applicable Laws relating to the possession, control,
warehousing, marketing, sale and distribution of pharmaceuticals, the operation
of medical or senior housing facilities (such as, but not limited to, nursing
homes, skilled nursing facilities, rehabilitation hospitals, intermediate care
facilities, assisted living and adult care facilities), patient healthcare,
patient healthcare information, patient abuse, the quality and adequacy of
medical care, rate setting, equipment, personnel, operating policies, fee
splitting, including, without limitation, (a) all federal and state fraud and
abuse laws, including, but not limited to the federal Anti-Kickback Statute (42
U.S.C. §1320a-7b(6)), the Stark Law (42 U.S.C. §1395nn), the civil False Claims
Act (31 U.S.C. §3729 et seq.); (b) TRICARE; (c) CHAMPUS, (d) Medicare; (e)
Medicaid; (f) HIPAA; (g) quality, safety and accreditation standards and
requirements of all applicable state laws or regulatory bodies; (h) all laws,
policies, procedures, permits, requirements, certifications, and regulations
pursuant to which licenses, approvals and accreditation certificates are issued
in order to operate medical, senior housing facilities, assisted living
facilities, or skilled nursing facilities; and (i) any and all other applicable
health care laws, regulations, manual provisions, policies and administrative
guidance, each of (a) through (i) as may be amended from time to time.
“Hedging Agreement” means any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices, in each case in form and substance
satisfactory to the Administrative Agent, as the same may be amended

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or modified from time to time; provided, Borrower will only enter into any such
Hedging Agreement with PrivateBank or another Lender reasonably approved by
Administrative Agent.
“HHS” means the United States Department of Health and Human Services and any
Person succeeding to the functions thereof.
“HIPAA” means the Health Insurance Portability and Accountability Act of 1996,
as the same may be amended, modified or supplemented from time to time, and any
successor statute thereto, and any and all rules or regulations promulgated from
time to time thereunder.
“HUD” means the United States Department of Housing and Urban Development and
any successor thereto.
“HUD Financing” means an Indebtedness of a Propco Borrower or Propco Borrowers
that is insured by HUD under one of its programs for HUD insured loans for long
term care facilities, including a HUD insured loan under Section 223(f) for
senior housing facilities and Section 232 for nursing home and assisted living
facilities of the National Housing Act, and any refinancing, refunding,
extension or renewal thereof, and which Indebtedness is to be secured by the
assets and properties owned or held by such Propco Borrower or Propco Borrowers,
including the Facility or Facilities owned and operated by such Propco Borrower
or Propco Borrowers.
“Hutchinson Acquisition” means the sale/purchase transaction intended to be
consummated on the Closing Date pursuant to and in accordance with the
Hutchinson Acquisition Documents.
“Hutchinson Acquisition Agreement” means that certain Purchase Option Agreement
dated as of January 22, 2015, by and among Hutchinson Seller and Hutchinson
Opco, the right thereunder of Hutchinson Opco to purchase the Hutchinson, Kansas
Facility having been assigned to Hutchinson Propco.
“Hutchinson Acquisition Documents” means, collectively, the Hutchinson
Acquisition Agreement, and any and all of the other material documents,
instruments and agreements executed or delivered in connection therewith, in
each case as the same may be amended or modified in conformity with Section 9.16
of this Agreement.
“Hutchinson Opco” means Diversicare of Hutchinson, LLC, a Delaware limited
liability company and the lessee-operator of the Hutchinson, Kansas Facility.
“Hutchinson Propco” means Diversicare Hutchinson Property, LLC, a Delaware
limited liability company and a wholly-owned Subsidiary of Diversicare Property
Co., LLC.
“Hutchinson Seller” means Golden Plains Real Estate, LLC, a Kansas limited
liability company.
“Incremental Amendment” shall have the meaning ascribed to such term in Section
2.12 hereof.
“Incremental Lender” shall have the meaning ascribed to such term in Section
2.12 hereof.

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“Incremental Term Loan” shall have the meaning ascribed to such term in Section
2.12 hereof.
“Indebtedness” with respect to any Person means, as of the date of determination
thereof, (a) all of such Person’s indebtedness for borrowed money, (b) all
indebtedness of such Person or any other Person secured by any Lien with respect
to any property or asset owned or held by such Person, regardless whether the
indebtedness secured thereby shall have been assumed by such Person or such
Person has become liable for the payment thereof, (c) all Capitalized Lease
Obligations of such Person and obligations or liabilities created or arising
under conditional sale or other title retention agreement with respect to
property used and/or acquired by Borrower even though the rights and remedies of
the lessor, seller and/or lender thereunder are limited to repossession of such
property, (d) all unfunded pension fund obligations and liabilities, (e) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (f) all obligations in respect of letters of credit, whether or not
drawn, and bankers’ acceptances issued for the account of such Person, (g)
deferred and/or accrued taxes and all unfunded pension fund obligations and
liabilities, (h) all guarantees by such Person, or any undertaking by such
Person to be liable for, the debts or obligations of any other Person, described
in clauses (a) through (h), (i) any Stock of such Person, whether or not
mandatorily redeemable, that under GAAP is characterized as debt, whether
pursuant to Financial Accounting Standards Board Issuance No. 150 or otherwise,
and (j) all Bank Product Obligations of such Person.
“Indemnified Liabilities” shall have the meaning ascribed to such term in
Section 12.16 hereof.
“Indemnified Parties” shall have the meaning ascribed to such term in Section
12.16 hereof.
“Intellectual Property” means all of the following in any jurisdiction
throughout the world: (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, Internet domain names, and rights in telephone numbers,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including source code, executable code, data,
databases, and related documentation), (g) all material advertising and
promotional materials, (h) all other proprietary rights, and (i) all copies and
tangible embodiments thereof (in whatever form or medium).
“Inventory” means “inventory” as defined in the Code, including, without
limitation, any and all inventory and goods of the Borrower, wheresoever
located, whether now owned or hereafter

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acquired by the Borrower, which are held for sale or lease, furnished under any
contract of service or held as raw materials, work-in-process or supplies, and
all materials used or consumed in the Borrower’s business, and shall include
such property the sale or other disposition of which has given rise to Accounts
and which has been returned to or repossessed or stopped in transit by the
Borrower.
“Joint Liability Payment” shall have the meaning ascribed to such term in
Section 12.21(g) hereof.
“Kansas Opco Borrowers” means Diversicare of Chanute, LLC, Diversicare of
Council Grove, LLC, Diversicare of Haysville, LLC, Diversicare of Hutchinson,
LLC, Diversicare of Larned, LLC, and Diversicare of Sedgwick, LLC, each a
Delaware limited liability company.
“Laws” means, collectively, all federal, state and local laws, statutes, codes,
ordinances, orders, rules and regulations, including judicial opinions or
presidential authority in the applicable jurisdiction and Healthcare Laws and
Environmental Laws, now or hereafter in effect, and in each case as amended or
supplemented from time to time.
“Leases” means all leases, subleases, licenses, concessions and other agreements
(written or oral), including all amendments, extensions, renewals, guaranties,
and other agreements with respect thereto, pursuant to which the Borrower holds
any leased real property (including, without limitation, the Commercial Leases
and Operating Leases).
“Lender Parties” shall have the meaning ascribed to such term in Section 12.24
hereof.
“Liabilities” means any and all of each of the Borrower’s liabilities,
obligations and Indebtedness to the Lenders and the Administrative Agent of any
and every kind and nature, whether heretofore, now or hereafter owing, arising,
due or payable and howsoever evidenced, created, incurred, acquired, or owing,
whether primary, secondary, direct, indirect, contingent, absolute, fixed or
otherwise (including, without limitation, payments of or for principal,
interest, default interest, reimbursement obligations, interest rate hedging
obligations, fees, costs, expenses, and/or indemnification, and obligations of
performance, and the Closing Fee, any other fee due or payable to Administrative
Agent or Lenders in connection with any Financing Agreement, the Prepayment
Premium, and all Bank Product Obligations, and any interest that accrues after
commencement of any insolvency or bankruptcy proceeding regardless of whether
allowed or allowable in whole or in part as a claim in any such insolvency or
bankruptcy proceeding) and whether arising or existing under written agreement,
oral agreement, or by operation of law, including, without limitation, all of
each Borrower’s Indebtedness, liabilities and obligations to the Lenders and the
Administrative Agent under this Agreement (whether relating to the Loan or
otherwise and including, without limitation, all of each Borrower’s Bank Product
Obligations) or each Hedging Agreement (but excluding any Excluded Swap
Obligation) and any and all other Financing Agreements to which Borrower is a
party, and any refinancings, substitutions, extensions, renewals, replacements
and modifications for or of any or all of the foregoing.
“Libor Base Rate” means a rate of interest equal to (a) the per annum rate of
interest at which United States dollar deposits in an amount comparable to the
amount of the relevant Libor Loan

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and for a period equal to the Libor Interest Period are offered in the London
Interbank Eurodollar market at 11:00 A.M. (London time) two (2) Business Days
prior to the commencement of such Libor Interest Period (or three (3) Business
Days prior to the commencement of such Libor Interest Period if banks in London,
England were not open and dealing in offshore United States dollars on such
second preceding Business Day), as displayed in the Bloomberg Financial Markets
system (or other authoritative source selected by the Administrative Agent in
its sole discretion) or, if the Bloomberg Financial Markets system or another
authoritative source is not available, as the Libor Base Rate is otherwise
determined by the Administrative Agent in its sole and absolute discretion,
divided by (b) a number determined by subtracting from 1.00 the then stated
maximum reserve percentage for determining reserves to be maintained by member
banks of the Federal Reserve System for Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D), such rate to remain fixed for such Libor Interest Period. The
Administrative Agent’s determination of the Libor Base Rate shall be conclusive,
absent manifest error.
“Libor Interest Period” means, with respect to any Libor Loan, successive one
(1) month periods, provided, however, that: (a) each Libor Interest Period
occurring after the initial Libor Interest Period of any Libor Loan shall
commence on the day on which the preceding Libor Interest Period for such Libor
Loan expires, with interest for such day to be calculated at the Libor Rate in
effect for the new Libor Interest Period; (b) whenever the last day of any Libor
Interest Period would otherwise occur on a day other than a Business Day, the
last day of such Libor Interest Period shall be extended to occur on the next
succeeding Business Day; (c) whenever the first day of any Libor Interest Period
occurs on a date for which there is no numerically corresponding date in the
month in which such Libor Interest Period terminates, such Libor Interest Period
shall end on the last day of such month, unless such day is not a Business Day,
in which case the Libor Interest Period shall terminate on the first Business
Day of the following month, provided, further, that so long as the Libor
Rollover remains in effect, all subsequent Libor Interest Periods shall
terminate on the date of the month numerically corresponding to the date on
which the initial Libor Interest Period commenced; and (d) if at any time the
Libor Interest Period for a Libor Loan expires less than one month before the
Stated Maturity Date, such Libor Loan shall automatically renew at the then
current Libor Rate for a Libor Interest Period terminating on the Stated
Maturity Date.
“Libor Loan” means a Loan which bears interest at a Libor Rate.
“Libor Rate” means, with respect to a Libor Loan for the relevant Libor Interest
Period, the sum of the Libor Base Rate applicable to that Libor Interest Period,
plus the Applicable Libor Margin.
“Libor Rollover” means that each Libor Loan shall automatically renew for the
Libor Interest Period specified in this Agreement at the then current Libor
Rate, except that a Libor Interest Period for a Libor Loan shall not
automatically renew with respect to any principal amount which is scheduled to
be repaid before the last day of the applicable Libor Interest Period, and any
such amounts shall bear interest at the Base Rate, until repaid.
“Licenses” shall have the meaning ascribed to such term in Section 10.2 hereof

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“Lien” means any lien, security interest, mortgage, pledge, hypothecation,
collateral assignment, or other charge, encumbrance or preferential arrangement,
including, without limitation, the retained security title of a conditional
vendor or lessor.
“Loan Account” shall have the meaning ascribed to such term in Section 2.5
hereof.
“Loan” means the Term Loan, any Acquisition Loan, and, if applicable, any and
all other advances made by the Lenders (or, if applicable, the Administrative
Agent) to the Borrower pursuant to the terms of this Agreement or any other
Financing Agreement. The term “Loans” shall mean, collectively, the Term Loan,
all Acquisition Loans and, if applicable, any and all other advances made by the
Lenders (or, if applicable, the Administrative Agent) to the Borrower pursuant
to the terms of this Agreement or any other Financing Agreement.
“Location” or “Locations” mean one or more of the healthcare or other facilities
owned by the Propco Borrowers and operated by the Operators on the Property as
identified on Schedule 1.1(d) hereto.
“Manage” or “Management” means to generate, handle, manufacture, process, treat,
store, use, re-use, refine, recycle, reclaim, blend or burn for energy recovery,
incinerate, accumulate speculatively, transport, transfer, dispose of, release,
threaten to release or abandon Hazardous Substances.
“Management Agreements” means, collectively, those certain Management Agreements
between (i) Manager and each Operator for the operation and management of the
Facilities and (ii) Manager and Diversicare Therapy Services, LLC, for
bookkeeping, accounting, payroll, billing and management of its contract therapy
services.
“Manager” means Diversicare Management Services Co.
“Material Adverse Change” or “Material Adverse Effect” means, with respect to
any event, act, condition or occurrence of whatever nature (including any
adverse determination in any litigation, arbitration, or governmental
investigation or proceeding), whether singly or in conjunction with any other
event or events, act or acts, condition or conditions, occurrence or
occurrences, whether or not related, any of the following: (a) a material
adverse change in, or a material adverse effect upon, the financial condition,
operations, business or properties of the Credit Parties, taken as a whole, (b)
a material adverse change in, or a material adverse effect upon, the rights and
remedies of the Administrative Agent or the Lenders under any Financing
Agreement or the ability of the Credit Parties, taken as a whole, to perform
their payment or other obligations under any Financing Agreement to which they
are parties, (c) a material adverse change in, or a material adverse effect
upon, the legality, validity or enforceability of any Financing Agreement, (d) a
material adverse change in, or a material adverse effect upon, the existence,
perfection or priority of any security interest granted in any Financing
Agreement or the value of any material Collateral not resulting from any action
or inaction by the Administrative Agent, or (e) any liability of the Credit
Parties, or any one or more of them, in excess of Five Hundred Thousand and
No/100 Dollars ($500,000.00) in the aggregate as a result the final adjudication
of one or more violations of any Healthcare Law which remains unpaid for a
period of thirty (30) days, unless such liability

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is being contested or appealed by appropriate proceedings and Borrower has
established appropriate reserves adequate for payment in the event such appeal
or contest is ultimately unsuccessful, provided further that in the event such
contest or appeal is ultimately unsuccessful, the Borrower shall pay the
assessment no later than the deadline set forth by the applicable agency.
“Maximum Acquisition Loan Facility” means an amount equal to Twelve Million Five
Hundred Thousand and No/100 Dollars ($12,500,000.00).
“Maximum Facility” means an amount equal to Seventy-Two Million Five Hundred
Thousand and No/100 Dollars ($72,500,000.00).
“Maximum Term Loan Facility” means an amount equal to Sixty Million and No/100
Dollars ($60,000,000.00).
“Medicaid” mean collectively all federal statutes (whether set forth in Title
XIX of the Social Security Act or elsewhere) affecting the health insurance
program established by Title XIX of the Social Security Act (42 U.S.C. §§ 1396,
et seq.), together with all applicable provisions of all rules, regulations,
manuals, final orders and administrative, reimbursement and other applicable
guidelines of all governmental authorities, including HHS, CMS or the Office of
the Inspector General of HHS, or any Person succeeding to the functions of any
of the foregoing (whether or not having the force of law).
“Medicare” mean collectively all federal statutes (whether set forth in Title
XVIII of the Social Security Act or elsewhere) affecting the health insurance
program for the aged and disabled established by Title XVIII of the Social
Security Act (42 U.S.C. § 1395, et seq.), together with all applicable
provisions of all rules, regulations, manuals, final orders and administrative,
reimbursement and other applicable guidelines of all governmental authorities,
including HHS, CMS or the Office of the Inspector General of HHS, or any Person
succeeding to the functions of any of the foregoing (whether or not having the
force of law).
“Mortgages” means, collectively, each of those certain Amended and Restated Deed
of Trust, Financing Statement and Fixture Filing, Amended and Restated Deed of
Trust, Amended and Restated Mortgage, or other Mortgage, Deed of Trust, Security
Agreement, Assignment of Leases and Rents and Fixture Filing each dated of even
date herewith made by the Propco Borrower, respectively, granting and conveying
to the Administrative Agent for the ratable benefit of the Lenders a first
mortgage Lien on the Property as identified on Schedule 1.1(d), as the same may
be amended, restated, supplemented or modified from time to time
“Multiemployer Plan” shall have the meaning ascribed to such term in Section
7.19 hereof.
“Non-U.S. Participant” shall have the meaning ascribed to such term in Section
3.3 hereof.
“OFAC Lists” means, collectively, the Specially Designated Nationals and Blocked
Persons List maintained by the Office of Foreign Asset Control, the Department
of the Treasury pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079
(Sept. 25, 2001) and/or any other list of terrorists or terrorist organizations
maintained pursuant to any of the rules and regulations of or by the Office

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of Foreign Asset Control, the Department of the Treasury or pursuant to any
other applicable Executive Orders, as such lists may be amended or supplemented
from time to time.
“Operating Lease” means the collective reference to any Commercial Leases
between the Propco Borrower and any Operators, respectively, pursuant to which
such Operators lease and operate each Location.
“Operator(s)” means the respective operators of the Locations, all of which are
licensed under all applicable Healthcare Laws.
“Note(s)” means, collectively, the Term Loan Notes and the Acquisition Loan
Notes.
“Participant” shall have the meaning ascribed to such term in Section 12.15(d)
hereof.
“Patriot Act” shall have the meaning ascribed to such term in Section 8.16
hereof.
“Payment In Full” means (a) the indefeasible payment in full in cash of all
Loans and other Liabilities (and all of the Affiliate Revolving Loan
Liabilities), other than contingent indemnification obligations for which no
claims have been asserted, and (b) the termination of the Acquisition Loan
Commitment in accordance with the terms and conditions hereof (and the
termination of the Revolving Loan Commitment in accordance with the terms and
conditions of the Revolving Loan Agreement).
“PBGC” shall have the meaning ascribed to such term in Section 7.19 hereof.
“Permitted Acquisition” means an Acquisition by a Borrower that (i) fully
complies with the terms and conditions set forth in Exhibit D attached hereto
and made a part of this Agreement by this reference thereto, and (ii) without
limiting the conditions identified on Exhibit D hereto, is otherwise approved in
advance in writing by the Administrative Agent, which approval will not be
unreasonably withheld, conditioned or delayed.
“Permitted Liens” shall have the meaning ascribed to such term in Section 9.1
hereof.
“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, limited liability company, unincorporated organization, association,
corporation, institution, entity, party, or government (whether national,
federal, state, provincial, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
“Plan” shall have the meaning ascribed to such term in Section 7.19 hereof.
“Pledge Agreements” means, collectively, that certain (a) Second Amended and
Restated Pledge Agreement of even date herewith made by Guarantor in favor of
the Administrative Agent, (b) Second Amended and Restated Pledge Agreement of
even date herewith made by Diversicare Management Services Co., a Tennessee
corporation, in favor of the Administrative Agent, (c) Second Amended and
Restated Pledge Agreement of even date herewith made by Advocat Finance, Inc., a
Delaware corporation, in favor of the Administrative Agent, (d) Third Amended
and Restated Pledge Agreement of even date herewith made by Diversicare Leasing
in favor of the Administrative

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Agent, (e) Second Amended and Restated Pledge Agreement of even date herewith
made by Senior Care Florida Leasing, LLC, a Delaware limited liability company,
in favor of the Administrative Agent, (f) Amended and Restated Pledge Agreement
of even date herewith of Diversicare Leasing Company II, LLC, a Delaware limited
liability company, in favor of the Administrative Agent (g) Amended and Restated
Pledge Agreement of even date herewith of Diversicare Holding in favor of the
Administrative Agent, (h) Amended and Restated Pledge Agreement of even date
herewith of Diversicare Kansas in favor of the Administrative Agent, and (i)
Amended and Restated Pledge Agreement of Diversicare Property in favor of the
Administrative Agent, each of the foregoing in form and substance reasonable
satisfactory to the Administrative Agent, as the same may be modified,
supplemented or amended from time to time in accordance with the terms thereof.
“Pledgor” means the “Pledgor” as such term is respectively defined in each
Pledge Agreement.
“Prepayment Premium” means, with respect to any prepayment of the Term Loan
pursuant to Section 2.10, three percent (3%) of the amount of the outstanding
principal balance of the Term Loan prepaid if such prepayment occurs on or prior
to the first (1st) year anniversary of the Closing Date; two percent (2%) of the
amount of the outstanding principal balance of the Term Loan prepaid if such
prepayment occurs after the first anniversary hereof and on or prior to the
second (2nd) year anniversary of the Closing Date; and one percent (1%) of the
amount of the outstanding principal balance of the Term Loan prepaid if such
prepayment occurs at any time after the second anniversary hereof.
“Pro Rata Share” means, (x) with respect to a Lender’s obligation to make any
portion of the Term Loan and receive payments of principal, interest, fees,
costs, and expenses with respect thereto, (a) prior to the making of the Term
Loan, the percentage obtained by dividing (i) such Lender’s Term Loan
Commitment, by (ii) the aggregate amount of all Lenders’ Term Loan Commitments,
and (b) from and after the making of the Term Loan, the percentage obtained by
dividing (i) the principal amount of such Lender’s Term Loan by (ii) the
aggregate principal amount of the Term Loan held by all Lenders, (y) with
respect to a Lender’s obligation to make Acquisition Loans and receive payments
of principal, interest, fees, costs, and expenses with respect thereto,
(a) prior to the Acquisition Loan Commitment being terminated or reduced to
zero, the percentage obtained by dividing (i) such Lender’s Acquisition Loan
Commitment, by (ii) the aggregate Acquisition Loan Commitment of all Lenders and
(b) from and after the time the Acquisition Loan Commitment has been terminated
or reduced to zero, the percentage obtained by dividing (i) the aggregate unpaid
principal amount of such Lender’s Acquisition Loan Outstandings by (ii) the
aggregate unpaid principal amount of all Acquisition Loan Outstandings and (z)
with respect to a Lender’s obligation to make any portion of the Loan and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (a) prior to the making of the Term Loan, the percentage obtained by
dividing (i) such Lender’s Commitment, by (ii) the aggregate amount of all
Lenders’ Commitments, and (b) from and after the making of the Term Loan, the
percentage obtained by dividing (i) the principal amount of such Lender’s Loan
by (ii) the aggregate principal amount of the Loans held by all Lenders.
“Prohibited Transaction” shall have the meaning ascribed to such term in ERISA.

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“Propco Borrowers” means the limited liability companies identified on Schedule
1.1(b) attached hereto, each a Delaware limited liability company and each a
wholly-owned Subsidiary of Diversicare Property Co., LLC.
“Property” means any and all real property owned, leased, sub-leased or used at
any time by Borrower, including the real estate owned by the Propco Borrower
identified on Schedule 1.1(d).
“Register” shall have the meaning ascribed to such term in Section 12.15(d)
hereof.
“Release” means any actual or threatened spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing of Hazardous Substances into the environment, as “environment” is
defined in CERCLA.
“Released Parties” shall have the meaning ascribed to such term in Section 12.24
hereof.
“Releasing Parties” shall have the meaning ascribed to such term in Section
12.24 hereof.
“Required Lenders” means, as of any date of determination, (a) if there are two
(2) or fewer Lenders, Lenders holding one hundred percent (100%) of the sum of
the outstanding principal balance of the Loan (and the unused Acquisition Loan
Commitment) at such time, or (b) if there are more than two (2) Lenders, Lenders
holding sixty-six and two-thirds percent (66‑2/3%) or more of the sum of the
outstanding principal balance of the Loan (and the unused Acquisition Loan
Commitment) at such time, provided, that the Commitments of, and the portion of
the Liabilities held or deemed held by, any Defaulting Lender shall be excluded
for purposes of making a determination of Required Lenders, and any Lender and
its Affiliates shall be counted as a single Lender for purposes of making a
determination of Required Lenders.
“Respond” or “Response” means any action taken pursuant to Environmental Laws to
correct, remove, remediate, cleanup, prevent, mitigate, monitor, evaluate,
investigate or assess the Release of a Hazardous Substance.
“Restricted Agreements” means, collectively, each Management Agreement, each
Commercial Lease, each agreement, document or instrument entered into in
connection with (directly or indirectly) the Borrower Cash Management Program,
the Hutchinson Acquisition Documents, the Clinton Acquisition Documents, and, if
applicable at any time, any material agreement entered into by a Borrower in
connection with a Permitted Acquisition (including, without limitation, each
Acquisition Agreement), and any other agreement, document or instrument between
or among the Credit Parties and any agreement, document or instrument pertaining
to (directly or indirectly) any of the foregoing.
“Restrictions” shall have the meaning ascribed to such term in Section 10.3
hereof.
“Revolving Loan Agreement” means that certain Third Amended and Restated
Revolving Loan and Security Agreement dated of even date herewith by and among
the Affiliated Revolving

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Borrowers, the Lenders and the Administrative Agent, as the same may be
restated, modified, supplemented or amended from time to time.
“Service Fee” shall have the meaning ascribed to such term in Section 8.9
hereof.
“Solvent” means, with respect to any Person on a particular date, that on such
date (a) the fair value of the property of such Person is greater than the total
amount of liabilities, including contingent liabilities, of such Person; (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured; (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person’s property would constitute
an unreasonably small capital. The amount of contingent liabilities (such as
litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability, but shall not include incurred but not
reported professional liability claims.
“Stated Maturity Date” means February 26, 2021.
“Stock” shall mean all certificated and uncertificated shares, stock, options,
warrants, general or limited partnership interests, membership interests or
units, limited liability company interests, participation or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company or equivalent entity whether voting or nonvoting, including
common stock, preferred stock, or any other “equity security” (as such term is
defined in Rule 3a11‑1 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934).
“Subordinated Debt” means any and all Indebtedness owing by the Borrower to a
third party that has been subordinated to the Liabilities in writing on terms
and conditions satisfactory to the Administrative Agent in its sole and absolute
discretion.
“Subordination Agreement” means, collectively, any subordination agreements
entered into from time to time by holders of Subordinated Debt and the
Administrative Agent, each in form and substance satisfactory to the
Administrative Agent in its sole and absolute discretion, each as the same may
be modified, supplemented, amended or restated from time to time.
“Subordination of Management Agreements” means that certain Amended and Restated
Assignment and Subordination of Management Agreements of even date herewith made
by the Propco Borrowers, each Borrower that is also an Operator, the Manager in
favor of the Administrative Agent, in form and substance reasonable satisfactory
to the Administrative Agent, as the same may be modified, restated, supplemented
or amended from time to time in accordance with the terms thereof.
“Subsidiary” means, with respect to any Person, (i) any corporation of which an
aggregate of more than fifty percent (50%) of the outstanding Stock having
ordinary voting power to elect a

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majority of the board of directors of such corporation (irrespective of whether,
at the time, Stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time, directly or indirectly, owned legally or beneficially by such Person
and/or one or more Subsidiaries of such Person, or with respect to which any
such Person has the right to vote or designate the vote of fifty percent (50%)
or more of such Stock whether by proxy, agreement, operation of law or
otherwise, and (ii) any partnership or limited liability company in which such
Person or one or more Subsidiaries of such Person has an equity interest
(whether in the form of voting or participation in profits or capital
contribution) of more than fifty percent (50%) or of which any such Person is a
general partner, managing member or manager or may exercise the powers of a
general partner, managing member or manager.
“Swap Obligation” means any Hedging Agreement or related obligation that
constitutes a “swap” within the meaning of section 1a(47) of the Commodity
Exchange Act.
“Tax Code” shall have the meaning ascribed to such term in Section 7.19 hereof.
“Taxes” shall have the meaning ascribed to such term in Section 3.3 hereof.
“Tenant” means any tenant, resident or occupant under any Lease.
“Term Loan” shall have the meaning ascribed to such term in Section 2.1 hereof.
“Term Loan Note(s)” shall have the meaning ascribed to such term in Section 2.1
hereof.
“Term Loan Commitment” means, as to any Lender, such Lender’s commitment to make
the Term Loan under this Agreement. The initial amount of each Lender’s Term
Loan Commitment is set forth on Annex A attached hereto and made a part hereof.
“TRICARE” means the medical program for active duty members, qualified family
members, CHAMPUS eligible retirees and their family members and survivors, of
all uniformed services.
“Uniform Commercial Code” or “UCC” or “Code” means the Uniform Commercial Code
as the same may, from to time, be in effect in the State of Illinois; provided,
however, that if, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect to,
Administrative Agent’s Lien on the Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of Illinois,
the term “Uniform Commercial Code” or “UCC” or “Code” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions of this Agreement or the other Financing Agreements relating to such
attachment, perfection, priority or remedies and for purposes of definitions
related to such provisions; provided further that, to the extent that the
Uniform Commercial Code of a particular jurisdiction is used to define a term
herein or in any Financing Agreement and such term is defined differently in
different Articles or Divisions of such Uniform Commercial Code, then the
definition of such term contained in Article or Division 9 of such Uniform
Commercial Code shall control.

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“United States” or “U.S.” means the United States of America.
“Unused Line Fee” means a fee in an amount equal to one half of one percent
(0.50%) per annum times the amount by which the Maximum Acquisition Loan
Facility exceeds the average daily balance of the Acquisition Loan Outstandings,
payable to the Administrative Agent for the Lenders for their Pro Rata Share.
“Withholding Certificate” shall have the meaning ascribed to such term in
Section 3.3 hereof.
1.2    Interpretation.
(a)    All accounting terms used in this Agreement or the other Financing
Agreements shall have, unless otherwise specifically provided herein or therein,
the meaning customarily given such term in accordance with GAAP, and all
financial computations thereunder shall be computed, unless otherwise
specifically provided therein, in accordance with GAAP consistently applied;
provided, however, that all financial covenants and calculations in the
Financing Agreements shall be made in accordance with GAAP as in effect on the
Closing Date unless Borrower, Administrative Agent and Required Lenders shall
otherwise specifically agree in writing. That certain items or computations are
explicitly modified by the phrase “in accordance with GAAP” shall in no way be
construed to limit the foregoing. Unless otherwise specified, references in this
Agreement or any of the attachments hereto or appendices hereof to a Section,
subsection or clause refer to such Section, subsection or clause as contained in
this Agreement. The words “herein,” “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole, including all annexes,
exhibits and schedules attached hereto, as the same may from time to time be
amended, restated, modified or supplemented, and not to any particular section,
subsection or clause contained in this Agreement or any such annex, exhibit or
schedule.
(b)    Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words “including”, “includes” and
“include” shall be deemed to be followed by the words “without limitation”; the
word “or” is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the
Financing Agreements) or, in the case of governmental Persons, Persons
succeeding to the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of the same and
any successor statutes and regulations. Whenever any provision in any Financing
Agreement refers to the knowledge (or an analogous phrase) of Borrower, except
as otherwise expressly provided for herein, such words are intended to signify
that a Duly Authorized Officer of Borrower has actual knowledge or awareness of
a particular fact or circumstance or that a prudent individual in the position
of such Duly Authorized Officer of Borrower, would reasonably be expected to
have known or been aware of such fact or circumstance in the course of
performing his or her duties. Any reference in this Agreement or any of the
Financing Agreements to a Permitted Lien is not intended to subordinate or
postpone, and shall not be interpreted as subordinating or postponing, or as any
agreement to subordinate or postpone, any Lien created by any of the Financing
Agreements in favor of Administrative Agent (for the benefit of the Lenders and
the Administrative Agent) to any Permitted Lien.

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2.    COMMITMENT; INTEREST; FEES.
2.1    Term Loan. On the terms and subject to the conditions set forth in this
Agreement, and provided there does not then exist a Default or an Event of
Default, each Lender with a Term Loan Commitment, severally and for itself
alone, agrees to make in Dollars such Lender’s Pro Rata Share of a term loan
(the “Term Loan”) in one advance to the Borrower on the Closing Date in the
aggregate amount of (x) the Maximum Term Loan Facility minus (y) the outstanding
aggregate principal amount of the “Term Loan” (as defined in the Original Term
Loan Agreement) on the date hereof. As of the date hereof, the outstanding
aggregate principal amount of the “Term Loan” (as defined in the Original Term
Loan Agreement) is equal to Forty-Two Million Two Hundred Twenty-Four Thousand
Nine Hundred Ninety-Nine and 82/100 Dollars ($42,224,999.82) and, immediately
after giving effect to such advance, is equal to the Maximum Term Loan Facility.
Any amounts paid or applied to the principal balance of the Term Loan (whether
by mandatory prepayment or otherwise) may not be reborrowed hereunder. The
payment obligations of the Borrower to the Lenders and Administrative Agent
hereunder are and shall be joint and several as provided in Section 12.21
hereof. Each Lender’s obligation to fund the Term Loan shall be limited to such
Lender’s Pro Rata Share of the Term Loan Commitment. The Term Loan Commitment
shall automatically and permanently terminate concurrently with the making of
the Term Loan on the Closing Date.
(c)    The advance to the Borrower under this Section 2.1 shall be deposited, in
immediately available funds, in the Borrower’s demand deposit account with the
Administrative Agent, or in such other account as the Borrower Agent designates
in writing with the Administrative Agent’s approval.
(d)    The principal balance of the Term Loan shall be amortized over
twenty-five (25) years and shall be jointly and severally repaid by Borrower in
consecutive equal monthly installments as follows (subject to Section 2.10):
Year 1:
$1,610,000 ($134,167/month)
Year 2:
$1,680,000 ($140,000/month)
Year 3:
$1,760,000 ($146,667/month)
Year 4:
$1,840,000 ($153,333/month)
Year 5:
$1,930,000 ($160,833/month)

, together with interest accrued thereon, each payable on the first day of each
calendar month, commencing on April 1, 2016, and otherwise in accordance with
Section 2.7 hereof, with a final installment of the aggregate unpaid principal
balance of the Term Loan, together with interest accrued thereon, payable on the
Credit Termination Date.
(e)    At the request of the applicable Lender, the Term Loan shall be evidenced
by a separate amended and restated promissory note or promissory note
(hereinafter, as the same may be amended, restated, modified or supplemented
from time to time, and together with any renewals or extensions thereof or
exchanges or substitutions therefor, called the “Term Loan Note(s)”), duly
executed and delivered by the Borrower, substantially in the form set forth in
Exhibit A attached hereto, with appropriate insertions, dated the Closing Date,
jointly and severally payable

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to the order of each Lender, respectively, in the principal amount equal to such
Lender’s Pro Rata Share of the Maximum Term Loan Facility. THE PROVISIONS OF THE
TERM LOAN NOTES NOTWITHSTANDING, THE TERM LOAN THEN OUTSTANDING SHALL BECOME
IMMEDIATELY DUE AND PAYABLE ON A JOINT AND SEVERAL BASIS UPON THE EARLIEST TO
OCCUR OF (X) STATED MATURITY DATE; (Y) THE ACCELERATION OF THE LIABILITIES
PURSUANT TO SECTION 11.2 HEREOF; AND (Z) TERMINATION OF THIS AGREEMENT (WHETHER
BY PREPAYMENT OR OTHERWISE) IN ACCORDANCE WITH ITS TERMS.
(f)    Accrued interest on the Term Loan shall be due and payable and shall be
made by the Borrower to the Administrative Agent in accordance with Section 2.7
hereof. Interest payments on the Term Loan shall be computed using the interest
rate then in effect and based on the outstanding principal balance of the Term
Loan. Upon maturity, the outstanding principal balance of the Term Loan shall be
immediately due and payable, together with any remaining accrued interest
thereon.
2.2    Acquisition Loans. On the terms and subject to the conditions set forth
in this Agreement, and provided there does not then exist a Default or an Event
of Default, each Lender with an Acquisition Loan Commitment, severally and for
itself alone, agrees to make in Dollars such Lender’s Pro Rata Share of
revolving acquisition loans (such loans are collectively called “Acquisition
Loans” and individually called an “Acquisition Loan”) to the Borrower from time
to time on and after the Closing Date and prior to the Credit Termination Date,
so long as the aggregate amount of such advances outstanding at any time to the
Borrower do not exceed the Acquisition Loan Availability at such time. The
aggregate outstanding principal amount of Acquisition Loans as of the date
hereof and immediately prior to giving effect to any advances of Acquisition
Loans (if any) to be made on the Closing Date is equal to zero Dollars ($0.00).
The Borrower shall have the right to repay and reborrow any of the Acquisition
Loans without premium or penalty (subject to Section 3.4 hereof); provided,
however, that it shall be a condition precedent to any reborrowing that as of
the date of any reborrowing (any such date herein called a “Borrowing Date”) all
of the conditions to borrowing set forth in Section 5.2 of this Agreement shall
be satisfied and all representations and warranties made herein shall be true
and correct in all material respects (without duplication of materiality, as
applicable) as of such Borrowing Date. The payment obligations of the Borrower
to the Lenders and Administrative Agent hereunder are and shall be joint and
several as provided in Section 12.21 hereof. The failure of any Lender to make a
requested Acquisition Loan on any date shall not relieve any other Lender of its
obligation to make an Acquisition Loan on such date, but no Lender shall be
responsible for the failure of any other Lender to make any Acquisition Loan to
be made by such other Lender. Each Lender’s obligation to fund any Acquisition
Loan shall be limited to such Lender’s Pro Rata Share of the Acquisition Loan
Commitment.
(a)    Each advance to the Borrower under this Section 2.2 shall be in integral
multiples of Fifty Thousand Dollars ($50,000) and shall, on the day of such
advance, be deposited, in immediately available funds, in the Borrower’s demand
deposit account with the Administrative Agent, or in such other account as the
Borrower Agent may, from time to time, designate in writing with the
Administrative Agent’s approval.

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(b)    [Intentionally Omitted].
(c)    At the request of the applicable Lender, the Acquisition Loans shall be
evidenced by a separate promissory note or amended and restated promissory note
(hereinafter, as the same may be amended, restated, modified or supplemented
from time to time, and together with any renewals or extensions thereof or
exchanges or substitutions therefor, called the “Acquisition Loan Note(s)”),
duly executed and delivered by the Borrower, substantially in the form set forth
in Exhibit B attached hereto, with appropriate insertions, dated the Closing
Date, jointly and severally payable to the order of each Lender, respectively,
in the principal amount equal to such Lender’s Pro Rata Share of the Maximum
Acquisition Loan Facility. THE PROVISIONS OF THE ACQUISITION LOAN NOTES
NOTWITHSTANDING, THE ACQUISITION LOAN OUTSTANDING, AND ALL INTEREST ACCRUED
THEREON AND OTHER LIABILITIES WITH RESPECT THERETO, SHALL BECOME IMMEDIATELY DUE
AND PAYABLE ON A JOINT AND SEVERAL BASIS UPON THE EARLIEST TO OCCUR OF: (X)
STATED MATURITY DATE; (Y) THE ACCELERATION OF THE LIABILITIES PURSUANT TO
SECTION 11.2 HEREOF; AND (Z) TERMINATION OF THIS AGREEMENT (WHETHER BY
PREPAYMENT OR OTHERWISE) IN ACCORDANCE WITH ITS TERMS.
(d)    Accrued interest on the Acquisition Loans shall be due and payable and
shall be made by the Borrower to the Administrative Agent in accordance with
Section 2.7 hereof. Interest payments on the Acquisition Loans shall be computed
using the interest rate then in effect and based on the outstanding principal
balance of the Acquisition Loans. On the Credit Termination Date, the
outstanding principal balance of the Acquisition Loans shall be immediately due
and payable, together with any remaining accrued interest thereon.
2.3    Reduction of Acquisition Loan Commitment by the Borrower. The Borrower
may from time to time, on at least five (5) Business Days’ prior written notice
(stating the amount of the prepayment and the prepayment date) received by the
Administrative Agent, permanently reduce the amount of the Acquisition Loan
Commitment but only upon first repaying the amount, if any, by which the
Acquisition Loan Outstandings exceeds the then reduced amount of the Acquisition
Loan Commitment), and Borrower paying any amount due pursuant to Section 3.4
hereof.
2.4    Principal Balance of Liabilities Not to Exceed the Maximum Facility. The
sum of the aggregate outstanding principal balance of the Loans to the Borrower
made under this Agreement shall not, at any time, exceed the Maximum Facility.
The Acquisition Loan Outstandings shall not, at any time, exceed the Maximum
Acquisition Loan Facility. The Borrower agrees that if at any time any such
excess shall arise, the Borrower shall immediately pay on a joint and several
basis to the Administrative Agent for distribution to the applicable Lenders
such amount as may be necessary to eliminate such excess.
2.5    The Borrower’s Loan Account. The Administrative Agent, on behalf of each
Lender, shall maintain a loan account (the “Loan Account”) on its books for the
Borrower in which shall be recorded (a) the Loan made by the Lenders (including
Administrative Agent) to the Borrower pursuant to this Agreement, (b) all
payments made by the Borrower on the Loan, and (c) all other appropriate debits
and credits as provided in this Agreement, including, without limitation, all
fees, charges, expenses and interest. All entries in the Loan Account shall be
made in accordance with

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the Administrative Agent’s customary accounting practices as in effect from time
to time. The Borrower promises to pay the amount reflected as owing by Borrower
under its Loan Account and all of its other obligations hereunder as such
amounts become due or are declared due pursuant to the terms of this Agreement.
Notwithstanding the foregoing, the failure so to record any such amount or any
error in so recording any such amount shall not limit or otherwise affect the
Borrower’s obligations under this Agreement or under the Notes to repay the
outstanding principal amount of the Loan together with all interest accruing
thereon.
2.6    Statements. The Loan to the Borrower, and all other debits and credits
provided for in this Agreement, shall be evidenced by entries made by the
Administrative Agent in its internal data control systems showing the date,
amount and reason for each such debit or credit. Until such time as the
Administrative Agent shall have rendered to the Borrower Agent written
statements of account as provided herein, the balance in the Loan Account, as
set forth on the Administrative Agent’s most recent computer printout, shall be
rebuttably presumptive evidence of the amounts due and owing the Lenders by the
Borrower. From time to time the Administrative Agent shall render to the
Borrower Agent a statement setting forth the balance of the Loan Account,
including principal, interest, expenses and fees. Each such statement shall be
subject to subsequent adjustment by the Administrative Agent but shall, absent
manifest errors or omissions, be presumed correct and binding upon the Borrower.
2.7    Interest. (a) The Borrower agrees to jointly and severally pay to the
Administrative Agent on behalf of the Lenders interest on the daily outstanding
principal balance of the Loans at the Libor Rate; provided, however, that
notwithstanding any other term or provision of this Agreement to the contrary,
(x) immediately following the occurrence and during the continuance of an Event
of Default relating to Sections 11.1(a), (h), (i) or (j) hereof, and (y) unless
the Required Lenders otherwise direct in writing, upon Administrative Agent’s
demand following the occurrence and during the continuance of any other Event of
Default, in each case, Borrower agrees to and shall pay to Administrative Agent
on behalf of Lenders interest on the outstanding principal balance of the Loan
at the per annum rate of two percent (2.0%) plus the rate otherwise payable
hereunder with respect to such Loan (the “Default Rate”).
(b)    Accrued interest on each Libor Loan shall be payable on the last day of
the Libor Interest Period relating to such Libor Loan and at maturity,
commencing with the first such last day of the initial Libor Interest Period. If
at any time applicable in accordance with Sections 3.2, 3.6 or 3.7 hereof,
accrued interest on each Base Rate Loan shall be payable on the first calendar
day of each month and at maturity. Notwithstanding the foregoing in this Section
2.7(b), the first interest payment hereunder shall be due and payable on April
1, 2016. Monthly interest payments on the Loan shall be computed using the
interest rate then in effect and based on the outstanding principal balance of
the Loan. Upon maturity, the outstanding principal balance of the Loan shall be
immediately due and payable, together with any remaining accrued interest
thereon. Interest shall be computed on the basis of a year of three hundred
sixty (360) days for the actual number of days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year). If any
payment of principal of, or interest on, any Loan falls due on a day that is not
a Business Day, then such due date shall be extended to the next following
Business Day, and additional interest shall accrue and be payable for the period
of such extension.

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2.8    Method for Making Payments. All payments of principal, interest, fees and
costs and expenses (including, without limitation, pursuant to Section 12.2)
hereunder shall be paid by automatic debit from Borrower’s concentration
account, wire transfer, check or in coin or currency which, at the time or times
of payment, is the legal tender for public and private debts in the United
States of America and shall be made at such place as Administrative Agent may
from time to time appoint or direct in the payment invoice or otherwise in
writing, and in the absence of such appointment or direction, then, not later
than 1:00 p.m. (Chicago time) on the date of payment, at the offices of
Administrative Agent at 120 South LaSalle Street, Chicago, Illinois 60603, Attn:
Commercial Loan Department. Payment made by check shall be deemed paid on the
date two Business Days after Administrative Agent receives such check; provided,
however, that if such check is subsequently returned to Administrative Agent
unpaid due to insufficient funds or otherwise, the payment shall not be deemed
to have been made and shall continue to bear interest until collected. If at any
time requested by Borrower (including via electronic transmission), principal,
interest, fees and costs and expenses (including, without limitation, pursuant
to Section 12.2) hereunder owed to Administrative Agent or Lenders from time to
time will be deducted by Administrative Agent automatically on the due date or
date declared due from Borrower’s concentration account with Administrative
Agent. Borrower shall maintain sufficient funds in the account on the dates
Administrative Agent enters debits authorized hereby. If there are insufficient
funds in the concentration account on the date Administrative Agent enters any
debit authorized hereby, the debit will be reversed. Borrower may terminate this
direct debit arrangement at any time by sending written notice to Administrative
Agent at the address specified above. Notwithstanding the foregoing in this
Section, Borrower hereby irrevocably authorizes and instructs Administrative
Agent after the occurrence and during the continuance of any Default or Event of
Default to direct debit any of Borrower’s operating accounts with Administrative
Agent and PrivateBank for all principal, interest, costs, and any and all fees,
costs and expenses due hereunder or pursuant hereto with respect to the Loan and
the Liabilities (including, without limitation, reasonable attorneys’ fees).
Payments made after 1:00 p.m. (Chicago time) shall be deemed to have been made
on the next succeeding Business Day. Administrative Agent shall promptly (but in
no event longer than within three (3) Business Days thereof) remit to each
Lender its Pro Rata Share of all such payments received in collected funds by
Administrative Agent for the account of such Lender; provided, however, all
payments due by Borrower under Section 3 hereof, as applicable, shall be made by
Borrower directly to Administrative Agent and Lenders entitled thereto without
setoff, counterclaim or other defense.
2.9    Term of this Agreement. The Borrower shall have the right to terminate
this Agreement (subject to survival of Sections 3.1, 3.3, 3.4, 12.2, 12.3, 12.9,
12.16, 13.3, 13.7 and Section 14 and any other term hereof surviving by its
terms hereof) following prepayment of all of the Liabilities as provided under
Section 2.10 hereof; provided, however, that (a) all of the Administrative
Agent’s and each Lender’s rights and remedies under this Agreement, and (b) the
Liens created under Section 6.1 hereof and under any of the other Financing
Agreements, shall survive such termination until Payment in Full. In addition,
the Liabilities may be accelerated as set forth in Section 11.2 hereof. Upon the
effective date of termination, all of the Liabilities shall become immediately
due and payable on a joint and several basis without notice or demand.
Notwithstanding any termination, until Payment in Full, the Administrative Agent
shall be entitled

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to retain its Liens (for the ratable benefit of the Lenders and the
Administrative Agent) in and to all existing and future Collateral.
2.10    Optional Prepayment of Term Loan. The Borrower may, at its option,
permanently prepay, at any time during the term of this Agreement the Term Loan
or any portion thereof but in minimum amounts of no less than Five Hundred
Thousand Dollars ($500,000), subject to the following conditions: (i) not less
than ten (10) days prior to the date upon which the Borrower desires to make any
such prepayment, Borrower shall deliver to the Administrative Agent a written
notice of its intention to prepay all or such portion of the Term Loan, which
notice shall be revocable (provided, that any and all costs or expenses incurred
or suffered by the Administrative Agent and the Lenders as a result of the
revocation of notice by the Borrower shall be borne solely by the Borrower) and
state the amount of the prepayment and the prepayment date, (ii) the Borrower
shall pay (A) in the case of a prepayment of the entire Term Loan with the
proceeds received from a Change in Control or a refinancing from a Person not an
Affiliate of the Borrower or any of its Affiliates, the Prepayment Premium (in
view of the impracticality and extreme difficulty of ascertaining actual damages
and by mutual agreement of the parties as to a reasonable calculation of each
Lender’s lost profits as a result of such prepayment), (B) any amount due
pursuant to Section 3.4 hereof, (C) any amounts due in connection with such
prepayment under any Hedging Agreement, and (D) all liabilities, including any
applicable swap or hedging breakage or termination fee, if any, in connection
with any Hedging Agreement; provided, however, no Prepayment Premium shall be
required or due in the event of a prepayment of the Term Loan or any portion
thereof (x) with the proceeds received by Borrower from a HUD Financing, or (y)
by Borrower outside the amortization schedule in Section 2.1(b). Any such
Prepayment Premium shall constitute a part of the Liabilities and be secured by
the Collateral. Prepayments of the Term Loan shall be applied against
installments payable pursuant to Section 2.1(b) in the inverse order of
maturity. The parties agree that the Prepayment Premium is not a penalty.
BORROWER HEREBY EXPRESSLY ACKNOWLEDGES THAT SUCH PREPAYMENT PREMIUM IS
REASONABLE AND WILL FAIRLY COMPENSATE THE LENDERS FOR ANY COSTS AND CHARGES
INCURRED BY LENDERS AS A RESULT OF THE PREPAYMENT OF ALL OR ANY PORTION OF THE
TERM LOAN. BORROWER ACKNOWLEDGES THAT THE INCLUSION OF THIS AGREEMENT TO PAY THE
PREPAYMENT PREMIUM FOR THE RIGHT TO PREPAY ALL OR ANY PORTION OF THE TERM LOAN
WAS SEPARATELY NEGOTIATED WITH ADMINISTRATIVE AGENT AND LENDERS, THAT THE
ECONOMIC VALUE OF THE VARIOUS ELEMENTS OF THIS AGREEMENT WERE DISCUSSED, THAT
THE CONSIDERATION GIVEN BY BORROWER FOR THE TERM LOAN WAS ADJUSTED TO REFLECT
THE SPECIFIC AGREEMENT NEGOTIATED AMONG BORROWER, ADMINISTRATIVE AGENT AND
LENDERS AND CONTAINED IN THIS SECTION.
2.11    Limitation on Charges. It being the intent of the parties that the rate
of interest and all other charges to the Borrower be lawful, if for any reason
the payment of a portion of the interest or other charges otherwise required to
be paid under this Agreement would exceed the limit which the Lenders may
lawfully charge the Borrower, then the obligation to pay interest or other
charges shall automatically be reduced to such limit and, if any amounts in
excess of such limit shall have been paid, then such amounts shall at the sole
option of the Administrative Agent (or otherwise at the direction of the
Required Lenders in writing) either be refunded to the Borrowers or credited

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to the principal amount of the Liabilities (or any combination of the foregoing)
so that under no circumstances shall the interest or other charges required to
be paid by the Borrowers hereunder exceed the maximum rate allowed by applicable
Laws, and Borrowers shall not have any action against any Lender or the
Administrative Agent for any damages arising out of the payment or collection of
any such excess interest.
2.12    Uncommitted Incremental Facility.
(a)    In addition to the Term Loan Commitments and Acquisition Loan Commitments
in effect on the Closing Date, at any time from and after the Closing Date but
on or prior to the three (3) year anniversary of the Closing Date, the Borrower
may elect to increase the aggregate amount of the Term Loan (the “Incremental
Term Loan”) by notifying Administrative Agent and the Lenders in writing that
the Borrower desires such increase, whereupon Administrative Agent shall, at
Borrower’s cost and expense, prepare the documentation required to implement
such Incremental Term Loan, including, without limitation, any Incremental
Amendment and any amendment or modification to any other Financing Agreement or
the Revolving Loan Agreement or any other Affiliate Revolving Loan Financing
Agreements (which documentation shall be in form and substance reasonably
satisfactory to Administrative Agent and Borrower).
(b)    The terms applicable to the Incremental Term Loan, including repayments
and pricing, shall be on the same terms as, and pursuant to documentation
applicable to, the existing Term Loan (as then in effect), provided, however, in
each case that:
(1)    the aggregate principal amount of all Incremental Term Loans plus all
“Incremental Revolving Loan Commitment Increases” (as such term is defined in
the Revolving Loan Agreement) shall not exceed Thirty Million Dollars
($30,000,000);
(2)    no Incremental Term Loan shall be effective later than the three (3) year
anniversary of the Closing Date;
(3)    both immediately before and immediately after giving pro forma effect to
the Incremental Term Loan, (i) no Default or Event of Default shall have
occurred and be continuing and (ii) Borrower shall be in compliance with the
financial covenants contained in Section 9.12 hereof;
(4)    Borrower shall have received additional commitments from existing Lenders
or new Lenders (each Person, including an existing Lender, electing to provide a
portion of the Incremental Term Loan referred to herein as an “Incremental
Lender”) in an aggregate amount equal to the requested amount of the Incremental
Term Loan (provided, that, any Incremental Lender that is not an existing Lender
shall be subject to Administrative Agent’s prior written consent, such consent
not to be unreasonably withheld), it being understood that neither
Administrative Agent nor any Lender shall have any obligation to provide any
such Incremental Term Loan;
(5)    there shall be not more than two (2) Incremental Term Loans and
“Incremental Revolving Loan Commitment Increases” (as such term is defined in
the Revolving Loan Agreement) made after the Closing Date and until the Credit
Termination Date; and

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(6)    each Incremental Term Loan shall constitute “senior debt” under any
applicable Subordination Agreement or subordination terms applicable to any
Subordinated Debt.
(c)    Administrative Agent shall promptly notify each Lender of the proposed
Incremental Term Loan and the anticipated effective date therefore, as agreed by
the Borrower and Administrative Agent.
(d)    The making of any Incremental Term Loan shall be subject to the
satisfaction of (i) the conditions precedent set forth in Section 5.1 as of the
date of the making of such Incremental Term Loan (including, without limitation,
financial performance conditions, pro forma covenant compliance, delivery of
good standing certificates and third-party searches as of a recent date) and
(ii) such other conditions precedent required by Administrative Agent and the
Incremental Lender(s) in their sole and absolute discretion.
(e)    Each Incremental Term Loan shall be effected pursuant to an amendment and
joinder agreement (the “Incremental Amendment”) executed and delivered by
Borrower, the Incremental Lenders and Administrative Agent, which Incremental
Amendment shall be in form and substance reasonably satisfactory to the parties
thereto and shall set forth the terms applicable to such Incremental Term Loan
in compliance with the provisions of this Section 2.12. The Incremental
Amendment may, with the consent of Administrative Agent and Borrower and without
the consent of any Lender (subject to the limitations set forth in this
paragraph applicable to the terms of the Incremental Term Loan), effect such
conforming and other amendments to this Agreement (including any Annex attached
hereto) and the other Financing Agreements as may be necessary or appropriate,
in the opinion of Administrative Agent and Borrower, to effect the provision of
this Section 2.12.
2.13    Setoff.
(a)    Borrower agrees that the Administrative Agent and each Lender has all
rights of setoff and banker’s liens provided by applicable law. The Borrower
agrees that, if at any time (i) any amount owing by it under this Agreement or
any Financing Agreement is then due and payable to the Administrative Agent or
Lenders, or (ii) or an Event of Default shall have occurred and be continuing,
then the Administrative Agent or Lenders, in their sole discretion, may set off
against and apply to the payment of any and all Liabilities, any and all
balances, credits, deposits, accounts or moneys of the Borrower then or
thereafter with the Administrative Agent or such Lender.
(b)    Without limitation of Section 2.13(a) hereof, the Borrower agrees that,
upon and after the occurrence of any Event of Default, the Administrative Agent
and each Lender is hereby authorized, at any time and from time to time, without
prior notice to the Borrower (provided, however, prior to an Event of Default
the Administrative Agent and such Lender shall use reasonable efforts to provide
notice of any such action within a reasonable time thereafter but the
Administrative Agent and such Lender shall not be liable for any failure to
provide such notice), (i) to set off against and to appropriate and apply to the
payment of any and all Liabilities any and all amounts which the Administrative
Agent or Lender is obligated to pay over to the Borrower (whether matured or
unmatured, and, in the case of deposits, whether general or special, time or
demand and however evidenced), and (ii) pending any such action, to the extent
necessary, to deposit such amounts with

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the Administrative Agent as Collateral to secure such Liabilities and to
dishonor any and all checks and other items drawn against any deposits so held
as the Administrative Agent in its sole discretion may elect.
(c)    The rights of the Administrative Agent and Lenders under this Section
2.13 are in addition to all other rights and remedies which the Administrative
Agent and Lenders may otherwise have in equity or at law.
(d)    If any Lender shall obtain any payment or other recovery (whether
voluntary, involuntary, by application of offset or otherwise), on account of
(a) principal of or interest on the Term Loan, but excluding (i) any payment
pursuant to Section 3.8 or Section 12.15 and (ii) payments of interest on any
Base Rate Loan that but for Sections 3.2, 3.6 and 3.7 would be a Libor Loan, or
(b) other recoveries obtained by all Lenders on account of principal of and
interest on the Loan (or such participation) then held by them, then such Lender
shall purchase from the other Lenders such participations in the Loan held by
them as shall be necessary to cause such purchasing Lender to share the excess
payment or other recovery ratably with each of them; provided that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery.
2.14    Termination of Acquisition Loan Commitment. On the earlier of (a) the
Credit Termination Date or (b) the payment in full in cash of the Term Loan, the
Acquisition Loans and all other Liabilities shall become immediately due and
payable, without presentment, demand or notice of any kind, and the Acquisition
Loan Commitment shall automatically and permanently terminate.
2.15    Unused Line Fee. Borrower hereby agrees to pay the Unused Line Fee to
the Administrative Agent for the Lenders with an Acquisition Loan Commitment on
a Pro Rata Share basis, which shall be payable in arrears, on the first day of
each Fiscal Quarter commencing on April 1, 2016, and on the Stated Maturity
Date, which fee shall be nonrefundable and deemed fully earned on the date of
payment thereof.
2.16    Closing Fee. On the Closing Date, the Borrower shall pay to the
Administrative Agent a one-time closing fee pursuant to the Fee Letter in
immediately available funds, which fee shall be nonrefundable and deemed fully
earned as of such date (“Closing Fee”).
2.17    Late Charge. If any installment of principal or interest due hereunder
shall become overdue for five (5) days after the date when due, the Borrower
shall pay to the Administrative Agent (for the ratable benefit of the Lenders)
on demand a “late charge” of five cents ($.05) for each dollar so overdue in
order to defray part of the increased cost of collection occasioned by any such
late payment, as liquidated damages and not as a penalty.
2.18    Mandatory Prepayments. Upon receipt by Borrower of the proceeds of any
(a) Asset Disposition, or (b) sale or issuance of any Stock of Borrower
(excluding (i) any issuance to another Borrower or Guarantor, (ii) any issuance
of Stock pursuant to any employee, officer or director option program or
agreement, benefit plan or compensation program or agreement, or (iii) any
issuance of Stock pursuant to the exercise of options or warrants, or (iv) any
issuance in connection

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with any dividend reinvestment plan or direct stock purchase plan, if
applicable), in each case, Borrower shall prepay the outstanding principal
amount of the Liabilities in an amount equal to one hundred percent (100%) of
the cash proceeds of such transaction net of (A) the direct reasonably and
actually incurred costs relating thereto, such as sales commissions and legal,
accounting and investment banking fees and out-of-pocket costs, and (B) taxes
paid or reasonably estimated by Borrower to be payable as a result thereof.
Nothing contained in this Section 2.18 shall be construed to permit Borrower to
consummate any transaction in violation of any other provision contained in this
Agreement, including, without limitation, Section 9.6 hereof. No Prepayment
Premium shall be required or due in respect of any mandatory prepayment made by
Borrower pursuant to this Section 2.18 (except as identified in Section
2.10(ii)(A) hereof).
3.    CHANGE IN CIRCUMSTANCES.
3.1    Yield Protection. If, after the date of this Agreement, any Change in
Law:
(e)    subjects any Lender to any tax, duty, charge or withholding on or from
payments due from the Borrower (excluding taxation of the overall net income or
receipts of such Lender or any branch profits taxes), or changes the basis of
taxation of payments to such Lender in respect of its portion of the Loan or
other amounts due it hereunder, or
(f)    imposes, modifies, or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any
Lender (other than reserves and assessments taken into account in determining
the interest rate applicable to Libor Loans), or
(g)    imposes any other condition the result of which is to increase the cost
to any Lender of making, funding or maintaining advances or reduces any amount
receivable by such Lender in connection with advances, or requires any Lender to
make any payment calculated by reference to the amount of advances held or
interest received by it, by an amount deemed material by such Lender, or
(h)    affects the amount of capital required or expected to be maintained by
any Lender or any corporation controlling such Lender and such Lender determines
the amount of capital required is increased by or based upon the existence of
this Agreement or its obligation to make the Loan hereunder or of commitments of
this type;
then, within three (3) Business Days of demand by such Lender, the Borrower
agrees to pay such Lender that portion of such increased expense incurred
(including, in the case of clause (d), any reduction in the rate of return on
capital to an amount below that which it could have achieved but for such law,
rule, regulation, policy, guideline or directive and after taking into account
such Lender’s policies as to capital adequacy) or reduction in an amount
received which such Lender determines is attributable to making, funding and
maintaining the Loan.
3.2    Availability of Rate Options. If Administrative Agent determines (or
Required Lenders advise Administrative Agent in writing) that maintenance of any
Libor Loans would violate any applicable law, rule, regulation or directive of
any government or any division, agency, body

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or department thereof, whether or not having the force of law, the Lenders shall
suspend the availability of the Libor Rate option and the Administrative Agent
shall require any Libor Loans outstanding to be promptly converted to a Base
Rate Loan subject to the Borrower’s compliance with Section 3.4 hereof; or if
Administrative Agent determines (or Required Lenders advise Administrative Agent
in writing) that (i) deposits of a type or maturity appropriate to match fund
Libor Loans are not available, the Lenders shall suspend the availability of the
Libor Rate after the date of any such determination, or (ii) the Libor Rate does
not accurately reflect the cost of making a Libor Loan, then, if for any reason
whatsoever the provisions of Section 3.1 hereof are inapplicable, the Lenders
shall, at their option, suspend the availability of the Libor Rate after the
date of any such determination or permit (solely in the case of clause (ii)) the
Borrower to pay the Lenders for any increased cost the Lenders may incur.
3.3    Taxes. All payments by the Borrower under this Agreement shall be made
free and clear of, and without deduction for, any present or future income,
excise, stamp or other taxes, fees, levies, duties, withholdings or other
charges of any nature whatsoever, now or hereafter imposed by any taxing
authority, other than franchise taxes and taxes imposed on or measured by any
Lender’s net income or receipts or branch profits taxes (such non-excluded items
being called “Taxes”). If any withholding or deduction from any payment to be
made by the Borrower hereunder is required in respect of any Taxes pursuant to
any applicable law, rule or regulation, then the Borrower shall:
(a)    pay directly to the relevant authority the full amount required to be so
withheld or deducted;
(b)    promptly forward to the Administrative Agent an official receipt or other
documentation satisfactory to the Administrative Agent evidencing such payment
to such authority; and
(c)    pay to the Lenders such additional amount or amounts as is necessary to
ensure that the net amount actually received by the Lenders will equal the full
amount the Lenders would have received had no such withholding or deduction been
required.
Moreover, if any Taxes are directly asserted against any Lender with respect to
any payment received by such Lender hereunder, such Lender may pay such Taxes
and the Borrower agrees to promptly pay such additional amounts (including,
without limitation, any penalties, interest or expenses) as is necessary in
order that the net amount received by the Lenders after the payment of such
Taxes (including, without limitation, any Taxes on such additional amount) shall
equal the amount the Lenders would have received had not such Taxes been
asserted.
The provisions of and undertakings of the Borrower set out in this Section 3.3
shall survive the satisfaction and payment of the Liabilities of Borrower and
the termination of this Agreement.
To the extent permitted by applicable law, each Lender that is not a United
States person within the meaning of Code Section 7701(a)(30) (a “Non-U.S.
Participant”) shall deliver to Borrower and Administrative Agent on or prior to
the Closing Date (or in the case of a Lender that is an Assignee, on the date of
such assignment to such Lender) two accurate and complete original signed copies
of IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor or other applicable

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form prescribed by the IRS) certifying to such Lender’s entitlement to a
complete exemption from, or a reduction in the rate of, United States
withholding tax on interest payments to be made hereunder or on the Loan. If a
Lender that is a Non-U.S. Participant is claiming a complete exemption from
withholding on interest pursuant to Code Sections 871(h) or 881(c), such Lender
shall deliver (along with two accurate and complete original signed copies of
IRS Form W-8BEN) a certificate in form and substance reasonably acceptable to
Administrative Agent (any such certificate, a “Withholding Certificate”). In
addition, each Lender that is a Non-U.S. Participant agrees that from time to
time after the Closing Date (or in the case of a Lender that is an Assignee,
after the date of the assignment to such Lender), when a lapse in time (or
change in circumstances occurs) renders the prior certificates hereunder
obsolete or inaccurate in any material respect, such Lender shall, to the extent
permitted under applicable law, deliver to Borrower and Administrative Agent two
new and accurate and complete original signed copies of an IRS Form W-8BEN,
W-8ECI, or W-8IMY (or any successor or other applicable forms prescribed by the
IRS), and if applicable, a new Withholding Certificate, to confirm or establish
the entitlement of such Lender or Administrative Agent to an exemption from, or
a reduction in the rate of, from United States withholding tax on interest
payments to be made hereunder or on the Loan.
Each Lender that is not a Non-U.S. Participant (other than any such Lender which
is taxed as a corporation for U.S. federal income tax purposes) shall provide
two properly completed and duly executed copies of IRS Form W-9 (or any
successor or other applicable form) to Borrower and Administrative Agent
certifying that such Lender is exempt from, or entitled to a reduction in the
rate of, United States backup withholding tax. To the extent that a form
provided pursuant to this Section is rendered obsolete or inaccurate in any
material respects as result of change in circumstances with respect to the
status of a Lender, such Lender shall, to the extent permitted by applicable
law, deliver to Borrower and Administrative Agent revised forms necessary to
confirm or establish the entitlement to such Lender’s or Administrative Agent’s
exemption from United States backup withholding tax. Borrower shall not be
required to pay additional amounts to a Lender, or indemnify any Lender, under
this Section to the extent that such obligations would not have arisen but for
the failure of such Lender to comply with this Section.
Each Lender agrees to and shall indemnify Administrative Agent and hold
Administrative Agent harmless for the full amount of any and all present or
future Taxes and related liabilities (including penalties, interest, additions
to tax and expenses, and any Taxes imposed by any jurisdiction on amounts
payable to Administrative Agent under this Section 3.3) which are imposed on or
with respect to principal, interest or fees payable to such Lender hereunder as
a result of the failure by such Lender to deliver, or as a result of the
inaccuracy, inadequacy or deficiency of, any documentation required to be
delivered by such Lender to the Administrative Agent as set forth above. Such
indemnification shall be made within thirty (30) days from the date
Administrative Agent makes written demand therefor.
If a payment made to a Non-U.S. Participant under any Financing Agreement 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 Tax Code, as applicable),
such Lender shall deliver to the Administrative Agent and Borrower at the time
or times prescribed by FATCA and at such time or times reasonably

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requested by the Administrative Agent or Borrower such documentation prescribed
by FATCA as may be necessary for the Administrative Agent and Borrower to comply
with their respective obligations under FATCA and to determine the amount (if
any) required to be deducted and withheld under FATCA from such payment and (ii)
any U.S. federal withholding taxes imposed by FATCA as a result of such Lender’s
failure to comply shall be excluded from the gross-up and indemnification
obligations under this section with respect to taxes.
3.4    Funding Indemnification. If any payment of a Libor Loan occurs on a date
that is not the last day of the applicable Libor Interest Period, whether
because of acceleration, prepayment, or otherwise, or a Libor Loan is not made
on the date specified by the Borrower, the Borrower shall indemnify the Lender
for any loss or cost incurred by it resulting therefrom, including, without
limitation, any loss or cost in liquidating or employing deposits acquired to
fund or maintain the Libor Loan.
3.5    Lender Statements. Each affected Lender shall deliver a written statement
to the Borrower and Administrative Agent as to the amount due, if any, under
Sections 3.1, 3.3 or 3.4 hereof. Such written statement shall set forth in
reasonable detail the calculations upon which such Lender determined such amount
and shall be final, conclusive and binding on the Borrower in the absence of
demonstrable error. Unless otherwise provided herein, the amount specified in
the written statement shall be payable on demand after receipt by the Borrower
of the written statement.
3.6    Basis for Determining Interest Rate Inadequate or Unfair. If with respect
to any Libor Interest Period: (a) Administrative Agent reasonably determines (or
Required Lenders advise Administrative Agent in writing), which determination
shall be binding and conclusive on the Borrower, that by reason of circumstances
affecting the interlender Libor Base market adequate and reasonable means do not
exist for ascertaining the applicable Libor Base Rate; or (b) Administrative
Agent reasonably determines (or Required Lenders advise Administrative Agent in
writing) that the Libor Base Rate will not adequately and fairly reflect the
cost to Lenders of maintaining or funding the Loan or any portion thereof for
such Libor Interest Period, or that the making or funding of Libor Loans has
become impracticable as a result of an event occurring after the date of this
Agreement which in the opinion of Administrative Agent (or Required Lenders)
adversely affects such Loan, then, in either case, so long as such circumstances
shall continue: (i) Lenders shall not be under any obligation to make, maintain,
convert into or continue Libor Loans and (ii) on the last day of the then
current Libor Interest Period for each Libor Loan, each such Loan shall, unless
then repaid in full, automatically convert to a Base Rate Loan. Each affected
Lender shall promptly give the Borrower written notice of any determination made
by it under this Section accompanied by a statement setting forth in reasonable
detail the basis of such determination.
3.7    Illegality. If any applicable law or regulation, or any interpretation
thereof by any court or any governmental or other regulatory body charged with
the administration thereof, should make it unlawful for any Lender or its
lending office to make, maintain or fund any Libor Loan, then the obligation of
such Lender to make, convert into or continue such Libor Loan shall, upon the
effectiveness of such event, be suspended for the duration of such unlawfulness,
and on the last day of the current Libor Interest Period for such Libor Loan
(or, in any event, if Administrative Agent or Required Lenders so request, on
such earlier date as may be required by the relevant law,

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regulation or interpretation), the Libor Loans shall, unless then repaid in
full, automatically convert to Base Rate Loans.
3.8    Right of Lenders to Fund through Other Offices. Each Lender may, if it so
elects, fulfill its commitment as to any Libor Loan by causing a foreign branch
or Affiliate of such Lender to make such Loan; provided that such election shall
not increase the costs to Borrower hereunder and that in such event for the
purposes of this Agreement such Loan shall be deemed to have been made by such
Lender and the obligation of Borrower to repay such Loan shall nevertheless be
to such Lender and shall be deemed held by it, to the extent of such Loan, for
the account of such branch or Affiliate.
3.9    Discretion of Lenders as to Manner of Funding; No Match Funding.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of its portion of the Loan in
any manner it sees fit, it being understood, however, that for the purposes of
this Agreement all determinations hereunder shall be made as if such Lender had
actually funded and maintained each Libor Loan during each Libor Interest Period
for such Loan through the purchase of deposits having a maturity corresponding
to such Libor Interest Period and bearing an interest rate equal to the Libor
Rate for such Libor Interest Period.
3.10    Further Documentation; Loss of Notes. If any further documentation or
information is (a) required by Administrative Agent or any Lender or any
prospective transferee in connection with selling, transferring, delivering,
assigning, or granting a participation in the Loan (or transferring the
servicing of the Loan), or (b) deemed necessary or appropriate by Administrative
Agent to correct patent mistakes in the Financing Agreements, Borrower shall
provide, or cause to be provided to Administrative Agent and Lenders, and, in
the case of (b), unless such patent mistake is due to the gross negligence,
willful misconduct or illegal activity of Administrative Agent and Lenders at
Borrower’s cost and expense, such documentation or information as Administrative
Agent and any Lender or any prospective transferee may reasonably request. Upon
notice from Administrative Agent of the loss, theft, or destruction of any of
the Notes and upon receipt of indemnity reasonably satisfactory to Borrower from
the applicable Lender, or in the case of mutilation of any of the Notes, upon
surrender of the mutilated Note, Borrower shall promptly make and deliver a new
promissory note of like tenor in lieu of the then to be superseded Note.
4.    ATTORNEY-IN-FACT.
4.1    Appointment of the Administrative Agent as the Borrower’s
Attorney-in-Fact. The Borrower hereby irrevocably designates, makes, constitutes
and appoints the Administrative Agent (and all Persons designated by the
Administrative Agent in writing to the Borrower) as the Borrower’s true and
lawful attorney-in-fact, and authorizes the Administrative Agent, in the
Borrower’s or the Administrative Agent’s name, after an Event of Default has
occurred and is continuing to do the following: (a) at any time, (i) endorse the
Borrower’s name upon any items of payment or proceeds thereof and deposit the
same in the Administrative Agent’s account on account of the Borrower’s
Liabilities, and (ii) do all other acts and things which are necessary, in the
Administrative Agent’s reasonable discretion, to fulfill the Borrower’s
obligations under this Agreement. The Borrower hereby ratifies and approves all
acts under such power of attorney and neither Administrative Agent nor any other
Person acting as Borrower’s attorney hereunder will be

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liable for any acts or omissions or for any error of judgment or mistake of fact
or law made in good faith except as result of its gross negligence, willful
misconduct or illegal activity as finally determined in a non-appealable
judicial proceeding. The appointment of Administrative Agent (and any of the
Administrative Agent’s officers, employees or agents designated by the
Administrative Agent) as Borrower’s attorney, and each and every one of
Administrative Agent’s rights and powers, being coupled with an interest, are
irrevocable until all of the Liabilities have been fully repaid and this
Agreement shall have expired or been terminated in accordance with the terms
hereunder. Without restricting the generality of the foregoing, after an Event
of Default has occurred and is continuing, Borrower hereby appoints and
constitutes the Administrative Agent its lawful attorney-in-fact with full power
of substitution in the Property to advance funds in excess of the face amount of
the applicable Note, to pay, settle or compromise all existing bills and claims,
which may be liens or security interests, or to avoid such bills and claims
becoming liens against the Collateral; to execute all applications and
certificates in the name of Borrower prosecute and defend all actions or
proceedings in connection with the Collateral (including any Leases pertaining
to Property); and to do any and every act which the Borrower might do in its own
behalf; it being understood and agreed that this power of attorney shall be a
power coupled with an interest and cannot be revoked.
5.    CONDITIONS OF LOANS.
5.1    Conditions to All Loans. Notwithstanding any other term or provision
contained in this Agreement, the Administrative Agent’s and Lenders’ obligation
to make the Term Loan and any other Loan hereunder is subject to the
satisfaction of each of the following conditions precedent:
(d)    The Borrower’s Request. The Administrative Agent shall have received a
borrowing notice from Borrower, signed by a Duly Authorized Officer of the
Borrower, irrevocably electing the Term Loan to be made on the Closing Date. If
at any time applicable, if at all, the Administrative Agent and Lenders shall
have no liability to the Borrower or any other Person as a result of acting on
any telephonic request that the Administrative Agent believes in good faith to
have been made by any Person authorized by Borrower to make a borrowing request
on behalf of Borrower. Promptly upon receipt of such borrowing request,
Administrative Agent will advise each Lender thereof. Not later than 1:00 p.m.
(Chicago time), on the date of the proposed borrowing of the Term Loan, each
Lender shall provide Administrative Agent at the office specified by
Administrative Agent with immediately available funds covering such Lender’s Pro
Rata Share of the Term Loan and, so long as Administrative Agent has not
received written notice that the conditions precedent set forth in Section 5.1
with respect to such borrowing have not been satisfied, Administrative Agent
shall pay over the funds received by Administrative Agent to Borrower on the
requested borrowing date.
(e)    No Default. Neither a Default nor an Event of Default shall have occurred
or be in existence.
(f)    Representations and Warranties. All of the representations and warranties
contained in the Financing Agreements to which the Borrower is a party and in
this Agreement (including, without limitation, those set forth in Section 7
hereof), are true and correct.

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(g)    Fees and Expenses. The Borrower shall have paid all fees owed to the
Administrative Agent and Lenders and reimbursed Administrative Agent and the
Lenders for all costs, disbursements, fees and expenses due and payable
hereunder on or before the Closing Date, including, without limitation, all fees
and costs identified in Section 12.2(a) hereof.
(h)    Documents. The Administrative Agent shall have received all of the
following, each duly executed and delivered and dated the Closing Date, or such
earlier date as shall be satisfactory to the Administrative Agent, each in form
and substance reasonably satisfactory to the Administrative Agent in its sole
determination:
(1)    Financing Agreements. This Agreement, the Term Loan Notes, the
Acquisition Loan Notes, the Guaranty, each Pledge Agreement, each Mortgage, each
Assignment of Rents and Leases, the Environmental Indemnity Agreement, the
Subordination of Management Agreements, and such other Financing Agreements as
the Administrative Agent may require (provided each Lender shall also receive a
fully-executed original of this Agreement and such Lender’s respective Term Loan
Note and Acquisition Loan Note).
(2)    Resolutions; Incumbency and Signatures. Copies of resolutions of the
Board of Directors or Board of Managers of the Borrower (as applicable), and, if
required, the shareholder or member(s) of the Borrower, authorizing or ratifying
the execution, delivery and performance by the Borrower of this Agreement, the
Financing Agreements to which the Borrower is a party and any other document
provided for herein or therein to be executed by Borrower, certified by a Duly
Authorized Officer. A certificate of a Duly Authorized Officer certifying the
names of the officers of the Borrower authorized to make a borrowing request and
sign this Agreement and the Financing Agreements to which the Borrower is a
party, together with a sample of the true signature of each such officer; the
Administrative Agent may conclusively rely on each such certificate until
formally advised by a like certificate of any changes therein. A copy of
resolutions of the Board of Directors of Guarantor and each Pledgor authorizing
or ratifying the execution, delivery and performance by Guarantor and each
Pledgor, respectively, of the Guaranty and its respective Pledge Agreement.
(3)    Consents. Certified copies of all documents evidencing any necessary
consents and governmental approvals, if any, with respect to this Agreement, the
Financing Agreements, and any other documents provided for herein or therein to
be executed by Borrower.
(4)    Opinions of Counsel. An opinion of Harwell Howard Hyne Gabbert & Manner,
the legal counsel to the Borrower, Guarantor and each Pledgor, and local counsel
opinions in the jurisdictions where the Facilities are located with respect to
the Mortgages, each in form and substance reasonably satisfactory to
Administrative Agent.
(5)    Certain Restricted Agreements. Correct and complete copies of the fully
executed Commercial Leases, Management Agreements, the Hutchinson Acquisition
Documents, the Clinton Acquisition Documents, the nursing home licenses of each
applicable Borrower that is an Operator, and any other Restricted Agreement,
together with all applicable amendments thereto.

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(6)    Financial Condition Certificate. A Financial Condition Certificate, in
form and substance reasonably satisfactory to the Administrative Agent, signed
on behalf of the Borrower by a Duly Authorized Officer of the Borrower.
(7)    Governing Documents and Good Standings. Administrative Agent shall have
received (i) copies, certified as correct and complete by the applicable state
of organization of each Borrower, Pledgor and Guarantor, of the certificate of
incorporation, certificate of formation or certificate of limited liability
partnership, as applicable, of each Borrower, Pledgor and Guarantor, with any
amendments to any of the foregoing, as of a recent date, (ii) copies, certified
as correct and complete by an authorized officer, member or partner of each
Borrower, Pledgor and Guarantor, of all other documents necessary for
performance of the obligations of each Borrower, Pledgor and Guarantor under
this Agreement and the other Financing Agreements, and (iii) certificates of
good standing for each Borrower, Pledgor and Guarantor issued by the state of
organization of each Borrower, Pledgor and Guarantor and by each state in which
each Borrower and Guarantor is doing and currently intends to do business for
which qualification is required, as of a recent date (such certificates set
forth in (i) through (iii), the “Certificates”).
(8)    Revolving Loan Agreement and Affiliate Revolving Loan Financing
Agreements. Fully-executed copies of the Revolving Loan Agreement and the
Affiliate Revolving Loan Financing Agreements.
(9)    UCC Financing Statements; Termination Statements; UCC Searches. UCC
Financing Statements or UCC Amendment Statements, as requested by the
Administrative Agent, naming the Borrower as debtor and the Administrative Agent
as secured party with respect to the Collateral, together with such UCC
termination statements necessary to release all Liens (other than Permitted
Liens) and other rights in favor of any Person in any of the Collateral except
the Administrative Agent (for the ratable benefit of the Lenders and the
Administrative Agent), and other documents as the Administrative Agent deems
necessary or appropriate, shall have been filed in all jurisdictions that the
Administrative Agent deems necessary or advisable. UCC Financing Statements or
UCC Amendment Statements, as requested by the Administrative Agent, naming each
Pledgor as debtor and the Administrative Agent as secured party with respect to
the Collateral (as respectively defined in the Pledge Agreement), and other
documents, if any, as the Administrative Agent deems necessary or appropriate,
shall have been filed in all jurisdictions that the Administrative Agent deems
necessary or advisable. UCC tax, lien, bankruptcy, pending suit and judgment
searches for each Borrower, Pledgor and the Guarantor (including, for each, any
assumed name or trade name) and each dated a date reasonably near to the Closing
Date in all jurisdictions deemed necessary by the Administrative Agent, the
results of which shall be satisfactory to the Administrative Agent in its sole
and absolute determination.
(10)    Insurance Certificates. Certificates from the Borrower’s insurance
carriers evidencing that all required insurance coverage is in effect, each
designating the Administrative Agent as an additional insured, mortgagee and
“lender’s loss payee” thereunder (and any reasonably required endorsements
thereof).
(11)    [Intentionally Omitted].

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(12)    Certificate of Occupancy. To the extent available, a true and complete
copy of each certificate of occupancy with respect to the Facilities,
respectively.
(13)    Environmental Assessments. A Phase I environmental report of the
Property addressed to Administrative Agent prepared by an environmental audit
firm reasonably acceptable to the Administrative Agent, the form and results of
which shall be satisfactory to the Administrative Agent in its sole and absolute
determination.
(14)    Title Insurance. A title insurance policy or date down endorsement, as
applicable, in the form of ALTA Form Mortgagee Title Insurance Policy shall be
issued by an insurer (reasonably acceptable to the Administrative Agent) in
favor of the Administrative Agent for the Property. Each title insurance policy
shall contain such endorsements as deemed appropriate by the Administrative
Agent that are available in the applicable State. Copies of all documents of
record concerning the Property as identified on the commitment for the ALTA
Policy referred to above.
(15)    Survey. If requested by Administrative Agent, an ALTA plat of survey
shall be prepared on the Property.
(16)    Appraisal. An Appraisal prepared by an independent appraiser of the
Property engaged by Administrative Agent, which appraisal shall satisfy the
requirements of the FIRREA, if applicable, and shall evidence compliance with
the supervisory loan-to-value limits set forth in the Federal Deposit Insurance
Corporation Improvement Act of 1991 (including a combined loan-to-value ratio on
a “stabilized value” not to exceed 75%). Such appraisal (and the results
thereof) shall be satisfactory to the Administrative Agent in its sole and
absolute determination.
(17)    Flood Insurance. A flood insurance policy, if applicable, concerning the
Property, reasonably satisfactory to the Administrative Agent, if required by
the Flood Disaster Protection Act of 1973.
(18)    Property Condition Report. Property Condition Reports for each parcel of
Property, the form, substance and results of which shall be satisfactory to the
Administrative Agent in its sole and absolute determination.
(19)    Bylaws and Operating Agreements. Correct and complete certified copies
of the Bylaws and the duly executed Limited Liability Company Agreements (as
applicable) of each Borrower and Pledgor, as amended.
(20)    Other. The Administrative Agent shall have received, in form and
substance reasonably satisfactory to the Administrative Agent, all certificates,
orders, authorities, consents, affidavits, schedules, instruments, agreements,
financing statements, and other documents which are provided for hereunder or
under or in connection with any Financing Agreement, which the Administrative
Agent may reasonably request on or prior to the Closing Date.

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(i)    Field Examinations. At the Administrative Agent’s sole option, the
Administrative Agent shall have completed its field examinations of the
Borrower’s books and records, assets, and operations which examinations will be
satisfactory to the Administrative Agent in its sole and absolute discretion.
(j)    Certificate. The Administrative Agent shall have received a certificate
signed on behalf of the Borrower by a Duly Authorized Officer and dated the
Closing Date certifying satisfaction of the conditions specified in this Section
5.
(k)    Closing Fee. The Borrower shall have paid the Administrative Agent the
Closing Fee.
(l)    [Intentionally Omitted].
(m)    Bank Meetings. Borrower’s senior management shall have made themselves
and Borrower’s facilities reasonably available (through scheduled bank meetings,
company visits, or other venues) to Administrative Agent and Lenders and their
representatives.
(n)    Revolving Loan Agreement. Satisfaction of each of the conditions
precedent contained in the Revolving Loan Agreement, as determined by the
Administrative Agent.
(o)    Hutchinson Acquisition . The closing of the transaction contemplated by
the Hutchinson Acquisition Documents (including all material conditions
precedent thereto, including, without limitation, the obtaining of any and all
consents and approvals) shall occur in accordance with its terms concurrently
with the transactions contemplated by this Agreement.
(p)    Solvency. On the Closing Date, Borrower, as determined on a consolidated
basis, is Solvent.
(q)    No Material Adverse Change. No Material Adverse Change, as reasonably
determined by Administrative Agent and Lenders, in the business, assets,
liabilities, properties, condition (financial or otherwise), prospects or
results of operations of Borrower or Guarantor shall have occurred from December
31, 2015 through the Closing Date.
(r)    Litigation. There shall not have been instituted or threatened, from
December 31, 2015 through the Closing Date, as reasonably determined by
Administrative Agent, any litigation or proceeding in any court or
administrative forum to which Borrower is, or is threatened to be, a party which
has, or is reasonably likely to result in, a Material Adverse Change.
(s)    Acquisition Loan Outstandings. On the Closing Date, Acquisition Loan
Outstandings shall equal zero Dollars ($0).
(t)    Clinton Acquisition . The closing of the transaction contemplated by the
Clinton Acquisition Documents (including all material conditions precedent
thereto, including, without limitation, the obtaining of any and all consents
and approvals) shall occur in accordance with its terms concurrently with the
transactions contemplated by this Agreement.

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5.2    Conditions to Acquisition Loans. Notwithstanding any other term or
provision contained in this Agreement, the Administrative Agent’s and Lenders’
obligation to make any Acquisition Loan hereunder is subject to the satisfaction
of each of all of the conditions precedent contained in Section 5.1 as of the
Closing Date and the following additional conditions precedent:
(a)    The Borrower’s Request. The Administrative Agent shall have received a
borrowing notice from Borrower substantially in the form attached hereto as
Exhibit E (each such notice, an “Acquisition Loan Borrowing Notice”), signed by
a Duly Authorized Officer of the Borrower, irrevocably electing an Acquisition
Loan to be made on the Borrowing Date. If at any time applicable, if at all, the
Administrative Agent and Lenders shall have no liability to the Borrower or any
other Person as a result of acting on any telephonic request that the
Administrative Agent believes in good faith to have been made by any Person
authorized by Borrower to make a borrowing request on behalf of Borrower.
Promptly upon receipt of such Acquisition Loan Borrowing Notice, Administrative
Agent will advise each Lender thereof. Not later than 1:00 p.m. (Chicago time),
on the requested Borrowing Date, each Lender shall provide Administrative Agent
at the office specified by Administrative Agent with immediately available funds
covering such Lender’s Pro Rata Share of the requested Acquisition Loan and, so
long as Administrative Agent has not received written notice that the conditions
precedent set forth in Section 5.2 with respect to such requested borrowing have
not been satisfied, Administrative Agent shall pay over the funds received by
Administrative Agent to Borrower on the requested Borrowing Date.
(b)    Invoices. With respect to any Acquisition Loan being requested to finance
Capital Expenditures in connection with any Property or Facility owned by a
Propco Borrower, the Administrative Agent shall have received true, complete and
correct copies of invoices, purchase orders, or such other documentation in form
and substance reasonably acceptable to Administrative Agent.
(c)    Leasehold Acquisition Documents; Joinder of Affiliated Revolving
Borrower. With respect to any Acquisition Loan being requested to finance the
cost of acquiring a leasehold interest in any skilled nursing homes or other
similar facilities to be operated by an Affiliated Revolving Borrower that is
not also a Borrower hereunder, the Administrative Agent shall have received
true, complete and correct copies of all applicable documents with respect
thereto. Prior to, or contemporaneously with, the making of such requested
Acquisition Loan, the applicable Affiliated Revolving Borrower shall have joined
as a “Borrower” under the Revolving Loan Agreement.
(d)    Permitted Acquisitions. With respect to any Acquisition Loan being
requested to finance a Permitted Acquisition, each of the conditions precedent
to a Permitted Acquisition identified on Exhibit D hereto shall be satisfied
prior to, or contemporaneously with, the making of such Acquisition Loan.
(e)    Pro Forma Covenant Compliance. Both immediately prior to, and after
giving effect to, the making of the requested Acquisition Loan, Borrowers shall
be in pro forma compliance with all of the financial covenants contained in
Section 9.12 hereof measured as of the last day of the most recently ended
Fiscal Quarter.

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6.    COLLATERAL.
6.1    Security Interest. As security for the prompt and complete payment and
performance of all of the Liabilities and the Affiliate Revolving Loan
Liabilities when due or declared due, each Borrower hereby grants, pledges,
conveys and transfers to the Administrative Agent (for the ratable benefit of
the Lenders and Administrative Agent) a continuing security interest in and to
all of such Borrower’s right, title and interest in and to the following
property and interests in property, whether now owned or existing or hereafter
owned, arising or acquired, and wheresoever located (collectively, the
“Collateral”): (a) all of Borrower’s accounts receivable, including, without
limitation, Accounts and Health-Care-Insurance Receivables (each as defined in
the Code); (b) all of the Borrower’s General Intangibles, including, without
limitation, General Intangibles related to accounts receivable and money; (c)
all of Borrower’s Deposit Accounts and other deposit accounts (general or
special) with, and credits and other claims against, the Administrative Agent or
any Lender, or any other financial institution with which the Borrower maintains
deposits; (d) all of the Borrower’s contracts, licenses (including, without
limitation, any Licenses and CONs), chattel paper, instruments, notes, letters
of credit, contract rights, bills of lading, warehouse receipts, shipping
documents, permits, tax refunds, documents and documents of title, and all of
the Borrower’s Tangible Chattel Paper, Documents, Electronic Chattel Paper,
Letter-of-Credit Rights, letters of credit, Software, Supporting Obligations,
Payment Intangibles, and Goods (each as defined in the Code); (e) all of the
Borrower’s Inventory and Equipment and motor vehicles and trucks; (f) all of the
Borrower’s monies, and any and all other property and interests in property of
the Borrower, including, without limitation, Investment Property, Instruments,
Security Entitlements, Uncertificated Securities, Certificated Securities,
Chattel Paper, and Financial Assets (each as defined in the Code), now or
hereafter coming into the actual possession, custody or control of the
Administrative Agent, any Lender or any agent or Affiliate thereof in any way or
for any purpose (whether for safekeeping, deposit, custody, pledge,
transmission, collection or otherwise), and, independent of and in addition to
the Administrative Agent’s and each Lender’s rights of setoff (which the
Borrower acknowledges), the balance of any account or any amount that may be
owing from time to time by Administrative Agent or any Lender to the Borrower;
(g) all insurance proceeds of or relating to any of the foregoing property and
interests in property, and any key man life insurance policy covering the life
of any officer or employee of Borrower; (h) all proceeds and profits derived
from the operation of the Borrower’s business; (i) all of the Borrower’s books
and records, computer printouts, manuals and correspondence relating to any of
the foregoing and to the Borrower’s business; and (j) all accessions,
improvements and additions to, substitutions for, and replacements, products,
profits and proceeds of any of the foregoing.
Administrative Agent acknowledges that it will not have control over or right of
setoff against the Government Blocked Account (as defined in the Revolving Loan
Agreement) solely to the extent such control or right of setoff is or would be
prohibited by applicable Healthcare Laws, provided, however, that as soon as any
such prohibition or restriction lapses or is legally removed Borrower shall
immediately take such all actions as are reasonably necessary to provide
Administrative Agent with control over and/or the right of setoff against such
Government Blocked Account (at Borrower’s cost).

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Administrative Agent, for itself and on behalf of the other Lenders further
acknowledges and agrees that the term “Collateral” shall not include: (i) any
portion of the Collateral (but not the proceeds thereof) that is subject to a
rule of law, statute or regulation prohibiting the granting of a security
interest therein; and (ii) any rights or interest in any contract, lease,
permit, license, or license agreement covering real or personal property of the
Borrower if under the terms of such contract, lease, permit, license, or license
agreement, or applicable law with respect thereto, the grant of a security
interest or lien therein is prohibited as a matter of law or under the terms of
such contract, lease, permit, license, or license agreement and such prohibition
or restriction has not been waived or the consent of the other party to such
contract, lease, permit, license, or license agreement has not been obtained;
provided, that, (A) the foregoing exclusions of clauses (i) and (ii) above shall
(x) exist only for so long as such rule of law, statute, regulations or written
agreement, document or instrument continues to be effective (and when such rule,
statute, regulation or written agreement, document or instrument becomes no
longer applicable or upon the cessation, termination or expiration thereof, the
security interest granted herein shall be deemed to have automatically attached
to such Collateral), (B) the foregoing exclusions of clause (ii) above shall in
no way be construed to (1) apply to the extent that any described prohibition or
restriction is ineffective under Section 9-406, 9-407, 9-408, or 9-409 of the
Code or other applicable law, or (2) apply to the extent that any consent or
waiver has been obtained that would permit Administrative Agent’s security
interest or lien to attach notwithstanding the prohibition or restriction on the
pledge of such contract, lease, permit, license, or license agreement, and (C)
the foregoing exclusions of clauses (i) and (ii) above shall in no way be
construed to limit, impair, or otherwise affect any of Administrative Agent’s or
any Lender’s continuing security interests in and liens upon any rights or
interests of the Borrower in or to (1) monies due or to become due under or in
connection with any described contract, lease, permit, license, license
agreement, or (2) any proceeds from the sale, license, lease, or other
dispositions of any such contract, lease, permit, license, or license
agreement).
6.2    Preservation of Collateral and Perfection of Security Interests Therein.
The Borrower agrees that it shall execute and deliver to Administrative Agent,
concurrently with the execution of this Agreement, and promptly at any time or
times hereafter at the reasonable request of Administrative Agent instruments
and documents as Administrative Agent may reasonably request, in a form and
substance satisfactory to Administrative Agent, to establish, create, perfect
and keep perfected the Liens in the Collateral or to otherwise protect and
preserve the Collateral and Administrative Agent’s Liens therein (including,
without limitation, if and as applicable, financing statements, and Borrower
shall pay the cost of filing or recording the same in all public offices deemed
necessary by Administrative Agent). If the Borrower fails to do so,
Administrative Agent is authorized to file such financing statements. The
Borrower further agrees that a carbon, photographic, photostatic or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement.
6.3    Loss of Value of Collateral. The Borrower agrees to immediately notify
the Administrative Agent of any material loss or depreciation in the value of
the Collateral or any portion thereof.
6.4    Right to File Financing Statements. Notwithstanding anything to the
contrary contained herein, the Administrative Agent may at any time and from
time to time file financing

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statements, continuation statements and amendments thereto that describe the
Collateral as “all assets” or in particular and which contain any other
information required by the Code for the sufficiency or filing office acceptance
of any financing statement, continuation statement or amendment, including
whether the Borrower is an organization, the type of organization and any
organization identification number issued to the Borrower. The Borrower agrees
to furnish any such information to the Administrative Agent promptly upon
request. Any such financing statements, continuation statements or amendments
may be signed (if at any time required) by the Administrative Agent on behalf of
the Borrower and may be filed at any time with or without signature and in any
jurisdiction as reasonably determined by the Administrative Agent. The
Administrative Agent agrees to use its reasonable efforts to notify the Borrower
of the Administrative Agent taking any such action provided in this Section;
provided, however, the Borrower agrees that the failure of the Administrative
Agent to so notify the Borrower for any reason shall not in any way invalidate
the actions taken by the Administrative Agent pursuant to this Section.
6.5    Third Party Agreements. The Borrower shall at any time and from time to
time take such steps as the Administrative Agent may reasonably require for the
Administrative Agent: (i) to obtain an acknowledgment, in form and substance
reasonably satisfactory to the Administrative Agent, of any third party having
possession of any of the Collateral that the third party holds for the benefit
of the Administrative Agent, (ii) to obtain “control” (as defined in the Code)
of any Investment Property, Deposit Accounts, Letter of Credit Rights or
Electronic Chattel Paper (each as defined in the Code), with any agreements
establishing control to be in form and substance reasonably satisfactory to the
Administrative Agent, and (iii) otherwise to ensure the continued perfection and
priority of the Administrative Agent’s security interest in any of the
Collateral and of the preservation of its rights therein.
6.6    All Loans One Obligation. All Liabilities of the Borrowers under this
Agreement and each of the Financing Agreements, and all of the Affiliate
Revolving Loan Liabilities under the Revolving Loan Agreement and each of the
Affiliate Revolving Loan Financing Agreements, are cross-collateralized and
cross-defaulted. Payment of all sums and indebtedness to be paid by Borrower to
Lenders and Administrative Agent under this Agreement shall be secured by, among
other things, the Financing Agreements. All loans or advances made to Borrower
under this Agreement shall constitute one Loan, and all of Borrower’s
Liabilities and other liabilities of Borrower to Lenders and Administrative
Agent shall constitute one general obligation secured by Administrative Agent’s
Lien on all of the Collateral of Borrower and by all other liens heretofore,
now, or at any time or times granted to Lender to secure the Loan and other
Liabilities (for the ratable benefit of the Lenders and the Administrative
Agent). Borrower agrees that all of the rights of Administrative Agent and
Lenders set forth in this Agreement shall apply to any amendment, restatement or
modification of, or supplement to, this Agreement, any supplements or exhibits
hereto and the Financing Agreements, unless otherwise agreed in writing by the
Administrative Agent or Required Lenders.
6.7    Commercial Tort Claim. If the Borrower shall at any time hereafter
acquire a Commercial Tort Claim (as defined in the Code), the Borrower shall
promptly notify the Administrative Agent of same in a writing signed by the
Borrower (describing such claim in reasonable detail) and grant to the
Administrative Agent (for the ratable benefit of the Lenders and

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the Administrative Agent) in such writing (at the sole cost and expense of the
Borrower) a continuing, first-priority security interest therein and in the
proceeds thereof, with such writing to be in form and substance satisfactory to
the Administrative Agent in its sole and absolute determination.
6.8    HUD Financing; Prepayment and Release. Notwithstanding the provisions of
Section 6.6, upon any one or more of the Propco Borrowers obtaining HUD
Financing for their respective Facility or Facilities, Administrative Agent will
fully release and discharge the lien and security interest granted to
Administrative Agent to secure the Loan (for the ratable benefit of the Lenders
and the Administrative Agent) under this Agreement and the Financing Agreements
on the specific Collateral of such Propco Borrower or Propco Borrowers (the
“Released Collateral (HUD)”), and will fully release and discharge such Propco
Borrower or Propco Borrowers and the applicable Operators who are also Borrowers
of such specific Collateral (the “Released Borrowers (HUD)”) from their
obligations under this Agreement and any Financing Agreement, including the Term
Loan Note and/or any Acquisition Loan Note (except for contingent
indemnification obligations that survive by their terms herein), provided that
and conditioned upon satisfaction of each of the foregoing, in the sole
determination of the Administrative Agent:
(1)    Administrative Agent shall receive written notice within thirty (30) days
of such Propco Borrower or Propco Borrowers decision to seek and obtain such HUD
Financing;
(2)    Both before and after giving effect to the HUD Financing, no Default or
Event of Default shall have occurred and be continuing (including, without
limitation, any breach of any financial covenant set forth in Section 9.12);
(3)    [Intentionally Omitted];
(4)    The release documents are reasonably acceptable to Administrative Agent
and customary for recording the release of liens and security interests in the
applicable Collateral in the jurisdictions where the liens and security in the
Released Collateral (HUD) are filed or recorded. Borrowers shall be responsible
for the cost and expense of preparing and recording the applicable release
documents;
(5)    All reasonably requested instruments, documents and agreements by the
Administrative Agent and Lenders in connection with such HUD Financing are duly
executed and delivered by Propco Borrower, each other applicable Borrower and
any Affiliate thereof (including amendments to this Agreement and the other
Financing Agreements); and
(6)    The Released Borrowers (HUD) shall, substantially simultaneously with
(and in any event not later than the first (1st) Business Day following the
receipt of the net cash proceeds from the insurance or incurrence of the HUD
Financing), apply and pay in immediately available funds without setoff or
deduction of any kind an amount equal to one hundred percent (100%) of such net
cash proceeds to prepay the outstanding Term Loan amount in accordance with
Section 2.10 and any other related then due and owing Liabilities of the
Released Borrowers (HUD). As used in this Section, “Net cash proceeds” shall
mean the cash proceeds of the HUD Financing

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net of all taxes and customary and reasonable fees, commissions, costs and other
expenses actually incurred in connection therewith.
Notwithstanding the release and discharge of the Released Borrowers (HUD) and
the Released Collateral (HUD) as provided in this Section 6.8, this Agreement,
the other Financing Agreements and the Lien of the Administrative Agent on the
Collateral (and any other Lien provided by the other Financing Agreements,
including pursuant to the applicable Mortgages), shall remain and continue in
full force and effect as to the Borrowers other than the Released Borrowers
(HUD) and the Collateral (and other assets and property subject to the other
Financing Agreements) other than the Released Collateral (HUD).
7.    REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants on a joint and several basis to
Administrative Agent and Lenders that as of the date of this Agreement, and
continuing as long as any Liabilities or Affiliate Revolving Loan Liabilities
remain outstanding, and (even if there shall be no such Liabilities or Affiliate
Revolving Loan Liabilities outstanding) as long as this Agreement remains in
effect:
7.1    Existence. The Borrower is a corporation or limited liability company
duly organized, validly existing and in good standing under the laws of the
state of its incorporation or formation. The Borrower is duly (a) qualified and
in good standing as a foreign corporation or foreign limited liability company
and (b) authorized to do business in each jurisdiction where such qualification
is required because of the nature of its activities or properties. The Borrower
has all requisite power to carry on its business as now being conducted and as
proposed to be conducted. The Pledgors legally and beneficially own and control
all of the issued and outstanding capital Stock of the Borrower.
7.2    Corporate Authority. The execution and delivery by the Borrower of this
Agreement and all of the other Financing Agreements to which Borrower is a party
and the performance of its obligations hereunder and thereunder: (i) are within
its powers; (ii) are duly authorized by the board of directors, manger or
members of the Borrower, each as applicable, and, if applicable, Pledgor; and
(iii) are not in contravention of the terms of its operating agreement, bylaws,
or of an indenture, agreement or undertaking to which it is a party or by which
it or any of its property is bound. The execution and delivery by the Borrower
of this Agreement and all of the other Financing Agreements to which it is a
party and the performance of its obligations hereunder and thereunder: (i) do
not require any governmental consent, registration or approval; (ii) do not
contravene any contractual or governmental restriction binding upon it; and
(iii) will not, except in favor of Administrative Agent, result in the
imposition of any Lien upon any property of Borrower under any existing
indenture, mortgage, deed of trust, loan or credit agreement or other material
agreement or instrument to which it is a party or by which it or any of its
property may be bound or affected. Borrower is not bound by any contractual
obligation, or subject to any restriction in any organizational document, that
could reasonably be expected to have a Material Adverse Effect. This Agreement
and all of the other Financing Agreements to which Borrower is a party have been
duly executed and delivered.

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7.3    Binding Effect. This Agreement and all of the other Financing Agreements
to which the Borrower is a party are the legal, valid and binding obligations of
the Borrower and are enforceable against the Borrower in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditor’s rights and
remedies generally.
7.4    Financial Data.
(a)    All income statements, balance sheets, cash flow statements, statements
of operations, and other financial data which have been or shall hereafter be
furnished to the Administrative Agent and Lenders for the purposes of or in
connection with this Agreement do and will present fairly in all material
respects in accordance with GAAP, consistently applied, the financial condition
of the Borrower as of the dates thereof and the results of its operations for
the period(s) covered thereby. The foregoing notwithstanding all unaudited
financial statements furnished or to be furnished to the Administrative Agent
and Lenders by or on behalf of Borrower are not and will not be prepared in
accordance with GAAP to the extent that such financial statements (a) are
subject to cost report and other year-end audit adjustments, (b) do not contain
footnotes, (c) were prepared without physical inventories, (d) are not restated
for subsequent events, (e) may not contain a statement of construction in
process, and (f) may not fully reflect the following liabilities: (i) vacation,
holiday and similar accruals, (ii) liabilities payable in connection with
workers’ compensation claims, (iii) liabilities payable to any employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) maintained by
Borrower or its affiliates on account of Borrower’s employees, (iv) federal,
state and local income or franchise taxes and (v) bonuses payable to certain
employees (collectively, the “GAAP Exceptions”).
(b)    Since December 31, 2015, there has been no Material Adverse Change with
respect to Borrower.
7.5    Collateral. Except for the Permitted Liens, all of the Borrower’s assets
and property (including, without limitation, the Collateral) is and will
continue to be owned by Borrower (except for items of Inventory disposed of in
the ordinary course of business and sales of Equipment being replaced in the
ordinary course of business, or as a result of casualty loss or condemnation,
with other Equipment with a value equal to or greater than the Equipment being
sold), has been fully paid for and is free and clear of all Liens. No financing
statement or other document similar in effect covering all or any part of the
Collateral is on file in any recording or filing office, other than those
identifying the Administrative Agent as the secured creditor or except for
Permitted Liens. The organizational number assigned by the Secretary of State of
the Borrower’s state of incorporation or formation, as applicable, is as
identified on the UCC Financing Statements filed in connection with this
Agreement and as set forth on Schedule 1.1(a) hereto.
7.6    Solvency. The Borrower, as determined on a consolidated basis, is
Solvent. The Borrower, as determined on a consolidated basis, will not be
rendered insolvent by the execution and delivery of this Agreement or any
Financing Agreement, or by completion of the transactions contemplated hereunder
or thereunder.

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7.7    Principal Place of Business; State of Organization. Set forth on Schedule
1.1(a) hereto, is, as of the Closing Date, (a) the principal place of business
and chief executive office of Borrower and (b) the Borrower’s state of
incorporation or formation. The books and records of the Borrower are at the
principal place of business and chief executive office of the Borrower.
7.8    Other Names. As of the Closing Date the Borrower is not using, and shall
not thereafter use, any name (including, without limitation, any trade name,
trade style, assumed name, division name or any similar name), other than the
names set forth on Schedule 7.8 attached hereto.
7.9    Tax Liabilities. The Borrower has filed all material federal, state and
local tax reports and returns required by any law or regulation to be filed by
it, except for extensions duly obtained, and taxes that are being contested in
good faith by appropriate proceedings duly conducted, and has either duly paid
all taxes, duties and charges indicated due on the basis of such returns and
reports, or made adequate provision for the payment thereof, and the assessment
of any material amount of additional taxes in excess of those paid and reported
is not reasonably expected.
7.10    Loans. Except as otherwise permitted by Section 9.2 hereof, the Borrower
is not obligated on any loans or other Indebtedness.
7.11    Margin Securities. No part of the proceeds of the Loan will be used, and
whether immediately, incidentally or ultimately, for any purposes that violates
or results in directly or indirectly, a violation of Regulations U, T or X of
the Board of Governors of the Federal Reserve System (assuming, in the case of
Regulation T, that no broker-dealer or other “creditor” as defined in Regulation
T extends or maintains credit to Borrower under this Agreement). The Borrower
does not own any margin securities and the Loan advanced hereunder will not be
used for the purpose of purchasing or carrying any margin securities or for the
purpose of reducing or retiring any Indebtedness which was originally incurred
to purchase any margin securities or for any other purpose not permitted by
Regulation U of the Board of Governors of the Federal Reserve System.
7.12    Organizational Chart. Set forth on Schedule 7.12 hereto is a true and
complete copy of an organizational chart setting forth the Guarantor and each of
its Subsidiaries and Affiliates as of the Closing Date.
7.13    Litigation and Proceedings. As of the Closing Date, no judgments are
outstanding against the Borrower that could be an Event of Default under clause
(e) of Section 11.1, nor is there as of such date pending, or to the best of
Borrower’s knowledge, threatened, except, as of the Closing Date, as shown on
Schedule 7.13, any (i) litigation, suit, action or contested claim (other than a
personal injury tort claim), or federal, state or municipal governmental
proceeding, by or against the Borrower or any of its Property which if adversely
determined could have a Material Adverse Effect, or (ii) any tort claim for
personal injury, including death, against the Borrower as to which (a)
litigation has been instituted and is pending or (b) or a request for medical
records has been made upon Borrower by an attorney for the claimant on or after
January 1, 2014.
7.14    Other Agreements. The Borrower is not in default under or in breach of
any agreement, contract, lease, or commitment to which it is a party or by which
it is bound which could reasonably be expected to have a Material Adverse
Effect. The Borrower does not know of any

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dispute regarding any agreement, contract, instrument, lease or commitment to
which it is a party which could reasonably be expected to have a Material
Adverse Effect.
7.15    Compliance with Laws and Regulations. The execution and delivery by the
Borrower of this Agreement and all of the other Financing Agreements to which it
is a party and the performance of the Borrower’s obligations hereunder and
thereunder are not in contravention of any applicable law, rule or regulation.
The Borrower has obtained all licenses, authorizations, approvals, licenses and
permits necessary in connection with the operation of its business, except to
the extent the failure to obtain any of the foregoing could reasonably be
expected to not result in a Material Adverse Effect. The Borrower is in
compliance with all laws, orders, rules, regulations and ordinances of all
federal, foreign, state and local governmental authorities applicable to it and
its business, operations, property, and assets, except to the extent any such
non-compliance could reasonably be expected to not result in a Material Adverse
Effect.
7.16    Intellectual Property. As of the Closing Date, the Borrower does not own
or otherwise possess any material Intellectual Property. To the Borrower’s best
knowledge, none of its Intellectual Property infringes on the rights of any
other Person; provided that the name “Diversicare” is shared in Canada with
various Diversicare entities that were sold in 2004.
7.17    Environmental Matters. The Borrower has not Managed Hazardous Substances
on or off its Property other than in compliance with applicable Environmental
Laws, except to the extent any such non-compliance could reasonably be expected
to not result in a Material Adverse Effect. Except as set forth on Schedule 7.17
hereto, the Borrower has complied in all material respects with applicable
Environmental Laws regarding transfer, construction on and operation of its
business and Property, including, but not limited to, notifying authorities,
observing restrictions on use, transferring, modifying or obtaining permits,
licenses, approvals and registrations, making required notices, certifications
and submissions, complying with financial liability requirements, and, except
where not required to do so pursuant to any Commercial Lease, Managing Hazardous
Substances and Responding to the presence or Release of Hazardous Substances
connected with operation of its business or Property. The Borrower does not have
any contingent liability with respect to the Management of any Hazardous
Substance that could reasonably be expected to result in a Material Adverse
Effect. As of the Closing Date, the Borrower has not received any Environmental
Notice that could reasonably be expected to result in a Material Adverse Effect.
7.18    Disclosure. As of the Closing Date, none of the representations or
warranties made by the Borrower herein or in any Financing Agreement to which
the Borrower is a party and no other written information provided or statements
made by the Borrower or its representatives to the Administrative Agent or
Lenders contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of the Closing
Date, the Borrower has disclosed to the Administrative Agent and Lenders all
facts of which the Borrower has knowledge which might result in a Material
Adverse Effect either prior or subsequent to the consummation of the
transactions contemplated hereby or which, to Borrower’s knowledge, at any time
hereafter might reasonably be expected to result in a Material Adverse Effect.

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7.19    Pension Related Matters. Each employee pension plan (other than a
multiemployer plan within the meaning of Section 3(37) of ERISA and to which the
Borrower or any ERISA Affiliate has or had any obligation to contribute (a
“Multiemployer Plan”)) maintained by the Borrower or any of its ERISA Affiliates
to which Title IV of ERISA applies and (a) which is maintained for employees of
the Borrower or any of its ERISA Affiliates or (b) to which the Borrower or any
of its ERISA Affiliates made, or was required to make, contributions at any time
within the preceding five (5) years (a “Plan”), complies, and is administered in
accordance, with its terms and all material applicable requirements of ERISA and
of the Internal Revenue Code of 1986, as amended, and any successor statute
thereto (the “Tax Code”), and with all material applicable rulings and
regulations issued under the provisions of ERISA and the Tax Code setting forth
those requirements. No “Reportable Event” or “Prohibited Transaction” (as each
is defined in ERISA) or withdrawal from a Multiemployer Plan caused by the
Borrower has occurred and no funding deficiency described in Section 302 of
ERISA caused by the Borrower exists with respect to any Plan or Multiemployer
Plan which could have a Material Adverse Effect. The Borrower and each ERISA
Affiliate has satisfied all of their respective funding standards applicable to
such Plans and Multiemployer Plans under Section 302 of ERISA and Section 412 of
the Tax Code and the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA (“PBGC”) has not
instituted any proceedings, and there exists no event or condition caused by the
Borrower which would reasonably be expected to constitute grounds for the
institution of proceedings by PBGC, to terminate any Plan or Multiemployer Plan
under Section 4042 of ERISA which could have a Material Adverse Effect.
7.20    Perfected Security Interests. The Lien in favor of the Administrative
Agent provided pursuant to Section 6.1 hereof is a valid and perfected first
priority security interest in the Collateral (subject only to the Permitted
Liens), and all filings and other actions necessary to perfect such Lien have
been or will be duly taken.
7.21    FCPA. None of Borrower or any of its Subsidiaries nor, to knowledge of
Borrower, any director, manager, officer, agent, employee or other Person acting
on behalf of Borrower or any of its Subsidiaries is aware of or has taken any
action, directly or indirectly, that would result in a violation by such persons
of the FCPA or any other applicable anti-corruption law, and Borrower has
instituted and maintains policies and procedures designed to ensure continued
compliance therewith.
7.22    Broker’s Fees. The Borrower does not have any obligation to any Person
in respect of any finder’s, brokers or similar fee in connection with the Loan
or this Agreement.
7.23    Investment Company Act. The Borrower is not an “investment company” or a
company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended.
7.24    [Intentionally Omitted.].
7.25    [Intentionally Omitted.].

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7.26    Offenses and Penalties Under the Medicare/Medicaid Programs. Except as
listed on Schedule 7.26 attached hereto, as of the Closing Date, neither the
Borrower nor any Affiliate and/or employee of the Borrower or any Affiliate is
currently, to the best knowledge of the Borrower, after due inquiry, under
investigation or prosecution for, nor has the Borrower or any Affiliate or, to
the best knowledge of Borrower, after due inquiry, any current employee of the
Borrower or any Affiliate been convicted of: (a) any offense related to the
delivery of an item or service under the Medicare or Medicaid programs; (b) a
criminal offense related to neglect or abuse of patients in connection with the
delivery of a health care item or service; (c) fraud, theft, embezzlement or
other financial misconduct; (d) the obstruction of an investigation of any crime
referred to in subsections (a) through (c) of this Section; or (e) unlawful
manufacture, distribution, prescription, or dispensing of a controlled
substance. Except as listed on Schedule 7.26, as of the Closing Date, neither
the Borrower nor any Affiliate and/or, to the best knowledge of Borrower, after
due inquiry, any current employee of the Borrower or any Affiliate has been
required to pay any civil money penalty under applicable laws regarding false,
fraudulent or impermissible claims or payments to induce a reduction or
limitation of health care services to beneficiaries of any state or federal
health care program, nor, to the best knowledge of the Borrower, after due
inquiry, is the Borrower nor any Affiliate and/or to the best knowledge of
Borrower, after due inquiry, any current employee of the Borrower or any
Affiliate currently the subject of any investigation or proceeding that may
result in such payment.
7.27    Medicaid/Medicare. Neither the Borrower nor any Affiliate of the
Borrower nor any current officer or director of the foregoing has engaged in any
of the following: (i) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any application for any
benefit or payment under Medicare or Medicaid; (ii) knowingly and willfully
making or causing to be made any false statement or representation of a material
fact for use in determining rights to any benefit or payment under Medicare or
Medicaid; (iii) failing to disclose knowledge by a claimant of the occurrence of
any event affecting the initial or continued right to any benefit or payment
under Medicare or Medicaid on its own behalf or on behalf of another, with
intent to secure such benefit or payment fraudulently; or (iv) knowingly and
willfully soliciting or receiving any remuneration (including any kickback,
bribe or rebate), directly or indirectly, overtly or covertly, in cash or in
kind or offering to pay such remuneration: (A) in return for referring any
individual to a Person for the furnishing or arranging for the furnishing of any
item or service for which payment may be made in whole or in part by Medicare or
Medicaid; or (B) in return for purchasing, leasing or ordering or arranging for
or recommending the purchasing, leasing or ordering of any good, facility,
service or item for which payment may be made in whole in part by Medicare or
Medicaid.
7.28    Consideration. Borrower acknowledges that it desires to have this
Agreement and the Financing Agreements to which the Borrower is a party
cross-collateralized and cross-defaulted and have the Collateral serve as
collateral for all of the Liabilities and Affiliate Revolving Loan Liabilities.
The Affiliated Revolving Borrowers and the Borrowers are Affiliates of each
other. Each Borrower will derive substantial direct and indirect benefit
(financial and otherwise) from funds made available to the Affiliated Revolving
Borrowers pursuant to this Agreement, and it is and will be to each Borrower’s
and Affiliated Revolving Borrower’s advantage to assist each other in procuring
such funds from the Lenders.

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7.29    USA Patriot Act. Neither the Borrower nor any of its Affiliates is
identified in any list of known or suspected terrorists published by any United
States government agency (collectively, as such lists may be amended or
supplemented from time to time, referred to as the “Blocked Persons Lists”)
including, without limitation, (a) the annex to Executive Order 13224 issued on
September 23, 2001, and (b) the Specially Designated Nationals List published by
the Office of Foreign Assets Control. No part of the proceeds of any Loan will
be used directly or indirectly for any payments to any government 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.
7.30    Absence of Foreign or Enemy Status. Neither the Borrower nor any
Affiliate of the Borrower is an “enemy” or an “ally of the enemy” within the
meaning of Section 2 of the Trading with the Enemy Act (50 U.S.C. App. §§ 1 et
seq.), as amended. Neither the Borrower nor any Affiliate of the Borrower is in
violation of, nor will the use of the Loan violate, the Trading with the Enemy
Act, as amended, or any executive orders, proclamations or regulations issued
pursuant thereto, including, without limitation, regulations administered by the
Office of Foreign Asset Control of the Department of the Treasury (31 C.F.R.
Subtitle B, Chapter V).
7.31    Hutchinson Acquisition; Clinton Acquisition.
(a)    Borrower has delivered true, correct and complete copies of the
fully-signed Hutchinson Acquisition Documents to the Administrative Agent on or
prior to the Closing Date. On the Closing Date and concurrently with the making
of the Term Loan hereunder, the Hutchinson Acquisition will have been
consummated in accordance with the terms of the Hutchinson Acquisition Documents
and in accordance in all material respects with all applicable laws. As of the
Closing Date, to the Borrower’s knowledge, the Seller is not in default or
breach of or under the Hutchinson Acquisition Documents to which Seller is a
party. All consents and approvals of, and filings and registrations with, and
all other actions by, any Governmental Authority and (except where the failure
to obtain or make the same could not reasonably be expected to have an adverse
effect on the Hutchinson Acquisition or any portion thereof or a Material
Adverse Effect) to the best of Borrower’s knowledge each other Person required
in order to make or consummate the Hutchinson Acquisition have been obtained,
given, filed or taken, or shall be obtained, given, filed or taken as soon as
reasonably practicable following the Closing Date, and are or will be in full
force and effect.
(b)    Borrower has delivered true, correct and complete copies of the
fully-signed Clinton Acquisition Documents to the Administrative Agent on or
prior to the Closing Date. On the Closing Date and concurrently with the making
of the Term Loan hereunder, the Clinton Acquisition will have been consummated
in accordance with the terms of the Clinton Acquisition Documents and in
accordance in all material respects with all applicable laws. As of the Closing
Date, to the Borrower’s knowledge, the Seller is not in default or breach of or
under the Clinton Acquisition Documents to which Seller is a party. All consents
and approvals of, and filings and registrations with, and all other actions by,
any Governmental Authority and (except where the failure to obtain or make the
same could not reasonably be expected to have an adverse effect on the Clinton
Acquisition or any portion thereof or a Material Adverse Effect) to the best of
Borrower’s

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knowledge each other Person required in order to make or consummate the Clinton
Acquisition have been obtained, given, filed or taken, or shall be obtained,
given, filed or taken as soon as reasonably practicable following the Closing
Date, and are or will be in full force and effect.
7.32    Labor Matters. There are no strikes or other labor disputes or
grievances pending or, to the knowledge of Borrower, threatened against
Borrower. All payments due from the Borrower on account of wages and employee
and retiree health and welfare insurance and other benefits have been paid or
accrued as a liability on its books. The consummation of the transactions
contemplated by the Financing Agreements will not give rise to a right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which Borrower is a party or by which it is
bound.
7.33    Capitalization. The authorized Stock of each Borrower, as of the Closing
Date, is set forth on Schedule 7.33 hereto. Pledgor legally and beneficially
owns all of the issued and outstanding Stock of each Borrower. All issued and
outstanding Stock of the Borrower is duly authorized and validly issued, fully
paid, non-assessable, free and clear of all Liens or pledges other than
Permitted Liens, and such Stock was issued in compliance with all applicable
state, federal and foreign laws concerning the issuance of securities. No shares
of the Stock of Borrower, other than those owned by Pledgor are issued and
outstanding. There are no preemptive or other outstanding rights, options,
warrants, conversion rights or similar agreements or understandings for the
purchase or acquisition from Borrower of any equity securities of Borrower.
7.34    Government Contracts. The Borrower is not a party to any contract or
agreement (including, but not limited to, any Lease) that requires Borrower to
comply with the Federal Assignment of Claims Act, as amended (31 U.S.C. Section
3727) or, to the best of Borrower’s knowledge, any similar state or local law.
7.35    OFAC. Neither the Borrower, nor Guarantor, nor any beneficial owner of
the Borrower or Guarantor, is currently listed on the OFAC Lists. None of
Borrower and, to the best knowledge of Borrower, its Affiliates, are in
violation of (a) the Trading with the Enemy Act, 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, (b) the Patriot Act and (c) other federal or state laws
relating to “know your customer” and anti-money laundering rules and
regulations.
7.36    Operation of the Facilities; Operating Leases. Each Borrower that is an
Operator is the Operator of the Facility owned by each respective Propco
Borrower, in each case as identified on Schedule 1.1(d) attached hereto.
Schedule 1.1(d) identifies each Operating Lease between Propco Borrower and the
respective Operators and Administrative Agent has been provided true, complete
and correct copies of all such Operating Leases.
7.37    Title to Property. Except as could not reasonably be expected to have a
Material Adverse Effect, the applicable Borrower owns good and, in the case of
real property, marketable title to all of its properties and assets, real and
personal, tangible and intangible, of any nature whatsoever, free and clear of
all Liens (except for Permitted Liens), and except for minor defects

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in title that do not interfere with in any material respect with the ability of
Borrower to conduct its business as currently conducted or utilize such
properties and assets for their intended purposes.
7.38    Management Fees. The management fees payable by the applicable Borrower
to Manager pursuant to the Management Agreements is entirely used to cover and
pay for actually incurred, ordinary course costs and does not include any amount
of profit.
8.    AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees on a joint and several basis with
Administrative Agent and Lenders that, as long as any Liabilities or Affiliate
Revolving Loan Liabilities remain outstanding, and (even if there shall be no
such Liabilities or Affiliate Revolving Loan Liabilities outstanding) as long as
this Agreement remains in effect:
8.1    Reports, Certificates and Other Information. The Borrower Agent shall
deliver to the Administrative Agent and each Lender:
(c)    Financial Statements.
(1)    On or before the one hundred twentieth (120th) day after each of
Guarantor’s Fiscal Years, a copy of the annual financial statements on a
consolidated basis for Guarantor, duly certified and audited by independent
certified public accountants of nationally recognized standing selected by the
Guarantor, together with the supporting consolidating statements for each
Borrower, consisting of, at least, balance sheets and statements of income and
cash flow for such period, prepared in conformity with GAAP. In lieu of its
obligations hereunder, Guarantor may submit to Administrative Agent and Lenders,
upon its filing thereof, a copy of its form 10-K as filed with the United States
Security and Exchange Commission.
(2)    On or before the forty-fifth (45th) day of the end of each of Guarantor’s
first, second and third Fiscal Quarters, a copy of the quarterly financial
statements on a consolidated basis for Guarantor, duly reviewed by independent
certified public accountants of nationally recognized standing selected by the
Guarantor, together with the supporting consolidating statements for each
Borrower, consisting of, at least, balance sheets and statements of income and
cash flow for such period, prepared in conformity with GAAP. In lieu of its
obligations hereunder, Guarantor may submit to Administrative Agent and Lenders,
upon its filing thereof, a copy of its form 10-Q as filed with the United States
Security and Exchange Commission.
(3)    On or before (i) the forty-fifth (45th) day after the end of each
calendar month ending the Borrower’s first, second and third Fiscal Quarters,
(ii) the seventy-fifth (75th) day after the end of the calendar month ending the
Borrower’s final Fiscal Quarter, and (iii) the thirtieth (30th) day after the
end of each other calendar month, a copy of internally prepared financial
statements for Borrower prepared in accordance with GAAP and in a manner
substantially consistent with the financial statements referred to in Section
8.1(a)(2) hereof, signed on behalf of the Borrower by a Duly Authorized Officer
and consisting of, at least, an income statement and a balance sheet, as at the
close of such calendar month and statements of earnings for such calendar month
and for the period from the beginning of such Fiscal Year to the close of such
calendar month, each of which

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must be in form, scope and substance reasonably satisfactory to Administrative
Agent and the Required Lenders.
(d)    [Intentionally Omitted.].
(e)    Compliance Certificates. Contemporaneously with the furnishing of each
quarterly financial statements pursuant to Section 8.1(a)(2), a duly completed
compliance certificate with appropriate insertions (a “Compliance Certificate”),
dated the date of such annual financial statement or such Fiscal Quarter and
signed on behalf of the Borrower by a Duly Authorized Officer, which Compliance
Certificate shall state that no Default or Event of Default has occurred and is
continuing, or, if there is any such event, describes it and the steps, if any,
being taken to cure it. Each Compliance Certificate shall contain a computation
of, and show compliance with, each of the financial covenants set forth in
Section 9.12 hereof (each such computation and calculation to be in form and
substance acceptable to the Administrative Agent), and each Compliance
Certificate must otherwise be in form, scope and substance reasonably
satisfactory to Administrative Agent and the Required Lenders.
(f)    Real Estate Taxes. As paid, evidence of timely payment of real estate
taxes owed on the Property.
(g)    Notice of Default, Regulatory Matters, Litigation Matters or Adverse
Change in Business. Forthwith upon learning of the occurrence of any of the
following, written notice thereof which describes the same and the steps being
taken by the Borrower with respect thereto: (i) the occurrence of a Default or
an Event of Default; (ii) the institution or threatened institution of, or any
adverse determination in, any litigation (other than a personal injury tort
claim), arbitration proceeding or governmental proceeding in which any
injunctive relief or money damages is sought which if adversely determined could
have a Material Adverse Effect; (iii) the receipt of any notice from any
governmental agency concerning any violation or potential violation of any
regulations, rules or laws applicable to Borrower which could have a Material
Adverse Effect; or (iv) any Material Adverse Change. With regard to personal
injury tort claims, upon request by Administrative Agent, Borrower shall review
with Administrative Agent the occurrence of any personal injury or other action
which could reasonably give rise to a personal injury tort claim against the
Borrower as to which (i) litigation has been instituted and is pending or (ii) a
request for medical records has been made upon Borrower by an attorney for the
claimant on or after January 1, 2014.
(h)    Insurance Reports. (i) At any time after a Default and upon the request
of the Administrative Agent, a certificate signed by a Duly Authorized Officer
that summarizes the property, casualty, liability and malpractice insurance
policies carried by the Borrower, and (ii) written notification of any material
change in any such insurance by the Borrower within five (5) Business Days after
receipt of any notice (whether formal or informal) of such change by any of its
insurers.

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(i)    Operating Budget. No later than thirty (30) days after the end of each
Fiscal Year, a copy of the Borrower’s and Guarantor’s Fiscal Year consolidated
operating budget.
(j)    Affiliate Transactions. Upon the Administrative Agent’s reasonable
request from time to time, a reasonably detailed description of each of the
material transactions between the Borrower and any of its Affiliates during the
time period reasonably requested by the Administrative Agent, which shall
include, without limitation, the amount of money either paid or received, as
applicable, by the Borrower in such transactions.
(k)    [Intentionally Omitted.].
(l)    Interim Reports. Promptly upon receipt thereof, copies of any reports
submitted to Guarantor or Borrower by the independent accountants in connection
with any interim audit of the books of any such Person and copies of each
management control letter provided to Guarantor or Borrower by independent
accountants.
(m)    Reports to the SEC. Upon the Administrative Agent’s reasonable request
from time to time, copies of any and all regular, annual, periodic or special
reports of Guarantor, any Borrower or any Affiliate thereof filed with the
Securities and Exchange Commission (“SEC”); copies of any and all registration
statements of Guarantor, any Borrower or any Affiliate thereof filed with the
SEC; and copies of any and all proxy statements or other written communications
made to security holders generally.
(n)    Other Information. Such other information, certificates, schedules,
exhibits or documents (financial or otherwise) concerning the Borrower and its
operations, business, properties, condition or otherwise as the Administrative
Agent or any Lender may reasonably request from time to time.
8.2    Inspection; Audit Fees. Borrower shall keep proper books of record and
account in accordance with GAAP in which full, true and correct entries shall be
made of all dealings and transactions in relation to its business and
activities; and shall permit (at the expense of the Borrower provided the
Borrower shall be responsible for such reasonable expenses no more than one (1)
time per year unless an Event of Default has occurred and is continuing),
representatives of the Administrative Agent or any Person appointed by
Administrative Agent to visit and inspect any of their respective properties, to
examine and make abstracts or copies from any of their respective books and
records (in each case excluding patient medical records and other records to the
extent confidential or where such examination is prohibited under applicable
Laws, including without limitation HIPAA), to conduct a collateral audit and
analysis of their respective Inventory and Accounts and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants as often as may reasonably be
desired. In the absence of an Event of Default, the Administrative Agent shall
give the Borrower commercially reasonable prior written notice of such exercise;
provided, no notice shall be required during the existence and continuance of
any Event of Default. All such costs, expenses and fees incurred or charged by
Administrative Agent under this Section 8.2 shall bear interest at the Default
Rate and shall be additional Liabilities of Borrower to Administrative Agent,
secured by the Collateral, if not promptly paid upon the request of
Administrative Agent.

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8.3    Conduct of Business. The Borrower shall maintain its corporate existence,
shall maintain in full force and effect all licenses, permits, authorizations,
bonds, franchises, leases, patents, trademarks and other Intellectual Property,
contracts and other rights necessary to the conduct of its business, and shall
comply with all applicable laws (including, without limitation, Healthcare Laws
and Environmental Laws), orders, regulations and ordinances of all federal,
foreign, state and local governmental authorities, except to the extent any such
non-compliance could reasonably be expected to result in a Material Adverse
Effect. The Borrower shall continue in, and limit its operations to, the same
general line of business as that currently conducted. The Borrower shall keep
proper books of record and account in which full and true entries will be made
of all dealings or transactions of or in relation to the business and affairs of
the Borrower, in accordance with GAAP (subject, however, to the GAAP
Exceptions), consistently applied.
8.4    Claims and Taxes. The Borrower agrees to pay or cause to be paid all
license fees, bonding premiums and related taxes and charges and shall pay or
cause to be paid all of the Borrower’s real and personal property taxes,
assessments and charges and all of the Borrower’s franchise, income,
unemployment, payroll, use, excise, old age benefit, withholding, sales and
other taxes and other governmental charges assessed against the Borrower, or
payable by the Borrower, at such times and in such manner as to prevent any
penalty from accruing or any Lien from attaching to its property, provided that
the Borrower shall have the right to contest in good faith, by an appropriate
proceeding promptly initiated and diligently conducted, the validity, amount or
imposition of any such tax, assessment or charge, and upon such good faith
contest to delay or refuse payment thereof, if (a) the Borrower establishes
adequate reserves to cover such contested taxes, assessments or charges, and (b)
such contest does not have a Material Adverse Effect.
8.5    State of Incorporation or Formation. The Borrower’s state of
incorporation or formation, as applicable, set forth on Schedule 1.1(a) hereto
shall remain the Borrower’s state of incorporation or formation, as applicable,
unless: (a) the Borrower provides the Administrative Agent with at least thirty
(30) days prior written notice of any proposed change (provided that Borrower
shall at all times be organized in a state or commonwealth of the United
States); (b) no Event of Default then exists or will exist immediately after
such proposed change; and (c) the Borrower provides the Administrative Agent
with, at Borrower’s sole cost and expense, such financing statements, and such
other agreements and documents as the Administrative Agent shall reasonably
request in connection therewith.
8.6    Liability Insurance. The Borrower shall maintain, at its expense, general
liability and environmental insurance through commercial insurance in such
amounts and with such deductibles consistent with its past practices, and shall
deliver to the Administrative Agent the original (or a certified) copy of each
policy of insurance and evidence of the payment of all premiums therefor. Such
policies of insurance shall contain an endorsement showing the Administrative
Agent as additional insured thereunder to the general liability coverage and,
where such an endorsement is available from Borrower’s carrier at commercially
affordable rates, to the professional liability coverage. Administrative Agent
acknowledges that general liability insurance coverage is currently unavailable
generally in the nursing home industry at commercially affordable rates.
Borrower has in place and will maintain either (i) so long it is available at
commercially affordable rates, for the States in which the Facilities are
located, indemnity insurance with coverage limits of One Million

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Dollars ($1,000,000.00) per medical incident, subject to a deductible of up to
Five Hundred Thousand Dollars ($500,000.00) per claim and a sublimit per
Facility of Three Million Dollars ($3,000,000.00) or (ii) general liability and
malpractice insurance with single limit coverage of Five Hundred Thousand and
No/100 Dollars ($500,000.00) per occurrence and One Million and No/100 Dollars
($1,000,000.00) cumulative. Administrative Agent agrees that until such time as
insurance coverage is generally available in the nursing home industry at
commercially affordable rates, Administrative Agent agrees to accept Borrower’s
current coverage. Borrower shall provide Administrative Agent, (a) on an annual
basis, information from its insurance representative, insurance carrier or from
comparable insurance carriers regarding availability of insurance and (b) with
respect to the insurance policies contemplated by this Section 8.6 and those
certain insurance policies contemplated by Section 8.7 below, prompt (but in any
event, within five (5) Business Days of any such occurrence) written notice of
any alteration or cancellation of such insurance policy.
8.7    Property and Other Insurance. The Borrower shall, at its expense, keep
and maintain its assets material to the business of Borrower insured against (i)
loss or damage by fire, theft, explosion, flood, earthquake, spoilage and all
other hazards and risks and (ii) business interruption, in such amounts with
such deductibles (which may include self-insurance trusts) ordinarily insured
against by other owners or users of such properties in similar businesses of
comparable size operating in the same or similar locations. Borrower, at
Borrower’s expense, shall keep and maintain workers compensation insurance as
may be required by applicable Laws. The Borrower Agent shall deliver to the
Administrative Agent the original (or a certified) copy of each policy of
insurance and evidence of payment of all premiums therefor. All such policies of
insurance shall be in form and substance reasonably satisfactory to the
Administrative Agent. Such policies of insurance shall contain an endorsement,
in form and substance satisfactory to the Administrative Agent, showing the
Administrative Agent as “Mortgagee” and “Lender’s Loss Payee” and all loss
payable to the Administrative Agent (for the ratable benefit of the Lenders), as
its interests may appear, as provided in this Section. Such endorsement shall
provide that such insurance company will give the Administrative Agent at least
thirty (30) days prior written notice before any such policy or policies of
insurance shall be altered or canceled and that no act or default of the
Borrower or any other Person shall affect the right of the Administrative Agent
to recover under such policy or policies of insurance in case of loss or damage.
The Borrower hereby directs all insurers under such policies of insurance to pay
all proceeds of insurance policies directly to the Administrative Agent and the
Administrative Agent shall absent an Event of Default permit the Borrower to use
such proceeds to restore or rebuild the damaged property as the Borrower shall
determine in its reasonable and good faith determination.
Upon the occurrence of an Event of Default under this Agreement, the Borrower
irrevocably makes, constitutes and appoints the Administrative Agent (and all
officers, employees or agents designated by the Administrative Agent in writing
to the Borrower) as the Borrower’s true and lawful attorney-in-fact for the
purpose, subject at all times to the terms and conditions of the Commercial
Leases (if and as applicable), of making, settling and adjusting claims on
behalf of the Borrower under all such policies of insurance, endorsing the name
of the Borrower on any check, draft, instrument or other item of payment
received by the Borrower or the Administrative Agent pursuant to any such
policies of insurance, and for making all determinations and decisions of
Borrower with respect to such policies of insurance.

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UNLESS THE BORROWER PROVIDES THE ADMINISTRATIVE AGENT WITH EVIDENCE OF THE
INSURANCE COVERAGE REQUIRED BY THIS AGREEMENT WITHIN THREE BUSINESS DAYS
FOLLOWING ADMINISTRATIVE AGENT’S REQUEST, THE ADMINISTRATIVE AGENT MAY PURCHASE
INSURANCE AT THE BORROWER’S EXPENSE TO PROTECT THE ADMINISTRATIVE AGENT’S
INTERESTS IN THE COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT THE
INTERESTS IN THE COLLATERAL. THE COVERAGE PURCHASED BY THE ADMINISTRATIVE AGENT
MAY NOT PAY ANY CLAIMS THAT THE BORROWER MAKES OR ANY CLAIM THAT IS MADE AGAINST
THE BORROWER IN CONNECTION WITH THE COLLATERAL. THE BORROWER MAY LATER CANCEL
ANY SUCH INSURANCE PURCHASED BY THE ADMINISTRATIVE AGENT, BUT ONLY AFTER
PROVIDING THE ADMINISTRATIVE AGENT WITH EVIDENCE THAT THE BORROWER HAS OBTAINED
INSURANCE AS REQUIRED BY THIS AGREEMENT. IF THE ADMINISTRATIVE AGENT PURCHASES
INSURANCE FOR THE COLLATERAL, THE BORROWER WILL BE RESPONSIBLE FOR THE COSTS OF
THAT INSURANCE, INCLUDING INTEREST AND ANY OTHER CHARGES THAT THE ADMINISTRATIVE
AGENT MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE
EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS OF
THE INSURANCE MAY BE ADDED TO THE LIABILITIES SECURED HEREBY. THE COSTS OF THE
INSURANCE MAY BE MORE THAN THE COST OF INSURANCE THE BORROWER MAY BE ABLE TO
OBTAIN ON ITS OWN.
8.8    Environmental. The Borrower shall promptly notify and furnish
Administrative Agent with a copy of any and all Environmental Notices which are
received by it. Except where not required to do so pursuant to any Commercial
Lease, the Borrower shall take prompt and appropriate action in response to any
and all such Environmental Notices and shall promptly furnish Administrative
Agent with a description of the Borrower’s Response thereto. The Borrower shall
(a) obtain and maintain all permits required under all applicable federal,
state, and local Environmental Laws, except as to which the failure to obtain or
maintain would not have a Material Adverse Effect; and (b) except where not
required to do so pursuant to any Commercial Lease, keep and maintain the
Property and each portion thereof in compliance with, and not cause or permit
the Property or any portion thereof to be in violation of, any Environmental
Law, except as to which the failure to comply with or the violation of which,
would not have a Material Adverse Effect. During the term of this Agreement, the
Borrower shall not permit others to, Manage, whether on or off Borrower’s
Property, Hazardous Substances, except to the extent such Management does not or
is not reasonably likely to result in or create a Material Adverse Effect.
Except where not required to do so pursuant to any Commercial Lease, the
Borrower shall take prompt action in material compliance with applicable
Environmental Laws to Respond to the on-site or off-site Release of Hazardous
Substances connected with operation of its business or Property.
8.9    Banking Relationship. Except as otherwise provided in the Revolving Loan
Agreement the Borrower and the Guarantor shall at all times maintain all of
their respective primary deposit and operating accounts with the Administrative
Agent and the Administrative Agent will act as the principal depository and
remittance agent for the Borrower and Guarantor. The Borrower agrees to pay to
the Administrative Agent reasonable and customary fees for banking services/cash

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management services of Borrower and Guarantor (the “Service Fee”). The
Administrative Agent shall be and hereby is authorized to charge any deposit or
operating account of the Borrower in respect of the Service Fee.
8.10    Intellectual Property. If after the Closing Date the Borrower shall own
or otherwise possess any registered patents, copyrights, trademarks, trade
names, or service marks other than those owned by Guarantor or any derivation
thereof (or file an application to attempt to register any of the foregoing),
the Borrower shall promptly notify the Administrative Agent in writing of same
and execute and deliver any documents or instruments (at the Borrower’s sole
cost and expense) reasonably required by Administrative Agent to perfect a
security interest in and lien on any such federally registered Intellectual
Property in favor of the Administrative Agent and assist in the filing of such
documents or instruments with the United States Patent and Trademark Office
and/or United States Copyright Office or other applicable registrar.
8.11    Change of Location; Etc. Any of the Collateral may be moved to another
location within the continental United States so long as: (i) the Borrower
provides the Administrative Agent with at least thirty (30) days prior written
notice; (ii) no Event of Default then exists, and (iii) the Borrower provides
the Administrative Agent with, at Borrower’s sole cost and expense, such
financing statements, landlord waivers, bailee and processor letters and other
such agreements and documents as the Administrative Agent shall reasonably
request. The Borrower shall defend and protect the Collateral against and from
all claims and demands of all Persons at any time claiming any interest therein
adverse to the Administrative Agent. If the Borrower desires to change its
principal place of business and chief executive office or its name, the Borrower
shall notify the Administrative Agent thereof in writing no later than thirty
(30) days prior to such change and the Borrower shall provide the Administrative
Agent with, at Borrower’s sole cost and expense, such financing statements,
amendment statements and other documents as the Administrative Agent shall
reasonably request in connection with such change. If the Borrower shall decide
to change the location where its books and records are maintained, the Borrower
shall notify the Administrative Agent thereof in writing no later than thirty
(30) days prior to such change.
8.12    Health Care Related Matters. To the extent applicable, the Borrower
shall cause all licenses, permits, certificates of need, reimbursement contracts
and programs, and any other agreements necessary for the use and operation of
its business or as may be necessary for participation in Medicaid and other
applicable reimbursement programs, to remain in full force and effect, except to
the extent that the failure to do so would not cause a Material Adverse Effect
or a material adverse effect on the prospects of the Borrowers on a consolidated
basis.
8.13    US Patriot Act. Borrower covenants to Administrative Agent and Lenders
that if Borrower becomes aware that it or any of its Affiliates is identified on
any Blocked Persons List (as identified in Section 7.29 hereof), Borrower shall
immediately notify Administrative Agent and Lenders in writing of such
information. Borrower further agrees that in the event any of them or any
Affiliate is at any time identified on any Blocked Persons List, such event
shall be an Event of Default, and shall entitle Administrative Agent and Lenders
to exercise any and all remedies provided in any Financing Agreements or
otherwise permitted by Law. In addition, Administrative Agent and Lenders may
immediately contact the Office of Foreign Assets Control and any other

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government agency Administrative Agent or Lenders deem appropriate in order to
comply with its respective obligations under any Law regulating or relating to
terrorism and international money laundering.
8.14    Single Purpose Entity Provisions. (a) The business and purposes of
Borrower is and will continue to be limited to the following: (i) for the Propco
Borrower, to acquire, own, hold, lease, maintain, develop and/or improve the
Property; (ii) except for the Propco Borrower and Diversicare Property, to
operate and manage the Facilities; (iii) to enter into and perform its
obligations under this Agreement and the other Financing Agreements and the
Affiliated Revolving Loan Financing Agreements; (iv) for the Propco Borrower, to
sell, transfer, service, convey, dispose of, pledge, assign, borrow money
against, finance or otherwise deal with the Property to the extent permitted
under this Agreement and the other Financing Agreements; (v) for the Propco
Borrower, to lease the Property to the Operators; and (vi) to engage in any
lawful act or activity and to exercise any powers permitted to entities of its
type pursuant to Section 6 of the applicable Borrower’s operating agreement or
the laws of its state of organization that are related or incidental to and
necessary, convenient or advisable for the accomplishment of the above mentioned
purposes.
(b)    Borrower shall do all of the following: (i) maintain its intention to
remain Solvent and pay its debts and liabilities (including, as applicable,
shared personnel and overhead expenses) from its assets, to the extent of its
assets, as the same shall become due; (ii) do or cause to be done all things
necessary to observe organizational formalities of Borrower and preserve its
existence; and (iii) to the extent of cash flow available from operations,
intend to maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations.
8.15    Further Assurances. The Borrower shall, at its own cost and expense,
cause to be promptly and duly taken, executed, acknowledged and delivered all
such further acts, documents and assurances as may from time to time be
necessary or as the Administrative Agent or any Lender may from time to time
reasonably request in order to carry out the intent and purposes of this
Agreement and the other Financing Agreements and the transactions contemplated
hereby and thereby, including, without limitation, all such actions to
establish, create, preserve, protect and perfect a first-priority Lien in favor
of the Administrative Agent (for the ratable benefit of Lenders and
Administrative Agent) on the Collateral (including Collateral acquired after the
date hereof), including on any and all unencumbered assets of Borrower whether
now owned or hereafter acquired.
8.16    Compliance with Anti-Terrorism Orders. Administrative Agent and Lenders
hereby notify Borrowers that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “Patriot
Act”), and the policies and practices of Administrative Agent and Lenders, the
Administrative Agent and Lenders are required to obtain, verify and record
certain information and documentation that identifies each Borrower, which
information includes the name and address of each Borrower and such other
information that will allow the Administrative Agent and Lenders to identify
each Borrower in accordance with the Patriot Act. In addition, Borrowers shall
(a) ensure that no Person who owns a controlling interest in or otherwise
controls any Borrower is or shall be listed on the OFAC Lists, (b) not use or
permit the use of the proceeds of the Loan to violate any of the foreign asset
control regulations of OFAC or

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any enabling statute or Executive Order relating thereto, and (c) comply with
all applicable Bank Secrecy Act laws and regulations, as amended. Borrower shall
not permit the transfer of any interest in Borrower to any Person (or any
beneficial owner of such entity) who is listed on the OFAC Lists. Borrower shall
not knowingly enter into a Lease with any party who is listed on the OFAC Lists.
Borrower shall immediately notify Administrative Agent and Lenders if Borrower
has knowledge that the Guarantor, manger or any member or beneficial owner of
Borrower, Guarantor, Manager is listed on the OFAC Lists or (i) is indicted on
or (ii) arraigned and held over on charges involving money laundering or
predicate crimes to money laundering. Borrower shall immediately notify
Administrative Agent and Lenders if Borrower knows that any Tenant is listed on
the OFAC Lists or (A) is convicted on, (B) pleads nolo contendere to, (C) is
indicted on or (D) is arraigned and held over on charges involving money
laundering or predicate crimes to money laundering.
8.17    [Intentionally Omitted].
8.18    ERISA. The Borrower shall maintain, or cause its ERISA Affiliates to
maintain, each Plan in compliance in all material respects with all material
applicable requirements of ERISA and the Tax Code.
8.19    Certain Healthcare Matters. Borrower shall, promptly following the
Closing Date, apply for, diligently prosecute, and promptly upon obtaining
provide Administrative Agent with copies of, certificates of need, certificates
of medical necessity, Medicaid and Medicare provider numbers, license, permits
and authorizations that are necessary in the generation of accounts receivable
for and with respect to the applicable Borrowers other than Diversicare
Property.
8.20    FCPA. No part of the proceeds of the Loan will be used, directly or
indirectly, in furtherance of an offer, payment, promise to pay, or
authorization of the payment or giving of money, or anything else of value, to
any Person in violation of the FCPA or any other applicable anti-corruption law.
Borrower shall maintain in effect policies and procedures designed to promote
compliance by Borrower, its Subsidiaries and their respective directors,
managers, officers, employees, and agents with the FCPA and any other applicable
anti-corruption laws.
9.    NEGATIVE COVENANTS.
The Borrower covenants and agrees on a joint and several basis with
Administrative Agent and Lenders that as long as any Liabilities or Affiliate
Revolving Loan Liabilities remain outstanding, and (even if there shall be no
such Liabilities or Affiliate Revolving Loan Liabilities outstanding) as long as
this Agreement remains in effect (unless the Required Lenders shall give (or
Administrative Agent upon instruction by Required Lenders to give) prior written
consent thereto):
9.1    Encumbrances. The Borrower shall not create, incur, assume or suffer to
exist any Lien of any nature whatsoever on any of its assets or property,
including, without limitation, the Collateral, other than the following
(“Permitted Liens”): (i) Liens securing the payment of taxes, either not yet due
or the validity of which is being contested in good faith by appropriate
proceedings, and as to which the Borrower shall, if appropriate under GAAP, have
set aside on its books and records adequate reserves, provided, that such
contest does not have a material adverse effect on the ability of the Borrower
to pay any of the Liabilities, or the priority or value of the Administrative

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Agent’s Lien in the Collateral; (ii) deposits under workmen’s compensation,
unemployment insurance, social security and other similar laws made in ordinary
course of business; (iii) Liens in favor of the Administrative Agent (for the
ratable benefit of Lenders and Administrative Agent); (iv) liens imposed by law,
such as mechanics’, materialmen’s, landlord’s, warehousemen’s, carriers’ and
other similar liens, securing obligations incurred in the ordinary course of
business that are not past due for more than thirty (30) calendar days, or that
are being diligently contested in good faith by appropriate proceedings and for
which appropriate reserves have been established, or that are not yet due and
payable; (v) purchase money security interests upon or in any property acquired
or held by the Borrower in the ordinary course of business to secure the
purchase price of such property so long as: (a) the aggregate indebtedness
relating to such purchase money security interests and Capitalized Lease
Obligations does not at any time exceed Three Million and No/100 Dollars
($3,000,000.00) in the aggregate at any time, (b) each such lien shall only
attach to the property to be acquired; and (c) the indebtedness incurred shall
not exceed one hundred percent (100%) of the purchase price of the item or items
purchased; (v) pledges and deposits made in the ordinary course of business in
compliance with workmen’s compensation laws, unemployment insurance and other
social security laws or regulations, or deposits to secure performance of
tenders, statutory obligations, trade contracts (other than for Indebtedness),
leases (other than Capital Lease Obligations), surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of Borrower’s business as presently conducted; (vi) any Lien
securing a judgment; provided, that any Lien securing a judgment in excess of
Five Hundred Thousand Dollars ($500,000.00) that remains unsatisfied or
undischarged for more than thirty (30) days shall not be a Permitted Lien,
unless such judgment is either (x) fully insured and such insurer has admitted
liability or (y) is being contested or appealed by appropriate proceedings and
the enforcement of such judgment is stayed during the course of such contest or
appeal, provided that Borrower has established reserves adequate for payment of
such judgment and in the event such contest or appeal is ultimately unsuccessful
pays such judgment within ten (10) days of the final, non-appealable ruling
rendered in such contest or appeal; and (vii) financing statements with respect
to a lessor’s rights in and to personal property leased to a Borrower in the
ordinary course of business other than through a Capitalized Lease Obligations.
9.2    Indebtedness; Capital Expenditures. Borrower shall not incur, create,
assume, become or be liable in any manner with respect to, or permit to exist,
any Indebtedness, except (i) the Liabilities, (ii) HUD Financing (but only for
purposes of payment and release of a Propco Borrower and such Propco Borrower’s
Collateral in accordance with Section 6.8 hereof), (iii) the Commercial Leases,
and any extensions or renewals thereof, (iv) trade obligations and normal
accruals in the ordinary course of business not yet due and payable, (v) the
indebtedness not to at any time exceed Three Million and No/100 Dollars
($3,000,000.00) relating to the purchase money security interests and
Capitalized Lease Obligations permitted pursuant to Section 9.1 hereof, and (vi)
intercompany Indebtedness of the Borrower to the extent permitted under Section
9.4.
9.3    Consolidations, Mergers or Transactions; Subsidiary. Other than the
Hutchinson Acquisition, the Clinton Acquisition and any Permitted Acquisition,
the Borrower shall not be a party to any merger, consolidation, recapitalization
or other exchange of Stock, or purchase or otherwise acquire all or
substantially all of the assets or Stock of any class of, or any other evidence
of an equity interest in, or any partnership, limited liability company, or
joint venture interest in,

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any other Person (whether in one transaction or a series of related
transactions); provided, that, with prior written notice to Administrative
Agent, a Borrower may merge or consolidate with, or dissolve into, another
Borrower so long as the surviving entity remains a Borrower for all purposes
under this Agreement and the other Financing Agreements. The Borrower shall not
form or establish any Subsidiary without the Administrative Agent’s prior
written consent, unless each of the requirements identified on Schedule 9.3
hereto are satisfied, as reasonably determined by the Administrative Agent. With
prior notice to Administrative Agent, Borrower may dissolve an inactive
Subsidiary that does not conduct any business operations and has assets with a
book value not in excess of Ten Thousand and No/100 Dollars ($10,000.00)
(“Inactive Subsidiary”), provided that any assets are transferred to Guarantor
or an existing Subsidiary which is a Borrower under this Agreement or the
Revolving Loan Agreement.
9.4    Investments or Loans. The Borrower shall not make, incur, assume or
permit to exist any loans or advances, or any investments in or to any other
Person, except (i) investments in short-term direct obligations of the United
States Government, agency or instrumentality thereof; or any (ii) investments in
negotiable certificates of deposit issued by the Administrative Agent or by any
other bank reasonably satisfactory to the Administrative Agent, payable to the
order of the Borrower or to bearer, (iii) investments in commercial paper rated
at least A-1 by Standard & Poor’s Corporation or P-1 by Moody’s Investors
Service, Inc., or carrying an equivalent rating by a nationally recognized
rating agency if both of the two named rating agencies cease publishing ratings
of investments, (iv) investments in money market funds which invest
substantially all their assets in securities of the types described in clauses
(i) through (iii), above; provided that, in each case, such investment is
reasonably acceptable to the Administrative Agent, (iv) other short-term
investments as may be permitted by Administrative Agent, (vi) loans or advances
made by any Borrower to Guarantor, any other Borrower or any Affiliated
Revolving Borrower, (vii) loans and advances to employees permitted under
Section 9.8; (viii) investments by the Borrowers in their respective
Subsidiaries existing on the date hereof and additional investments by the
Borrower in their respective Subsidiaries so long as such Subsidiary is a
Borrower under this Agreement; and (iv) loans or advances made to the applicable
hospital operator under either (x) the Indiana IGT Arrangement (as defined in
the Revolving Loan Agreement) or (y) a Texas IGT Arrangement (as defined in the
Revolving Loan Agreement).
9.5    Guarantees. The Borrower shall not guarantee, endorse or otherwise in any
way become or be responsible for obligations of any other Person, whether by
agreement to purchase the Indebtedness of any other Person or through the
purchase of goods, supplies or services, or maintenance of working capital or
other balance sheet covenants or conditions, or by way of stock purchase,
capital contribution, advance or loan for the purpose of paying or discharging
any Indebtedness or obligation of such other Person or otherwise, except (i)
endorsements of negotiable instruments for collection in the ordinary course of
business, and (ii) the Indebtedness permitted under Section 9.2, above.
9.6    Disposal of Property. The Borrower shall not sell, assign, lease, convey,
lease, transfer or otherwise dispose of (whether in one transaction or a series
of transactions) all or any substantial part of its properties, assets and
rights (or sell or assign, with or without recourse, any receivables) to any
Person except (a) sales of Inventory in the ordinary course of business, (b)
sales

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of Equipment being replaced in the ordinary course of business with other
Equipment with a fair market value and orderly liquidation value equal to or
greater than the Equipment being replaced, (c) sales in the ordinary course of
business of personal property that is obsolete, unmerchantable or otherwise
unsalable, unusable or unnecessary to Borrower’s business, (d) sales, leases and
assignments of personal property between one Borrower to another Borrower, and
(e) the sale, conveyance or transfer (a “Permitted Disposition”) of any one or
more of the Facilities provided that:
(i)     at the time of each such Permitted Disposition, no Default or Event of
Default shall have occurred and be continuing or would result from such
transaction (including, without limitation, any breach or violation of any
financial covenant set forth in Section 9.12 hereof);
(ii)     that such Permitted Disposition is an arm’s length transaction for the
fair value of the Facility being sold or transferred;
(iii)     such Permitted Disposition shall be consummated in accordance with all
applicable Law; and
(iv)     at least five (5) Business Days prior to the consummation of the
Permitted Disposition, the Borrower whose Facility is being disposed of shall
have delivered to the Administrative Agent an Officer’s Certificate certifying
that such transactions comply with the foregoing provisions (which shall have
attached thereto reasonable back-up data and calculations showing such
compliance).
Solely for purpose of this Section 9.6 in connection with the consummation of
any one or more Permitted Dispositions complying in all respects with the
foregoing requirements, or as permitted pursuant to Section 6.8, Administrative
Agent and Lender will fully release and discharge the applicable lien and
security interest granted to Administrative Agent to secure the Loan (for the
ratable benefit of the Lenders and the Administrative Agent) under this
Agreement and the Financing Agreements on the specific Collateral of such
applicable Borrower or Borrowers (the “Released Collateral”), and will fully
release and discharge such Borrower or Borrowers (the “Released Borrowers”) from
their obligations under this Agreement and any Financing Agreement, including
the Term Loan Note and the Acquisition Loan Note (except for contingent
indemnification obligations that survive by their terms herein, including,
without limitation, pursuant to Sections 12.9 and 12.16), provided that and
conditioned upon satisfaction of each of the foregoing, in the sole
determination of the Administrative Agent:
(1)    The release documents are reasonably acceptable to Administrative Agent
and customary for recording the release of liens and security interests in the
applicable Collateral in the jurisdictions where the liens and security in the
Released Collateral are filed or recorded. Released Borrowers shall be
responsible for the cost and expense of preparing and recording the applicable
release documents;
(2)    All reasonably requested instruments, documents and agreements by the
Administrative Agent and Lenders in connection with such Permitted Dispositions
are duly executed

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and delivered by the Released Borrowers and, if applicable, any other Borrower
(including amendments to this Agreement and the other Financing Agreements); and
(3)    The Released Borrowers shall, substantially simultaneously with (and in
any event not later than the first (1st) Business Day following the receipt of
the net cash proceeds from the insurance or incurrence of the Permitted
Disposition), apply and pay in immediately available funds without setoff or
deduction of any kind an amount equal to (A) the loan value apportioned to the
Facility or Facilities being disposed of as set forth on Schedule 9.6 attached
hereto (which Schedule shall identify the values given to the respective
Facilities for purposes of achieving such loan to value based on the “Debt
Allocation Percentage” column on such Schedule) to prepay the outstanding Term
Loan amount in accordance with Section 2.10 and any other related then due and
owing Liabilities, if such Permitted Disposition is with respect to any Facility
listed on Schedule 9.6 hereof or (B) an amount equal to one hundred percent
(100%) of such net cash proceeds of such Permitted Disposition to be applied to
the outstanding Acquisition Loans and any other related then due and owing
Liabilities, if such Permitted Disposition is with respect to any Facility not
listed on Schedule 9.6 and that was acquired by the Borrowers pursuant to a
Permitted Acquisition.
Notwithstanding the release and discharge of the Released Borrowers and the
Released Collateral as provided in this Section 9.6, this Agreement, the other
Financing Agreements and the Lien of the Administrative Agent on the Collateral
(and any other Lien provided by the other Financing Agreements, including
pursuant to the applicable Mortgages), shall remain and continue in full force
and effect as to the Borrowers other than the Released Borrower and the
Collateral (and other assets and property subject to the other Financing
Agreements) other than the Released Collateral. No Prepayment Premium shall be
required or due in respect of any prepayment on the Loan made by Borrower
pursuant to a Permitted Disposition.
9.7    Use of Proceeds. The Borrower shall use the proceeds of the Term Loan
only for the following purposes: (a) to finance the consummation of the
Hutchinson Acquisition; (b) to finance the consummation of the Clinton
Acquisition; (c) payment of certain capital expenditures in the ordinary course
of Borrower’s business; (d) to refinance an aggregate amount equal to Three
Million Nine Hundred Thousand Dollars ($3,900,000) of Revolving Loans under the
Original Revolving Loan Agreement, which was used by Diversicare Fulton
Property, LLC, to acquire the Property and Facility commonly known as Haws
Memorial Nursing & Rehab Center, in Fulton, Kentucky; and (e) to pay reasonable
and actually incurred transaction costs and expenses in connection with this
Agreement, the Hutchinson Acquisition Agreement, the Clinton Acquisition
Agreement and the transactions contemplated hereby and thereby. The Borrower
shall use the proceeds of each Acquisition Loan only for the following purposes:
(x) to finance the consummation of the Permitted Acquisitions; (y) the payment
of capital expenditures relating solely to the Properties and/or Facilities in
the ordinary course of Borrower’s business; and (z) to finance the acquisition
of leasehold interests in Facilities such as those described in the definition
of the Facilities under this Agreement to be operated by an Affiliated Revolving
Borrower.
9.8    Loans to Officers; Consulting and Management Fees. The Borrower shall not
make any loans to its officers, directors, equity holders, manager, member, or
employees or to any other Person, and the Borrower shall not pay any consulting,
management fees or similar fees to its

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officers, directors, equity holders, member, manager, employees, or Affiliates
or any other Person, whether for services rendered to the Borrower or otherwise;
provided, however, the Borrower shall be permitted to (i) make advances to its
employees in an aggregate amount not to exceed One Hundred Thousand Dollars
($100,000) in any Fiscal Year of Borrower for all such employees collectively,
in each case, provided that both immediately before such contemplated payment(s)
or after giving effect to any such payment(s) no Default or Event of Default
shall exist or have occurred or result therefrom; (ii) pay reasonable outside
directors fees; and (iii) pay the management fees permitted by the Management
Agreements (with an absolute cap on the payment of any and all management fees
notwithstanding anything to the contrary contained in the Management Agreements
of five percent (5.0%) of the total revenues of Borrowers on a consolidated
basis during any Fiscal Year). Administrative Agent acknowledges that travel
advances issued in the ordinary course of business do not constitute loans for
purposes of this Section 9.8.
9.9    Dividends, Distributions and Stock Redemptions. The Borrower shall not
(a) declare, make or pay any dividend or other distribution (whether in cash,
property or rights or obligations) to or for the benefit of any officer, member,
equity holder, director, or any Affiliate or any other Person other than (i) to
Guarantor, provided that both immediately before such contemplated payment(s) or
after giving effect to any such payment(s) Guarantor is in compliance with
Section 9.12(b), (ii) the Required Dividends and Redemption Amounts (as such
term is defined in the Revolving Loan Agreement), (iii) distributions under the
Borrower Cash Management Program, including distributions for Guarantor’s normal
quarterly dividends to common shareholders, and (iv) payment of the management
fees under the Management Agreements (subject to subsection (iii) of Section 9.8
above), or (b) purchase or redeem any of the Stock of the Borrower or any
options or warrants with respect thereto, declare or pay any dividends or
distributions thereon, or set aside any funds for any such purpose.
Notwithstanding the foregoing or anything to the contrary contained herein, the
foregoing declarations, payments, distributions, purchases or redemptions set
forth in this Section 9.9 shall, in each case, be in both manner and amount
consistent with the Borrower’s historical practices.
9.10    Payments in Respect of Subordinated Debt.
(a)    [Intentionally Omitted.]
(b)    The Borrower shall not make any payment in respect of any Indebtedness
for borrowed money that is subordinated to the Liabilities (including, without
limitation, the Subordinated Debt); provided, however, the Borrower shall be
permitted to make solely those payments expressly permitted pursuant to the
terms of any Subordination Agreements, in each case, as long as the Borrower is
in compliance with the financial covenants contained in Section 9.12 hereof both
immediately before and after any such contemplated or actual payment, provided,
further, that both immediately before any such contemplated payment or after
giving effect to any such payments no Default or Event of Default shall exist or
have occurred or result therefrom, unless otherwise permitted expressly under
the terms of such Subordination Agreements.
9.11    Transactions with Affiliates. Except as expressly permitted under this
Agreement, and except for the Management Agreements and payment of the fee
permitted by the terms of the Management Agreements (subject to subsection (iii)
of Section 9.8 above), and the Borrower Cash

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Management Program, the Borrower shall not transfer any cash or property to any
Affiliate or enter into any transaction, including, without limitation, the
purchase, lease, sale or exchange of property or the rendering of any service to
any Affiliate; provided, however, except as otherwise expressly restricted under
this Agreement, that the Borrower may transfer cash or property to Affiliates
and enter into transactions with Affiliates for fair value in the ordinary
course of business pursuant to terms that are no less favorable to the Borrower
than the terms upon which such transfers or transactions would have been made
had such transfers or transactions been made to or with a Person that is not an
Affiliate.
9.12    Financial Covenants. Commencing with the Fiscal Quarter ending June 30,
2013 and continuing thereafter:
(a)    Minimum EBITDAR. The consolidated Borrower shall not permit its EBITDAR
to be less than Ten Million Dollars ($10,000,000) for the Fiscal Quarter ending
March 31, 2016 and for each Fiscal Quarter thereafter, measured on the last day
of the applicable Fiscal Quarter on a trailing twelve (12) month basis;
provided, Administrative Agent acknowledges the minimum EBITDAR herein will need
to be adjusted to a mutually acceptable dollar amount as a result of any HUD
Financing in accordance with Section 6.8.
(b)    Minimum Fixed Charge Coverage Ratio. The Guarantor shall not permit its
Fixed Charge Coverage Ratio to be less than 1.05 to 1.00 for the Fiscal Quarter
ending March 31, 2016 and for each Fiscal Quarter thereafter, measured on the
last day of the applicable Fiscal Quarter on a trailing twelve (12) month basis.
(c)    Minimum Adjusted EBITDA. The Guarantor shall not permit its Adjusted
EBITDA to be less than $10,000,000 for the Fiscal Quarter ending March 31, 2016
and for each Fiscal Quarter thereafter, measured on the last day of the
applicable Fiscal Quarter on a trailing twelve (12) month basis.
(d)    Minimum Current Ratio. The Guarantor shall not permit its Current Ratio
to be less than 1.00 to 1.00 for the Fiscal Quarter ending March 31, 2016 and
for each Fiscal Quarter thereafter, measured on the last day of the applicable
Fiscal Quarter on a trailing twelve (12) month basis.
The Borrower and the Guarantor acknowledge and agree that the calculation and
computation of the foregoing financial covenants shall be pursuant to and in
accordance with the last sentence of Section 8.1(c) hereof.
Administrative Agent, Lenders, Borrower and Guarantor acknowledge and agree that
for purposes of the calculation and computation of the foregoing financial
covenants in subparagraphs (b), (c) and (d), the terms “Fixed Charge Coverage
Ratio”, “Adjusted EBITDA”, and “Current Ratio”, for purposes of this Section
9.12, shall all be as defined, calculated and measured in the Revolving Loan
Agreement, on a consolidated basis, for Guarantor and all Affiliated Revolving
Borrowers thereunder.

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9.13    Change in Nature of Business. Propco Borrower shall not engage, directly
or indirectly, in any business other than owning and/or leasing the Property to
the Operators and matters incidental or directly related thereto. Borrowers
other than Propco Borrower and Divesicare Property shall not engage, directly or
indirectly, in any business other than operating the Facilities leased to them
by Propco Borrower.
9.14    Other Agreements. The Borrower shall not enter into any agreement
containing any provision which would be violated or breached by the performance
of its obligations hereunder or under any Financing Agreement to which Borrower
is a party or which would violate or breach any provision hereof or thereof, or
that would or is reasonably likely to adversely affect the Administrative
Agent’s or any Lender’s interests or rights under this Agreement and the other
Financing Agreements to which Borrower is a party or the likelihood that the
Liabilities will be paid in full when due, nor shall the Borrower’s certificate
of formation, bylaws, articles of incorporation, operating agreement,
partnership agreement or other governing document (each a “Governing Document”),
as applicable, be amended or modified in any way that would violate or breach
any provision hereof or of any Financing Agreement to which Borrower is a party,
or that would or is reasonably likely to adversely affect the Administrative
Agent’s or any Lender’s interests or rights under this Agreement and the other
Financing Agreements to which Borrower is a party or the likelihood that the
Liabilities will be paid in full when due; provided, prior to any amendment or
modification of any of the Borrower’s Governing Documents, the Borrower shall
furnish a correct and complete copy of any such proposed amendment or
modification to the Administrative Agent.
9.15    Blocked Accounts and Lock Box Accounts. The Borrower shall not establish
or open any blocked account or any lock box accounts after the Closing Date
unless in favor of and with the Administrative Agent.
9.16    Amendments to Restricted Agreements. The Borrower shall not amend,
modify or supplement any Restricted Agreement in any manner that would or is
reasonably likely to adversely affect the Administrative Agent’s or any Lender’s
interests under this Agreement and the other Financing Agreements to which
Borrower is a party, without the Administrative Agent’s prior written consent.
Within three (3) Business Days after entering into any non-adverse amendment,
modification or supplement to any Restricted Agreement, the Borrower Agent shall
deliver to the Administrative Agent a complete and correct copy of such
amendment, modification or supplement.
9.17    State of Incorporation or Formation. The Borrower shall not change its
state of incorporation or formation, as applicable, from that set forth on
Schedule 1.1(a) hereto. The Borrower shall not convert or change its status as a
type of Person (e.g., corporation, limited liability company, partnership or
limited partnership).
9.18    Environmental. Except as to environmental conditions for which it is not
responsible pursuant to any Commercial Lease, the Borrower shall not permit the
Property or any portion thereof to be involved in the use, generation,
manufacture, storage, disposal or transportation of Hazardous Substances except
in compliance in all material respects with all Environmental Laws.

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9.19    Fiscal Year. The Borrower shall not change its Fiscal Year.
9.20    Restrictions on Fundamental Changes. Without duplication of any of the
foregoing, Borrower shall not:
(a)    except as expressly permitted in accordance with Section 9.3 hereof,
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution);
(b)    except as required upon the termination of a Commercial Lease or in
connection with a Texas IGT Arrangement (as defined in the Revolving Loan
Agreement), transfer, assign, convey or grant to any other Person, other than
another Borrower, the right to operate or control any Location, whether by
lease, sublease, management agreement, joint venture agreement or otherwise;
(c)    without providing Administrative Agent with thirty (30) days’ prior
written notice, change its legal name (and Borrower shall provide Administrative
Agent with, at Borrower’s sole cost and expense, such amendment and financing
statements and other documents as Administrative Agent shall reasonably request
in connection with such contemplated change);
(d)    except as expressly permitted in accordance with Section 9.3 hereof,
suffer or permit to occur any change in the legal or beneficial ownership of the
capital stock, partnership interests or membership interests, or in the capital
structure, or any material change in the organizational documents or governing
documents, of Borrower;
(e)    except as permitted by a Texas IGT Arrangement (as defined in the
Revolving Loan Agreement) change the licensed operator, manager or property
manager for any Property; or
(f)    consent to or acknowledge any of the foregoing.
9.21    Margin Stock. Borrower shall not carry or purchase any “margin security”
within the meaning of Regulations U, T or X of the Board of Governors of the
Federal Reserve System.
9.22    Truth of Statements and Certificates. Borrower shall not furnish to the
Administrative Agent or any Lender any certificate or other document that
contains any untrue statement of a material fact or that omits to state a
material fact necessary to make it not misleading in light of the circumstances
under which it was furnished.
9.23    Commercial Leases. Without the prior written consent of Administrative
Agent, which consent will not unreasonably be withheld: (a) Borrower (other than
Diversicare Property) shall not enter into any Commercial Lease as to which a
Borrower would be the lessee; (b) except in connection with a Texas IGT
Arrangement (as defined in the Revolving Loan Agreement), no Person shall be the
Operator of the Facility other than the applicable Borrower; and (c) except in
connection with a Texas IGT Arrangement (as defined in the Revolving Loan
Agreement), no Operating Lease will be entered into between Borrower and any
Operator of the Facilities (other than an Operating Lease by and among a Propco
Borrower and any Borrower).

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9.24    ERISA. Borrower shall not, and shall not cause or permit any ERISA
Affiliate to, cause or permit to occur an unfunded pension fund obligation and
liability to the extent such unfunded pension fund obligation and liability
would reasonably be expected to result in taxes, penalties and other liability
in excess of Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate.
9.25    Miscellaneous. Borrower shall not (a) voluntarily cancel any claim or
debt owing to it, except for reasonable consideration or in the ordinary course
of business, the effect of which would be a Material Adverse Change, (b) enter
into any agreement containing any provision that would (i) be violated or
breached by any borrowing by Borrower hereunder or the performance by Borrower
of any of its Liabilities hereunder or under any other Financing Agreement to
which it is a party, or (ii) prohibit Borrower from granting to Administrative
Agent (for the benefit of the Lenders and itself) a Lien on any of Borrower’s
assets as contemplated hereunder, except for (w) any restrictions imposed by any
Permitted Lien pursuant to Section 9.1; (x) any restrictions imposed by any
agreement relating to any Indebtedness permitted by Section 9.2; (y) customary
provisions contained in leases and licenses entered into in the ordinary course
of Borrower’s business restricting the assignment thereof; and (z) any
restrictions imposed by applicable Laws. Without the prior written consent of
Administrative Agent and Required Lenders, the management fees payable by
Borrower to Manager pursuant to the Management Agreements shall not include any
amount of profit (but shall entirely be used to cover and pay for actually
incurred, ordinary course costs).
The Borrower agrees that compliance with this Section 9 is a material inducement
to the Lenders’ advancing credit under this Agreement. The Borrower further
agrees that in addition to all other remedies available to the Administrative
Agent and the Lenders, the Administrative Agent and Lenders shall be entitled to
specific enforcement of the covenants in this Section 9, including injunctive
relief.
10.    HEALTH CARE MATTERS.
Without limiting the generality of any representation or warranty made in
Section 7 or any covenant made in Sections 8 or 9, each Borrower represents and
warrants on a joint and several basis to and covenants with the Administrative
Agent and each Lender (or any Affiliate Revolving Loan Liabilities shall be
outstanding under the Revolving Loan Agreement), that:
10.1    [Intentionally Omitted].
10.2    Certificate of Need. If required under applicable Law, each Borrower has
and shall maintain in full force and effect a valid certificate of need (“CON”)
or similar certificates, license, permit, registration, certification or
approval issued by the applicable Governmental Authority for the requisite
number of beds in each Property (the “Licenses”). Borrower shall cause to be
operated the Location and the Property in a manner such that the Licenses shall
remain in full force and effect at all times, except to the extent the failure
to do so would not cause a Material Adverse Effect or a material adverse effect
on the prospects of the Borrowers on a consolidated basis. True and complete
copies of the Licenses have been delivered to Administrative Agent.
10.3    Licenses. The Licenses: (i) are and shall continue in full force and
effect at all times throughout the term of this Agreement and are and shall be
free from restrictions or known conflicts

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which would materially impair the use or operation of any Property for its
current use, and if any Licenses become provisional, probationary, conditional
or restricted in any way (collectively “Restrictions”), Borrower shall take or
cause to be taken prompt action to correct such Restrictions; (ii) may not be,
and have not been, and will not be transferred to any location other than the
Property; and (iii) have not been and will not be pledged as collateral security
for any other loan or indebtedness. Borrower shall not do (or suffer to be done)
any of the following:
(a)    Rescind, withdraw, revoke, amend, modify, supplement, or otherwise alter
the nature, tenor or scope of the Licenses for any Property without
Administrative Agent’s prior written consent;
(b)    Amend or otherwise change any Property’s licensed beds capacity and/or
the number of beds approved by the applicable Governmental Authority without
Administrative Agent’s prior written consent; or
(c)    Unless required to do so by the applicable Governmental Authority,
replace, assign or transfer all or any part of any Property’s beds to another
site or location (other than to any other Property) without Administrative
Agent’s prior written consent.
11.    DEFAULT, RIGHTS AND REMEDIES OF THE ADMINISTRATIVE AGENT.
11.1    Event of Default. Any one or more of the following shall constitute an
“Event of Default” under this Agreement:
(a)    the Borrower fails to pay: (i) any principal or interest payable
hereunder or under a Term Loan Note or an Acquisition Loan Note, as applicable,
on the date due, declared due or demanded (including, without limitation, any
amount due under Sections 2.4 or 2.15); or (ii) any other amount payable to the
Administrative Agent or any Lender under this Agreement or under any other
Financing Agreement to which the Borrower is a party (including, without
limitation, the Term Loan Notes and the Acquisition Loan Notes) within five (5)
calendar days after the date when any such payment is due and, with respect to
clause (ii) only, such failure is not cured within five (5) calendar days after
notice to Borrower by Administrative Agent;
(b)    the Borrower fails or neglects to perform, keep or observe any of the
covenants, conditions or agreements set forth in (i) Sections 8.1(a), 8.1(c),
8.2, 8.5, 8.6, 8.7, 8.9, 8.11, 8.12, or Section 8.17 hereof, (ii) any Section of
Section 9 hereof (other than Section 9.18 hereof), or (iii) any Section of
Section 10 hereof and, with respect to such Sections in Section 10 only, such
failure or neglect shall continue for a period of five (5) calendar days after
the earlier of (1) the date the Borrower actually knew of such failure or
neglect and (2) notice to the Borrower by the Administrative Agent.
(c)    the Borrower fails or neglects to perform, keep or observe any of the
covenants, conditions, promises or agreements contained in this Agreement (which
is not otherwise specifically referenced in this Section 11.1) and such failure
or neglect shall continue for a period of thirty (30) calendar days after the
earlier of (i) the date the Borrower actually knew of such failure or neglect
and (ii) notice to the Borrower by the Administrative Agent;

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(d)    any representation or warranty heretofore, now or hereafter made by the
Borrower in connection with this Agreement or any of the other Financing
Agreements to which Borrower is a party is untrue, misleading or incorrect in
any material respect, or any schedule, certificate, statement, report, financial
data, notice, or writing furnished at any time by the Borrower to the
Administrative Agent or any Lender is untrue, misleading or incorrect in any
material respect, on the date as of which the facts set forth therein are stated
or certified;
(e)    a judgment, decree or order requiring payment in excess of Five Hundred
Thousand Dollars ($500,000) shall be rendered against the Borrower and such
judgment or order shall remain unsatisfied or undischarged and in effect for
thirty (30) consecutive days without a stay of enforcement or execution,
provided that this clause (e) shall not apply to any judgment, decree or order
for which the Borrower is fully insured and with respect to which the insurer
has admitted liability, or such judgment, decree or order is being contested or
appealed by appropriate proceedings;
(f)    a notice of Lien, levy or assessment is filed or recorded with respect to
any of the assets of the Borrower (including, without limitation, the
Collateral), by the United States, or any department, agency or instrumentality
thereof, or by any state, county, municipality or other governmental agency or
any taxes or debts owing at any time or times hereafter to any one or more of
them become a Lien, upon any of the assets of the Borrower (including, without
limitation, the Collateral), provided that this clause (f) shall not apply to
any Liens, levies, or assessments which a Borrower is diligently contesting in
good faith (provided the Borrower has complied with the provisions of clauses
(a) and (b) of Section 8.4 hereof) or which relate to current taxes not yet due
and payable;
(g)    any material portion of the Collateral is attached, seized, subjected to
a writ or distress warrant, or is levied upon, or comes within the possession of
any receiver, trustee, custodian or assignee for the benefit of creditors;
(h)    a proceeding under any bankruptcy, reorganization, arrangement of debt,
insolvency, readjustment of debt or receivership law or statute is filed against
the Borrower or any guarantor of the Liabilities, including Guarantor, and any
such proceeding is not dismissed within sixty (60) days of the date of its
filing, or a proceeding under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt or receivership law or statute is filed
by the Borrower or any guarantor of the Liabilities, including Guarantor, or the
Borrower or any guarantor of the Liabilities, including Guarantor, makes an
assignment for the benefit of creditors, or the Borrower or any guarantor of the
Liabilities, including Guarantor, takes any action to authorize any of the
foregoing;
(i)    except as permitted for an Inactive Subsidiary, the Borrower or Guarantor
voluntarily or involuntarily dissolves or is dissolved, or its existence
terminates or is terminated; provided that in the case of an administrative
dissolution or revocation of existence for failure to file the proper reports or
returns with the applicable governmental authorities, no Event of Default shall
be deemed to have occurred if an application for reinstatement is (i) filed
promptly (but in any event, within fifteen (15) calendar days) upon Guarantor or
Borrower receiving notice of such dissolution or revocation from the applicable
Governmental Authority and (ii) diligently pursued

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to completion (if reasonably capable of being completed), as determined by the
Administrative Agent in its sole and absolute discretion;
(j)    the Credit Parties, taken as a whole, fail, at any time, to be Solvent;
(k)    the Borrower or any guarantor of the Liabilities, including Guarantor, is
enjoined, restrained, or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
its business affairs;
(l)    a breach by the Borrower shall occur under any agreement, document or
instrument (other than an agreement, document or instrument evidencing the
lending of money), whether heretofore, now or hereafter existing between the
Borrower and any other Person and the effect of such breach if not cured within
any applicable cure period will or is likely to have or create a Material
Adverse Effect;
(m)    the Borrower shall fail to make any payment due on any other obligation
for borrowed money or shall be in breach of any agreement evidencing the lending
of money and the effect of such failure or breach if not cured within any
applicable cure period would be to permit the acceleration of any obligation,
liability or indebtedness in excess of Five Hundred Thousand Dollars ($500,000);
(n)    there shall be instituted in any court criminal proceedings against the
Borrower, or the Borrower shall be indicted for any crime, in either case for
which forfeiture of a material amount of its property is a potential penalty,
unless (i) such actions are being contested or appealed in good faith by
appropriate proceedings, (ii) the potential forfeiture has been stayed during
the pendency of such proceedings, and (iii) no Medicare or Medicaid
reimbursement obligations are materially adversely affected by such proceedings;
(o)    a Change of Control shall occur;
(p)    any Lien securing the Liabilities shall, in whole or in part, cease to be
a perfected first priority Lien (subject only to the Permitted Liens); this
Agreement or any of the Financing Agreements to which the Borrower is a party,
shall (except in accordance with its terms), in whole or in part, terminate,
cease to be effective or cease to be the legally valid, binding and enforceable
obligations of the Borrower; or the Borrower shall directly or indirectly,
contest in any manner such effectiveness, validity, binding nature or
enforceability;
(q)    any breach, non-compliance, default or event of default shall occur under
or pursuant to any Subordination Agreement, or any other Financing Agreement
(including, without limitation, the Guaranty, any Hedging Agreement, any
Mortgage or any Pledge Agreement) by any party thereto (other than by the
Administrative Agent), and the same is not cured or remedied within any
applicable cure period, provided that if such default or event of default,
breach, noncompliance or default, requires the giving of notice by
Administrative Agent to any party in addition to or other than Borrower,
Administrative Agent shall have provided Borrower with such notice at the same
time as it provides such notice to such other party;

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(r)    any material adverse breach by Borrower that would materially adversely
effect the Administrative Agent or the Lenders or their respective rights or
remedies hereunder shall occur under or pursuant to the Acquisition Documents,
after expiration of any applicable notice or cure period provided therein, if
any;
(s)    institution by the PBGC, the Borrower or any ERISA Affiliate of steps to
terminate any Plan or to organize, withdraw from or terminate a Multiemployer
Plan if as a result of such reorganization, withdrawal or termination, the
Borrower or any ERISA Affiliate could be required to make a contribution to such
Plan or Multiemployer Plan, or could incur a liability or obligation to such
Plan or Multiemployer Plan, in excess of Two Hundred Fifty Thousand Dollars
($250,000), or (ii) a contribution failure occurs with respect to any Plan
sufficient to give rise to a Lien under ERISA, which Lien is not fully
discharged within fifteen (15) days;
(t)    a Material Adverse Change shall occur;
(u)    Borrower or any Affiliate of Borrower, shall challenge or contest, in any
action, suit or proceeding, the validity or enforceability of this Agreement, or
any of the other Financing Agreements, the legality or the enforceability of any
of the Liabilities or the perfection or priority of any Lien granted to the
Administrative Agent;
(v)    Guarantor shall revoke or attempt to revoke, terminate or contest its
obligations under the Guaranty, or the Guaranty or any provision thereof shall
cease to be in full force and effect in accordance with its terms and
provisions;
(w)    Any Pledgor shall revoke or attempt to revoke, terminate or contest in
any way its respective Pledge Agreement, or any provision thereof shall cease to
be in full force and effect in accordance with its terms and provisions;
(x)    Borrower shall be prohibited or otherwise restrained from conducting the
business theretofore conducted by it in any manner that has or could reasonably
be expected to have or result in a Material Adverse Effect;
(y)    there shall occur with respect to the Operator of any Location any
Medicare or Medicaid survey deficiencies at Level I, J, K, L or worse (i) which
deficiencies are not cured within the amount of time permitted by the applicable
reviewing agency; (ii) which result in the imposition by any Government
Authority or the applicable state survey agency of sanctions in the form of
either a program termination, temporary management, denial of payment for new
admission (which continues for thirty (30) days or more or pertains to more than
one Location) or facility closure and (iii) which sanctions could have a
Material Adverse Effect as determined by Administrative Agent in its reasonable
discretion. Upon the occurrence of such event, Borrower shall submit to
Administrative Agent its plan of correction for dealing with such event, and
shall periodically review its progress under the plan of correction with
Administrative Agent. Provided that Administrative Agent remains satisfied with
the progress under the plan of correction, then such Event shall not be an Event
of Default unless formal notice is given by Administrative Agent to Borrower;

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(z)    a state or federal regulatory agency shall have revoked any license,
permit, certificate or Medicaid or Medicare qualification pertaining to the
Property or any Location, regardless of whether such license, permit,
certificate or qualification was held by or originally issued for the benefit of
Borrower, a tenant or any other Person, the revocation of which could reasonably
be expected to have a Material Adverse Effect;
(aa)    any material default by Borrower under the terms of any material Lease
following the expiration of any applicable notice and cure period (if any);
(bb)    Kelly J. Gill or James R. McKnight, Jr. shall not be senior officers of
the Borrower and devote significant time and energy to the business of the
Borrower; provided, however, it shall not constitute an Event of Default if any
such individual shall fail for any reason to be a senior officer of the Borrower
or fail to devote significant time and energy to the business of the Borrower,
and such individual shall be promptly replaced by the Borrower, whether on an
interim or permanent basis, with an individual with substantially similar skills
and experience (but in no event later than within 90 calendar days of the former
individual’s resignation, termination, permanent disability or death) and
otherwise acceptable to the Administrative Agent in its reasonable and good
faith determination;
(cc)    any subordination provision in any document or instrument governing
Subordinated Debt, or any subordination provision in any guaranty by any
Subsidiary of any Subordinated Debt, shall cease to be in full force and effect,
or any Credit Party or any other Person (including the holder of any applicable
Subordinated Debt) shall contest in any manner the validity, binding nature or
enforceability of any such provision;
(dd)    [Intentionally Omitted]; or
(ee)    an “Event of Default” shall occur under or pursuant to the Revolving
Loan Agreement or any Affiliate Revolving Loan Financing Agreement.
Notwithstanding the foregoing, in the situations described in clauses (l), (t),
(x) and (z), above, where an Event of Default is triggered by the occurrence of
a Material Adverse Change or a Material Adverse Effect, events which could
reasonably be expected to have or result in a Material Adverse Effect or
Material Adverse Change, such occurrence shall not be deemed to be an Event of
Default hereunder provided that Borrower shall within forty-eight (48) hours
after the occurrence thereof submit to Administrative Agent in writing a plan of
correction for dealing with such Material Adverse Change or Material Adverse
Effect that is acceptable to Administrative Agent in its sole and absolute
discretion, and, if such plan of correction is so acceptable, for so long as
Administrative Agent remains satisfied in all respects with the progress under
such plan of correction and until written notice that Administrative Agent is
not so satisfied is given by Administrative Agent to Borrower.
11.2    Acceleration. Upon the occurrence of any Event of Default described in
Sections 11.1(h), (i), or (j), the Acquisition Loan Commitment (if it has not
theretofore terminated) shall automatically and immediately terminate and all of
the Liabilities shall immediately and automatically, without presentment,
demand, protest or notice of any kind (all of which are hereby

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expressly waived), be immediately due and payable; and upon the occurrence of
any other Event of Default, the Administrative Agent may with the consent of the
Required Lenders (or, upon written request of Required Lenders shall) declare
the Acquisition Loan Commitment (if it has not theretofore terminated) to be
terminated and any or all of the Liabilities may, at the option of the
Administrative Agent with the consent of the Required Lenders (or, upon written
request of Required Lenders shall), and without presentment, demand, protest or
notice of any kind (all of which are hereby expressly waived), be declared, and
thereupon shall become, immediately due and payable, whereupon the Acquisition
Loan Commitment shall immediately terminate.
11.3    Rights and Remedies Generally.
(f)    Upon the occurrence of any Event of Default, the Administrative Agent and
Lenders shall have, in addition to any other rights and remedies contained in
this Agreement and in any of the other Financing Agreements, all of the rights
and remedies of a secured party under the Code or other applicable laws, all of
which rights and remedies shall be cumulative, and non-exclusive, to the extent
permitted by Laws, including, without limitation, the right of Administrative
Agent (with the consent of or at the direction of the Required Lenders) to sell,
assign, or lease any or all of the Collateral. The exercise of any one right or
remedy shall not be deemed a waiver or release of any other right or remedy, and
the Administrative Agent, upon the occurrence of an Event of Default, may
proceed against Borrower, and/or the Collateral (with the consent of or at the
direction of the Required Lenders), at any time, under any agreement, with any
available remedy and in any order. All sums received from Borrower and/or the
Collateral in respect of the Loan may be applied by the Administrative Agent to
any Liabilities in such order of application and in such amounts as the
Administrative Agent shall deem appropriate in its discretion (subject to
Section 12.8). Borrower waives any right it may have to require the
Administrative Agent to pursue any Person for any of the Liabilities.
(g)    Upon notice to Borrower after an Event of Default, Borrower at its own
expense shall assemble all or any part of the Collateral as determined by
Administrative Agent and make it available to Administrative Agent at any
location designated by Administrative Agent. In such event, Borrower shall, at
its sole cost and expense, store and keep any Collateral so assembled at such
location pending further action by Administrative Agent and provide such
security guards and maintenance services as shall be necessary to protect and
preserve such Collateral. In addition to all such rights and remedies, the sale,
lease or other disposition of the Collateral, or any part thereof, by the
Administrative Agent after an Event of Default may be for cash, credit or any
combination thereof, and the Administrative Agent (on behalf of Lenders and
itself) may purchase all or any part of the Collateral at public or, if
permitted by law, private sale, and in lieu of actual payment of such purchase
price, may set-off the amount of such purchase price against the Liabilities of
the Borrower then owing. Any sales of such Collateral may be adjourned from time
to time with or without notice. The Administrative Agent may, in its sole
discretion, cause the Collateral to remain on the Borrower’s premises, at the
Borrower’s expense, pending sale or other disposition of such Collateral. The
Administrative Agent shall have the right after an Event of Default to conduct
such sales (with the consent of the Required Lenders) on the Borrower’s
premises, at the Borrower’s expense, or elsewhere, on such occasion or occasions
as the Administrative Agent may see fit.

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11.4    Entry Upon Premises and Access to Information. Upon the occurrence of
any Event of Default, the Administrative Agent shall have the right to enter
upon the premises of the Borrower where the Collateral is located without any
obligation to pay rent to the Borrower, or any other place or places where such
Collateral is believed to be located and kept, and remove such Collateral
therefrom to the premises of the Administrative Agent or any agent of the
Administrative Agent, for such time as the Administrative Agent may desire, in
order to effectively collect or liquidate such Collateral. Upon the occurrence
of any Event of Default, the Administrative Agent shall have the right to obtain
access to the Borrower’s data processing equipment, computer hardware and
software relating to the Collateral and subject to the privacy requirements and
regulations of HIPAA and of any applicable state or federal patients’ bill of
rights, to use all of the foregoing and the information contained therein in any
manner the Administrative Agent deems appropriate. Upon the occurrence of any
Event of Default, the Administrative Agent shall have the right to receive, open
and process all mail addressed to the Borrower and relating to the Collateral.
11.5    Sale or Other Disposition of Collateral by the Administrative Agent. Any
notice required to be given by the Administrative Agent of a sale, lease or
other disposition or other intended action by the Administrative Agent, with
respect to any of the Collateral, which is deposited in the United States mails,
postage prepaid and duly addressed to the Borrower at the address specified in
Section 12.12 hereof, at least ten (10) calendar days prior to such proposed
action shall constitute fair and reasonable notice to the Borrower of any such
action. The net proceeds realized by the Administrative Agent upon any such sale
or other disposition, after deduction for the expense of retaking, holding,
preparing for sale, selling or the like and the attorneys’ and paralegals’ fees
and legal expenses incurred by the Administrative Agent in connection therewith,
shall be applied as provided herein toward satisfaction of the Liabilities,
including, without limitation, such Liabilities described in Sections 8.2 and
11.2 hereof. The Administrative Agent shall account to the Borrower for any
surplus realized upon such sale or other disposition, and the Borrower shall
remain liable for any deficiency. The commencement of any action, legal or
equitable, or the rendering of any judgment or decree for any deficiency shall
not affect the Administrative Agent’s Liens in the Collateral until Payment in
Full. The Borrower agrees that the Administrative Agent has no obligation to
preserve rights to the Collateral against any other Person. If and to the extent
applicable, the Administrative Agent is hereby granted a license or other right
to use, without charge, the Borrower’s labels, patents, copyrights, rights of
use of any name, trade secrets, trade names, trade styles, trademarks, service
marks and advertising matter or any property of a similar nature, as it pertains
to the Collateral, in completing production of, advertising for sale and selling
any such Collateral, and the Borrower’s rights and benefits under all licenses
and franchise agreements, if any, shall inure to the Administrative Agent’s
benefit until Payment in Full. Borrower covenants and agrees not to interfere
with or impose any obstacle to Administrative Agent’s exercise of its rights and
remedies with respect to the Collateral.
11.6    Waivers (General).
(a)    Except as otherwise provided for in this Agreement and to the fullest
extent permitted by applicable Law, Borrower hereby waives: (i) presentment,
demand and protest, and notice of presentment, dishonor, intent to accelerate,
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all Financing Agreements,

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the Term Loan Notes, the Acquisition Loan Notes or any other notes, commercial
paper, Accounts, contracts, documents, instruments, chattel paper and guaranties
at any time held by Administrative Agent or any Lender on which Borrower may in
any way be liable, and hereby ratifies and confirms whatever Administrative
Agent and Lenders may do in this regard; (ii) all rights to notice and a hearing
prior to Administrative Agent’s taking possession or control of, or to
Administrative Agent’s replevy, attachment or levy upon, any Collateral or any
bond or security which might be required by any court prior to allowing
Administrative Agent to exercise any of its remedies; and (iii) the benefit of
all valuation, appraisal and exemption Laws. Borrower acknowledges that it has
been advised by counsel of its choice and decision with respect to this
Agreement, the other Financing Agreements and the transactions evidenced hereby
and thereby.
(b)    Borrower for itself and all endorsers, guarantors and sureties and their
heirs, legal representatives, successors and assigns, (i) agrees that its
liability shall not be in any manner affected by any indulgence, extension of
time, renewal, waiver, or modification granted or consented to by Administrative
Agent; (ii) consents to any indulgences and all extensions of time, renewals,
waivers, or modifications that may be granted by Administrative Agent with
respect to the payment or other provisions of this Agreement, the Term Loan
Notes, the Acquisition Loan Notes, and to any substitution, exchange or release
of the Collateral, or any part thereof, with or without substitution, and agrees
to the addition or release of any Borrower, endorsers, guarantors, or sureties,
or whether primarily or secondarily liable, without notice to Borrower and
without affecting its liability hereunder; (iii) agrees that its liability shall
be unconditional and without regard to the liability of any other tax; and (iv)
expressly waives the benefit of any statute or rule of law or equity now
provided, or which may hereafter be provided, which would produce a result
contrary to or in conflict with the foregoing.
(c)    Subject to Section 12.1, each and every covenant and condition for the
benefit of Administrative Agent and Lenders contained in this Agreement and the
other Financing Agreements may be waived by Administrative Agent. Any
forbearance by Administrative Agent in exercising any right or remedy under any
of the Financing Agreements, or otherwise afforded by applicable Law, including
any failure to accelerate the Stated Maturity Date shall not be a waiver of or
preclude the exercise of any right or remedy nor shall it serve as a novation of
a Term Loan Note or an Acquisition Loan Note or as a reinstatement of the Loan
or a waiver of such right of acceleration or the right to insist upon strict
compliance of the terms of the Financing Agreements. Administrative Agent’s
acceptance of payment of any sum secured by any of the Financing Agreements
after the due date of such payment shall not be a waiver of Administrative
Agent’s right to either require prompt payment when due of all other sums so
secured or to declare a default for failure to make prompt payment. The
procurement of insurance or the payment of taxes or other liens or charges by
Administrative Agent shall not be a waiver of Administrative Agent’s right to
accelerate the maturity of the Loan, nor shall Administrative Agent’s receipt of
any condemnation awards, insurance proceeds, or damages under this Agreement
operate to cure or waive Borrower’s or Guarantor’s default in payment of sums
secured by any of the Financing Agreements.
(d)    Without limiting the generality of anything contained in this Agreement
or the other Financing Agreements, Borrower agrees that if an Event of Default
is continuing (i) Administrative Agent is not subject to any “one action” or
“election of remedies” law or rule,

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and (ii) all liens and other rights, remedies or privileges provided to
Administrative Agent shall remain in full force and effect until Administrative
Agent has exhausted all of its remedies against the Collateral and any other
properties owned by Borrower and the Financing Agreements and other security
instruments or agreements securing the Liabilities has been foreclosed, sold
and/or otherwise realized upon in satisfaction of the Liabilities.
(e)    Nothing contained herein or in any other Financing Agreement shall be
construed as requiring Administrative Agent to resort to any part of the
Collateral for the satisfaction of any of Borrower’s obligations under the
Financing Agreements in preference or priority to any other Collateral, and
Administrative Agent may (with the consent of or at the direction of the
Required Lenders) seek satisfaction out of all of the Collateral or any part
thereof, in its absolute discretion in respect of Borrower’s obligations under
the Financing Agreements. In addition, Administrative Agent shall have the right
from time to time to partially foreclose upon any Collateral in any manner and
for any amounts secured by the Financing Agreements then due and payable as
determined by Administrative Agent (with the consent of or at the direction of
the Required Lenders), including, without limitation, the following
circumstances: (i) if Borrower defaults beyond any applicable grace period in
the payment of one or more scheduled payments of principal and interest,
Administrative Agent may (with the consent of or at the direction of the
Required Lenders) foreclose upon all or any part of the Collateral to recover
such delinquent payments, or (ii) if Administrative Agent elects (with the
consent of or at the direction of the Required Lenders) to accelerate less than
the entire outstanding principal balance of the Loans, Administrative Agent may
(with the consent of or at the direction of the Required Lenders) foreclose all
or any part of the Collateral to recover so much of the principal balance of the
Loans as Administrative Agent may accelerate and such other sums secured by one
or more of the Financing Agreements as Administrative Agent may elect (with the
consent of or at the direction of the Required Lenders). Notwithstanding one or
more partial foreclosures, any unforeclosed Collateral shall remain subject to
the Financing Agreements to secure payment of sums secured by the Financing
Agreements and not previously recovered.
(f)    To the fullest extent permitted by Law, Borrower, for itself and its
successors and assigns, waives in the event of foreclosure of any or all of the
Collateral any equitable right otherwise available to Borrower which would
require the separate sale of any of the Collateral or require Administrative
Agent to exhaust its remedies against any part of the Collateral before
proceeding against any other part of the Collateral; and further in the event of
such foreclosure Borrower does hereby expressly consent to and authorize, at the
option of Administrative Agent, the foreclosure and sale either separately or
together of each part of the Collateral.
11.7    Waiver of Notice. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, THE
BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO THE
EXERCISE BY THE ADMINISTRATIVE AGENT OF ITS RIGHTS TO REPOSSESS THE COLLATERAL
WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL
WITHOUT PRIOR NOTICE OR HEARING.
11.8    Injunctive Relief. The parties acknowledge and agree that, in the event
of a breach or threatened breach of any Credit Party’s obligations under any
Financing Agreements, Administrative Agent may have no adequate remedy in money
damages and, accordingly, shall be

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entitled to an injunction (including without limitation, a temporary restraining
order, preliminary injunction, writ of attachment, or order compelling an audit)
against such breach or threatened breach. However, no specification in this
Agreement of a specific legal or equitable remedy shall be construed as a waiver
or prohibition against any other legal or equitable remedies in the event of a
breach or threatened breach of any provision of this Agreement. Each Credit
Party waives the requirement of the posting of any bond in connection with such
injunctive relief.
11.9    Marshalling; Recourse to Borrower. Administrative Agent shall have no
obligation to marshal any assets in favor of any Credit Party, or against or in
payment of any of the other Liabilities or any other obligation owed to the
Administrative Agent and Lenders by any Credit Party. Notwithstanding anything
to the contrary contained herein or in any other Financing Agreement, the Loan
and other Liabilities shall be fully recourse to Borrower, and Administrative
Agent shall be authorized, in its sole and absolute discretion, to enforce any
or all of its remedies hereunder against Borrower, including all present and
future revenue and assets of Borrower, whether or not such assets have been
pledged as collateral for the Loan.
11.10    Advice of Counsel. The Borrower acknowledges that it has been advised
by its counsel with respect to this transaction and this Agreement, including,
without limitation, all waivers contained herein.
11.11    Credit Bidding. Without limiting the foregoing, Borrower and Lenders
hereby irrevocably authorize (and by entering into a Bank Product Agreement,
each Bank Product provider shall be deemed to authorize) Administrative Agent,
based upon the written instruction of the Required Lenders, to Credit Bid (as
defined below) and purchase (either directly or through one or more acquisition
vehicles) all or any portion of the Collateral (and Borrower shall approve
Administrative Agent as a qualified bidder and such Credit Bid as a qualified
bid) at any sale thereof conducted by Administrative Agent, based upon the
written instruction of the Required Lenders, to Credit Bid (as defined below)
and purchase (either directly or through one or more acquisition vehicles) all
or any portion of the Collateral (and Borrower shall approve Administrative
Agent as a qualified bidder and such Credit Bid as a qualified bid) at any sale
thereof conducted by Administrative Agent, based upon the written instruction of
the Required Lenders, (a) under any provisions of the UCC, including pursuant to
Sections 9-610 or 9-620 of the UCC, (b) under the provisions of the Bankruptcy
Code, including pursuant to Section 363 thereof, or any applicable insolvency,
reorganization or similar law, or (c) at any other sale or foreclosure conducted
by (or with the consent or at the direction of) the Administrative Agent
(whether by judicial action or otherwise) in accordance with applicable law or
by the exercise of any legal or equitable remedy; provided, however, that (i)
the Required Lenders may not direct Administrative Agent in any manner that does
not treat each of the Lenders equally, without preference or discrimination, in
respect of consideration received as a result of the Credit Bid, (ii) the
acquisition documents shall be commercially reasonable and contain customary
protections for minority holders, such as anti-dilution and tag-along rights,
(iii) the exchanged debt or equity securities must be freely transferable,
without restriction (subject to applicable securities laws) and (iv) reasonable
efforts shall be made to structure the acquisition in a manner that causes the
governance documents pertaining thereto to not impose any obligations or
liabilities upon the Lenders individually (such as indemnification obligations).
Each Lender hereby agrees that, except as otherwise provided in this Agreement
or

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with the written consent of the Administrative Agent and the Required Lenders,
it will not exercise any right that it might otherwise have to Credit Bid at any
sales of all or any portion of the Collateral conducted under the provisions of
the UCC, the Bankruptcy Code, foreclosure sales or other similar dispositions of
Collateral.
For purposes of the preceding sentence, the term “Credit Bid” shall mean, an
offer submitted at a public or private sale of all or any portion of the
Collateral by Administrative Agent (on behalf of the Lender group), based upon
the written instruction of the Required Lenders, to acquire all of the
Collateral of any Borrower or any portion thereof in exchange for and in full
and final satisfaction of all or a portion (as determined by Administrative
Agent, based upon the written instruction of the Required Lenders) of the
Liabilities owing to the Lenders under this Agreement and the other Financing
Agreements.
12.    MISCELLANEOUS.
12.1    Waiver; Amendment. The Administrative Agent’s or Lenders’ failure, at
any time or times hereafter, to require strict performance by the Borrower of
any covenant, condition or provision of this Agreement shall not waive, affect
or diminish any right of the Administrative Agent thereafter to demand strict
compliance and performance therewith. Any suspension or waiver by the
Administrative Agent or the Lenders, as applicable, of an Event of Default under
this Agreement or a default under any of the other Financing Agreements shall
not suspend, waive or affect any other Event of Default under this Agreement or
any other default under any of the other Financing Agreements, whether the same
is prior or subsequent thereto and whether of the same or of a different kind or
character. None of the undertakings, agreements, warranties, covenants and
representations of the Borrower contained in this Agreement or any of the other
Financing Agreements and no Event of Default under this Agreement or default
under any of the other Financing Agreements shall be deemed to have been
suspended or waived by the Administrative Agent unless such suspension or waiver
is in writing signed by an officer of the Administrative Agent, and directed to
the Borrower specifying such suspension or waiver.
Except as otherwise set forth herein, no amendment or modification or waiver of,
or consent with respect to (as reasonably determined by Administrative Agent)
any provision of this Agreement or the other Financing Agreements shall in any
event be effective unless the same shall be in writing and acknowledged by
Borrower and either (i) Required Lenders, or (ii) Administrative Agent with a
certification that consent from the Required Lenders has been obtained, and then
any such amendment, modification, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
Notwithstanding anything contained herein to the contrary, no amendment,
modification, waiver or consent shall (a) extend or increase the Commitment of
any Lender without the written consent of such Lender, as applicable, (b) extend
the date scheduled for payment of any principal (exclusive of mandatory
prepayments) of or interest on the Loan or any fees payable hereunder without
the written consent of each Lender directly affected thereby, (c) extend the
Stated Maturity Date of the Loan without the written consent of all Lenders
(except in accordance with the terms of this Agreement, if applicable), (d)
reduce the principal amount of the Loan, the rate of interest thereon or any
fees payable hereunder, without the consent of each Lender directly affected
thereby (except for any periodic adjustments of interest rates and fees as

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provided for in this Agreement), provided, that only the consent of the Required
Lenders shall be necessary (i) to amend the definition of “Default Rate” or to
waive any obligation of the Borrower to pay interest at the Default Rate or (ii)
to amend or waive any financial covenant hereunder (or any defined term used
therein) even if the effect of such amendment or waiver would be to reduce the
rate of interest on any Loan or any unreimbursed drawing under a Letter of
Credit or to reduce any fee payable hereunder, (e) release any party from its
obligations under any guaranty at any time hereafter provided, if any, or all or
substantially all of the Collateral granted hereunder or under any of the
Financing Agreements (except as otherwise specifically permitted or provided in
this Agreement), subordinate the Liens of Administrative Agent on all or
substantially all of the Collateral or subordinate any guaranty, change the
payment application waterfall in Section 12.8 or the pro rata sharing provision
in Section 2.13(d), change the definition of Required Lenders, change any
provision of this Section 12.1 or reduce the aggregate Pro Rata Share required
to effect an amendment, modification, waiver or consent, without, in each case
with respect to this subsection (e), the written consent of all Lenders, or (f)
waive any material condition set forth in Section 5 without the prior written
consent of each Lender directly affected thereby. No provision in this Agreement
with respect to the timing or application of mandatory prepayments of the Loan
shall be amended, modified or waived without the consent of Required Lenders. No
provision of Section 13 or other provision of this Agreement affecting
Administrative Agent as such shall be amended, modified or waived without the
prior written consent of Administrative Agent. Notwithstanding anything to the
contrary herein, no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder, except for the matters
set forth in subsections (a), (b), (c) or (d)(subject to the proviso contained
therein) of this Section 12.1.
12.2    Costs and Attorneys’ Fees.
(h)    Borrower agrees to jointly and severally pay on demand all of the costs
and expenses of the Administrative Agent (including, without limitation, the
reasonable fees and out-of-pocket expenses of the Administrative Agent’s
counsel, all UCC tax, lien, judgment, pending suit, and bankruptcy search fees
and costs, UCC filing fee and costs, recording, filing and registration fees and
charges, mortgage or documentary taxes, all costs of Intralinks, DebtX or other
similar transmission system, if applicable, all corporate search fees and
certified documents, all financial and legal due diligence expenses, all audit,
field exam and appraisal costs and fees, costs incurred by Administrative Agent
in connection with travel expenses of its associates, background checks on
members of management of Borrower, and real estate appraisal fees, survey fees,
recording and title insurance costs, and any environmental report or analysis)
in connection with the structuring, preparation, negotiation, execution,
delivery and closing of: (i) this Agreement, the other Financing Agreements and
all other instruments, agreements, certificates or documents provided for herein
or delivered or to be delivered hereunder, and (ii) any and all amendments,
modifications, supplements and waivers executed and delivered pursuant hereto or
any other Financing Agreement or in connection herewith or therewith. Borrower
further agrees that the Administrative Agent, in its sole discretion, may deduct
all such unpaid amounts from the aggregate proceeds of the Loan or debit such
amounts from the operating accounts of Borrower maintained with the
Administrative Agent.

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(i)    The costs and expenses that the Administrative Agent and Lenders incur in
any manner or way with respect to the following shall be part of the
Liabilities, payable by Borrower jointly and severally on demand if at any time
after the date of this Agreement the Administrative Agent or any Lender: (i)
employs counsel in good faith for advice or other representation, (ii) with
respect to the amendment, modification or enforcement of this Agreement or the
other Financing Agreements, or with respect to any Collateral hereunder or other
collateral under the other Financing Agreements securing the Liabilities
hereunder, (iii) to represent the Administrative Agent and Lender in any
work-out or any type of restructuring of the Liabilities, or any litigation,
contest, dispute, suit or proceeding or to commence, defend or intervene or to
take any other action in or with respect to any litigation, contest, dispute,
suit or proceeding (whether instituted by the Administrative Agent, Lenders,
Borrower or any other Person) in any way or respect relating to this Agreement,
the other Financing Agreements, Borrower’s affairs or any Collateral hereunder
or under any other Financing Agreement, (iv) to protect, preserve, or enforce
any of the rights of the Administrative Agent or Lenders with respect to
Borrower provided in this Agreement, under any of the other Financing
Agreements, or otherwise (whether at law or in equity) (including any
foreclosure sale, deed in lieu transaction or costs incurred in connection with
any litigation or bankruptcy or administrative hearing and any appeals therefrom
and any post-judgment enforcement action including, without limitation,
supplementary proceedings in connection with the enforcement of this Agreement);
(v) takes any action to protect, preserve, store, ship, appraise, prepare for
sale, collect, sell, liquidate or otherwise dispose of any Collateral hereunder
or any other collateral under any other Financing Agreement; and/or (vi) seeks
to enforce or enforces any of the rights and remedies of the Administrative
Agent or Lenders with respect to Borrower or any guarantor of the Liabilities.
Without limiting the generality of the foregoing, such expenses, costs, charges
and fees include: reasonable fees, costs and expenses of attorneys, accountants,
environmental consultants, and other consultants (whether work out, financial or
otherwise); court costs and expenses; court reporter fees, costs and expenses;
long distance telephone charges; and courier and telecopier charges.
(j)    Borrower further agrees to pay, and to save the Administrative Agent and
Lenders harmless from all liability for, any documentary stamp tax, intangible
tax, or other stamp tax or taxes of any kind which may be payable in connection
with or related to the execution or delivery of this Agreement, the other
Financing Agreements, the borrowing hereunder, the issuance of the Term Loan
Notes, the Acquisition Loan Notes or of any other instruments, agreements,
certificates or documents provided for herein or delivered or to be delivered
hereunder or in connection herewith, provided that Borrower shall not be liable
for Administrative Agent’s or any Lender’s income tax liabilities.
(k)    All of the Borrower’s obligations provided for in this Section 12.2 shall
be Liabilities secured by the Collateral and shall survive repayment of the Loan
or any termination of this Agreement or any Financing Agreements.
12.3    Expenditures by the Administrative Agent. In the event the Borrower
shall fail to pay taxes, insurance, audit fees and expenses, consulting fees,
filing, recording and search fees, assessments, fees, costs or expenses which
the Borrower is, under any of the terms hereof or of any of the other Financing
Agreements, required to pay, or fails to keep the Collateral free from other

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Liens, except as permitted herein, the Administrative Agent may, in its sole
discretion, pay or make expenditures for any or all of such purposes, and the
amounts so expended, together with interest thereon at the Default Rate (from
the date the obligation or liability of Borrower is charged or incurred until
actually paid in full to Administrative Agent and Lenders, as applicable) and
shall be part of the Liabilities of the Borrower, payable on demand and secured
by the Collateral.
12.4    Custody and Preservation of Collateral. The Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral in its possession if it takes such action for that purpose
as the Borrower shall request in writing, but failure by the Administrative
Agent to comply with any such request shall not of itself be deemed a failure to
exercise reasonable care, and no failure by the Administrative Agent to preserve
or protect any right with respect to such Collateral against prior parties, or
to do any act with respect to the preservation of such Collateral not so
requested by a Borrower, shall of itself be deemed a failure to exercise
reasonable care in the custody or preservation of such Collateral.
12.5    Reliance by the Lenders. The Borrower acknowledges that the Lenders and
Administrative Agent, in entering into this Agreement and agreeing to make the
Loan to the Borrower hereunder, has relied upon the accuracy of the covenants,
agreements, representations and warranties made herein by the Borrower and the
information delivered by the Borrower to the Administrative Agent and Lenders in
connection herewith (including, without limitation, all financial information
and data).
12.6    Assignability; Parties. This Agreement (including, without limitation,
any and all of the Borrower’s rights, obligations and liabilities hereunder) may
not be assigned by the Borrower without the prior written consent of
Administrative Agent and Required Lenders. Whenever in this Agreement there is
reference made to any of the parties hereto, such reference shall be deemed to
include, wherever applicable, a reference to the successors and permitted
assigns of the Borrower and the successors and assigns of the Administrative
Agent and (subject to Section 12.15 hereof) the Lenders.
12.7    Severability; Construction. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Agreement. The parties
hereto have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
hereto, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.
12.8    Application of Payments. Notwithstanding any contrary provision
contained in this Agreement or in any of the other Financing Agreements, after
the occurrence of a Default or an Event of Default Borrower irrevocably waives
the right to direct the application of any and all payments at any time or times
hereafter received by Administrative Agent or any Lender from Borrower or with
respect to any of the Collateral, and Borrower and Administrative Agent does

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hereby irrevocably agree that any and all payments or proceeds so received shall
be applied in the following manner:
First, to the payment of all fees, costs, expenses and indemnities of
Administrative Agent (in its capacity as such), including reasonable attorneys’
fees and costs of Administrative Agent, and any other Liabilities owing to
Administrative Agent in respect of sums advanced by Administrative Agent to
preserve the Collateral or to preserve its security interest in the Collateral
(or any other collateral provided pursuant to any other Financing Agreement);
Second, to payment of that portion of the Liabilities constituting fees, costs,
expenses and indemnities of Administrative Agent;
Third, to payment of that portion of the Liabilities constituting fees,
Prepayment Premium, costs, expenses and indemnities of the Lenders as provided
herein, ratably among them in proportion to the respective amounts described in
this clause Third payable to them;
Fourth, to the payment of all of the Liabilities consisting of accrued and
unpaid interest owing to the Lenders, ratably among them in proportion to the
respective amounts described in this clause Fourth payable to them;
Fifth, to the payment of all Liabilities consisting of principal owing to the
Lenders, ratably among them in proportion to the respective amounts described in
this clause Fifth payable to them;
Sixth, to the payment of all Bank Product Obligations (including with respect to
any Hedging Agreement) owing to the applicable Lenders or their Affiliates,
ratably among such Lenders and their Affiliates in proportion to the respective
amounts described in this clause Sixth payable to them;
Seventh, to the payment of all other Liabilities owing to the Lenders;
Eighth, to the payment of all Affiliated Revolving Loan Liabilities pursuant to
Section 12.8 of the Affiliate Revolving Loan Financing Agreements; and
Last, the payment of any remaining proceeds, if any, to whomever may be lawfully
entitled to receive such amounts, including, if applicable, Borrower.
All amounts owing under this Agreement in respect of Liabilities including fees,
interest, default interest, interest on interest, expense reimbursements and
indemnities, shall be payable in accordance with the foregoing waterfall
provisions irrespective of whether a claim in respect of such amounts is allowed
or allowable in any insolvency proceeding.
12.9    Payments Set Aside. To the extent that the Borrower makes a payment or
payments to the Administrative Agent or Lenders or the Administrative Agent or
Lenders enforce their respective Liens or exercise their respective rights of
setoff, and such payment or payments or the proceeds of such enforcement or
setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any

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other party or Person under any bankruptcy law, state or federal law, common law
or equitable cause or otherwise (including, without limitation, provisions of
the Bankruptcy Code relating to fraudulent conveyances, preferences, or other
voidable or recoverable payments of money or transfers of property), then to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied shall be automatically revived, reinstated, restored and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred. The provisions of and undertakings set
out in this Section 12.9 shall survive the satisfaction and payment of the
Liabilities of Borrower and the termination of this Agreement.
12.10    Sections and Titles; UCC Termination Statements. The sections and
titles contained in this Agreement shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto. Upon Payment in Full, the Administrative Agent will, upon
Borrower’s written request and at the Borrower’s cost and expense, timely file
all Uniform Commercial Code termination statements reasonably required by the
Borrower to evidence the termination of the Liens in the Collateral in favor of
the Administrative Agent (for the ratable benefit of Lenders and Administrative
Agent).
12.11    Continuing Effect; No Joint Venture. This Agreement, the Administrative
Agent’s Liens in the Collateral, and all of the other Financing Agreements shall
continue in full force and effect so long as any Liabilities shall be owed to
the Lenders and Administrative Agent, and (even if there shall be no such
Liabilities outstanding) so long as this Agreement has not been terminated as
provided in Section 2.9 hereof. The relationship between Administrative Agent
and Lenders on the one hand and Borrower on the other hand shall be that of
creditor-debtor only. No term in this Agreement or in any other Financing
Agreement and no course of dealing between the parties shall be deemed to create
any relationship or agency, partnership or joint venture or any fiduciary duty
by Administrative Agent or any Lender to Borrower or any other party. In
exercising its rights hereunder and under any other Financing Agreements or
taking any actions herein or therein, Administrative Agent and Lenders may act
through its respective employees, agents or independent contractors as
authorized by Administrative Agent or such Lender.
12.12    Notices. Any notice or other communication required or permitted under
this Agreement shall be in writing and personally delivered, mailed by
registered or certified U.S. mail (return receipt requested and postage
prepaid), sent by telecopier (with a confirming copy sent by regular mail), or
sent by prepaid nationally recognized overnight courier service, and addressed
to the relevant party at its address set forth below, or at such other address
as such party may, by written notice, designate as its address for purposes of
notice under this Agreement:
(a)    If to the Administrative Agent, at:
The PrivateBank and Trust Company
120 South LaSalle Street
Chicago, Illinois 60603
Attention: Adam D. Panos, Managing Director
Telephone No.: 312-564-1278
Facsimile No.: 312-564-6889

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With a copy to:

Duane Morris LLP
190 South LaSalle Street - Suite 3700
Chicago, Illinois 60603
Attention: Brian P. Kerwin, Esq.
Telephone No: 312-499-6737
Facsimile No: 312-499-6701
(b)    If to the Borrower or Borrower Agent, at:
Diversicare Healthcare Services, Inc.
1621 Galleria Boulevard
Brentwood, Tennessee 37027
Attention: James R. McKnight, Jr.
Telephone No.: 615-771-7575
Facsimile No.: 615-771-7409
With a copy to:

Harwell Howard Hyne Gabbert & Manner
333 Commerce Street, Suite 150037201
Nashville, Tennessee 37201
Attention: John N. Popham IV, Esq.
Telephone No.: 615-251-1093
Facsimile No.: 615-251-1059
(c)    If to Lenders, as identified on Annex A hereto.
If mailed, notice shall be deemed to be given three (3) days after being sent,
and if sent by personal delivery, telecopier or prepaid courier, notice shall be
deemed to be given when delivered. If any notice is tendered to an addressee and
delivery thereof is refused by such addressee, such notice shall be effective
upon such tender unless expressly set forth in such notice.
12.13    Equitable Relief. The Borrower recognizes that, in the event the
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to the Administrative Agent and Lenders; therefore, the Borrower agrees
that the Administrative Agent and Lenders, if the Administrative Agent or
Lenders so request, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
12.14    Entire Agreement. This Agreement, together with the Financing
Agreements (and, as applicable, the Revolving Loan Agreement) executed in
connection herewith, constitutes the entire agreement among the parties with
respect to the subject matter hereof, and supersedes all prior written or oral
understandings, discussions and agreements with respect thereto (including,
without limitation, any term sheet, proposal letter or commitment letter).
Notwithstanding anything

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to the contrary contained in this Agreement, Borrower is and shall be required
to observe, perform and comply with each of the terms, representations,
warranties, covenants, conditions and provisions set forth in the Revolving Loan
Agreement applicable to Borrower and such terms, representations, warranties,
covenants, conditions and provisions are hereby incorporated into this Agreement
by this reference thereto.
12.15    Participations and Assignments. (a) Any Lender may at any time assign
to one or more Persons that extends secured commercial loans in its ordinary
course of business and has assets or capital of at least $100,000,000 (other
than (i) a natural person or (ii) any Defaulting Lender or its wholly-owned
subsidiaries or its other Affiliates) (any such Person, an “Assignee”) all or
any portion of such Lender’s Pro Rata Share of the Loan and also such Lender’s
Pro Rata Share of the Revolving Loans, with the prior written consent of
Administrative Agent, and, so long as no Event of Default has occurred and is
continuing, Borrower (all of which consents shall not be unreasonably withheld,
conditioned or delayed and shall not be required for an assignment by a Lender
to another Lender or an Affiliate of a Lender). Except as Administrative Agent
may otherwise agree (and, so long as no Event of Default has occurred and is
continuing, Borrower otherwise consents in writing, which consent shall not be
unreasonably withheld, conditioned or delayed), any such assignment shall be in
a minimum aggregate amount equal to Five Million Dollars ($5,000,000) or, if
less, the remaining Loan held by the assigning Lender. Borrower and
Administrative Agent shall be entitled to continue to deal solely and directly
with such Lender in connection with the interests so assigned to an Assignee
until Administrative Agent shall have received and accepted an effective
assignment agreement in substantially the form of Exhibit C hereto (an
“Assignment Agreement”) executed, delivered and fully completed by the
applicable parties thereto and a processing fee of Five Thousand Dollars
($5,000). No assignment may be made to any Person if at the time of such
assignment Borrower would be obligated to pay any greater amount under Sections
3.1 or 3.3 to the Assignee than Borrower is then obligated to pay to the
assigning Lender under such Sections (and if any assignment is made in violation
of the foregoing, Borrower will not be required to pay such greater amounts).
Any attempted assignment not made in accordance with this Section 12.15 shall be
treated as the sale of a participation hereunder. Borrower shall be deemed to
have granted its consent to any assignment requiring its consent hereunder
unless Borrower has expressly objected to such assignment within three (3)
Business Days after notice thereof. Notwithstanding the foregoing, no consent of
Borrower or Administrative Agent shall be required for any assignment to a
Lender or an Affiliate of a Lender (provided that no assignment shall be made to
any Defaulting Lender or its wholly-owned subsidiaries).
(b)    From and after the date on which the conditions described above have been
met, (i) such Assignee shall be deemed automatically to have become a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Lender hereunder and (ii) the assigning Lender, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment Agreement, shall be released from its rights (other
than its indemnification rights) and obligations hereunder. Upon the request of
the Assignee (and, as applicable, the assigning Lender) pursuant to an effective
Assignment Agreement, Borrower shall execute and deliver to Administrative Agent
for delivery to the Assignee (and, as applicable, the assigning Lender) (i) a
Term Loan Note in the principal amount of the Assignee’s Term Loan (and,

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as applicable, a Term Loan Note in the principal amount of the Term Loan
retained by the assigning Lender) and (ii) an Acquisition Loan Note in the
principal amount of the Assignee’s Acquisition Loan Commitment (and, as
applicable, an Acquisition Loan Note in the principal amount of the Acquisition
Loan Commitment retained by the assigning Lender). Each such Term Loan Note or
Acquisition Loan Note shall be dated the effective date of such assignment. Upon
receipt by the assigning Lender of such Term Loan Note or Acquisition Loan Note,
the assigning Lender shall return to Borrower any prior Term Loan Note or
Acquisition Loan Note held by it.
(c)    Notwithstanding anything to the contrary set forth herein, any Lender may
at any time pledge or assign a security interest in all or any portion of its
rights under this Agreement and applicable promissory note to secure obligations
of such Lender, including any pledge or assignment to secure obligations to any
Federal Reserve Bank (including as collateral security pursuant to Regulation A
and any Operating Circular issued by such Federal Reserve Bank), and such
Loan(s) and promissory note(s) shall be fully transferable as provided therein,
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.
(d)    Subject to the last sentence in Section 13.9, any Lender may at any time
(without any required consent) sell to one or more Persons (other than (i) a
natural person or (ii) a Defaulting Lender or its wholly-owned subsidiaries or
its other Affiliates) participating interests in its respective Loan or other
interests hereunder (any such Person, a “Participant”). In the event of a sale
by a Lender of a participating interest to a Participant, (a) such Lender’s
obligations under this Agreement shall remain unchanged for all purposes, (b)
Administrative Agent and Borrower shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
this Agreement and (c) all amounts payable by Borrower shall be determined as if
such Lender had not sold such participation and shall be paid directly to such
Lender. No Participant shall have any direct or indirect voting rights under
this Agreement except with respect to any event described in Section 12.1
expressly requiring the unanimous vote of all Lenders or, as applicable, all
affected Lenders. Each Lender agrees to incorporate the requirements of the
preceding sentence into each participation agreement which such Lender enters
into with any Participant. Borrower agrees that if amounts outstanding under
this Agreement are due and payable (as a result of acceleration or otherwise),
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement; provided that such right of set-off shall be
subject to the obligation of each Participant to share with Lenders, and Lenders
agree to share with each Participant, as provided in Section 2.13(d). Borrower
agrees that each Participant shall be entitled to the benefits of Sections 3.1
or 3.3 as if it were a Lender (provided that on the date of the participation no
Participant shall be entitled to any greater compensation pursuant to Sections
3.1 or 3.3 than would have been paid to the participating Lender on such date if
no participation had been sold and that each Participant complies with Section
3.3 as if it were an Assignee).
(e)    Administrative Agent will maintain a copy of each Assignment Agreement
delivered and accepted by it and register (the “Register”) for the recordation
of names and addresses

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of Lenders, the Pro Rata Share of each Lender and the portion of the Loan of
each Lender and whether such Lender is the original Lender or the Assignee. No
assignment shall be effective unless and until the Assignment Agreement is
accepted and registered in the Register. All records of transfer of a Lender’s
interest in the Register shall be conclusive, absent manifest error, as to the
ownership of the interests in such Loan. Administrative Agent shall not incur
any liability of any kind with respect to any Lender with respect to the
maintenance of the Register. Upon the reasonable written request of Borrower,
Administrative Agent will furnish a copy of the Register to the Borrower Agent
or Borrower (at the cost, if any, to Borrower).
12.16    INDEMNIFICATION BY BORROWER. IN CONSIDERATION OF THE EXECUTION AND
DELIVERY OF THIS AGREEMENT BY ADMINISTRATIVE AGENT AND LENDERS AND THE AGREEMENT
TO EXTEND THE COMMITMENTS PROVIDED HEREUNDER, EACH BORROWER HEREBY JOINTLY AND
SEVERALLY AGREES TO AND SHALL INDEMNIFY, DEFEND, PROTECT, EXONERATE AND HOLD
ADMINISTRATIVE AGENT, EACH LENDER, AND EACH OF THE OFFICERS, DIRECTORS,
EMPLOYEES, PARENT ENTITIES, AFFILIATES, SUCCESSORS, ASSIGNS, ATTORNEYS AND
AGENTS OF ADMINISTRATIVE AGENT AND EACH LENDER (EACH A “INDEMNIFIED PARTY”) FREE
AND HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS,
JUDGMENTS, CLAIMS, LOSSES, LIABILITIES, DAMAGES, PENALTIES, COSTS, AND EXPENSES,
INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND COSTS (COLLECTIVELY, THE
“INDEMNIFIED LIABILITIES”), INCURRED BY THE INDEMNIFIED PARTIES OR ANY OF THEM
AS A RESULT OF, OR ARISING OUT OF, OR RELATING TO (a) ANY REFINANCING, TENDER
OFFER, MERGER, PURCHASE OF STOCK, PURCHASE OF ASSETS OR OTHER SIMILAR
TRANSACTION FINANCED OR PROPOSED TO BE FINANCED IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, WITH THE PROCEEDS OF THE LOAN, (b) THE USE, HANDLING, RELEASE,
EMISSION, DISCHARGE, TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF ANY
HAZARDOUS SUBSTANCE AT ANY PROPERTY OWNED OR LEASED BY ANY BORROWER, (c) ANY
VIOLATION OF ANY ENVIRONMENTAL LAWS WITH RESPECT TO CONDITIONS AT ANY PROPERTY
OWNED OR LEASED BY ANY BORROWER OR THE OPERATIONS CONDUCTED THEREON, (d) THE
INVESTIGATION, CLEANUP OR REMEDIATION OF OFFSITE LOCATIONS AT WHICH ANY BORROWER
OR THEIR RESPECTIVE PREDECESSORS ARE ALLEGED TO HAVE DIRECTLY OR INDIRECTLY
DISPOSED OF HAZARDOUS SUBSTANCES, (e) THE USE, MAINTENANCE OR OPERATION OF THE
FACILITIES, OR (f) THE EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS
AGREEMENT OR ANY OTHER FINANCING AGREEMENT BY ANY OF THE INDEMNIFIED PARTIES,
EXCEPT FOR ANY SUCH INDEMNIFIED LIABILITIES (A) ARISING ON ACCOUNT OF THE
APPLICABLE INDEMNIFIED PARTY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR ILLEGAL
ACTIVITY AS DETERMINED BY A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF
COMPETENT JURISDICTION, OR (B) AS ARE IN RESPECT OF ANY PROPERTY FOR ANY
OCCURRENCE ARISING DIRECTLY FROM THE ACTS OR OMISSIONS OF THE ADMINISTRATIVE
AGENT OR ANY LENDER DURING THE PERIOD AFTER WHICH

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SUCH PERSON, ITS SUCCESSORS OR ASSIGNS HAVE OBTAINED TITLE AND POSSESSION OF
SUCH PROPERTY BY FORECLOSURE OR DEED IN LIEU OF FORECLOSURE; PROVIDED, HOWEVER,
THAT THE INDEMNIFICATION IN THIS SECTION 12.16 SHALL NOT EXTEND TO DISPUTES
SOLELY AND ENTIRELY BETWEEN OR AMONG ADMINISTRATIVE AGENT, THE LENDERS OR THEIR
RESPECTIVE AFFILIATES NOT IN ANY WAY OR MANNER DIRECTLY OR INDIRECTLY CAUSED BY
OR THE FAULT OF ANY BORROWER OR ANY OF ITS RESPECTIVE AFFILIATES. IF AND TO THE
EXTENT THAT THE FOREGOING UNDERTAKING MAY BE UNENFORCEABLE FOR ANY REASON, EACH
BORROWER HEREBY AGREES TO MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND
SATISFACTION OF EACH OF THE INDEMNIFIED LIABILITIES THAT IS PERMISSIBLE UNDER
APPLICABLE LAW. ALL OBLIGATIONS PROVIDED FOR IN THIS SECTION 12.16 SHALL SURVIVE
REPAYMENT OF THE LOAN, CANCELLATION OF THE NOTES, ANY FORECLOSURE UNDER, OR ANY
MODIFICATION, RELEASE OR DISCHARGE OF, ANY OR ALL OF THE OTHER FINANCING
AGREEMENTS AND TERMINATION OF THIS AGREEMENT. Any liability, obligation, loss,
damage, penalty, cost or expense incurred by the Indemnified Parties shall be
paid to the Indemnified Parties on demand, together with interest thereon at the
Default Rate from the date incurred by the Indemnified Parties until paid by
Borrower, be added to the Liabilities, and be secured by the Collateral. The
provisions of and undertakings and indemnifications set out in this Section
12.16 shall survive the satisfaction and payment of the Liabilities of Borrower
and the termination of this Agreement. Borrower agrees that neither
Administrative Agent nor any Lender shall have liability to any Borrower
(whether sounding in tort, contract or otherwise) for losses suffered by any
Borrower in connection with, arising out of, or in any way related to the
transactions contemplated and the relationship established by this Agreement and
the other Financing Agreements, or any act, omission or event occurring in
connection herewith or therewith, unless it is determined in a final
non-appealable judgment by a court of competent jurisdiction that such losses
resulted from the gross negligence, willful misconduct or illegal activity of
the party from which recovery is sought. NO INDEMNIFIED PARTY SHALL BE LIABLE
FOR ANY DAMAGES ARISING FROM THE USE BY OTHERS OF ANY INFORMATION OR OTHER
MATERIALS OBTAINED THROUGH INTRALINKS, DEBTX, OR OTHER SIMILAR INFORMATION
TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT, NOR SHALL ANY
INDEMNIFIED PARTY HAVE ANY LIABILITY WITH RESPECT TO, AND BORROWER HEREBY
WAIVES, RELEASES AND AGREES NOT TO SUE FOR ANY SPECIAL, PUNITIVE, EXEMPLARY,
INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER
FINANCING AGREEMENT OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR
THEREWITH (WHETHER BEFORE OR AFTER THE CLOSING DATE). Each Borrower acknowledges
that it has been advised by counsel in the negotiation, execution and delivery
of this Agreement and the other Financing Agreements to which it is a party.
12.17    Representations and Warranties. Notwithstanding anything to the
contrary contained herein, each representation or warranty contained in this
Agreement or any of the other Financing Agreements shall survive the execution
and delivery of this Agreement and the other Financing Agreements and the making
of the Loan and the repayment of the Liabilities hereunder.

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12.18    Counterparts. This Agreement and any amendment or supplement hereto or
any waiver granted in connection herewith may be executed in any number of
counterparts and by the different parties on separate counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Agreement.
12.19    Limitation of Liability of Administrative Agent and Lenders. It is
hereby expressly agreed that:
(a)    Administrative Agent and Lenders may conclusively rely and shall be
protected in acting or refraining from acting upon any document, instrument,
certificate, instruction or signature believed to be genuine and may assume and
shall be protected in assuming that any Person purporting to give any notice or
instructions in connection with any transaction to which this Agreement relates
has been duly authorized to do so. Administrative Agent and Lenders shall not be
obligated to make any inquiry as to the authority, capacity, existence or
identity of any Person purporting to have executed any such document or
instrument or have made any such signature or purporting to give any such notice
or instructions;
(b)    Administrative Agent and Lenders shall not be liable for any acts,
omissions, errors of judgment or mistakes of fact or law, including, without
limitation, acts, omissions, errors or mistakes with respect to the Collateral,
except for those arising out of or in connection with Administrative Agent’s and
Lender’s gross negligence, willful misconduct or illegal activity. Without
limiting the generality of the foregoing, Administrative Agent and Lenders shall
be under no obligation to take any steps necessary to preserve rights in the
Collateral against any other parties, but may do so at its option, and all
expenses incurred in connection therewith shall be payable by Borrower; and
(c)    Administrative Agent and Lenders shall not be liable for any action taken
in good faith and believed to be authorized or within the rights or powers
conferred by this Agreement and the other Financing Agreements.
12.20    Borrower Authorizing Accounting Firm. Borrower shall authorize its
accounting firm and/or service bureaus to provide Administrative Agent with such
information as is requested by Administrative Agent in accordance with this
Agreement. Borrower authorizes Administrative Agent to contact directly any such
accounting firm and/or service bureaus to obtain such information.
12.21    Joint and Several Liability; Binding Obligations.
(a)    Borrower is defined collectively to include all Persons constituting the
Borrower; provided, however, that any references herein to “any Borrower”, “each
Borrower” or similar references, shall be construed as a reference to each
individual Person comprising the Borrower; provided, further, in case of any
question as to which particular Person is to be deemed a Borrower in any given
context for purposes of any term or provision contained in this Agreement, the
Lender shall make such determination. Each Person comprising Borrower shall be
jointly and severally liable for all of the liabilities and obligations of
Borrower under this Agreement, regardless of which of the Borrowers actually
receives the proceeds of the Loan hereunder, or the manner in which the
Borrowers, or the Administrative Agent or Lenders accounts therefor in their
respective

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books and records. In addition, each entity comprising Borrower hereby
acknowledges and agrees that all of the representations, warranties, covenants,
obligations, conditions, agreements and other terms contained in this Agreement
shall be applicable to and shall be binding upon and measured and enforceable
individually against each Person comprising Borrower as well as all such Persons
when taken together. By way of illustration, but without limiting the generality
of the foregoing, the terms of Section 11 of this Agreement are to be applied to
each individual Person comprising the Borrower (as well as to all such Persons
taken as a whole), such that the occurrence of any of the events described in
Section 11 of this Agreement as to any Person comprising the Borrower shall
constitute an Event of Default even if such event has not occurred as to any
other Persons comprising the Borrower or as to all such Persons taken as a whole
(except as otherwise expressly provided therein by, for example, the use of the
term “Material Adverse Effect”).
(b)    Each Borrower acknowledges that it will enjoy significant benefits from
the business conducted by the other Borrowers because of, inter alia, their
combined ability to bargain with other Persons including, without limitation,
their ability to receive the credit facilities hereunder and other Financing
Agreements which would not have been available to an individual Borrower acting
alone. Each Borrower has determined that it is in its best interest to procure
the Loan with the credit support of the other Borrowers as contemplated by this
Agreement and the other Financing Agreements as well as permit the
cross-collateralization and cross-default with the Affiliate Revolving Loan
Liabilities, Revolving Loan Agreement and Affiliate Revolving Loan Financing
Agreements as contemplated hereunder.
(c)    The Administrative Agent and the Lenders have advised the Borrowers that
the Administrative Agent and the Lenders are unwilling to enter into this
Agreement and the other Financing Agreements and make available the Loan
extended hereby or thereby to any Borrower unless each Borrower agrees, among
other things, to be jointly and severally liable for the due and proper payment
of the Liabilities of each other Borrower under this Agreement and other
Financing Agreements. Each Borrower has determined that it is in its best
interest and in pursuit of its purposes that it so induce the Lenders to extend
credit pursuant to this Agreement and the other documents executed in connection
herewith (i) because of the desirability to each Borrower of the Loan and the
interest rates and the modes of borrowing available hereunder, (ii) because each
Borrower may engage in transactions jointly with other Borrowers and
(iii) because each Borrower may require, from time to time, access to funds
under this Agreement for the purposes herein set forth. Each Borrower,
individually, expressly understands, agrees and acknowledges, that the Loan
would not be made available on the terms herein in the absence of the collective
credit of all of the Persons constituting the Borrower, the joint and several
liability of all such Persons, and the cross-collateralization of the collateral
of all such Persons hereunder and under the other Financing Agreements.
Accordingly, each Borrower, individually acknowledges that the benefit to each
of the Persons comprising the Borrower as a whole constitutes reasonably
equivalent value, regardless of the amount of the Loan actually borrowed by,
advanced to, or the amount of collateral provided by, any individual Borrower.
(d)    Each Borrower has determined that it has and, after giving effect to the
transactions contemplated by this Agreement and the other Financing Agreements
(including, without limitation, the inter-Borrower arrangement set forth in this
Section) will have, assets having

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a fair saleable value in excess of the amount required to pay its probable
liability on its existing debts as they fall due for payment and that the sum of
its debts is not and will not then be greater than all of its property at a fair
valuation, that such Borrower has, and will have, access to adequate capital for
the conduct of its business and the ability to pay its debts from time to time
incurred in connection therewith as such debts mature and that the value of the
benefits to be derived by such Borrower from the access to funds under this
Agreement (including, without limitation, the inter-Borrower arrangement set
forth in this Section) is reasonably equivalent to the obligations undertaken
pursuant hereto.
(e)    The Borrower Agent (on behalf of each Borrower) shall maintain records
specifying (a) all Liabilities incurred by each Borrower, (b) the date of such
incurrence, (c) the date and amount of any payments made in respect of such
Liabilities and (d) all inter-Borrower obligations pursuant to this Section. The
Borrower Agent shall make copies of such records available to the Administrative
Agent, upon request.
(f)    To the extent that applicable Law otherwise would render the full amount
of the joint and several obligations of any Borrower hereunder and under the
other Financing Agreements invalid or unenforceable, such Borrower’s obligations
hereunder and under the other Financing Agreements shall be limited to the
maximum amount which does not result in such invalidity or unenforceability,
provided, however, that each Borrower’s obligations hereunder and under the
other Financing Agreements shall be presumptively valid and enforceable to their
fullest extent in accordance with the terms hereof or thereof, as if this
Section were not a part of this Agreement.
(g)    To the extent that any Borrower shall make a payment under this Section
of all or any of the Liabilities (a “Joint Liability Payment”) which, taking
into account all other Joint Liability Payments then previously or concurrently
made by any other Borrower, exceeds the amount which such Borrower would
otherwise have paid if each Borrower had paid the aggregate Liabilities
satisfied by such Joint Liability Payments in the same proportion that such
Borrower’s “Allocable Amount” (as defined below) (as determined immediately
prior to such Joint Liability Payments) bore to the aggregate Allocable Amounts
of each of the Borrowers as determined immediately prior to the making of such
Joint Liability Payments, then, following Payment in Full, such Borrower shall
be entitled to receive contribution and indemnification payments from, and be
reimbursed by, each other Borrower for the amount of such excess, pro rata based
upon their respective Allocable Amounts in effect immediately prior to such
Joint Liability Payments. As of any date of determination, the “Allocable
Amount” of any Borrower shall be equal to the maximum amount of the claim which
could then be recovered from such Borrower under this Section without rendering
such claim voidable or avoidable under Section 548 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
(h)    The term “Borrower” as used herein shall mean either one or more
particular Borrowers or all of the Borrowers collectively as the Administrative
Agent shall determine in its sole and absolute good faith discretion.
(i)    [Intentionally Omitted.]

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(j)    [Intentionally Omitted.]
(k)    Each Borrower hereby agrees that, except as hereinafter provided, its
obligations hereunder shall be unconditional, irrespective of (i) the absence of
any attempt to collect the Liabilities from any obligor or other action to
enforce the same; (ii) the waiver or consent by Administrative Agent with
respect to any provision of any instrument evidencing the Liabilities, or any
part thereof, or any other agreement heretofore, now or hereafter executed by a
Borrower and delivered to Administrative Agent or any Lender; (iii) failure by
Administrative Agent to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for the
Liabilities; (iv) the institution of any proceeding under the Bankruptcy Code,
or any similar proceeding, by or against a Borrower or Administrative Agent’s
election in any such proceeding of the application of Section 1111(b)(2) of the
Bankruptcy Code; (v) any borrowing or grant of a security interest by a Borrower
as debtor-in-possession, under Section 364 of the Bankruptcy Code; (vi) the
disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of
Administrative Agent’s claim(s) for repayment of any of the Liabilities; or
(vii) any other circumstance other than Payment in Full which might otherwise
constitute a legal or equitable discharge or defense of a guarantor or surety.
(l)    Until Payment in Full, no payment made by or for the account of a
Borrower including, without limitation, (i) a payment made by such Borrower on
behalf of the liabilities of any other Borrower or (ii) a payment made by any
other Person under any guaranty, shall entitle such Borrower, by subrogation or
otherwise, to any payment from any other Borrower or from or out of any other
Borrower’s property and such Borrower shall not exercise any right or remedy
against any other Borrower or any property of any other Borrower by reason of
any performance of such Borrower of its joint and several obligations hereunder.
(m)    Any notice given by one Borrower hereunder shall constitute and be deemed
to be notice given by all Borrowers, jointly and severally. Notice given by
Administrative Agent to any one Borrower hereunder or pursuant to any Financing
Agreements in accordance with the terms hereof or thereof shall constitute
notice to each and every Borrower. The knowledge of one Borrower shall be
imputed to all Borrowers and any consent by one Borrower shall constitute the
consent of and shall bind all Borrowers.
(n)    This Section is intended only to define the relative rights of Borrower
and nothing set forth in this Section is intended to or shall impair the
obligations of Borrower, jointly and severally, to pay any amounts as and when
the same shall become due and payable in accordance with the terms of this
Agreement or any other Financing Agreements. Nothing contained in this Section
shall limit the liability of any Borrower to pay the Loan made directly or
indirectly to that Borrower and accrued interest, fees and expenses with respect
thereto for which such Borrower shall be primarily liable.
(o)    The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of each Borrower to which such
contribution and indemnification is owing. The rights of any indemnifying
Borrower against the other Borrowers under this Section shall be exercisable
upon the full and indefeasible payment of the Liabilities and the termination of
the Loan.

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12.22    Confidentiality; Press Releases. Borrower shall not disclose the
contents of this Agreement and the other Financing Agreements to any third party
(including, without limitation, any financial institution or intermediary),
unless required by applicable Laws or by any subpoena, judicial order or similar
legal process, without Administrative Agent’s prior written consent, other than
to Borrower’s officers, lawyers and other professional advisors on a
need-to-know basis, and in connection with any filings required to be made under
any applicable federal or state securities laws or regulations (“Securities
Laws”). Borrower agrees to inform all such Persons who receive information
concerning this Agreement that such information is confidential and may not be
disclosed to any other Person, except as required by applicable Laws, including
Securities Laws, or by any subpoena, judicial order or similar legal process. No
party hereto shall, and no party hereto shall permit its Affiliates to, at any
time issue any press release or other public disclosure using the name of any
Borrower, Lender, Administrative Agent or any of their respective Affiliates or
referring to this Agreement or the other Financing Agreements without at least
two (2) Business Days prior written notice to Borrower, Administrative Agent and
the applicable Lender and, except for press releases or other public disclosures
required under applicable Securities Laws, without the prior written consent of
Borrower, Administrative Agent and the applicable Lender, which consent shall
not unreasonably be withheld, conditioned or delayed. Upon Borrower’s prior
written consent, which consent shall not unreasonably be withheld, conditioned
or delayed, each Lender and Administrative Agent may publish or disseminate a
tombstone or similar advertising material relating to the financing transactions
contemplated by this Agreement. Nothing contained in this Agreement is intended
to permit or authorize Borrower to make any contract on behalf of Administrative
Agent or any Lender. Each of the Administrative Agent and the Lenders agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to each of its and its Affiliates’ respective
directors, officers, managers, employees and agents, including, without
limitation, accountants, legal counsel and other professional advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable Laws or regulations or by
any subpoena, judicial order or similar legal process or bank regulatory
process, (d) to any other party to this Agreement or any other Financing
Agreement, (e) in connection with the exercise of any remedies hereunder or
under any Financing Agreement or any suit, action or proceedings relating to
this Agreement or any Financing Agreement or the enforcement of rights hereunder
or thereunder, or (f) subject to an agreement containing provisions
substantially the same as those of this Section 12.22, to any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement.
For the purpose of this Section 12.22, “Information” means all information
received from the Borrower or any other Credit Party relating to the Borrower or
any other Credit Party and their businesses, other than any information (i) that
is available to the Administrative Agent or any Lender on a non-confidential
basis prior to disclosure by the Borrower or any Credit Party, (ii) that is
publicly disclosed by the Borrower or any Credit Party in connection with public
filings with the Securities and Exchange Commission, (iii) without limitation of
subsection (i) immediately above, that was in the possession of the
Administrative Agent or Lender prior to its disclosure by the Borrower or any
Credit Party pursuant hereto provided that the source of such information was
not known by the Administrative Agent or Lender to be bound by a confidentiality
agreement with or

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other contractual, legal or fiduciary obligation of confidentiality to the
Borrower or any Credit Party with respect to such information, (iv) is or
becomes generally available to the public by acts other than those of the
Administrative Agent or any Lender or their respective Affiliates, officers,
directors, managers, employees or agents in breach of the terms hereof, (v) that
has been or is received by the Administrative Agent or any Lender from a third
party who is not known by Administrative Agent or any Lender, as applicable, to
be bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to the Borrower or any Credit Party with
respect to such information, or (vi) has been or is developed independently
without use of or reference to Confidential Information. Any Person required to
maintain the confidentiality of Information as provided in this Section 12.22
shall be considered to have complied with its obligation to do so if such Person
has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Without limiting anything to the contrary contained in this Agreement, each of
the obligations contained in this Section 12.22 are several (and not joint and
several) and Administrative Agent shall not be liable or responsible in any way
for any breach of this Section 12.22 by any Lender or any other Person.
12.23    Fax Signatures. A signature hereto sent or delivered by facsimile or
other electronic transmission shall be as legally binding and enforceable as a
signed original for all purposes.
12.24    Release. For and in consideration of the Loan hereunder, each Borrower,
voluntarily, knowingly, unconditionally, and irrevocably, with specific and
express intent, for and on behalf of itself and its agents, attorneys, heirs,
successors, and assigns (collectively the “Releasing Parties”) does hereby fully
and completely release, acquit and forever discharge the Administrative Agent
and each Lender, and each of their respective successors, assigns, heirs,
affiliates, subsidiaries, parent companies, principals, directors, officers,
employees, shareholders and agents (hereinafter called the “Lender Parties”),
and any other person, firm, business, corporation, insurer, or association which
may be responsible or liable for the acts or omissions of the Lender Parties, or
who may be liable for the injury or damage resulting therefrom (collectively the
“Released Parties”), of and from any and all actions, causes of action, suits,
debts, disputes, damages, claims, obligations, liabilities, costs, expenses,
fees (including, without limitation, reasonable attorneys’ fees) and demands of
any kind whatsoever, at law or in equity, whether matured or unmatured,
liquidated or unliquidated, vested or contingent, choate or inchoate, known or
unknown that the Releasing Parties (or any of them) have or may have, against
the Released Parties or any of them (whether directly or indirectly) relating to
events occurring on or before the date of this Agreement, other than any claim
as to which a final determination is made in a judicial proceeding (in which the
Administrative Agent and Lenders or any of the Released Parties have had an
opportunity to be heard) which determination includes a specific finding that
one of the Released Parties acted in a grossly negligent manner or with actual
willful misconduct or illegal activity. Each Borrower acknowledges that the
foregoing release is a material inducement to Administrative Agent’s and each
Lender’s decision to extend to Borrower the financial accommodations hereunder
and has been relied upon by the Lenders in agreeing to make the Loan hereunder.
Borrower understands, acknowledges and agrees that the release set forth above
may be pleaded as a full and complete defense and may be used as a basis for an
injunction against any action, suit or other proceeding which may be instituted,
prosecuted or attempted in breach of the provisions of such release. To the
furthest extent permitted by law, Borrower hereby knowingly, voluntarily,
intentionally and expressly waives and relinquishes any

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and all rights and benefits that it respectively may have as against any of the
Lender Parties or any other Released Parties under any law, rule or regulation
of any jurisdiction that would or could have the effect of limiting the extent
to which a general release extends to claims which any of the Releasing Parties
does not know or suspect to exist as of the date hereof.
12.25    Time; Inconsistency. Time is of the essence in Borrower’s performance
under this Agreement and all other Financing Agreements. Notwithstanding
anything to the contrary contained in any Financing Agreement, if and to the
extent any terms or provisions contained in any Financing Agreement are
inconsistent or conflict with the terms and provisions of this Agreement, the
terms and provisions of this Agreement shall control and govern.
12.26    Relationship. The relationship between, on the one hand, the
Administrative Agent and Lenders, and the Borrower, on the other hand, shall be
that of creditor-debtor only. No term in this Agreement or in the other
Financing Agreements and no course of dealing between the parties shall be
deemed to create any relationship of agency, partnership or joint venture or any
fiduciary duty by the Administrative Agent and Lenders to Borrower or any other
party.
12.27    Borrower Agent. Each Borrower hereby irrevocably appoints Borrower
Agent as the borrowing agent and attorney-in-fact for all Borrowers which
appointment shall remain in full force and effect unless and until
Administrative Agent shall have received prior written notice signed by each
Borrower that such appointment has been revoked and that another Borrower has
been appointed Borrower Agent. Each Borrower hereby irrevocably appoints and
authorizes the Borrower Agent (i) to provide Administrative Agent with all
notices with respect to Loan obtained for the benefit of Borrower and all other
notices and instructions under this Agreement, (ii) for all purposes of delivery
or receipt of communications, preparation and delivery of financial reports,
receipt and payment of Liabilities, requests for waivers, amendments or other
accommodations and/or actions under this Agreement, and to duly execute and
deliver on behalf of Borrower any and all instruments, amendments,
modifications, reaffirmations, agreements, certificates and documents made to,
in favor of or with Administrative Agent and Lenders in connection with this
Agreement or the Financing Agreements, and (iii) to take such other action as
Borrower Agent deems appropriate on its behalf to obtain the Loan and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. Each Borrower agrees that any notice, election,
communication, representation, instrument, amendment, modification,
reaffirmation, certificate, document, agreement or undertaking made on its
behalf by Borrower Agent shall be legally binding upon and enforceable against
each such Borrower. It is understood that the handling of the Loan Account and
Collateral of Borrowers in a combined fashion, as more fully set forth in this
Agreement, is done solely as an accommodation to Borrowers in order to utilize
the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and Administrative Agent and Lenders
shall not incur liability to any Borrower as a result hereof. Each Borrower
expects to derive benefit, directly or indirectly, from the handling of the Loan
Account and the Collateral in a combined fashion since the successful operation
of each Borrower is dependent on the continued successful performance of the
integrated group. To induce the Administrative Agent and Lenders to do so, and
in consideration thereof, but without limiting any other provision contained in
this Agreement, each Borrower hereby jointly and severally agrees to indemnify
Administrative Agent and each Lender and hold Administrative Agent and Lenders
harmless against any and all

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liability, expense, loss or claim of damage or injury, made against
Administrative Agent or any Lender by any Borrower or by any third party or
Person whosoever, arising from or incurred by reason of (a) the handling of the
Loan Account and Collateral as herein provided, (b) the Administrative Agent’s
relying on any instructions of the Borrower Agent, or (c) any other action taken
by the Administrative Agent hereunder or under the other Financing Agreements,
except that Borrowers will have no liability to the Administrative Agent under
this Section with respect to any liability that has been finally determined by a
court of competent jurisdiction in a non-appealable proceeding to have resulted
solely from the gross negligence, willful misconduct, or illegal activity of
Administrative Agent.
12.28    Acting Through Agents. In exercising any rights under the Financing
Agreements or taking any actions provided for therein, the Administrative Agent
may act through its employees, agents or independent contractors as authorized
by the Administrative Agent. Borrower shall authorize its accounting firm and/or
service bureaus to provide Administrative Agent with such information as is
requested by Administrative Agent in accordance with this Agreement. Borrower
authorizes the Administrative Agent to contact directly any such accounting firm
and/or service bureaus to obtain such information.
12.29    Additional Provisions.
(a)    Consents. Each Borrower, as joint and several primary obligor of the
Liabilities directly incurred by any other Borrower, authorizes Administrative
Agent, without giving notice to such Borrower or to any other Borrower (to the
extent permitted hereunder) or obtaining such Borrower’s consent or any other
Borrower’s consent (to the extent permitted hereunder) and without affecting the
liability of such Borrower for the Liabilities directly incurred by the other
Borrower, from time to time to:
(1)    compromise, settle, renew, extend the time for payment, change the manner
or terms of payment, discharge the performance of, decline to enforce, or
release all or any of the Liabilities; grant other indulgences to any Borrower
in respect thereof; or modify in any manner any documents relating to the
Liabilities;
(2)    declare all Liabilities due and payable upon the occurrence and during
the continuance of an Event of Default;
(3)    take and hold security for the performance of the Liabilities of any
Borrower and exchange, enforce, waive and release any such security;
(4)    apply and reapply such security and direct the order or manner of sale
thereof as Administrative Agent, in its sole discretion, may determine;
(5)    release, surrender or exchange any deposits or other property securing
the Liabilities or on which Administrative Agent at any time may have a Lien;
release, substitute or add any one or more endorsers or guarantors of the
Liabilities of any other Borrower or such Borrower; or compromise, settle,
renew, extend the time for payment, discharge the performance of, decline to
enforce, or release all or any obligations of any such endorser or guarantor or
other

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Person who is now or may hereafter be liable on any Liabilities or release,
surrender or exchange any deposits or other property of any such Person;
(6)    apply payments received by Administrative Agent from any Borrower to any
Liabilities, in such order as Administrative Agent shall determine, in its sole
discretion, subject to Section 12.8; and
(7)    assign this Agreement in whole or in part.
(b)    Waivers. Each Borrower, as a primary, joint and several obligor with
respect to the Liabilities directly incurred by any other Borrower, hereby
waives:
(1)    any defense based upon any legal disability or other defense of any other
Borrower, or by reason of the cessation or limitation of the liability of any
other Borrower from any cause (other than full payment of all Liabilities),
including, but not limited to, failure of consideration, breach of warranty,
statute of frauds, statute of limitations, accord and satisfaction, and usury;
(2)    any defense based upon any legal disability or other defense of any other
guarantor or other Person;
(3)    any defense based upon any lack of authority of the officers, directors,
members, managers, partners or agents acting or purporting to act on behalf of
any other Borrower or any principal of any other Borrower or any defect in the
formation of any other Borrower or any principal of any other Borrower;
(4)    any defense based upon the application by any other Borrower of the
proceeds of the Loan for purposes other than the purposes represented by such
other Borrower to Administrative Agent or intended or understood by
Administrative Agent or such Borrower;
(5)    any defense based on such Borrower’s rights, under statute or otherwise,
to require Administrative Agent to sue any other Borrower or otherwise to
exhaust its rights and remedies against any other Borrower or any other Person
or against any collateral before seeking to enforce its right to require such
Borrower to satisfy the Liabilities of any other Borrower;
(6)    any defense based on Administrative Agent’s failure at any time to
require strict performance by any Borrower of any provision of the Financing
Agreements. Such Borrower agrees that no such failure shall waive, alter or
diminish any right of Administrative Agent thereafter to demand strict
compliance and performance therewith. Nothing contained herein shall prevent
Administrative Agent from foreclosing on any Lien, or exercising any rights
available to Administrative Agent thereunder, and the exercise of any such
rights shall not constitute a legal or equitable discharge of such Borrower;
(7)    [intentionally omitted];

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(8)    any defense based upon Administrative Agent’s election of any remedy
against such Borrower or any other Borrower or any of them; any defense based on
the order in which Administrative Agent enforces its remedies;
(9)    any defense based on (A) Administrative Agent’s surrender, release,
exchange, substitution, dealing with or taking any additional collateral, (B)
Administrative Agent’s abstaining from taking advantage of or realizing upon any
Lien or other guaranty, and (C) any impairment of collateral securing the
Liabilities, including, but not limited to, Administrative Agent’s failure to
perfect or maintain a Lien in such collateral;
(10)    any defense based upon Administrative Agent’s failure to disclose to
such Borrower any information concerning any other Borrower’s financial
condition or any other circumstances bearing on any other Borrower’s ability to
pay the Liabilities;
(11)    any defense based upon any statute or rule of law which provides that
the obligation of a surety must be neither larger in amount nor in any other
respects more burdensome than that of a principal;
(12)    any defense based upon Administrative Agent’s election, in any
proceeding instituted under the Bankruptcy Code, of the application of Section
1111(b)(2) of the Bankruptcy Code or any successor statute;
(13)    any defense based upon any borrowing or any grant of a security interest
under Section 364 of the Bankruptcy Code;
(14)    [intentionally omitted];
(15)    except as otherwise expressly set forth herein: notice of acceptance
hereof; notice of the existence, creation or acquisition of any Liability;
notice of any Event of Default; notice of the amount of the Liabilities
outstanding from time to time; notice of any other fact which might increase
such Borrower’s risk; diligence; presentment; demand of payment; protest; filing
of claims with a court in the event of any other Borrower’s receivership or
bankruptcy and all other notices and demands to which such Borrower might
otherwise be entitled (and agrees the same shall not have to be made on the
other Borrower as a condition precedent to such Borrower’s obligations
hereunder);
(16)    [intentionally omitted];
(17)    any defense based on application of fraudulent conveyance or transfer
law or shareholder distribution law to any of the Liabilities or the security
therefor;
(18)    any defense based on Administrative Agent’s failure to seek relief from
stay or adequate protection in any other Borrower’s bankruptcy proceeding or any
other act or omission by Administrative Agent which impairs such Borrower’s
prospective subrogation rights;
(19)    any defense based on legal prohibition of Administrative Agent’s
acceleration of the maturity of the Liabilities during the occurrence of an
Event of Default or any

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other legal prohibition on enforcement of any other right or remedy of
Administrative Agent with respect to the Liabilities and the security therefor;
(20)    any defense available to a surety under applicable Law; and
(21)    the benefit of any statute of limitations affecting the liability of
such Borrower hereunder or the enforcement hereof.
Each Borrower further agrees that its obligations hereunder shall not be
impaired in any manner whatsoever by any bankruptcy, extensions, moratoria or
other relief granted to any other Borrower pursuant to any statute presently in
force or hereafter enacted.
(c)    Additional Waivers. Each Borrower authorizes Administrative Agent to
exercise, in its sole discretion, any right, remedy or combination thereof which
may then be available to Administrative Agent, since it is such Borrower’s
intent that the Liabilities be absolute, independent and unconditional
obligations of such Borrower under all circumstances. Notwithstanding any
foreclosure of any Lien with respect to any or all of any property securing the
Liabilities, whether by the exercise of the power of sale contained therein, by
an action for judicial foreclosure or by an acceptance of a deed in lieu of
foreclosure, each Borrower shall remain bound under such Borrower’s guaranty of
the Liabilities directly incurred by any other Borrower.
(d)    Primary Obligations. This Agreement is a primary and original obligation
of each of the Borrowers and each of the Borrowers shall be liable for all
existing and future Liabilities of any other Borrower as fully as if such
Liabilities were directly incurred by such Borrower.
12.30    Nonliability of Administrative Agent and Lenders. The relationship
between the Borrowers on the one hand and the Administrative Agent and Lenders
on the other hand shall be solely that of borrower and lender. The
Administrative Agent and Lenders do not have any fiduciary relationship with or
duty to any Credit Party arising out of or in connection with this Agreement or
any of the other Financing Agreements, and the relationship between the Credit
Parties, on the one hand, and the Administrative Agent and Lenders, on the other
hand, in connection herewith or therewith is solely that of debtor and creditor.
The Administrative Agent does not undertake any responsibility to any Credit
Party to review or inform any Credit Party of any matter in connection with any
phase of any Credit Party’s business or operations. The Borrower Agent agrees,
on behalf of itself and each other Borrower, that the Administrative Agent and
Lenders shall have no liability to any Credit Party (whether sounding in tort,
contract or otherwise) for losses suffered by any Credit Party in connection
with, arising out of, or in any way related to the transactions contemplated and
the relationship established by the Financing Agreements, or any act, omission
or event occurring in connection therewith, unless it is determined in a final
non-appealable judgment by a court of competent jurisdiction that such losses
resulted from the gross negligence, willful misconduct or illegal activity of
the party from which recovery is sought. NO LENDER OR ADMINISTRATIVE AGENT SHALL
BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY OTHERS OF ANY INFORMATION OR
OTHER MATERIALS OBTAINED THROUGH INTRALINKS, DEBTX OR OTHER SIMILAR INFORMATION
TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT, NOR SHALL ANY LENDER OR

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ADMINISTRATIVE AGENT HAVE ANY LIABILITY WITH RESPECT TO, AND THE BORROWER AGENT
ON BEHALF OF ITSELF AND EACH OTHER CREDIT PARTY, HEREBY WAIVES, RELEASES AND
AGREES NOT TO SUE FOR ANY SPECIAL, PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING
AGREEMENT OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR THEREWITH
(WHETHER BEFORE OR AFTER THE CLOSING DATE). Each Borrower and the Borrower Agent
acknowledges that it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Financing Agreements to which it is
a party. No joint venture is created hereby or by the other Financing Agreements
or otherwise exists by virtue of the transactions contemplated hereby by the
Administrative Agent and Lenders or among the Credit Parties and the
Administrative Agent and Lenders.
12.31    Amendment and Restatement. On the date hereof (the “Restatement Date”),
the Original Term Loan Agreement shall be amended, restated and superseded by
this Agreement. The parties hereto acknowledge and agree that (a) this
Agreement, the Term Loan Notes delivered pursuant to this Agreement (the
“Restated Notes”) and the other Financing Agreements executed and delivered in
connection herewith do not constitute a novation, payment and reborrowing, or
termination of the “Liabilities” (as defined in the Original Term Loan
Agreement) under the Original Term Loan Agreement as in effect prior to the
Restatement Date; (b) such “Liabilities” are in all respects continuing with
only the terms thereof being amended and modified as provided in this Agreement;
(c) the Liens granted in the Collateral pursuant to the Financing Agreements
securing payment of such “Liabilities” are in all respects continuing and in
full force and effect and secure the payment of the Liabilities (as defined in
this Agreement) and are hereby fully ratified and affirmed; and (d) upon the
effectiveness of this Agreement all loans outstanding under the Original Term
Loan Agreement immediately before the effectiveness of this Agreement will be
part of the Loans hereunder on the terms and conditions set forth in this
Agreement. Without limitation on the foregoing, each of the Borrowers hereby
fully and unconditionally ratifies and affirms all of the Financing Agreements,
as amended, and agrees that all security interests granted to PrivateBank or the
Administrative Agent in the Collateral thereunder shall from and after the date
hereof secure all Liabilities hereunder but in favor of the Administrative Agent
for the ratable benefit of the Lenders and the Administrative Agent.
Notwithstanding the modifications effected by this Agreement of the
representations, warranties and covenants of the Borrowers contained in the
Original Term Loan Agreement, each of the Borrowers acknowledges and agrees that
any choses in action or other rights created in favor of PrivateBank or the
Administrative Agent and its successors and assigns arising out of the
representations and warranties of the Borrowers contained in or delivered
(including representations and warranties delivered in connection with the
making of the loans or other extensions of credit thereunder) in connection with
the Original Term Loan Agreement, shall survive the execution and delivery of
this Agreement but in favor of the Lenders and the Administrative Agent;
provided, however, that it is understood and agreed that the Borrowers’ monetary
obligations under the Original Term Loan Agreement in respect of the loans and
letters of credit thereunder are evidenced by this Agreement. All
indemnification obligations of the Borrowers pursuant to the Original Term Loan
Agreement shall survive the amendment and restatement of the Original Term Loan
Agreement pursuant to this Agreement. On and after the Restatement Date, (a)
each reference in the Financing Agreements to the “Loan Agreement”, “Loan and
Security Agreement”,

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“thereunder”, “thereof” or similar words referring to the Loan Agreement shall
mean and be a reference to this Agreement and (b) each reference in the
Financing Agreements to a “Term Loan Note” shall mean and be a Term Loan Note as
defined in this Agreement.
13.    AGENCY.
Administrative Agent, Lenders and Borrower agree that, except for the rights
expressly granted to Borrower under Section 13.9 and Section 13.15 and
Borrower’s obligations pursuant to Section 13.14, Borrower shall not be a party
to the agreements contained in this Section 13, and shall have no obligations
under this Section 13. Without limitation of the foregoing, Administrative
Agent, Lenders and Borrower agree that in no event shall Borrower be required to
seek comment from, deliver notices to or otherwise deal with any Lender other
than Administrative Agent (except as otherwise specifically stated in this
Agreement), nor shall Borrower be required to make an independent investigation
of whether Administrative Agent has obtained any consents from the Lenders or as
may be required (it being agreed that all communications from Administrative
Agent may conclusively be deemed to be authorized by Lenders in accordance with
this Section 13). Borrower shall not have any benefits or rights as a third
party beneficiary of any term or condition contained in this Section 13.
13.1    Appointment and Authorization. Each Lender hereby irrevocably (subject
to Section 13.9) appoints, designates and authorizes Administrative Agent to
take such action on its behalf under the provisions of this Agreement and each
other Financing Agreement and to exercise such powers and perform such duties as
are expressly delegated to it by the terms of this Agreement or any other
Financing Agreement, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Financing Agreement, Administrative Agent shall
not have any duty or responsibility except those expressly set forth herein, nor
shall Administrative Agent have or be deemed to have any fiduciary relationship
with any Lender or participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Financing Agreement or otherwise exist against
Administrative Agent. The duties of Administrative Agent shall be mechanical and
administrative in nature. Without limiting the generality of the foregoing
sentence, the use of the term “agent” herein and in other Financing Agreements
with reference to Administrative 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 merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.
13.2    Delegation of Duties. Administrative Agent may execute any of its duties
under this Agreement or any other Financing Agreement by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of legal counsel
and other consultants, independent public accountants or experts concerning all
matters pertaining to such duties. Administrative Agent shall not be responsible
for the negligence or misconduct of any agent or attorney-in-fact that it
selects in the absence of gross negligence or willful misconduct.
13.3    Exculpation of Administrative Agent. None of Administrative Agent nor
any of its directors, officers, employees, Affiliates or agents shall (a) be
liable to any Lender or any other

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Person for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Financing Agreement or the
transactions contemplated hereby (except to the extent resulting from its own
gross negligence or willful misconduct in connection with its duties expressly
set forth herein as determined by a final, nonappealable judgment by a court of
competent jurisdiction), or (b) be responsible in any manner to any Lender or
participant for any recital, statement, representation or warranty made by
Borrower or any Affiliate, or any officer thereof, contained in this Agreement
or in any other Financing Agreement, or in any certificate, report, statement or
other document referred to or provided for in, or received by Administrative
Agent under or in connection with, this Agreement or any other Financing
Agreement, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Financing Agreement (or the creation,
perfection or priority of any Lien or security interest therein), or for any
failure of Borrower or any other party to any Financing Agreement to perform its
obligations and Liabilities hereunder or thereunder, or be responsible for or
have any duty to ascertain or verify the satisfaction of any conditions
specified in this Agreement or any other Financing Agreement, except receipt of
items required to be delivered to Administrative Agent. Administrative Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Financing Agreement, or to inspect
the properties, books or records of Borrower or its Affiliates.
13.4    Reliance by Administrative Agent. Administrative Agent shall be entitled
to rely, and shall be fully protected in relying, upon any writing,
communication, signature, resolution, representation, notice, consent,
certificate, electronic mail message, affidavit, letter, telegram, facsimile,
telex or telephone message, statement or other document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons, and upon advice and statements of legal counsel
(including legal counsel to Borrower), independent accountants and other experts
selected by Administrative Agent. Administrative Agent shall be fully justified
in failing or refusing to take any action under this Agreement or any other
Financing Agreement unless it shall first receive such advice or concurrence of
the Required Lenders or such other number or percentage of Lenders as shall be
required elsewhere in this Agreement as it deems appropriate and, if it so
requests, confirmation from Lenders of their obligation to indemnify
Administrative Agent against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action.
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Financing Agreement in
accordance with a request or consent of the Required Lenders or such other
number or percentage of Lenders as shall be required elsewhere in this Agreement
and such request and any action taken or failure to act pursuant thereto shall
be binding upon each Lender. For purposes of determining compliance with the
conditions specified in Section 5.1, each Lender that has signed this Agreement
shall be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to a Lender unless Administrative
Agent shall have received written notice from such Lender prior to the Closing
Date specifying its objection thereto.
13.5    Notice of Default. Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default except
with respect to defaults in the payment of principal, interest and fees required
to be paid to Administrative Agent for the account

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of the Lenders, unless Administrative Agent shall have received written notice
from a Lender or Borrower referring to this Agreement, describing such Default
or Event of Default and stating that such notice is a “notice of default”.
Administrative Agent will notify Lenders of its receipt of any such notice.
Administrative Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Required Lenders in accordance with
Section 11.2; provided that unless and until Administrative Agent has received
any such request, Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable or in the best interest of Lenders.
13.6    Credit Decision. Each Lender acknowledges that Administrative Agent has
not made any representation or warranty to it, and that no act by Administrative
Agent hereafter taken, including any consent and acceptance of any assignment or
review of the affairs of Borrower, shall be deemed to constitute any
representation or warranty by Administrative Agent to any Lender as to any
matter, including whether Administrative Agent has disclosed material
information in its possession. Each Lender represents to Administrative Agent
that it has, independently and without reliance upon Administrative Agent and
based on such documents and information as it has deemed appropriate, made its
own appraisal of, and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower, and
made its own decision to enter into this Agreement and to extend credit to
Borrower hereunder. Each Lender also represents that it will, independently and
without reliance upon Administrative Agent 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
this Agreement and the other Financing Agreements, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrower. Except for notices, reports and other documents
expressly herein required to be furnished to Lenders by Administrative Agent,
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial or other condition or creditworthiness of
Borrower which may come into the possession of Administrative Agent.
13.7    Indemnification. Whether or not the transactions contemplated hereby are
consummated, each Lender shall severally indemnify, defend and hold harmless
upon demand Administrative Agent and its directors, officers, employees,
Affiliates and agents (to the extent not reimbursed by or on behalf of Borrower
and without limiting the obligation of Borrower to do so), according to its
applicable Pro Rata Share, from and against any and all Indemnified Liabilities,
provided that no Lender shall be liable for any payment to any such Person of
any portion of the Indemnified Liabilities to the extent determined by a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from the applicable Person’s own gross negligence or willful misconduct. No
action taken in accordance with the directions of Required Lenders shall be
deemed to constitute gross negligence or willful misconduct for purposes of this
Section. Without limitation of the foregoing, each Lender shall reimburse
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including, without limitation, reasonable attorneys’
fees and costs) incurred by Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this

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Agreement, any other Financing Agreement, or any document contemplated by or
referred to herein, to the extent that Administrative Agent is not reimbursed
for such expenses by or on behalf of Borrower. If any indemnity furnished to
Administrative Agent for any purpose shall, in the reasonable, good faith
opinion of Administrative Agent, be insufficient or become impaired,
Administrative Agent may call for additional reasonable indemnity and cease, or
not commence, to do the acts indemnified against even if so directed by Required
Lenders until such additional reasonable indemnity is furnished. The undertaking
in this Section shall survive repayment of the Loan and other Liabilities,
cancellation of any promissory notes, any foreclosure under, or modification,
release or discharge of, any or all of the Financing Agreements, termination of
this Agreement and the resignation or replacement of Administrative Agent.
13.8    Administrative Agent in Individual Capacity. PrivateBank and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with Borrower
and its Affiliates as though PrivateBank were not Administrative Agent hereunder
and without notice to or consent of any Lender. Each Lender acknowledges that,
pursuant to such activities, PrivateBank or its Affiliates may receive
information regarding Borrower or its Affiliates (including information that may
be subject to confidentiality obligations in favor of Borrower or such
Affiliates) and acknowledge that Administrative Agent shall be under no
obligation to provide such information to them. With respect to its portion of
the Loan, PrivateBank and its Affiliates shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though
PrivateBank were not Administrative Agent, and the terms “Lender” and “Lenders”
include PrivateBank and its Affiliates, to the extent applicable, in their
individual capacities.
13.9    Successor Administrative Agent. Administrative Agent may resign as
Administrative Agent upon at least thirty (30) days’ notice to Lenders. If
Administrative Agent resigns under this Agreement, Required Lenders shall, with
(so long as no Default or Event of Default exists) the consent of Borrower
(which shall not be unreasonably withheld, conditioned or delayed), appoint from
among Lenders a successor agent for Lenders. Notwithstanding the immediately
foregoing sentence, if no successor agent is appointed prior to the effective
date of the resignation of Administrative Agent, Administrative Agent may
appoint, after consulting with Lenders and Borrower, a successor agent from
among Lenders. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to and become vested with all the
rights, powers and duties of the retiring Administrative Agent and the term
“Administrative Agent” shall mean such successor agent, and the retiring
Administrative Agent’s appointment, powers and duties as Administrative Agent
shall be terminated. After any retiring Administrative Agent’s resignation
hereunder as Administrative Agent, the provisions of this Section 13 and
Sections 12.2 and 12.16 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement. If no successor agent has accepted appointment as Administrative
Agent by the date which is thirty (30) days following a retiring Administrative
Agent’s notice of resignation, the retiring Administrative Agent’s resignation
shall nevertheless thereupon become effective and Lenders shall perform all of
the duties of Administrative Agent hereunder until such time, if any, as
Required Lenders appoint a successor agent as provided for above. The fees
payable by Borrower to a successor agent in its capacity as

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such agent shall be the same as those payable to its predecessor unless
otherwise agreed in writing between Borrower and such successor.
13.10    Collateral Matters; Restriction on Lenders; Etc. Each Lender authorizes
and directs Administrative Agent to enter into the other Financing Agreements
for the benefit of Lenders. Each Lender hereby agrees that, except as otherwise
set forth herein, any action taken by Required Lenders in accordance with the
provisions of this Agreement or the other Financing Agreements, and the exercise
by the Required Lenders of the powers set forth herein or therein, together with
such other powers as are reasonably incidental thereto, shall be authorized and
binding upon all Lenders. Administrative Agent is hereby authorized on behalf of
all Lenders, without the necessity of any notice to or further consent from any
Lender, to take any action with respect to any Collateral and any of the other
collateral pursuant to Financing Agreements that may be necessary to perfect and
maintain perfected the Liens upon the Collateral and the other collateral
pursuant to the other Financing Agreements. Lenders irrevocably authorize
Administrative Agent, at its option and in its discretion, (a) to release any
Lien granted to or held by Administrative Agent under this Agreement and any
other Financing Agreement (i) upon Payment in Full; (ii) constituting property
sold or to be sold or disposed of, financed or refinanced, as part of or in
connection with any sale, disposition, financing or refinancing which is
expressly permitted by this Agreement or the Revolving Loan Agreement at any
time; or (iii) subject to Section 12.1, if approved, authorized or ratified in
writing by Required Lenders; or (b) to subordinate its interest in any
Collateral to any holder of a Lien on such Collateral which is expressly
permitted by this Agreement or the Revolving Loan Agreement at any time. Upon
request by Administrative Agent at any time, Lenders will promptly confirm in
writing Administrative Agent’s authority to release, or subordinate its interest
in, particular types or items of Collateral pursuant to this Section 13.10.
Administrative Agent and each Lender hereby appoint each other Lender as agent
for the purpose of perfecting Administrative Agent’s security interest in assets
and Collateral which, in accordance with the Uniform Commercial Code in any
applicable jurisdiction, can be perfected by possession or control. Should any
Lender (other than Administrative Agent) obtain possession or control of any
such assets or Collateral, such Lender shall promptly notify Administrative
Agent thereof in writing, and, promptly upon Administrative Agent’s written
request therefor, shall deliver such assets or Collateral to Administrative
Agent or in accordance with Administrative Agent’s instructions or transfer
control to Administrative Agent in accordance with Administrative Agent’s
instructions. Each Lender agrees that, except as otherwise expressly provided
herein, it will not have any right individually to enforce or seek to enforce
this Agreement or any Financing Agreement or to realize upon any Collateral for
the Liabilities unless instructed in writing to do so by Administrative Agent,
it being understood and agreed that such rights and remedies may be exercised
only by Administrative Agent. Each Lender agrees that it shall not, without the
express written consent of Administrative Agent, and shall, upon the written
request of Administrative Agent (to the extent it is lawfully entitled to do
so), set off against the Liabilities, any amounts owing by such Lender to a
Credit Party or any deposit accounts of any Credit Party now or hereafter
maintained with such Lender. Each of the Lenders further agrees that it shall
not, unless specifically requested to do so in writing by Administrative Agent,
take or cause to be taken, any action, including the commencement of any legal
or equitable proceedings to foreclose any loan or otherwise enforce any security
interest in any of the Collateral or to enforce all or any part of this
Agreement or the other Financing Agreements. All enforcement actions under this
Agreement and the other Financing Agreements against the Credit Parties or any

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third party with respect to the Liabilities or the Collateral may only be taken
by Administrative Agent (at the direction of the Required Lenders or as
otherwise permitted in this Agreement) or by its agents at the direction of
Administrative Agent.
13.11    Administrative Agent May File Proofs of Claim. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
Borrower, Administrative Agent (irrespective of whether the principal of the
Loan shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether Administrative Agent shall have made any
demand on Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
(d)    to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loan, and all other Liabilities that
are owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of Lenders and Administrative Agent
(including any claim for the reasonable compensation, expenses, disbursements
and advances of Lenders and Administrative Agent and their respective agents and
attorneys and all other amounts due Lenders and Administrative Agent under this
Agreement) allowed in such judicial proceedings; and
(e)    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 Administrative Agent and, in the event that
Administrative Agent shall consent to the making of such payments directly to
Lenders, to pay to Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of Administrative Agent and
its agents and attorneys, and any other amounts due Administrative Agent under
this Agreement.
Nothing contained herein shall be deemed to authorize Administrative Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Liabilities
or the rights of any Lender or to authorize Administrative Agent to vote in
respect of the claim of any Lender in any such proceeding.
13.12    Other Agents; Arrangers and Managers. None of the Lenders or other
Persons identified on the facing page or signature pages of this Credit
Agreement as a “collateral agent” (including the Collateral Agent), shall have
any right, power, obligation, liability, responsibility or duty under this
Credit Agreement other than, in the case of such Lenders, those applicable to
all Lenders as such. Without limiting the foregoing, none of the Lenders or
other Persons so identified shall have or be deemed to have any fiduciary
relationship with any Lender. Each Lender acknowledges that it has not relied,
and will not rely, on any of the Lenders or other Persons so identified in
deciding to enter into this Credit Agreement or in taking or not taking action
hereunder.

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13.13    Return of Payments. If Administrative Agent pays an amount to a Lender
under this Agreement in the belief or expectation that a related payment has
been or will be received by Administrative Agent from Borrower and such related
payment is not received by Administrative Agent, then Administrative Agent will
be entitled to recover such amount from such Lender on demand without setoff,
counterclaim or deduction of any kind, together with interest accruing on a
daily basis at the Federal Funds Rate (as defined below). If Administrative
Agent determines at any time that any amount received by Administrative Agent
under this Agreement must be returned to Borrower or paid to any other Person
pursuant to any insolvency law or otherwise, then, notwithstanding any other
term or condition of this Agreement or any other Financing Agreement,
Administrative Agent will not be required to distribute any portion thereof to
any Lender. In addition, each Lender will repay to Administrative Agent on
demand any portion of such amount that Administrative Agent has distributed to
such Lender, together with interest at such rate, if any, as Administrative
Agent is required to pay to Borrower or such other Person, without setoff,
counterclaim or deduction of any kind. As used herein, the term “Federal Funds
Rate” means for any day, a fluctuating interest rate equal for each day during
such period to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by
Administrative Agent from three Federal funds brokers of recognized standing
selected by Administrative Agent; provided, Administrative Agent’s determination
of such rate shall be binding and conclusive absent manifest error.
13.14    Defaulting Lender. Notwithstanding any provision of this Agreement to
the contrary, if any Lender becomes a Defaulting Lender, then the following
provisions shall apply for so long as such Lender is a Defaulting Lender:
(a)    Any amount payable to a Defaulting Lender hereunder (whether on account
of principal, interest, fees or otherwise) shall, in lieu of being distributed
to such Defaulting Lender, be retained by Administrative Agent in a segregated
account and, subject to any applicable requirements of law, be applied at such
time or times as may be determined by Administrative Agent (i) first, to the
payment of any amounts owing by such Defaulting Lender to Administrative Agent
hereunder, (ii) second, if so determined by Administrative Agent and Borrower,
held in such account as cash collateral for future funding obligations (if any)
of the Defaulting Lender under this Agreement, (iii) third, pro rata, to the
payment of any amounts owing to Borrower, Administrative Agent or the Lenders as
a result of any judgment of a court of competent jurisdiction obtained by
Borrower, Administrative Agent or any Lender against such Defaulting Lender as a
result of such Defaulting Lender’s breach of its obligations under this
Agreement, and (vi) fourth, to such Defaulting Lender or as otherwise directed
by a court of competent jurisdiction; provided, that if such payment is (x) a
prepayment of the principal amount of any Loans and (y) made at a time when the
conditions set forth in Section 5.1 are satisfied, such payment shall be applied
solely to prepay the Loans of all Lenders that are not Defaulting Lenders pro
rata prior to being applied to the prepayment of any Loans of any Defaulting
Lender.

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(b)    Notwithstanding anything set forth herein to the contrary, a Defaulting
Lender shall not have any voting or consent rights under or with respect to this
Agreement or any other Financing Agreement or constitute a “Lender” (or be
included in the calculation of “Required Lenders” hereunder) for any voting or
consent rights under or with respect to this Agreement or any other Financing
Agreement except with respect to items which require the vote or consent of all
Lenders or all affected Lenders, and no Defaulting Lender shall have any other
right to approve or disapprove any amendment, waiver, consent or any other
action the Lenders or the Required Lenders have taken or may take hereunder
(including any consent to any amendment or waiver pursuant to Section 12.1),
provided that any waiver, amendment or modification requiring the consent of all
Lenders or each directly affected Lender which affects such Defaulting Lender
differently than other affected Lenders shall require the consent of such
Defaulting Lender.
(c)    The failure of any Defaulting Lender to make any Loan, advance or any
payment required by it hereunder shall not relieve any other Lender of its
obligations to make such Loan, advance or payment, but neither any Lender nor
Administrative Agent shall be responsible for the failure of any Defaulting
Lender to make a Loan, advance or make any other payment required hereunder.
At Borrower’s written request, Administrative Agent or a Person reasonably
acceptable to Administrative Agent shall have the right with Administrative
Agent’s written consent and in Administrative Agent’s sole discretion (but
without no obligation whatsoever on Administrative Agent) to purchase from any
Defaulting Lender, and each Defaulting Lender agrees that it shall, at
Administrative Agent’s written request, promptly sell and assign to
Administrative Agent or such Person, all of the lending commitments and
commitment interests of that Defaulting Lender for an amount equal to the
principal balance of all Loans held by such Defaulting Lender and all accrued
interest and fees with respect thereto through the date of sale, such purchase
and sale to be consummated (if at all upon Administrative Agent’s election)
pursuant to an executed Assignment Agreement.
13.14    [Intentionally Omitted].
13.15    Replacement of Certain Lenders.
(a)    Each of the following shall constitute a “Replacement Event”:
(i)    if in connection with any proposed change, waiver, discharge or
termination of or to any of the provisions of this Agreement and/or any
Financing Agreement as contemplated by Section 12.1, the consent of each Lender
or each affected Lender, as applicable, is required and the consent of the
Required Lenders at such time is obtained but the consent of one or more of such
other Lenders (other than Administrative Agent) whose consent is required is not
obtained (each such other Lender, a “Non-Consenting Lender”);
(ii)    if any Lender (other than Administrative Agent) is a Defaulting Lender;
or

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(iii)    if any Lender (other than Administrative Agent) requests compensation
under Section 3.1 and the condition giving rise to such compensation still
exists (each such Lender, an “Affected Lender”).
(b)    For so long as any Replacement Event exists, the Borrower may seek one or
more Assignees eligible under Section 12.15, for clarification, with the prior
written consent of the Administrative Agent (each, a “Replacement Lender”) at
Borrower’s sole cost and expense to purchase the affected Loans and Commitments
of the Non-Consenting Lender, Defaulting Lender or Affected Lender, as the case
may be (such Lender, the “Replaced Lender”). Such purchase may be made, in whole
or in part (subject to the minimum amount requirements in Section 12.15 and a
requirement that the Replacement Lender assume a portion of the Commitment of
the Replaced Lender that corresponds to the purchased portion of the Loans of
such Replaced Lender), at an aggregate price no less than the outstanding
principal amount of the purchased Loans plus accrued interest with respect
thereto. In such case, the Borrower, the Administrative Agent, the Replaced
Lender and each Replacement Lender shall execute and deliver (at Borrower’s sole
cost and expense) an appropriately completed Assignment and Assumption pursuant
to Section 12.15 to effect the assignment of rights to, and the assumption of
obligations by, each Replacement Lender; provided that any fees required to be
paid by Section 12.15 in connection with such assignment shall be paid by the
Borrower or the Replacement Lender. In the case of each replacement of a Lender
(other than a Defaulting Lender), the Borrower shall pay such Replaced Lender,
any commitment fees and other amounts then due and owing to such Lender
(including any additional amounts owing under Section 3.1) prior to such
replacement.
(c)    If a Replaced Lender does not execute and deliver to the Administrative
Agent a duly completed Assignment and Assumption and/or any other reasonable
documentation necessary to reflect such replacement within a period of time
deemed reasonable by the Administrative Agent after the later of (x) the date on
which each Replacement Lender executes and delivers such Assignment and
Assumption and/or such other reasonable documentation and (y) the date as of
which all obligations of the Borrower owing to the Replaced Lender relating to
the Loans and participations so assigned have been paid in full by each
Replacement Lender to such Replaced Lender, then such Replaced Lender shall be
deemed to have executed and delivered such Assignment and Assumption and/or such
other documentation as of such date and the Borrower shall be entitled (but not
obligated) to execute and deliver such Assignment and Assumption and/or such
other documentation on behalf of such Replaced Lender.
(d)    Notwithstanding anything herein, neither the Administrative Agent nor any
Lender shall have any obligation to the Borrower to find a Replacement Lender.
14.    JURISDICTION; JURY TRIAL WAIVER.
14.1    SUBMISSION TO JURISDICTION; WAIVER OF VENUE. THE BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:

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(a)    SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT AND THE OTHER FINANCING AGREEMENTS TO WHICH IT IS A
PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO
THE EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS, THE
COURTS OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS AND
APPELLATE COURTS FROM ANY THEREOF, LOCATED IN COOK COUNTY;
(b)    CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS
AND WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW IN CONNECTION WITH ANY SUCH
ACTION OR PROCEEDING (i) ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM
THE SAME, (ii) THE RIGHT TO ASSERT OR IMPOSE ANY CLAIM, NONCOMPULSORY SET-OFF,
COUNTERCLAIM OR CROSS-CLAIM IN RESPECT THEREOF IN SUCH PROCEEDING; PROVIDED,
HOWEVER, THIS WAIVER DOES NOT PRECLUDE THE RIGHT TO ASSERT A DEFENSE IN SUCH
ACTION OR PROCEEDING OR TO ASSERT OR IMPOSE ANY CLAIM, COUNTERCLAIM OR
CROSS-CLAIM WHICH THE BORROWER WISHES TO PURSUE IN A SEPARATE PROCEEDING AT ITS
SOLE COST AND EXPENSE, AND (iii) ALL STATUTES OF LIMITATIONS WHICH MAY BE
RELEVANT THERETO; AND
(c)    AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE
EFFECTED BY MAILING A COPY THEREOF BY CERTIFIED MAIL (OR ANY SUBSTANTIALLY
SIMILAR FORM OF MAIL), POSTAGE PREPAID, RETURN RECEIPT REQUESTED, TO THE
BORROWER AT ITS ADDRESS SET FORTH ABOVE OR AT SUCH OTHER ADDRESS OF WHICH THE
ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO. THE BORROWER
AGREES THAT SUCH SERVICE, TO THE FULLEST EXTENT PERMITTED BY LAW (i) SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE BORROWER IN ANY
SUIT, ACTION OR PROCEEDING, AND (ii) SHALL BE TAKEN AND HELD TO BE VALID
PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO THE BORROWER. SOLELY TO THE
EXTENT PROVIDED BY APPLICABLE LAW, SHOULD THE BORROWER, AFTER BEING SERVED, FAIL
TO APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED
WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER THE DELIVERY OR MAILING
THEREOF, THE BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT
MAY BE ENTERED BY THE COURT AGAINST THE BORROWER AS DEMANDED OR PRAYED FOR IN
SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS.
(d)    NOTHING HEREIN SHALL AFFECT THE ADMINISTRATIVE AGENT’S OR ANY LENDER’S
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR LIMIT THE
ADMINISTRATIVE AGENT’S OR ANY LENDER’S RIGHT TO BRING PROCEEDINGS AGAINST THE
BORROWER OR ITS PROPERTY IN ANY COURT OR ANY OTHER JURISDICTION.

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14.2    GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ALL RESPECTS IN
ACCORDANCE WITH, AND ENFORCED AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
14.3    JURY TRIAL. THE BORROWER, ADMINISTRATIVE AGENT AND THE LENDERS HEREBY
IRREVOCABLY AND KNOWINGLY WAIVE (TO THE FULLEST EXTENT PERMITTED BY LAW) ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING (INCLUDING, WITHOUT
LIMITATION, ANY COUNTERCLAIM) ARISING OUT OF THIS AGREEMENT, THE FINANCING
AGREEMENTS OR ANY OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO,
INCLUDING, WITHOUT LIMITATION, ANY ACTION OR PROCEEDING (A) TO ENFORCE OR DEFEND
ANY RIGHTS UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH, OR (B) ARISING FROM ANY DISPUTE OR CONTROVERSY IN
CONNECTION WITH OR RELATED TO THIS AGREEMENT AND THE FINANCING AGREEMENTS. THE
ADMINISTRATIVE AGENT, THE LENDERS AND THE BORROWER AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY.
[Signature Page Follows]

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IN WITNESS WHEREOF, this Second Amended and Restated Term Loan and Security
Agreement has been duly executed as of the day and year first above written.
BORROWER:
DIVERSICARE AFTON OAKS, LLC
DIVERSICARE BRIARCLIFF, LLC
DIVERSICARE CHISOLM, LLC
DIVERSICARE HARTFORD, LLC
DIVERSICARE WINDSOR HOUSE, LLC
DIVERSICARE HILLCREST, LLC
DIVERSICARE LAMPASAS, LLC
DIVERSICARE YORKTOWN, LLC
DIVERSICARE CLINTON, LLC
 
BY:
Diversicare Leasing Corp., its sole member
 
By:
/s/ James R. McKnight, Jr.
 
Name: James R. McKnight, Jr.
 
Its: Executive Vice President &
Chief Financial Officer
DIVERSICARE OF CHANUTE, LLC
DIVERSICARE OF COUNCIL GROVE, LLC
DIVERSICARE OF HAYSVILLE, LLC
DIVERSICARE OF SEDGWICK, LLC
DIVERSICARE OF HUTCHINSON, LLC
DIVERSICARE OF LARNED, LLC
BY:

Diversicare Kansas, LLC,
its sole member

 
By:
/s/ James R. McKnight, Jr.
 
Name: James R. McKnight, Jr.
 
Its: Executive Vice President &
Chief Financial Officer

Second Amended and Restated Term Loan and Security Agreement

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

DIVERSICARE PROPERTY CO., LLC
 
 
 
By:
/s/ James R. McKnight, Jr.
 
Name: James R. McKnight, Jr.
 
Its: Executive Vice President &
Chief Financial Officer

Second Amended and Restated Term Loan and Security Agreement

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

DIVERSICARE AFTON OAKS PROPERTY, LLC
DIVERSICARE BRIARCLIFF PROPERTY, LLC
DIVERSICARE CHANUTE PROPERTY, LLC
DIVERSICARE CHISOLM PROPERTY, LLC
DIVERSICARE COUNCIL GROVE PROPERTY, LLC
DIVERSICARE HAYSVILLE PROPERTY, LLC
DIVERSICARE HARTFORD PROPERTY, LLC
DIVERSICARE HILLCREST PROPERTY, LLC
DIVERSICARE LAMPASAS PROPERTY, LLC
DIVERSICARE LARNED PROPERTY, LLC
DIVERSICARE SEDGWICK PROPERTY, LLC
DIVERSICARE WINDSOR HOUSE PROPERTY, LLC
DIVERSICARE YORKTOWN PROPERTY, LLC
DIVERSICARE GLASGOW PROPERTY, LLC
DIVERSICARE HUTCHINSON PROPERTY, LLC
DIVERSICARE CLINTON PROPERTY, LLC
DIVERSICARE FULTON PROPERTY, LLC
BY:
Diversicare Property Co., LLC, its sole member
 
By:
/s/ James R. McKnight, Jr.
 
Name: James R. McKnight, Jr.
 
Its: Executive Vice President &
Chief Financial Officer

Second Amended and Restated Term Loan and Security Agreement

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

DIVERSICARE OF GLASGOW, LLC
DIVERSICARE OF FULTON, LLC
BY:
Diversicare Holding Company, LLC, its sole member
 
By:
/s/ James R. McKnight, Jr.
 
Name: James R. McKnight, Jr.
 
Its: Executive Vice President &
Chief Financial Officer

Second Amended and Restated Term Loan and Security Agreement

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

Acknowledged and Agreed
solely for purposes of Sections 8.1(a)(1), 8.1(a)(2), 8.9 and 9.12 hereof:
DIVERSICARE HEALTHCARE SERVICES, INC.
By:
/s/ Kelly J. Gill
 
Name: Kelly J. Gill
 
Its: President and Chief Executive
          Officer
 
 

Second Amended and Restated Term Loan and Security Agreement

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

ADMINISTRATIVE AGENT:
THE PRIVATEBANK AND TRUST COMPANY, in its capacity as administrative agent
By:
/s/ Adam D. Panos
 
Name: Adam D. Panos
 
Its: Managing Director

Second Amended and Restated Term Loan and Security Agreement

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

LENDER:
THE PRIVATEBANK AND TRUST COMPANY
By:
/s/ Adam D. Panos
 
Name: Adam D. Panos
 
Its: Managing Director

Second Amended and Restated Term Loan and Security Agreement

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

LENDER:
BANKERS TRUST COMPANY
By:
/s/ Jon M. Doll
 
Name: Jon M. Doll
 
Its: Vice President

Second Amended and Restated Term Loan and Security Agreement

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

LENDER:
BOKF, NA D/B/A BANK OF OKLAHOMA
By:
/s/ Ryan Kirk
 
Name: Ryan Kirk
 
Its: Vice President

Second Amended and Restated Term Loan and Security Agreement

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

LENDER:
CIT BANK N.A.

By:
/s/ Edward Shuster
 
Name: Edward Shuster
 
Its: Director

Second Amended and Restated Term Loan and Security Agreement

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

LENDER:
OPUS BANK,  
a California commercial bank
By:
/s/ Bryan Nance
 
Name: Bryan Nance
 
Its: VP, Portfolio Manager Healthcare Banking

Second Amended and Restated Term Loan and Security Agreement

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

LENDER:
FRANKLIN SYNERGY BANK
By:
/s/ Lisa Fletcher
 
Name: Lisa Fletcher
 
Its: Senior Vice President

Second Amended and Restated Term Loan and Security Agreement

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

LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1.1(a)
Borrowers
Schedule 1.1(b)
Propco Borrowers
Schedule 1.1(c)
Affiliated Revolving Borrowers
Schedule 1.1(d)
Facilities; Locations; Real Property; Operators; Owners; Leases
Schedule 7.8
Other Names
Schedule 7.12
Organizational Chart
Schedule 7.13
Litigation
Schedule 7.17
Environmental Matters
Schedule 7.26
Medicare and Medicaid Penalties
Schedule 7.33
Capitalization
Schedule 9.3
Requirements for Subsidiary Formation
Schedule 9.6
Released Collateral Information

EXHIBITS
Exhibit A
Form of Term Loan Note
Exhibit B
Form of Acquisition Loan Note
Exhibit C
Form of Assignment Agreement
Exhibit D
Conditions Precedent to Permitted Acquisition
Exhibit E
Form of Acquisition Loan Borrowing Notice

ANNEX
Annex A
Lenders, Pro Rata Shares/Dollar Allocations, and Notice Information

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

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

SCHEDULE 1.1(a)
BORROWERS
 
Name
State of Incorporation or Formation
Organizational Number
Principal Place of Business and Chief Executive Office
1.    
Diversicare Afton Oaks, Property, LLC
Delaware limited liability company
5654145
1621 Galleria Blvd., Brentwood, TN 37027
2.    
Diversicare Briarcliff Property, LLC
Delaware limited liability company
5654147
1621 Galleria Blvd., Brentwood, TN 37027
3.    
Diversicare Chisolm Property, LLC
Delaware limited liability company
5654151
1621 Galleria Blvd., Brentwood, TN 37027
4.    
Diversicare Hartford Property, LLC
Delaware limited liability company
5654153
1621 Galleria Blvd., Brentwood, TN 37027
5.    
Diversicare Windsor House Property, LLC
Delaware limited liability company
5654162
1621 Galleria Blvd., Brentwood, TN 37027
6.    
Diversicare Hillcrest Property, LLC
Delaware limited liability company
5654156
1621 Galleria Blvd., Brentwood, TN 37027
7.    
Diversicare Lampasas Property, LLC
Delaware limited liability company
5654158
1621 Galleria Blvd., Brentwood, TN 37027
8.    
Diversicare Yorktown Property, LLC
Delaware limited liability company
5654160
1621 Galleria Blvd., Brentwood, TN 37027
9.    
Diversicare Glasgow Property, LLC
Delaware limited liability company
5623793
1621 Galleria Blvd., Brentwood, TN 37027
10.    
Diversicare Hutchinson Property, LLC
Delaware limited liability company
5630632
1621 Galleria Blvd., Brentwood, TN 37027
11.    
Diversicare Clinton Property, LLC
Delaware limited liability company
5747489
1621 Galleria Blvd., Brentwood, TN 37027
12.    
Diversicare Fulton Property, LLC
Delaware limited liability company
5837392
1621 Galleria Blvd., Brentwood, TN 37027
13.    
Diversicare Chanute Property, LLC
Delaware limited liability company
5642974
1621 Galleria Blvd., Brentwood, TN 37027
14.    
Diversicare Council Grove Property, LLC
Delaware limited liability company
5642977
1621 Galleria Blvd., Brentwood, TN 37027
15.    
Diversicare Haysville Property, LLC
Delaware limited liability company
5642990
1621 Galleria Blvd., Brentwood, TN 37027
16.    
Diversicare Sedgwick Property, LLC
Delaware limited liability company
5643010
1621 Galleria Blvd., Brentwood, TN 37027
17.    
Diversicare Larned Property, LLC
Delaware limited liability company
5643007
1621 Galleria Blvd., Brentwood, TN 37027
18.    
Diversicare Property Co., LLC
Delaware limited liability company
5623795
1621 Galleria Blvd., Brentwood, TN 37027
19.    
Diversicare Afton Oaks, LLC
Delaware limited liability company
3265649
1621 Galleria Blvd., Brentwood, TN 37027
20.    
Diversicare Briarcliff, LLC
Delaware limited liability company
3997006
1621 Galleria Blvd., Brentwood, TN 37027
21.    
Diversicare Chisolm, LLC
Delaware limited liability company
4154382
1621 Galleria Blvd., Brentwood, TN 37027

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

 
Name
State of Incorporation or Formation
Organizational Number
Principal Place of Business and Chief Executive Office
22.    
Diversicare Hartford, LLC
Delaware limited liability company
3924217
1621 Galleria Blvd., Brentwood, TN 37027
23.    
Diversicare Windsor House, LLC
Delaware limited liability company
3265652
1621 Galleria Blvd., Brentwood, TN 37027
24.    
Diversicare Hillcrest, LLC
Delaware limited liability company
4154388
1621 Galleria Blvd., Brentwood, TN 37027
25.    
Diversicare Lampasas, LLC
Delaware limited liability company
4154396
1621 Galleria Blvd., Brentwood, TN 37027
26.    
Diversicare Clinton, LLC
Delaware limited liability company
5071217
1621 Galleria Blvd., Brentwood, TN 37027
27.    
Diversicare Yorktown, LLC
Delaware limited liability company
4154403
1621 Galleria Blvd., Brentwood, TN 37027
28.    
Diversicare of Glasgow, LLC
Delaware limited liability company
5623797
1621 Galleria Blvd., Brentwood, TN 37027
29.    
Diversicare of Hutchinson, LLC
Delaware limited liability company
5623799
1621 Galleria Blvd., Brentwood, TN 37027
30.    
Diversicare of Fulton, LLC
Delaware limited liability company
5837391
1621 Galleria Blvd., Brentwood, TN 37027
31.    
Diversicare of Chanute, LLC
Delaware limited liability company
5281255
1621 Galleria Blvd., Brentwood, TN 37027
32.    
Diversicare of Council Grove, LLC
Delaware limited liability company
5281258
1621 Galleria Blvd., Brentwood, TN 37027
33.    
Diversicare of Haysville, LLC
Delaware limited liability company
5281263
1621 Galleria Blvd., Brentwood, TN 37027
34.    
Diversicare of Sedgwick, LLC
Delaware limited liability company
5281268
1621 Galleria Blvd., Brentwood, TN 37027
35.    
Diversicare of Larned, LLC
Delaware limited liability company
5281267
1621 Galleria Blvd., Brentwood, TN 37027

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

SCHEDULE 1.1(b)
PROPCO BORROWERS
 
Name
State of Incorporation or Formation
Principal Place of Business and Chief Executive Office
1.    
Diversicare Afton Oaks, Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
2.    
Diversicare Briarcliff Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
3.    
Diversicare Chisolm Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
4.    
Diversicare Hartford Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
5.    
Diversicare Windsor House Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
6.    
Diversicare Hillcrest Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
7.    
Diversicare Lampasas Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
8.    
Diversicare Yorktown Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
9.    
Diversicare Glasgow Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
10.    
Diversicare Hutchinson Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
11.    
Diversicare Clinton Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
12.    
Diversicare Fulton Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
13.    
Diversicare Chanute Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
14.    
Diversicare Council Grove Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
15.    
Diversicare Haysville Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
16.    
Diversicare Sedgwick Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
17.    
Diversicare Larned Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027

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

SCHEDULE 1.1(c)
AFFILIATED REVOLVING BORROWERS

 
Name
State of Incorporation or Formation
Principal Place of Business and Chief Executive Office
1.    
Advocat Finance, Inc.
Delaware corporation
1621 Galleria Blvd., Brentwood, TN 37027
2.    
Diversicare Management Services Co.
Tennessee corporation
1621 Galleria Blvd., Brentwood, TN 37027
3.    
Diversicare Leasing Corp.
Tennessee corporation
1621 Galleria Blvd., Brentwood, TN 37027
4.    
Sterling Health Care Management, Inc.
Kentucky corporation
1621 Galleria Blvd., Brentwood, TN 37027
5.    
Senior Care Cedar Hills, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
6.    
Senior Care Golfcrest, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
7.    
Senior Care Golfview, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
8.    
Senior Care Florida Leasing, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
9.    
Senior Care Southern Pines, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
10.    
Diversicare Afton Oaks, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
11.    
Diversicare Briarcliff, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
12.    
Diversicare Chisolm, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
13.    
Diversicare Hillcrest, LLC,
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
14.    
Diversicare Lampasas, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
15.    
Diversicare Pinedale, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
16.    
Diversicare Windsor House, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
17.    
Diversicare Yorktown, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
18.    
Diversicare Ballinger, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
19.    
Diversicare Doctors, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
20.    
Diversicare Estates, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
21.    
Diversicare Humble, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
22.    
Diversicare Katy, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027

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

 
Name
State of Incorporation or Formation
Principal Place of Business and Chief Executive Office
23.    
Diversicare Texas I, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
24.    
Diversicare Treemont, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
25.    
Diversicare Rose Terrace, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
26.    
Diversicare Paris, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
27.    
Diversicare Therapy Services, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
28.    
Diversicare of Chanute, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
29.    
Diversicare of Council Grove, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
30.    
Diversicare of Haysville, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
31.    
Diversicare of Sedgwick, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
32.    
Diversicare of Larned, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
33.    
Diversicare Highlands, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
34.    
Diversicare Holding Company, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
35.    
Diversicare Kansas, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
36.    
Diversicare Leasing Company II, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027]
37.    
Diversicare of Seneca Place, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
38.    
Diversicare of Bradford Place, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
39.    
Diversicare of Providence, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
40.    
Diversicare of Siena Woods, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
41.    
Diversicare of St. Theresa, LLC

Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
42.    
Diversicare of Big Springs, LLC

Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
43.    
Diversicare of Nicholasville, LLC

Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
44.    
Diversicare of Avon, LLC

Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
45.    
Diversicare of Mansfield, LLC

Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
46.    
Diversicare of Riverside, LLC

Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
47.    
Diversicare of Chateau, LLC

Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027

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

 
Name
State of Incorporation or Formation
Principal Place of Business and Chief Executive Office
48.    
Diversicare of St. Joseph, LLC

Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
49.    
Diversicare Afton Oaks, Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
50.    
Diversicare Briarcliff Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
51.    
Diversicare Chisolm Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
52.    
Diversicare Hartford Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
53.    
Diversicare Windsor House Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
54.    
Diversicare Hillcrest Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
55.    
Diversicare Lampasas Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
56.    
Diversicare Yorktown Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
57.    
Diversicare Glasgow Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
58.    
Diversicare Hutchinson Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
59.    
Diversicare Clinton Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
60.    
Diversicare Fulton Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
61.    
Diversicare Chanute Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
62.    
Diversicare Council Grove Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
63.    
Diversicare Haysville Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
64.    
Diversicare Sedgwick Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
65.    
Diversicare Larned Property, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
66.    
Diversicare Property Co., LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
67.    
Diversicare Hartford, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
68.    
Diversicare of Glasgow, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
69.    
Diversicare of Hutchinson, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
70.    
Diversicare Clinton, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
71.    
Diversicare of Fulton, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
72.    
Diversicare Greenville, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027

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

 
Name
State of Incorporation or Formation
Principal Place of Business and Chief Executive Office
73.    
Diversicare Normandy Terrace, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027

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SCHEDULE 1.1(d)
FACILITIES; LOCATIONS; REAL PROPERTY; OPERATORS; OWNERS; LEASES

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

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

SCHEDULE 9.3

REQUIREMENTS FOR SUBSIDIARY FORMATION
(a) the due execution of a joinder by such subsidiary and the other Borrowers to
this Agreement and each other applicable Financing Agreement, in form and
substance reasonably satisfactory to Administrative Agent (“Joinders”) shall be
delivered to the Administrative Agent, including pursuant to which such
subsidiary shall then absolutely and unconditionally (i) join as and become a
party to this Agreement as a Borrower hereunder and under each other Financing
Agreement to which a Borrower is a party, (ii) assume, as a joint and several
obligor hereunder, all of the obligations, liabilities and indemnities of
Borrower under this Agreement (including the Liabilities) and the Financing
Agreements to which a Borrower is a party, (iii) covenant and agree to be bound
by and adhere to all of the terms, representations, warranties, covenants,
waivers, releases, agreements and conditions of or respecting Borrower with
respect to this Agreement and the other Financing Agreements to which a Borrower
is a party, and (iv) grant in favor of Administrative Agent (for benefit of
Lenders and itself) a present first priority perfected security interest and
Lien in all of such subsidiary’s Collateral (other than Permitted Liens);
(b) the business of such subsidiary is and will be engaged in substantially the
same line of business or a related business engaged in by the other Borrowers at
such time; (c) immediately before and immediately after giving effect to the
formation of such subsidiary, no Default or Event of Default shall exist or be
reasonably likely to occur as a result of such subsidiary formation; (d) unless
otherwise agreed in writing by Administrative Agent, the equity of such
subsidiary shall be pledged to Administrative Agent pursuant to a pledge
agreement in form and substance substantially similar to the Pledge Agreement,
or if applicable, the applicable Pledge Agreement shall be amended, to provide
for the first priority perfected pledge of the equity of such subsidiary (and
the original stock certificate regarding such subsidiary shall be delivered to
Administrative Agent, together with an applicable assignment separate from
certificate, if such Stock is certificated, and in any case, the filing of an
applicable UCC Financing Statement); (e) all of the representations and
warranties of the Borrowers (and with respect to such subsidiary, except as
otherwise noted in the Joinder) contained in this Agreement shall be true and
correct in all material respects (without duplication of materiality); (f) a
copy of the resolutions of the Board of Directors or other governing body of
such subsidiary authorizing or ratifying the execution, delivery and performance
by such subsidiary of the Joinders, this Agreement and the Financing Agreements
to which such subsidiary is a party shall be delivered to the Administrative
Agent; (g) a written legal opinion of Borrower’s counsel with respect to such
subsidiary, in form and substance as reasonably requested by Administrative
Agent, shall be delivered to the Administrative Agent; (h) certified copies of
such subsidiary’s organizational documents from the secretary of state of the
state of organization, together with applicable good standing certificate(s),
operating agreement and/or bylaws, shall be furnished to the Administrative
Agent; (i) a UCC Financing Statement naming such subsidiary as debtor and the
Administrative Agent as secured party shall be filed with the secretary of state
of the applicable state of organization for such subsidiary; (j) UCC tax, lien,
bankruptcy, pending suit and judgment searches for such subsidiary shall be
furnished to the Administrative Agent, if requested; (k) a certificate from the
insurance carrier of such subsidiary evidencing that all required insurance
coverage for such

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

subsidiary as a Borrower is in effect, designating the Administrative Agent as
“mortgagee” and “lender’s loss payee” and an additional insured thereunder, in
form and substance reasonably satisfactory to Administrative Agent; and (l) any
other applicable Financing Agreement (including, without limitation, Mortgage)
or other instrument, document, agreement, opinion or certificate shall be duly
executed and delivered to the Administrative Agent as it may reasonably require
in its reasonable discretion in connection with the creation of such subsidiary.

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

SCHEDULE 9.6

RELEASED COLLATERAL INFORMATION
Facility Name
Propco Borrower
City
State
Appraisal Value as of the Closing Date
Debt Allocation as of the Closing Date
Debt Allocation Percentage
Diversicare of Chanute
Diversicare Chanute Property, LLC
Chanute
Kansas
$3,000,000
$2,386,177
3.29%
Council Grove Health Care Center
Diversicare Council Grove Property, LLC
Council Grove
Kansas
$4,600,000
$3,658,804
5.05%
Haysville Health Care Center
Diversicare Haysville Property, LLC
Haysville
Kansas
$5,800,000
$4,613,275
6.36%
Sedgwick Health Care Center
Diversicare Sedgwick Property, LLC
Sedgwick
Kansas
$2,900,000
$2,306,637
3.18%
Larned Health Care Center
Diversicare Larned Property, LLC
Larned
Kansas
$1,400,000
$1,113,549
1.54%
Windsor House of Huntsville
Diversicare Windsor House Property, LLC
Huntsville
Alabama
$15,800,000
$12,567,197
17.33%
Hillcrest Manor Nursing and Rehabilitation
Diversicare Hillcrest Property, LLC
Luling
Texas
$2,400,000
$1,908,941
2.63%
Lampasas Nursing & Rehabilitation
Diversicare Lampasas Property, LLC
Lampasas
Texas
$5,800,000
$4,613,275
6.36%
Yorktown Manor Nursing & Rehab
Diversicare Yorktown Property, LLC
Yorktown
Texas
$4,500,000
$3,579,265
4.94%
Hartford Health Care
Diversicare Hartford Property, LLC
Hartford
Alabama
$10,800,000
$8,590,236
11.85%
Briarcliff Health Care Center
Diversicare Briarcliff Property, LLC
Oak Ridge
Tennessee
$7,500,000
$5,965,442
8.23%
Chisolm Trail Nursing & Rehab
Diversicare Chisolm Property, LLC
Lockhart
Texas
$3,100,000
$2,465,716
3.40%
Afton Oaks Nursing & Rehabilitation
Diversicare Afton Oaks Property, LLC
Houston
Texas
$5,100,000
$4,056,500
5.60%
Barren County Healthcare Center
Diversicare Glasgow Property, LLC
Glasgow
Kentucky
$6,900,000
$5,488,206
7.57%
Diversicare of Hutchinson
Diversicare Hutchinson Property, LLC
Hutchinson
Kansas
$1,950,000
$1,551,015
2.14%
Clinton Place
Diversicare Clinton Property, LLC
Clinton
Kentucky
$5,700,000
$4,533,736
6.25%
Haws Memorial Nursing and Rehabilitation
Diversicare Fulton Property, LLC
Fulton
Kentucky
$3,900,000
$3,102,030
4.28%
Total
 
 
 
$91,150,000
$72,500,000
 

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

EXHIBIT A
FORM OF TERM LOAN NOTE
See attached.

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

EXHIBIT B
FORM OF ACQUISITION LOAN NOTE
See attached.

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

EXHIBIT C
FORM OF ASSIGNMENT AGREEMENT
See attached.

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

EXHIBIT D
CONDITIONS PRECEDENT TO PERMITTED ACQUISITIONS

With respect to any Permitted Acquisition to be consummated after the Closing
Date, each of the following conditions precedent shall be satisfied, in form and
substance (and in results) satisfactory to the Administrative Agent and the
Required Lenders:

(a)    immediately before and after giving effect to such Permitted Acquisition,
no Default or Event of Default shall exist, or be reasonably likely to occur, as
a result of such Permitted Acquisition;

(b)    the business, division, property or assets to be acquired are for use, or
the Person to be acquired is engaged, in substantially the same line of business
or a related business engaged in by Borrower on the Closing Date;

(c)    reasonably prior to such Acquisition, Administrative Agent shall have
received true, complete copies of (i) each material document, instrument and
agreement contemplated to be executed in connection with such Acquisition
(including all Acquisition Documents and the disclosure schedules thereto), (ii)
all existing appraisals, surveys, environmental testing results and reports,
title commitments, property condition reports and applicable documents of
record, in each case as reasonably requested by Administrative Agent and as
available to the Borrower, and (iii) UCC, tax, judgment, bankruptcy, pending
suit and lien search reports (from all reasonably required jurisdictions and
under all corporate and trade names), lien and ownership searches from the U.S.
Patent and Trademark Office and U.S. Copyright Office (if applicable), and
payoff letters, lien release letters, UCC termination statements and other
documents as Administrative Agent may require to evidence the existence and
termination of Liens on the assets or business to be acquired (and
fully-executed or conformed copies of such documents when final), except only to
the extent such Liens constitute Permitted Liens;

(d)    a title insurance policy in the form of ALTA Form Mortgagee Title
Insurance Policy (containing such endorsements as deemed appropriate by the
Administrative Agent that are available in the applicable State) issued by an
insurer (reasonably acceptable to the Administrative Agent) in favor of the
Administrative Agent for any real property acquired in connection with a
Permitted Acquisition, together with copies of all documents of record
concerning such real property as identified on the commitment for the ALTA
Policy referred to above;

(e)    not less than ten (10) days’ prior to the closing date of such
Acquisition, a flood insurance report and policy, if required by the Flood
Disaster Protection Act of 1973, concerning the property or facility to be
acquired in connection with an Acquisition, reasonably satisfactory to the
Administrative Agent;

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

(f)    receipt of due diligence with respect to environmental, insurance and
management background checks; provided, all such due diligence must be performed
by parties reasonably acceptable to Administrative Agent and the results thereof
may not have findings that could be deemed to have a Material Adverse Effect;
provided, further, Administrative Agent shall have completed its own due
diligence with respect to the applicable/target/property and the results thereof
shall be reasonably satisfactory to Administrative Agent;

(g)    in the case of an Acquisition of any Person (which must be a business in
the United States), the applicable governing body of such Person has approved
such Acquisition, and such transaction shall in any event not be deemed to be,
as is customarily known as, a “hostile takeover” or “tender offer”;

(h)    simultaneously with the closing of such Acquisition, any and all
additional documents, opinions, joinders, affidavits, instruments, notes,
amendments, modifications, security agreements, pledge agreements, and other
Financing Agreements reasonably required by Administrative Agent and Required
Lenders shall be duly executed and delivered by Borrower, Guarantor and their
applicable Affiliates;

(i)    any and all indebtedness of any kind incurred by Borrower from a third
party in making such Acquisition is made expressly subordinate to the
Liabilities pursuant to a Subordination Agreement duly executed and delivered by
all applicable parties in connection with such Acquisition in favor of and
reasonably acceptable to Administrative Agent;

(j)    all representations and warranties made by Borrower in this Agreement and
in the Acquisition Documents shall be true and correct as of the date made
therein (except where the failure to do so could not reasonably be expected to
have an adverse effect on such Acquisition or any portion thereof or a Material
Adverse Effect), and to the best of Borrower’s knowledge, as of such closing
date, and except as disclosed to Administrative Agent in writing, all
representations made by the applicable seller/target in such Acquisition
Documents, shall be true and correct in all material respects (without the
duplication of materiality that may be set forth therein); and none of such
representations and warranties are inconsistent in any material respect with the
representations and warranties of Borrower made in this Agreement or in any
other Financing Agreement;

(k)    all consents and approvals of, and filings and registrations with, and
all other actions by, any Governmental Authority and (except where the failure
to obtain or make the same could not reasonably be expected to have an adverse
effect on such Acquisition or any portion thereof or a Material Adverse Effect)
each other Person required in order to make or consummate such Acquisition will
have been obtained, given, filed or taken and are or will be in full force and
effect at such time;

(l)    Borrower shall not, directly or indirectly, have any obligation or
liability to any Person in respect of any finder’s, brokers or similar fee in
connection with such Acquisition that will not be fully paid concurrent with the
closing of such Acquisition;

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

(m)    resolutions, certified organization documents, good standing
certificates, secretary’s certificates, landlord waivers, insurance certificates
(each designating Lender as “lender’s loss payee” and additional insured
thereunder, with required endorsements), and related certificates and documents
customarily required by Administrative Agent in connection with such type of
transaction as the contemplated Acquisition (similar to those required pursuant
to Section 5 hereof) shall be duly executed and delivered to Administrative
Agent;

(n)    immediately prior to and after giving effect to such Acquisition,
Borrower must be in pro forma compliance with the financial covenants contained
in Section 9.12 of this Agreement;

(o)    such contemplated Acquisition does not result in a Change of Control;

(p)    the Acquisition closes in accordance with the terms of the applicable
Acquisition Agreement and the other relevant Acquisition Documents and in
accordance in all material respects with all applicable laws;

(q)    Administrative Agent shall have received a certificate signed on behalf
of Borrower by a Duly Authorized Officer and dated the date of the contemplated
Acquisition certifying satisfaction of each of the conditions precedent
specified in this Exhibit;

(r)    payment by Borrower of the reasonable fees and out-of-pocket costs and
expenses of counsel to Administrative Agent in connection with such Acquisition
and the items identified in this Exhibit;

(s)    Borrower duly executes and delivers to Administrative Agent such other
instruments, certificates, schedules (including supplements to the schedules to
this Agreement), exhibits, opinions, affidavits, amendments, instruments,
agreements and documents reasonably required by Administrative Agent in
connection with such contemplated Acquisition; and

(t)    Administrative Agent shall have received a first priority Lien over the
property and assets acquired in connection with such Acquisition, including,
without limitation, a first priority Mortgage and Assignment of Rents and
Leases.

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

EXHIBIT E
FORM OF ACQUISITION LOAN BORROWING NOTICE
See attached.

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

ANNEX A
LENDERS, PRO RATA SHARES/DOLLAR ALLOCATIONS, AND NOTICE INFORMATION
Lender
Contact Information
Pro Rata Shares
The PrivateBank and
Trust Company
120 South LaSalle Street
Chicago, IL 60603
Attn.: Adam D. Panos
Managing Director
Tel.: (312) 564-1278
Fax: (312) 683-0446
Dollar Allocations:
Term Loan Commitment: $21,000,000.00
Acquisition Loan Commitment: $4,375,000.00
Term Loan Commitment: 35.000000000%
Acquisition Loan Commitment: 35.000000000%
CIT Bank N.A.
11 West 42nd Street
New York, NY 10036
Attn.: Ed Shuster, Director
Tel.: (212) 771-9303
Fax: (___) ___-_____
Dollar Allocations:
Term Loan Commitment: $12,000,000
Acquisition Loan Commitment: $2,500,000
Term Loan Commitment: 20.000000000%
Acquisition Loan Commitment: 20.000000000%

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

Bankers Trust Company
453 7th Street
Des Moines, IA 50304-0897
Attn.: Jon M. Doll
Vice President
Tel.: (515) 245-2837
Fax: (515) 245-5216
Dollar Allocations:
Term Loan Commitment: $9,000,000
Acquisition Loan Commitment: $1,875,000
Term Loan Commitment: 15.000000000%
Acquisition Loan Commitment: 15.000000000%
BOKF, NA d/b/a Bank of Oklahoma
One Williams Center, 8th Floor
Tulsa, OK 74172
Attn.: Ryan Kirk
Vice President
Tel.: (918) 588-6743
Fax: (918) 280-3368

Dollar Allocations:
Term Loan Commitment: $6,000,000
Acquisition Loan Commitment: $1,250,000
Term Loan Commitment: 10.000000000%
Acquisition Loan Commitment: 10.000000000%
Opus Bank
19900 MacArthur Blvd.
12th Floor
Irvine, CA 92612
Attn.: Bryan Nance,
VP, Portfolio Manager Healthcare Banking
Tel.: (949) 251-8123
Fax: (949) 250-9988

Dollar Allocations:
Term Loan Commitment: $6,000,000
Acquisition Loan Commitment: $1,250,000
Term Loan Commitment: 10.000000000%
Acquisition Loan Commitment: 10.000000000%

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

Franklin Synergy Bank
722 Columbia Ave.
Franklin, TN 37064
Attn.: Lisa Fletcher, Senior Vice President
Tel.: (615) 564-6374
Fax: (615) 564-7375

Dollar Allocations:
Term Loan Commitment: $6,000,000
Acquisition Loan Commitment: $1,250,000
Term Loan Commitment: 10.000000000%
Acquisition Loan Commitment: 10.000000000%