Exhibit 10.1

 

EXECUTION COPY

 

$150,000,000

 

CREDIT AGREEMENT

 

Dated as of April 13, 2012

 

among

 

FIVE STAR QUALITY CARE, INC.,

 

as Borrower,

 

THE GUARANTORS NAMED HEREIN,

 

as Guarantors,

 

THE INITIAL LENDERS, INITIAL ISSUING BANK AND SWING LINE BANK NAMED HEREIN,

 

as Initial Lenders, Initial Issuing Bank and Swing Line Bank,

 

CITIBANK, N.A.

 

as Administrative Agent and as Collateral Agent,

 

RBC CAPITAL MARKETS*

 

as Syndication Agent,

 

and

 

CITIGROUP GLOBAL MARKETS INC. AND RBC CAPITAL MARKETS*

 

as Joint Lead Arrangers and Joint Book Running Managers

 

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*                                         RBC Capital Markets is the global
brand name for the corporate and investment banking businesses of Royal Bank of
Canada and its affiliates.

 

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T A B L E  OF  C O N T E N T S

 

Section

 

 

Page

 

 

 

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

 

 

 

 

 

Section 1.01

Certain Defined Terms

1

Section 1.02

Computation of Time Periods; Other Definitional Provisions

28

Section 1.03

Accounting Terms

28

 

 

 

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT

 

 

 

 

 

Section 2.01

The Advances and the Letters of Credit

29

Section 2.02

Making the Advances

30

Section 2.03

Issuance of and Drawings and Reimbursement Under Letters of Credit

31

Section 2.04

Repayment of Advances

33

Section 2.05

Termination or Reduction of the Commitments

34

Section 2.06

Prepayments

35

Section 2.07

Interest

36

Section 2.08

Fees

37

Section 2.09

Conversion of Advances

38

Section 2.10

Increased Costs, Etc.

38

Section 2.11

Payments and Computations

40

Section 2.12

Taxes

42

Section 2.13

Sharing of Payments, Etc.

44

Section 2.14

Use of Proceeds

45

Section 2.15

Evidence of Debt

45

Section 2.16

Extensions of Termination Date

45

Section 2.17

Defaulting Lenders

46

Section 2.18

Replacement of Lenders

48

 

 

 

ARTICLE III

CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT

 

 

 

 

 

Section 3.01

Conditions Precedent to Initial Extension of Credit

49

Section 3.02

Conditions Precedent to Each Borrowing, Issuance, Renewal and Extension

55

Section 3.03

Determinations Under Section 3.01 and 3.02

56

 

 

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

 

 

 

 

Section 4.01

Representations and Warranties of the Loan Parties

57

 

 

 

ARTICLE V

COVENANTS OF THE LOAN PARTIES

 

 

 

 

 

Section 5.01

Affirmative Covenants

67

Section 5.02

Negative Covenants

74

Section 5.03

Reporting Requirements

80

Section 5.04

Financial Covenants

84

 

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ARTICLE VI

EVENTS OF DEFAULT

 

 

 

 

 

Section 6.01

Events of Default

85

Section 6.02

Actions in Respect of the Letters of Credit upon Default

87

 

 

 

ARTICLE VII

GUARANTY

 

 

 

 

 

Section 7.01

Guaranty; Limitation of Liability

88

Section 7.02

Guaranty Absolute

88

Section 7.03

Waivers and Acknowledgments

89

Section 7.04

Subrogation

90

Section 7.05

Guaranty Supplements

91

Section 7.06

Indemnification by Guarantors

91

Section 7.07

Subordination

91

Section 7.08

Continuing Guaranty

92

 

 

 

ARTICLE VIII

THE AGENTS

 

 

 

 

 

Section 8.01

Authorization and Action; Appointment of Supplemental Collateral Agents

92

Section 8.02

Agents’ Reliance, Etc.

93

Section 8.03

CBNA and Affiliates

93

Section 8.04

Lender Party Credit Decision

94

Section 8.05

Indemnification by Lender Parties

94

Section 8.06

Successor Agents

95

Section 8.07

Relationship of Agents and Lenders

95

 

 

 

ARTICLE IX

MISCELLANEOUS

 

 

 

 

 

Section 9.01

Amendments, Etc.

96

Section 9.02

Notices, Etc.

97

Section 9.03

No Waiver; Remedies

99

Section 9.04

Costs and Expenses

99

Section 9.05

Right of Set-off

100

Section 9.06

Binding Effect

100

Section 9.07

Assignments and Participations; Replacement Notes

101

Section 9.08

Execution in Counterparts

104

Section 9.09

No Liability of the Issuing Banks

104

Section 9.10

Confidentiality

104

Section 9.11

Release of Collateral

106

Section 9.12

Patriot Act Notification

107

Section 9.13

Jurisdiction, Etc.

107

Section 9.14

Governing Law

107

Section 9.15

WAIVER OF JURY TRIAL

107

Section 9.16

No Fiduciary Duties

107

 

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SCHEDULES

 

 

 

 

 

Schedule I

-

Commitments and Applicable Lending Offices

Schedule II

-

Borrowing Base Assets

Schedule 4.01(b)

-

Subsidiaries

Schedule 4.01(d)

-

Authorizations and Consents

Schedule 4.01(f)

-

Material Litigation

Schedule 4.01(n)

-

Existing Debt

Schedule 4.01(o)

-

Surviving Debt

Schedule 4.01(p)

-

Existing Liens

Schedule 4.01(q)

-

Real Property

Part I

-

Owned Assets

Part II

-

Leased Assets

Part III

-

Management Agreements

Schedule 4.01(r)

-

Environmental Concerns

Schedule 4.01(x)

-

Plans and Welfare Plans

Schedule 4.01(y)

-

Healthcare Matters

Schedule 5.01(d)

-

Insurance Requirements

 

 

 

EXHIBITS

 

 

 

 

 

Exhibit A

-

Form of Note

Exhibit B

-

Form of Notice of Borrowing

Exhibit C

-

Form of Guaranty Supplement

Exhibit D

-

Form of Assignment and Acceptance

Exhibit E-1

-

Form of Opinion of Sullivan & Worcester LLP

Exhibit E-2

-

Form of Opinion of Local Counsel for the Loan Parties

Exhibit E-3

-

Form of Opinion of Venable LLP

Exhibit F

-

Form of Security Agreement

Exhibit G

-

Form of Mortgage

Exhibit H

-

Form of Borrowing Base Certificate

Exhibit I

-

Form of Section 2.12(e) U.S. Tax Compliance Certificate

Exhibit J

-

Form of Compliance Certificate

 

iii

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CREDIT AGREEMENT

 

CREDIT AGREEMENT dated as of April 13, 2012 (this “Agreement”) among FIVE STAR
QUALITY CARE, INC., a Maryland corporation (the “Borrower”), the entities listed
on the signature pages hereof as the subsidiary guarantors (together with any
Additional Guarantors (as hereinafter defined) acceding hereto pursuant to
Section 5.01(j) or 7.05, the “Guarantors”), the banks, financial institutions
and other institutional lenders listed on the signature pages hereof as the
initial lenders (the “Initial Lenders”), the Swing Line Bank (as hereinafter
defined), CITIBANK, N.A., as the initial issuer of Letters of Credit (as
hereinafter defined) (the “Initial Issuing Bank”), CITIBANK, N.A. (“CBNA”), as
administrative agent (together with any successor administrative agent appointed
pursuant to Article VIII, the “Administrative Agent”) for the Lender Parties (as
hereinafter defined), CBNA, as collateral agent (together with any successor
collateral agent appointed pursuant to Article VIII, the “Collateral Agent”, and
together with the Administrative Agent, the “Agents”; each an “Agent”) for the
Secured Parties (as hereinafter defined), RBC CAPITAL MARKETS* (“RBCCM”), as
syndication agent, and CITIGROUP GLOBAL MARKETS INC. (“CGMI”) and RBCCM, as
joint lead arrangers and joint book running managers (the “Arrangers”).

 

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

 

Section 1.01                                Certain Defined Terms.  As used in
this Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):

 

“Additional Guarantor” has the meaning specified in Section 7.05.

 

“Adjusted EBITDA” means (a) EBITDA for the consecutive four fiscal quarters most
recently ended for which financial statements are required to be delivered to
the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be, less
(b) the Capital Expenditure Reserve for all Assets for such four fiscal
quarters.

 

“Adjusted Net Operating Income” means, with respect to any Borrowing Base Asset,
(a) the Net Operating Income attributable to such Borrowing Base Asset less (b)
the Capital Expenditure Reserve for such Borrowing Base Asset, less (c) the
Management Fee Adjustment for such Borrowing Base Asset, in each case for the
consecutive four fiscal quarters most recently ended for which financial
statements are required to be delivered to the Lender Parties pursuant to
Section 5.03(b) or (c), as the case may be.

 

“Administrative Agent” has the meaning specified in the recital of parties to
this Agreement.

 

“Administrative Agent’s Account” means the account of the Administrative Agent
maintained by the Administrative Agent with Citibank, N.A., at its office at
1615 Brett Road OPS III, New Castle, DE 19720, ABA No. 021000089, Account No.
36852248, Account Name:  Agency/Medium Term Finance, Reference:  Five Star
Quality Care, Attention:  Global Loans/Agency, or such other account as the
Administrative Agent shall specify in writing to the Lender Parties.

 

“Advance” means a Revolving Credit Advance, a Swing Line Advance or a Letter of
Credit Advance.

 

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person.

 

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*                                         RBC Capital Markets is the global
brand name for the corporate and investment banking businesses of Royal Bank of
Canada and its affiliates.

 

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For purposes of this definition, the term “control” (including the terms
“controlling”, “controlled by” and “under common control with”) of a Person
means the possession, direct or indirect, of the power to vote 5% or more of the
Voting Interests of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Interests, by contract or otherwise.  For purposes of this Agreement, the
Borrower and its Subsidiaries shall not be deemed to be Affiliates of SNH and
its Subsidiaries so long as each of the board of directors of the Borrower and
the board of trustees of SNH has at least one independent member who does not
serve as both a director of the Borrower and a trustee of SNH.

 

“Agents” has the meaning specified in the recital of parties to this Agreement.

 

“Agreement” has the meaning specified in the recital of parties to this
Agreement.

 

“Agreement Value” means, for each Hedge Agreement, on any date of determination,
an amount determined by the Administrative Agent equal to:  (a) in the case of a
Hedge Agreement documented pursuant to the Master Agreement (Multicurrency-Cross
Border) published by the International Swap and Derivatives Association, Inc.
(the “Master Agreement”), the amount, if any, that would be payable by any Loan
Party or any of its Subsidiaries to its counterparty to such Hedge Agreement, as
if (i) such Hedge Agreement was being terminated early on such date of
determination, (ii) such Loan Party or Subsidiary was the sole “Affected Party”,
and (iii) the Administrative Agent was the sole party determining such payment
amount (with the Administrative Agent making such determination pursuant to the
provisions of the above-described Master Agreement); or (b) in the case of a
Hedge Agreement traded on an exchange, the mark-to-market value of such Hedge
Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan
Party or Subsidiary of a Loan Party to such Hedge Agreement determined by the
Administrative Agent based on the settlement price of such Hedge Agreement on
such date of determination; or (c) in all other cases, the mark-to-market value
of such Hedge Agreement, which will be the unrealized loss on such Hedge
Agreement to the Loan Party or Subsidiary of a Loan Party to such Hedge
Agreement determined by the Administrative Agent as the amount, if any, by which
(i) the present value of the future cash flows to be paid by such Loan Party or
Subsidiary exceeds (ii) the present value of the future cash flows to be
received by such Loan Party or Subsidiary pursuant to such Hedge Agreement;
capitalized terms used and not otherwise defined in this definition shall have
the respective meanings set forth in the above-described Master Agreement.

 

“Anti-Kickback Statute” has the meaning specified in Section 4.01(y).

 

“Applicable Lending Office” means, with respect to each Lender Party, such
Lender Party’s Domestic Lending Office in the case of a Base Rate Advance and
such Lender Party’s Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.

 

“Applicable Margin” means (a) 2.50% per annum with respect to each Eurodollar
Rate Advance and (b) 1.50% per annum with respect to each Base Rate Advance.

 

“Appraisal” means an appraisal complying with the requirements of the Federal
Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended
from time to time, commissioned by and prepared for the account of the
Administrative Agent (for the benefit of the Lenders) by a MAI appraiser
selected by the Administrative Agent in consultation with the Borrower, and
otherwise in scope, form and substance satisfactory to the Collateral Agent.  A
true and correct copy of each Appraisal delivered to the Administrative Agent
shall, promptly after Administrative Agent’s review thereof, be provided by the
Administrative Agent to each Lender Party.

 

“Appraised Value” means, for any Borrowing Base Asset, the “as-is” fair market
value of such Borrowing Base Asset (determined free and clear of all liens and
encumbrances), as set forth in

 

2

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the Appraisal of such Borrowing Base Asset delivered prior to the Closing Date
or the date such Asset is added as a Borrowing Base Asset.

 

“Approved Electronic Communications” means each Communication that any Loan
Party is obligated to, or otherwise chooses to, provide to the Administrative
Agent pursuant to any Loan Document or the transactions contemplated therein,
including any financial statement, financial and other report, notice, request,
certificate and other information materials required to be delivered pursuant to
Section 5.03; provided, however, that solely with respect to delivery of any
such Communication by any Loan Party to the Administrative Agent and without
limiting or otherwise affecting either the Administrative Agent’s right to
effect delivery of such Communication by posting such Communication to the
Approved Electronic Platform or the protections afforded hereby to the
Administrative Agent in connection with any such posting, “Approved Electronic
Communication” shall exclude (i) any notice of borrowing, letter of credit
request, swing loan request, notice of conversion or continuation, and any other
notice, demand, communication, information, document and other material relating
to a request for a new, or a conversion of an existing, Borrowing, (ii) any
notice pursuant to Section 2.06(a) and any other notice relating to the payment
of any principal or other amount due under any Loan Document prior to the
scheduled date therefor, (iii) all notices of any Default or Event of Default
and (iv) any notice, demand, communication, information, document and other
material required to be delivered to satisfy any of the conditions set forth in
Article III or any other condition to any Borrowing or other extension of credit
hereunder or any condition precedent to the effectiveness of this Agreement.

 

“Approved Electronic Platform” has the meaning specified in Section 9.02(c).

 

“Approved Manager” means with respect to any Healthcare Asset (i) an Affiliate
of the Borrower, or (ii) a nationally recognized manager of Healthcare Assets
(a) with (or controlled by a Person or Persons with) at least ten years of
experience in the Healthcare Asset management industry, (b) that is engaged
pursuant to a written management agreement or similar agreement in form and
substance reasonably satisfactory to the Administrative Agent and (c) that has
entered into a subordination agreement in form and substance reasonably
satisfactory to the Administrative Agent.  The Administrative Agent confirms
that as of the Closing Date the existing managers of the Healthcare Assets shown
on Part III of Schedule 4.01(q) hereto are satisfactory to the Administrative
Agent.  For purposes of this definition, the term “control” (including the term
“controlled by”) of a Person means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of Voting Interests, by contract or
otherwise.

 

“Arrangers” has the meaning specified in the recital of parties to this
Agreement.

 

“Assets” means Healthcare Assets, Development Assets and Joint Venture Assets.

 

“Asset Value” means, at any date of determination, (a) in the case of any
Healthcare Asset, the Appraised Value of such Asset, (b) in the case of any
Development Asset, the gross book value of such Development Asset as determined
in accordance with GAAP, (c) in the case of any Joint Venture Asset that, but
for such Asset being owned by a Joint Venture, would qualify as a Healthcare
Asset under the definition thereof, the JV Pro Rata Share of the Appraised Value
of such Asset and (d) in the case of any other Joint Venture Asset, the JV Pro
Rata Share of the gross book value of such Joint Venture Asset as determined in
accordance with GAAP.

 

“Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender Party and an Eligible Assignee, and accepted by the Administrative Agent,
in accordance with Section 9.07 and in substantially the form of Exhibit D
hereto.

 

3

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“Available Amount” of any Letter of Credit means, at any time, the maximum
amount available to be drawn under such Letter of Credit at such time (assuming
compliance at such time with all conditions to drawing).

 

“Bankruptcy Law” means any applicable law governing a proceeding of the type
referred to in Section 6.01(f) or Title 11, U.S. Code, or any similar foreign,
federal or state law for the relief of debtors.

 

“Base Rate” means a fluctuating interest rate per annum in effect from time to
time, which rate per annum shall at all times be equal to the highest of (a) the
rate of interest announced publicly by Citibank, N.A. in New York, New York,
from time to time, as Citibank, N.A.’s base rate, (b) ½ of 1% per annum above
the Federal Funds Rate and (c) the one-month Eurodollar Rate plus 1% per annum.

 

“Base Rate Advance” means an Advance that bears interest as provided in Section
2.07(a)(i).

 

“BBA Proposal Package” means, with respect to any Proposed Borrowing Base Asset,
the following items, each in form and substance satisfactory to the
Administrative Agent and in sufficient copies for each Lender:  (a) a
description of such Asset in detail satisfactory to the Administrative Agent,
(b) a projected cash flow analysis of such Asset, (c) a statement of operating
expenses for such Asset for the immediately preceding 36 consecutive calendar
months, (d) an operating expense and capital expenditures budget for such Asset
for the next succeeding 12 consecutive months, and (e) if such Asset is then the
subject of an acquisition transaction, a copy of the purchase agreement with
respect thereto and a schedule of the proposed sources and uses of funds for
such transaction.

 

“Borrower” has the meaning specified in the recital of parties to this
Agreement.

 

“Borrower’s Account” means the account of the Borrower maintained by the
Borrower with Citizens Bank at its office at One Citizens Drive, Riverside, RI
02915, ABA No. 011500120, Account No. 1135638907, Account Name: Five Star
Quality Care, Inc., or such other account as the Borrower shall specify in
writing to the Administrative Agent.

 

“Borrowing” means a borrowing consisting of simultaneous Revolving Credit
Advances of the same Type made by the Lenders or a Swing Line Borrowing.

 

“Borrowing Base Assets” means, unless and until such Healthcare Assets have been
designated non-Borrowing Base Assets pursuant to Section 5.02(e)(iii), (a) those
Healthcare Assets for which the applicable conditions (as may be determined by
the Administrative Agent in its sole discretion) in Section 3.01 and, if
applicable, Section 5.01(k) have been satisfied and as the Administrative Agent
and the Required Lenders, in their sole discretion, shall have elected to treat
as Borrowing Base Assets for purposes of this Agreement, and (b) the Healthcare
Assets listed on Schedule II hereto on the Closing Date, including Pending
Borrowing Base Assets; provided, however, that each Pending Borrowing Base Asset
shall cease to be a Borrowing Base Asset in the event that the Collateral
Deliverables relating to such Pending Borrowing Base Asset is not received by
Administrative Agent by July 12, 2012.

 

“Borrowing Base Certificate” means a certificate in substantially the form of
Exhibit H hereto, duly certified by the Chief Financial Officer (or other
Responsible Officer performing similar functions) of the Borrower.

 

“Borrowing Base Conditions” means, with respect to any Borrowing Base Asset or
Proposed Borrowing Base Asset, that such Borrowing Base Asset or Proposed
Borrowing Base Asset (a) is a Healthcare Asset located in one of the 48
contiguous states of the United States of America or the

 

4

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District of Columbia; (b) is wholly-owned directly or indirectly by the Borrower
either in fee simple absolute or subject to a Qualifying Ground Lease; (c) is
fully operating, properly licensed, in compliance with all applicable Healthcare
Requirements, and not under significant development or redevelopment; (d) is
free of all material structural defects or architectural deficiencies, title
defects, environmental or other material matters (including a casualty event or
condemnation) that could reasonably be expected to have a material adverse
effect on the value, use or ability to sell or refinance such Asset; (e) is
operated by an Approved Manager or any other property manager approved by the
Administrative Agent; (f) is not subject to mezzanine Debt financing; (g) is
not, and no interest of the Borrower or any of its Subsidiaries therein is,
subject to any Lien (other than Permitted Liens) or any Negative Pledge; and (h)
is 100% owned by a single-purpose entity that is a direct or indirect Subsidiary
of the Borrower and (1) none of the Borrower’s direct or indirect Equity
Interests in such Subsidiary is subject to any Lien (other than Permitted Liens)
or any Negative Pledge (other than pursuant to the Jefferies Agreement) and
(2)(x) on or prior to the date such Asset is added to the Collateral, such
Subsidiary shall have become a Guarantor hereunder, and (y) the Borrower
directly, or indirectly through a Subsidiary, has the right to take the
following actions without the need to obtain the consent of any Person:  (i) to
create Liens on such Asset and on the Equity Interests in such Subsidiary as
security for Debt of the Borrower or such Subsidiary, as applicable, and (ii) to
sell, transfer or otherwise dispose of such Asset.

 

“Borrowing Base Debt Service Coverage Ratio” means, at any date of
determination, the ratio of (a) the aggregate Adjusted Net Operating Income for
all Borrowing Base Assets to (b) the annual debt service payments that would
have been required to be made for the same consecutive four fiscal quarter
period on an assumed Debt in an aggregate principal amount equal to the Facility
Exposure applying a 30-year amortization schedule with a coupon equal to the
greatest of (x) the one-month Eurodollar Rate plus 2.50% per annum, (y) the rate
per annum on 10 year United States Treasury Securities plus 2.50% per annum, or
(z) 7.50% per annum.

 

“Borrowing Base Value” means, with respect to any Borrowing Base Asset, an
amount equal to 65% of the Asset Value of such Borrowing Base Asset.

 

“Business Day” means a day of the year on which banks are not required or
authorized by law to close in New York City and, if the applicable Business Day
relates to any Eurodollar Rate Advances, on which dealings are carried on in the
London interbank market.

 

“Capital Expenditure Reserve” means, with respect to any owned Asset at any date
of determination, $350.00 times the total number of units comprising such Asset.

 

“Capitalized Leases” means all leases that have been or should be, in accordance
with GAAP, recorded as capitalized leases.

 

“Cash Collateral Account” means the interest-bearing account of the Borrower
maintained with the Collateral Agent, in each case in the name of the Collateral
Agent and under the sole control and dominion of the Collateral Agent and
subject to terms of this Agreement.

 

“Cash Collateralize” means, in respect of an Obligation, to provide and pledge
(as a first priority perfected security interest) cash collateral in U.S.
Dollars, at a location and pursuant to documentation in form and substance
satisfactory to the Administrative Agent, the Issuing Bank and the Swing Line
Bank (and “Cash Collateralization” has a corresponding meaning).

 

“Cash Equivalents” means, as to any Person, (a) securities issued, or directly,
unconditionally and fully guaranteed or insured, by the United States or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States is pledged in support thereof) having maturities of not more
than one year from the date of acquisition by such Person, (b) time

 

5

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deposits and certificates of deposit of any Lender or any commercial bank
having, or which is the principal banking subsidiary of a bank holding company
organized under the laws of the United States, any state thereof or the District
of Columbia having, capital and surplus aggregating in excess of $500,000,000
and a rating of “A” (or such other similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act) with maturities of not more than one year
from the date of acquisition by such Person, (c) repurchase obligations with a
term of not more than 30 days for underlying securities of the types described
in clause (a) above entered into with any Person meeting the qualifications
specified in clause (b) above, which repurchase obligations are secured by a
valid perfected security interest in the underlying securities, (d) commercial
paper issued by any Person incorporated in the United States rated at least A 1
or the equivalent thereof by Standard & Poor’s Rating Service or at least P 1 or
the equivalent thereof by Moody’s Investors Service Inc., and in each case
maturing not more than one year after the date of acquisition by such Person,
and (e) investments in money market funds at least 95% of whose assets are
comprised of securities of the types described in clauses (a) through (d) above.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time.

 

“CERCLIS” means the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the U.S. Environmental Protection
Agency.

 

“CGMI” has the meaning specified in the recital of parties to this Agreement.

 

“Change of Control” means the occurrence of any of the following:  (a) any
Person or two or more Persons acting in concert shall have acquired and shall
continue to have following the date hereof beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934), directly or indirectly, of Voting Interests of
the Borrower or any Guarantor (or other securities convertible into such Voting
Interests) representing 35% or more of the combined voting power of all Voting
Interests of the Borrower or such Guarantor; or (b) there is a change in the
composition of the Borrower’s Board of Directors over a period of 24 consecutive
months (or less) such that a majority of Board members (rounded up to the
nearest whole number) ceases, by reason of one or more proxy contests for the
election of Board members, to be comprised of individuals who either (i) have
been Board members continuously since the beginning of such period or (ii) have
been elected or nominated for election as Board members during such period by at
least a majority of the Board members described in clause (i) who were still in
office at the time such election or nomination was approved by the Board; or (c)
any Person or two or more Persons acting in concert shall have acquired and
shall continue to have following the date hereof, by contract or otherwise, or
shall have entered into a contract or arrangement that, upon consummation will
result in its or their acquisition of the power to direct, directly or
indirectly, the management or policies of the Borrower or any Guarantor; or (d)
the Borrower ceases to be the direct or indirect legal and beneficial owner of
all of the Equity Interests in each direct and indirect Subsidiary that owns or
leases a Borrowing Base Asset.

 

“Civil Monetary Penalty Law” has the meaning specified in Section 4.01(y).

 

“Closing Date” means April 13, 2012 or such other date as may be agreed upon by
the Borrower and the Administrative Agent.

 

“CBNA” has the meaning specified in the recital of parties to this Agreement.

 

“Collateral” means all “Collateral” and all “Mortgaged Property” referred to in
the Collateral Documents and all other property that is or is intended to be
subject to any Lien in favor of the

 

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Collateral Agent for the benefit of the Secured Parties and includes, without
limitation, all Borrowing Base Assets.

 

“Collateral Agent” has the meaning specified in the recital of parties to this
Agreement.

 

“Collateral Deliverables” means, with respect to any Proposed Borrowing Base
Asset, the following items, each in form and substance satisfactory to the
Administrative Agent (unless otherwise specified):

 

(i)                                     A certificate of the Chief Financial
Officer (or other Responsible Officer) of the Borrower, dated the date of the
addition of such Proposed Borrowing Base Asset to the Collateral as a Borrowing
Base Asset, confirming that (A) the Proposed Borrowing Base Asset satisfies all
Borrowing Base Conditions, (B) no Default or Event of Default has occurred or is
continuing, and the addition of such Proposed Borrowing Base Asset as a
Borrowing Base Asset shall not cause or result in a Default or Event of Default,
(C) the representations and warranties contained in the Loan Documents are true
and correct on and as of such date, (D) the Loan Parties are in compliance with
the covenants contained in Section 5.04 (both immediately before and on a pro
forma basis immediately after the addition of such Proposed Borrowing Base
Property as a Borrowing Base Asset), together with supporting information
demonstrating such compliance; and (E) on the date of the addition of such
Proposed Borrowing Base Asset to the Collateral as a Borrowing Base Asset the
Borrowing Base Debt Service Coverage Ratio (adjusted on a pro forma basis to
include such Proposed Borrowing Base Asset) shall not be less than 1.50:1.00,
together with supporting information demonstrating such compliance;

 

(ii)                                  A Borrowing Base Certificate demonstrating
that the Facility Available Amount (calculated on a pro forma basis after giving
effect to the addition of such Proposed Borrowing Base Asset to the Collateral
as a Borrowing Base Asset and to any Advances made at the time thereof) will be
greater than or equal to the Facility Exposure;

 

(iii)                               Each of the items set forth in Sections
3.01(a)(ii), (iii), (xi), (xii), (xiii), (xiv) and (xvii) and, to the extent
applicable, 5.01(j)(i), mutatis mutandis, in each case in respect of such
Proposed Borrowing Base Asset;

 

(iv)                              An Appraisal of such Proposed Borrowing Base
Asset;

 

(v)                                 Reports supplementing Schedules II, 4.01(b),
4.01(q) Part III and 4.01(r) hereto, including descriptions of such changes in
the information included in such Schedules as may be necessary for such
Schedules to be accurate and complete, certified as correct and complete by a
Responsible Officer of the Borrower, provided that for purposes of the
definition of the term Borrowing Base Assets, the supplement to Schedule II
shall become effective only upon (A) delivery of all Collateral Deliverables and
approval thereof by the Administrative Agent, and (B) approval of the Proposed
Borrowing Base Asset as a Borrowing Base Asset pursuant to the definition of
“Borrowing Base Assets”;

 

(vi)                              Copies of all necessary Healthcare Licenses
for such Proposed Borrowing Base Asset;

 

(vii)                           All Healthcare Deliverables for such Proposed
Borrowing Base Asset (provided, however, that this requirement shall not apply
to those Borrowing Base Assets listed on Schedule II hereto as of the Closing
Date); and

 

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(viii)                        Such other approvals, opinions or documents as any
Lender Party through the Administrative Agent may reasonably request.

 

“Collateral Documents” means the Security Agreement, the Mortgages and any other
agreement entered into by a Loan Party that creates or purports to create a Lien
in favor of the Collateral Agent for the benefit of the Secured Parties.

 

“Commitment” means a Revolving Credit Commitment, a Swing Line Commitment or a
Letter of Credit Commitment.

 

“Communications” means each notice, demand, communication, information, document
and other material provided for hereunder or under any other Loan Document or
otherwise transmitted between the parties hereto relating this Agreement, the
other Loan Documents, any Loan Party or its Affiliates, or the transactions
contemplated by this Agreement or the other Loan Documents including, without
limitation, all Approved Electronic Communications.

 

“Compliance Certificate” means a certificate in substantially the form of
Exhibit J hereto, duly certified by the Chief Financial Officer (or other
Responsible Officer performing similar functions) of the Borrower.

 

“Conditional Approval Notice” has the meaning specified in Section 5.01(k).

 

“Consent Request Date” has the meaning specified in Section 9.01(b).

 

“Consolidated” refers to the consolidation of accounts in accordance with GAAP.

 

“Contingent Obligation” means, with respect to any Person, any Obligation or
arrangement of such Person to guarantee or intended to guarantee any Debt,
leases, dividends or other payment Obligations (“primary obligations”) of any
other Person (the “primary obligor”) in any manner, whether directly or
indirectly, including, without limitation, (a) the direct or indirect guarantee,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the Obligation of a primary obligor, (b) the Obligation to make
take-or-pay or similar payments, if required, regardless of nonperformance by
any other party or parties to an agreement or (c) any Obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (A) for the purchase or payment of any such primary obligation or
(B) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, assets, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (iv) otherwise to assure
or hold harmless the holder of such primary obligation against loss in respect
thereof.  The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made (or, if less, the maximum
amount of such primary obligation for which such Person may be liable pursuant
to the terms of the instrument evidencing such Contingent Obligation) or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder), as determined
by such Person in good faith.

 

“Conversion”, “Convert” and “Converted” each refer to a conversion of Advances
of one Type into Advances of the other Type pursuant to Section 2.07(d), 2.09 or
2.10.

 

“Customary Carve-Out Agreement” has the meaning specified in the definition of
Non-Recourse Debt.

 

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“Debt” of any Person means, without duplication for purposes of calculating
financial ratios, (a) all Debt for Borrowed Money of such Person, (b) all
Obligations of such Person for the deferred purchase price of property or
services other than trade payables incurred in the ordinary course of business
and not overdue by more than 60 days, (c) all Obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments, (d) all
Obligations of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Obligations of such Person as lessee under Capitalized
Leases, (f) all Obligations of such Person under acceptance, letter of credit or
similar facilities, (g) all Obligations of such Person to purchase, redeem,
retire, defease or otherwise make any payment in respect of any Equity Interests
in such Person or any other Person (other than Preferred Interests that are
issued by any Loan Party or Subsidiary thereof and classified as either equity
or minority interests pursuant to GAAP) or any warrants, rights or options to
acquire such Equity Interests, (h) all Obligations of such Person in respect of
Hedge Agreements, valued at the Agreement Value thereof, (i) all Contingent
Obligations of such Person and (j) all indebtedness and other payment
Obligations referred to in clauses (a) through (i) above of another Person
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
indebtedness or other payment Obligations (valued, in the case of any such Debt
as to which recourse for the payment thereof is expressly limited to the
property or assets on which such Lien is granted, at the lesser of (1) the
stated or determinable amount of the Debt that is so secured or, if not stated
or determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) and (2) the fair market
value of such property or assets); provided, however, that in the case of the
Borrower and its Subsidiaries, “Debt” shall also include, without duplication,
the JV Pro Rata Share of Debt for each Joint Venture.

 

“Debt for Borrowed Money” of any Person means all items that, in accordance with
GAAP, would be classified as indebtedness on a Consolidated balance sheet of
such Person; provided, however, that in the case of the Borrower and its
Subsidiaries “Debt for Borrowed Money” shall also include, without duplication,
the JV Pro Rata Share of Debt for Borrowed Money for each Joint Venture;
provided further that as used in the definition of “Fixed Charge Coverage
Ratio”, in the case of any acquisition or disposition of any direct or indirect
interest in any Asset (including through the acquisition or disposition of
Equity Interests) by the Borrower or any of its Subsidiaries during the
consecutive four fiscal quarters of the Borrower most recently ended for which
financial statements are required to be delivered to the Lender Parties pursuant
to Section 5.03(b) or (c), as the case may be, the term “Debt for Borrowed
Money” (a) shall include, in the case of an acquisition, any Debt for Borrowed
Money directly relating to such Asset existing immediately following such
acquisition computed as if such indebtedness also existed for the portion of
such period that such Asset was not owned by the Borrower or such Subsidiary,
and (b) shall exclude, in the case of a disposition, for such period any Debt
for Borrowed Money to which such Asset was subject to the extent such Debt for
Borrowed Money was repaid or otherwise terminated upon the disposition of such
Asset.

 

“Default” means any Event of Default or any event that would constitute an Event
of Default but for the requirement that notice be given or time elapse or both.

 

“Defaulting Lender” means at any time, subject to Section 2.17(f), (i) any
Lender that has failed for two or more Business Days to comply with its
obligations under this Agreement to make an Advance, make a payment to the
Issuing Bank in respect of a Letter of Credit Advance, make a payment to the
Swing Line Bank in respect of a Swing Line Advance or make any other payment due
hereunder (each, a “funding obligation”), unless such Lender has notified the
Administrative Agent and the Borrower in writing that such failure is the result
of such Lender’s determination that one or more conditions precedent to funding
has not been satisfied (which conditions precedent, together

 

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with the applicable default, if any, will be specifically identified in such
writing), (ii) any Lender that has notified the Administrative Agent, the
Borrower, the Issuing Bank or the Swing Line Bank in writing, or has stated
publicly, that it does not intend to comply with its funding obligations
hereunder, unless such writing or statement states that such position is based
on such Lender’s determination that one or more conditions precedent to funding
cannot be satisfied (which conditions precedent, together with the applicable
default, if any, will be specifically identified in such writing or public
statement), (iii) any Lender that has, for three or more Business Days after
written request of the Administrative Agent or the Borrower, failed to confirm
in writing to the Administrative Agent and the Borrower that it will comply with
its prospective funding obligations hereunder (provided that such Lender will
cease to be a Defaulting Lender pursuant to this clause (iii) upon the
Administrative Agent’s and the Borrower’s receipt of such written confirmation),
or (iv) any Lender with respect to which a Lender Insolvency Event has occurred
and is continuing with respect to such Lender or its Parent Company, provided
that in each case, neither the reallocation of funding obligations provided for
in Section 2.17(b) as a result of a Lender’s being a Defaulting Lender nor the
performance by Non-Defaulting Lenders of such reallocated funding obligations
will by themselves cause the relevant Defaulting Lender to become a
Non-Defaulting Lender.  Any determination by the Administrative Agent that a
Lender is a Defaulting Lender under any of clauses (i) through (iv) above will
be conclusive and binding absent demonstrable error, and such Lender will be
deemed to be a Defaulting Lender (subject to Section 2.17(f)) upon notification
of such determination by the Administrative Agent to the Borrower, the Issuing
Bank, the Swing Line Bank and the Lenders.

 

“Development Assets” means all Real Property acquired for development into
Healthcare Assets that, in accordance with GAAP, would be classified as
development property on a Consolidated balance sheet of the Borrower and its
Subsidiaries.

 

“Domestic Lending Office” means, with respect to any Lender Party, the office of
such Lender Party specified as its “Domestic Lending Office” opposite its name
on Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender Party, as the case may be, or such other office of such Lender
Party as such Lender Party may from time to time specify to the Borrower and the
Administrative Agent.

 

“EBITDA” means, at any date of determination, the sum of the following items, in
each for the four consecutive fiscal quarters of the Borrower most recently
ended for which financial statements are required to be delivered to the Lender
Parties pursuant to Section 5.03(b) or (c), as the case may be:  (a) net income
(or loss) for such period determined for the Borrower and its Subsidiaries on a
consolidated basis, in accordance with GAAP, exclusive of the following (but
only to the extent included in the determination of such net income (or loss)
for such period): (i) depreciation and amortization expense, (ii) interest
expense, (iii) income tax expense, (iv) extraordinary or non-recurring gains and
losses, and (v) transaction costs of acquisitions not permitted to be
capitalized pursuant to GAAP, plus (b) with respect to each Joint Venture, the
JV Pro Rata Share of the sum of :  (a) net income (or loss) for such period
determined on a consolidated basis, in accordance with GAAP, exclusive of the
following (but only to the extent included in the determination of such net
income (or loss) for such period): (i) depreciation and amortization expense,
(ii) interest expense, (iii) income tax expense, (iv) extraordinary or
non-recurring gains and losses, and (v) transaction costs of acquisitions not
permitted to be capitalized pursuant to GAAP; provided, however, that for
purposes of this definition, in the case of any acquisition or disposition of
any direct or indirect interest in any Asset (including through the acquisition
or disposition of Equity Interests) by the Borrower or any of its Subsidiaries
during such four fiscal quarter period, EBITDA will be adjusted (1) in the case
of an acquisition, by adding thereto an amount equal to the acquired Asset’s
actual EBITDA (computed as if such Asset was owned by the Borrower or one of its
Subsidiaries for the entire four fiscal quarter period) generated during the
portion of such four fiscal quarter period that such Asset was not owned by the
Borrower or such Subsidiary, and (2) in the case of a disposition, by
subtracting therefrom an

 

10

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amount equal to the actual EBITDA generated by the Asset so disposed of during
such four fiscal quarter period.

 

“Effective Date” means the first date on which the conditions set forth in
Article III shall be satisfied.

 

“Eligible Assignee” means (a) with respect to the Revolving Credit Facility, (i)
a Lender; (ii) an Affiliate or Fund Affiliate of a Lender; or (iii) any other
Person approved by the Administrative Agent, and, unless a Default has occurred
and is continuing at the time any assignment is effected pursuant to Section
9.07, approved by the Borrower, each such approval not to be unreasonably
withheld or delayed, and (b) with respect to the Letter of Credit Facility, a
Person that is approved by the Administrative Agent and, unless a Default has
occurred and is continuing at the time any assignment is effected pursuant to
Section 9.07, approved by the Borrower, each such approval not to be
unreasonably withheld or delayed; provided, however, that neither any Loan Party
nor any Affiliate of a Loan Party shall qualify as an Eligible Assignee under
this definition absent the prior consent of all Lenders.

 

“Environmental Action” means any enforcement action, suit, demand, demand
letter, claim of liability, notice of non-compliance or violation, notice of
liability or potential liability, investigation, enforcement proceeding, consent
order or consent agreement relating in any way to any Environmental Law, any
Environmental Permit or Hazardous Material or arising from alleged injury or
threat to health or safety from exposure to Hazardous Materials or to the
environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response, remedial or
other actions or damages and (b) by any governmental or regulatory authority or
third party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.

 

“Environmental Law” means any Federal, state, local or foreign statute, law,
ordinance, rule, regulation, code, order, writ, judgment, injunction, decree or
judicial or agency interpretation relating to pollution or protection of the
environment, or natural resources, including, without limitation, those relating
to the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Materials.

 

“Environmental Permit” means any permit, approval, identification number,
license or other authorization required under any Environmental Law.

 

“Equity Interests” means, with respect to any Person, shares of capital stock of
(or other ownership or profit interests in) such Person, warrants, options or
other rights for the purchase or other acquisition from such Person of shares of
capital stock of (or other ownership or profit interests in) such Person,
securities convertible into or exchangeable for shares of capital stock of (or
other ownership or profit interests in) such Person or warrants, rights or
options for the purchase or other acquisition from such Person of such shares
(or such other interests), and other ownership or profit interests in such
Person (including, without limitation, partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are authorized or otherwise existing on any
date of determination.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.

 

“ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a
member of the controlled group of any Loan Party, or under common control with
any Loan Party, within the meaning of Section 414 of the Internal Revenue Code.

 

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“ERISA Event” means (a)(i) the occurrence of a reportable event, within the
meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the PBGC or
(ii) the requirements of Section 4043(b) of ERISA apply with respect to a
contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and
an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c)
of ERISA is reasonably expected to occur with respect to such Plan within the
following 30 days; (b) the application for a minimum funding waiver with respect
to a Plan; (c) the provision by the administrator of any Plan of a notice of
intent to terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including
any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA); (d) the cessation of operations at a facility of any
Loan Party or any ERISA Affiliate in the circumstances described in
Section 4062(e) of ERISA; (e) the withdrawal by any Loan Party or any ERISA
Affiliate from a Multiple Employer Plan during a plan year for which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the
conditions for imposition of a lien under Section 302(f) of ERISA shall have
been met with respect to any Plan; (g) the adoption of an amendment to a Plan
requiring the provision of security to such Plan pursuant to Section 307 of
ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that constitutes grounds for the termination
of, or the appointment of a trustee to administer, such Plan.

 

“Eurocurrency Liabilities” has the meaning specified in Regulation D of the
Board of Governors of the Federal Reserve System, as in effect from time to
time.

 

“Eurodollar Lending Office” means, with respect to any Lender Party, the office
of such Lender Party specified as its “Eurodollar Lending Office” opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender Party (or, if no such office is specified, its Domestic
Lending Office), or such other office of such Lender Party as such Lender Party
may from time to time specify to the Borrower and the Administrative Agent.

 

“Eurodollar Rate” means, for any Interest Period for all Eurodollar Rate
Advances comprising part of the same Borrowing, an interest rate per annum equal
to the rate per annum obtained by dividing (a) the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%) determined by the
Administrative Agent to be the offered rate that appears on the Reuters Screen
LIBOR01 Page (or any successor thereto) as the British Bankers Association
London interbank offered rate for deposits in U.S. Dollars (for delivery on the
first day of such Interest Period) with a term equivalent to such Interest
Period, determined as of approximately 11:00 A.M. (London time) two Business
Days prior to the first day of such Interest Period, or , if for any reason such
rate is not available, the average (rounded upward, if necessary, to the nearest
1/100 of 1%, if such average is not such a multiple) of the rate per annum at
which deposits in U.S. dollars are offered by the principal office of each of
the Reference Banks in London, England to prime banks in the London interbank
market at 11:00 A.M. (London time) two Business Days before the first day of
such Interest Period in an amount substantially equal to such Reference Bank’s
Eurodollar Rate Advance comprising part of such Borrowing to be outstanding
during such Interest Period (or, if such Reference Bank shall not have such a
Eurodollar Rate Advance, $1,000,000) and for a period equal to such Interest
Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage for such Interest Period.

 

“Eurodollar Rate Advance” means an Advance that bears interest as provided in
Section 2.07(a)(ii).

 

“Eurodollar Rate Reserve Percentage” means, for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing, the reserve
percentage applicable two Business Days before the first day of such Interest
Period under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum

 

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reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Advances is determined) having a term equal to such Interest
Period.

 

“Events of Default” has the meaning specified in Section 6.01.

 

“Existing Debt” means Debt of each Loan Party and its Subsidiaries outstanding
immediately before the Effective Date.

 

“Extension Fee” has the meaning specified in Section 2.08(d).

 

“Facility” means the Revolving Credit Facility, the Swing Line Facility or the
Letter of Credit Facility.

 

“Facility Available Amount” means, at any date of determination, the maximum
total amount available under the Facility, which shall at all times be the least
of (i) $150,000,000, (ii) the Total Borrowing Base Value and (iii) an amount
that would result in a Borrowing Base Debt Service Coverage Ratio equal to 1.50
to 1.00.

 

“Facility Exposure” means, at any time, the sum of (a) the aggregate principal
amount of all outstanding Advances, plus (b) the amount (not less than zero)
equal to the Available Amount under all outstanding Letters of Credit less all
amounts then on deposit in the L/C Cash Collateral Account.

 

“False Claims Act” has the meaning specified in Section 4.01(y).

 

“FATCA” has the meaning specified in Section 2.12.

 

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum 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 that
is a Business Day, the average of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

 

“Fee Letter” means any separate letter agreement executed and delivered by the
Borrower and to which the Administrative Agent is a party, as the same may be
amended from time to time.

 

“First Extension Date” has the meaning specified in Section 2.16.

 

“Fiscal Year” means a fiscal year of the Borrower and its Consolidated
Subsidiaries ending on December 31 in any calendar year.

 

“Fixed Charge Coverage Ratio” means, at any date of determination, the ratio of
(a) Adjusted EBITDA to (b) the sum of (i) interest (including capitalized
interest) payable on, all Debt for Borrowed Money plus (ii) principal amounts of
all Debt for Borrowed Money payable (excluding maturities) plus (iii) cash
dividends payable on any Preferred Interests, in each case, of or by the
Borrower and its Subsidiaries for the consecutive four fiscal quarters of the
Borrower most recently ended for which financial statements are required to be
delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case
may be.

 

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“Fund Affiliate” means, with respect to any Lender that is a fund that invests
in bank loans, any other fund that invests in bank loans and is advised or
managed by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

 

“GAAP” has the meaning specified in Section 1.03.

 

“Good Faith Contest” means the contest of an item as to which:  (a) such item is
contested in good faith, by appropriate proceedings, (b) reserves that are
adequate are established with respect to such contested item in accordance with
GAAP and (c) the failure to pay or comply with such contested item during the
period of such contest could not reasonably be expected to result in a Material
Adverse Effect.

 

“Governmental Authority” means the government of the United States of America or
any other nation, or of any political subdivision thereof, whether state or
local, and any Federal, state, municipal, national, local or other governmental
department, agency, authority, commission, instrumentality, board, bureau,
regulatory body, contractor, intermediary, carrier, court, central bank or other
entity or officer exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government
(including any supra-national bodies such as the European Union or the European
Central Bank).

 

“Group Purchasing Organization” or “GPO” means any Subsidiary of the Borrower
that provides purchasing for the long-term care industry or other institutional
providers.

 

“Guaranteed Obligations” has the meaning specified in Section 7.01.

 

“Guarantor Deliverables” means each of the items set forth in Section 5.01(j).

 

“Guaranty” means the Guaranty by the Guarantors pursuant to Article VII,
together with any and all Guaranty Supplements required to be delivered pursuant
to Section 5.01(j) or Section 7.05.

 

“Guaranty Supplement” means a supplement entered into by an Additional Guarantor
in substantially the form of Exhibit C hereto.

 

“Hazardous Materials” means (a) petroleum or petroleum products, by-products or
breakdown products, radioactive materials, asbestos-containing materials,
polychlorinated biphenyls, radon gas and mold and (b) any other chemicals,
materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.

 

“Healthcare Asset” means any facility (including, without limitation, each
skilled nursing facility, assisted living facility, memory care or independent
living facility) which provides independent living or any level of geriatric
care, nursing care, home care, medical care (including sub-acute care), assisted
living, rehabilitative services or assistance with activities of daily living,
whether or not licensed as a skilled-nursing facility, intermediate care
facility, assisted living facility, personal care facility, outpatient clinic or
hospital (including any long term acute care hospital), owned by Borrower or any
of its Subsidiaries.

 

“Healthcare Deliverables” means copies of the following, in each case provided
at such time as to permit the Lenders’ reasonable review with respect to any
Borrowing Base Asset or Proposed Borrowing Base Asset, and which content and/or
matters disclosed therein are reasonably acceptable to Lenders: (a) all
investigations, surveys, subpoenas, proceedings or audit reports pertaining to
Healthcare Licenses, Healthcare Assets and Healthcare Services for the past year
and any related correspondence and responses thereto (not including any
materials protected by attorney-client privilege or constituting attorney-client
work product); and (b) settlement agreements, consent

 

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agreements, consent orders, corporate integrity agreements or certification of
compliance agreements currently in effect and entered into with any Governmental
Authority.

 

“Healthcare Licenses” means all certificates of need (or similar documents,
including but not limited to certificates of completion), certifications,
licenses, permits, accreditations, reimbursement approvals, regulatory
agreements, participation agreements or other material agreements, state
skilled-nursing facility or assisted-living facility licenses, and any other
license, permit, agreement, approval or requirement required by a Governmental
Authority for the establishment, construction, ownership, operation, use,
management of a Healthcare Asset or any part thereof or for the provision of
services by each Healthcare Service, provided, however, that for the Borrowing
Base Asset known as Palms of Fort Myers, located at 2674 Winkler Avenue, Fort
Myers, Florida 33901, (a) a “comfort letter” from the Florida Agency for Health
Care Administration, indicating that (i) the change of ownership (CHOW)
application for a license is complete with the exception of proof of ownership,
(ii) upon receipt of such proof of ownership a six-month provisional license
will be issued, and (iii) upon receipt of a deficiency-free survey,
recommendation will be made to issue a standard license, shall suffice as a
Healthcare License with respect to such Borrowing Base Asset for a period of
forty-five (45) days following the Closing Date; and (b) such provisional
license as referenced in such “comfort letter” shall suffice as a Healthcare
License with respect to such Borrowing Base Asset for a period of one hundred
eighty (180) days from the date of issuance of such provisional license.

 

“Healthcare Requirements” means each Federal, state, local or foreign statute,
law, ordinance, rule, regulation, code, order, writ, judgment, injunction,
decree, procedure, plan, reimbursement requirement, provider manual, or judicial
or agency interpretation, policy or guidance pertaining to or concerned with:
(a) the establishment, construction, ownership, operation, use, management or
occupancy of a Healthcare Asset or any part thereof as a skilled-nursing
facility, assisted-living facility or other facility or provider type; and
(b) the provision of services therein.

 

“Healthcare Service” means any service that may be paid for by Medicare,
Medicaid, Tricare, Veteran’s Administration, any other Federal or state
healthcare reimbursement program, or a managed care company, insurance company,
and/or any other third party payor arrangement, plan or program, including,
without limitation, nursing care, hospice, home health care, speech therapy,
occupational therapy, and physical therapy services, and that is furnished by
the Borrower or any of its Subsidiaries.

 

“Healthcare Staffing Company” means any Subsidiary of the Borrower that provides
staffing and/or recruitment services for healthcare providers, including,
without limitation, placement of nurses and physical, occupational and/or speech
therapists.

 

“Hedge Agreements” means interest rate swap, cap or collar agreements, interest
rate future or option contracts, currency swap agreements, currency future or
option contracts and other hedging agreements.

 

“HHS” has the meaning specified in Section 4.01(y)(viii).

 

“HIPAA” means the administrative simplification provisions of the Health
Insurance Portability and Accountability Act of 1996, Public Law 104-191, and
the regulations promulgated thereunder, and as amended by the Health Information
Technology for Economic and Clinical Health Act provisions of the American
Recovery and Reinvestment Act of 2009, Public Law 111-005, and the regulations
promulgated thereunder.

 

“ICC” has the meaning specified in Section 2.03(f).

 

“ICC Rule” has the meaning specified in Section 2.03(f).

 

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“Indemnified Costs” has the meaning specified in Section 8.05(a).

 

“Indemnified Party” has the meaning specified in Section 7.06(a).

 

“Information” has the meaning specified in Section 9.10.

 

“Information Memorandum” means the information memorandum dated February 21,
2012 used by the Arrangers in connection with the syndication of the
Commitments.

 

“Initial Extension of Credit” means the first to occur of the initial Borrowing
and the initial issuance of a Letter of Credit hereunder.

 

“Initial Issuing Bank” has the meaning specified in the recital of parties to
this Agreement.

 

“Initial Lenders” has the meaning specified in the recital of parties to this
Agreement.

 

“Insufficiency” means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.

 

“Interest Period” means, for each Eurodollar Rate Advance comprising part of the
same Borrowing, the period commencing on the date of such Eurodollar Rate
Advance or the date of the Conversion of any Base Rate Advance into such
Eurodollar Rate Advance, and ending on the last day of the period selected by
the Borrower pursuant to the provisions below and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below.  The duration of each such Interest Period shall be seven
days, one, two, three or six months (or nine or twelve months if available from
all Lenders), as the Borrower may, upon notice received by the Administrative
Agent not later than 12:00 Noon (New York City time) on the third Business Day
prior to the first day of such Interest Period, select; provided, however, that:

 

(a)           the Borrower may not select any Interest Period with respect to
any Eurodollar Rate Advance that ends after the Termination Date;

 

(b)           Interest Periods commencing on the same date for Eurodollar Rate
Advances comprising part of the same Borrowing shall be of the same duration;

 

(c)           whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest Period shall
be extended to occur on the next succeeding Business Day; provided, however,
that if such extension would cause the last day of such Interest Period to occur
in the next following calendar month, the last day of such Interest Period shall
occur on the next preceding Business Day; and

 

(d)           whenever the first day of any Interest Period occurs on a day of
an initial calendar month for which there is no numerically corresponding day in
the calendar month that succeeds such initial calendar month by the number of
months equal to the number of months in such Interest Period, such Interest
Period shall end on the last Business Day of such succeeding calendar month.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.

 

“Investment” means (a) any loan or advance to any Person, any purchase or other
acquisition of any Equity Interests or Debt or the assets comprising a division
or business unit or a substantial part

 

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or all of the business of any Person, any capital contribution to any Person or
any other direct or indirect investment in any Person, including, without
limitation, any acquisition by way of a merger or consolidation and any
arrangement pursuant to which the investor incurs Debt of the types referred to
in clause (i) or (j) of the definition of “Debt” in respect of any Person, and
(b) the purchase or other acquisition of any Healthcare Asset or other real
property.

 

“ISP” has the meaning specified in Section 2.03(f).

 

“Issuing Bank” means the Initial Issuing Bank and any other Lender approved as
an Issuing Bank by the Administrative Agent and the Borrower and any Eligible
Assignee to which a Letter of Credit Commitment hereunder has been assigned
pursuant to Section 9.07 so long as each such Lender or each such Eligible
Assignee expressly agrees to perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as an Issuing Bank and notifies the Administrative Agent of its Applicable
Lending Office and the amount of its Letter of Credit Commitment (which
information shall be recorded by the Administrative Agent in the Register) for
so long as such Initial Issuing Bank, Lender or Eligible Assignee, as the case
may be, shall have a Letter of Credit Commitment.

 

“Jefferies Agreement” means that certain Credit and Security Agreement dated as
of March 18, 2010 among Borrower, the guarantors named therein, the lenders
named therein, Jefferies Finance LLC, as lead arranger, administrative agent and
collateral agent, and Jefferies Group Inc., as issuing bank.

 

“Joint Venture” means any joint venture or other entity (a) in which the
Borrower or any of its Subsidiaries holds any Equity Interest, (b) that is not a
Subsidiary of the Borrower or any of its Subsidiaries and (c) the accounts of
which would not appear on the Consolidated financial statements of the Borrower.

 

“Joint Venture Assets” means, with respect to any Joint Venture at any time, the
assets owned by such Joint Venture at such time.

 

“JV Pro Rata Share” means, with respect to any Joint Venture at any time, the
fraction, expressed as a percentage, obtained by dividing (a) the total gross
book value of all Equity Interests in such Joint Venture held by the Borrower
and any of its Subsidiaries by (b) the total gross book value of all outstanding
Equity Interests in such Joint Venture at such time.

 

“L/C Cash Collateral Account” means an account of the Borrower to be maintained
with the Administrative Agent, in the name of the Administrative Agent and under
the sole control and dominion of the Administrative Agent and subject to the
terms of this Agreement.

 

“L/C Related Documents” has the meaning specified in Section 2.04(c)(ii)(A).

 

“Lender Insolvency Event” means that (i) the Lender or its Parent Company is
insolvent, or is generally unable to pay its debts as they become due, or admits
in writing its inability to pay its debts as they become due, or makes a general
assignment for the benefit of its creditors, or (ii) such Lender or its Parent
Company is the subject of a bankruptcy, insolvency, reorganization, liquidation
or similar proceeding, or a receiver, trustee, conservator, intervenor or
sequestrator or the like has been appointed for such Lender or its Parent
Company, or such Lender or its Parent Company has taken any action in
furtherance of or indicating its consent to or acquiesence in any such
proceeding or appointment.

 

“Lender Party” means any Lender, the Swing Line Bank or any Issuing Bank.

 

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“Lenders” means the Initial Lenders and each Person that shall become a Lender
hereunder pursuant to Section 9.07 for so long as such Initial Lender or Person,
as the case may be, shall be a party to this Agreement.

 

“Letter of Credit Advance” means an advance made by any Issuing Bank or any
Lender pursuant to Section 2.03(c).

 

“Letter of Credit Agreement” has the meaning specified in Section 2.03(a).

 

“Letter of Credit Commitment” means, with respect to any Issuing Bank at any
time, the amount set forth opposite such Issuing Bank’s name on Schedule I
hereto under the caption “Letter of Credit Commitment” or, if such Issuing Bank
has entered into one or more Assignment and Acceptances, set forth for such
Issuing Bank in the Register maintained by the Administrative Agent pursuant to
Section 9.07(d) as such Issuing Bank’s “Letter of Credit Commitment”, as such
amount may be reduced at or prior to such time pursuant to Section 2.05.

 

“Letter of Credit Exposure” means, at any time, the sum of (a) the aggregate
Available Amount of all outstanding Letters of Credit at such time plus (b) the
aggregate amount of all payments or disbursements made by an Issuing Bank
pursuant to a Letter of Credit Advance that have not yet been reimbursed at such
time.

 

“Letter of Credit Facility” means, at any time, an amount equal to the lesser of
(a) the aggregate amount of the Issuing Banks’ Letter of Credit Commitments at
such time, and (b) $10,000,000, as such amount may be reduced at or prior to
such time pursuant to Section 2.05.

 

“Letters of Credit” has the meaning specified in Section 2.01(b).

 

“Leverage Ratio” means, at any date of determination, the ratio of (a) Total
Debt minus Unrestricted Cash, in each case as at the end of the most recently
ended fiscal quarter of the Borrower for which financial statements are required
to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the
case may be, to (b) EBITDA.

 

“Lien” means any lien, security interest or other charge or encumbrance of any
kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.

 

“Loan Documents” means (a) this Agreement, (b) the Notes, (c) the Fee Letter,
(d) each Letter of Credit Agreement, (e) each Guaranty Supplement, and (f) the
Collateral Documents, in each case, as amended.

 

“Loan Parties” means the Borrower and the Guarantors (each, a “Loan Party”).

 

“Management Agreements” means (a) the Management Agreements set forth on
Part III of Schedule 4.01(q) hereto (as supplemented from time to time in
accordance with the provisions hereof), and (b) any Management Agreement in
respect of a Borrowing Base Asset entered into after the Closing Date in
compliance with Section 5.01(p).

 

“Management Fee Adjustment” means, with respect to any Asset for any fiscal
period, the greater of (i) an amount equal to 5.0% of the total revenues
generated from the operation of such Asset for such fiscal period and (ii) all
actual management fees payable in respect of such Asset during such fiscal
period.

 

“Margin Stock” has the meaning specified in Regulation U.

 

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“Material Adverse Change” means a material adverse change in the business,
condition (financial or otherwise), results of operations or prospects of the
Borrower or the Borrower and its Subsidiaries, taken as a whole.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
condition (financial or otherwise), operations or prospects of the Borrower and
its Subsidiaries, taken as a whole, (b) the rights and remedies of any Agent or
any Lender Party under any Loan Document, (c) the ability of any Loan Party to
perform its Obligations under any Loan Document to which it is or is to be a
party, (d) the value of the Collateral or (e) the value, use, operation or
ability to sell or refinance any Borrowing Base Asset.

 

“Material Contract” means each contract to which the Borrower or any of its
Subsidiaries is a party involving aggregate consideration payable to or by the
Borrower or such Subsidiary in an amount of $5,000,000 or more per annum or
otherwise material to the business, condition (financial or otherwise),
operations, performance, properties or prospects of the Borrower and its
Subsidiaries, taken as a whole.  Without limitation of the foregoing, the
Management Agreements shall be deemed to comprise Material Contracts hereunder.

 

“Material Debt” means any Debt of any Loan Party or any Subsidiary of a Loan
Party that is outstanding in a principal amount (or, in the case of any Hedge
Agreement, an Agreement Value) of $10,000,000 or more, in each case (a) whether
or not the primary obligation of the applicable obligor, (b) whether the subject
of one or more separate debt instruments or agreements, and (c) exclusive of
Debt outstanding under this Agreement.  For the avoidance of doubt, Material
Debt may include Refinancing Debt to the extent comprising Material Debt as
defined herein.

 

“Material Litigation” has the meaning specified in Section 3.01(e).

 

“Medicaid” means collectively, the healthcare assistance program established by
Title XIX of the Social Security Act (42 U.S.C. §1396 et seq.) and any statutes
succeeding thereto, and all laws, rules, regulations, manuals, policies,
procedures, orders, guidelines or requirements pertaining to such program
including: (a) all Federal statutes (whether set forth in Title XIX of the
Social Security Act or elsewhere) affecting such program; (b) all state
statutes, regulations and plans for medical assistance enacted in connection
with such program and Federal rules and regulations promulgated in connection
with such program; and (c) all applicable provisions of all rules, regulations,
manuals, policies, procedures, orders and administrative, reimbursement,
guidelines and requirements of all Governmental Authorities promulgated in
connection with such program (whether or not having the force of law), in each
case as the same may be amended, restated, supplemented or otherwise modified
from time to time.

 

“Medicare” means collectively, the health insurance program for the aged and
disabled established by Title XVIII of the Social Security Act (42 U.S.C. §1395
et seq.) and any statutes succeeding thereto, and all laws, rules, regulations,
manuals, policies, procedures, orders, guidelines or requirements pertaining to
such program including: (a) all Federal statutes (whether set forth in Title
XVIII of the Social Security Act or elsewhere) affecting such program; and
(b) all applicable provisions of all rules, regulations, manuals, policies,
procedures, orders and administrative, reimbursement, guidelines and
requirements of all Governmental Authorities promulgated in connection with such
program (whether or not having the force of law), in each case as the same may
be amended, restated, supplemented or otherwise modified from time to time.

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

 

“Mortgage Policies” has the meaning specified in Section 3.01(a)(iii)(B).

 

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“Mortgage Receivable” means a promissory note secured by a mortgage of which the
Borrower or a Subsidiary thereof is the holder and retains the rights of
collection of all payments thereunder.

 

“Mortgages” has the meaning specified in Section 3.01(a)(iii).

 

“Multiemployer Plan” means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make contributions.

 

“Multiple Employer Plan” means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan
Party or any ERISA Affiliate and at least one Person other than the Loan Parties
and the ERISA Affiliates or (b) was so maintained and in respect of which any
Loan Party or any ERISA Affiliate could have liability under Section 4064 or
4069 of ERISA in the event such plan has been or were to be terminated.

 

“Negative Pledge” means, with respect to any asset, any provision of a document,
instrument or agreement (other than a Loan Document) which prohibits or purports
to prohibit the creation or assumption of any Lien on such asset as security for
Debt of the Person owning such asset or any other Person.

 

“Net Operating Income” means, with respect to any Borrowing Base Asset for any
applicable measurement period, (a) the total rental and other revenue from the
operation of such Borrowing Base Asset for such period (“Operating Revenue”),
minus (b) all expenses and other proper charges incurred in connection with the
operation and maintenance of such Borrowing Base Asset for such period,
including, without limitation, management fees, repairs, real estate and chattel
taxes and bad debt expenses, but before payment or provision for debt service
charges, income taxes and depreciation, amortization and other non-cash expenses
(“Operating Expenses”), all as determined in accordance with GAAP and in each
case for consecutive four fiscal quarters of the Borrower most recently ended
for which financial statements are required to be delivered to the Lender
Parties pursuant to Section 5.03(b) or (c), as the case may be.

 

“Non-Consenting Lender” has the meaning specified in Section 9.01(b).

 

“Non-Defaulting Lender” means, at any time, a Lender that is not a Defaulting
Lender or a Potential Defaulting Lender.

 

“Non-Recourse Debt” means Debt for Borrowed Money with respect to which recourse
for payment is limited to (a) any building(s) or parcel(s) of real property and
any related assets encumbered by a Lien securing such Debt for Borrowed Money
and/or (b) (i) the general credit of the Property-Level Subsidiary that has
incurred such Debt for Borrowed Money, and/or the direct Equity Interests
therein and/or (ii) the general credit of the immediate parent entity of such
Property-Level Subsidiary, provided that such parent entity’s assets consist
solely of Equity Interests in such Property-Level Subsidiary, it being
understood that the instruments governing such Debt may include customary
carve-outs to such limited recourse (any such customary carve-outs or agreements
limited to such customary carve-outs, being a “Customary Carve-Out Agreement”)
such as, for example, personal recourse to the Borrower or any Subsidiary of the
Borrower for fraud, misrepresentation, misapplication or misappropriation of
cash, waste, environmental claims, damage to properties, non-payment of taxes or
other liens despite the existence of sufficient cash flow, interference with the
enforcement of loan documents upon maturity or acceleration, voluntary or
involuntary bankruptcy filings, violation of loan document prohibitions against
transfer of properties or ownership interests therein and liabilities and other
circumstances customarily excluded by lenders from exculpation

 

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provisions and/or included in separate indemnification and/or guaranty
agreements in non-recourse financings of real estate.

 

“Note” means a promissory note of the Borrower payable to the order of any
Lender, in substantially the form of Exhibit A hereto, evidencing the aggregate
indebtedness of the Borrower to such Lender resulting from the Revolving Credit
Advances, Swing Line Advances and Letter of Credit Advances made by such Lender.

 

“Notice of Borrowing” has the meaning specified in Section 2.02(a).

 

“Notice of Issuance” has the meaning specified in Section 2.03(a).

 

“Notice of Renewal” has the meaning specified in Section 2.01(b).

 

“Notice of Swing Line Borrowing” has the meaning specified in Section 2.02(b).

 

“Notice of Termination” has the meaning specified in Section 2.01(b).

 

“NPL” means the National Priorities List under CERCLA.

 

“Obligation” means, with respect to any Person, any payment, performance or
other obligation of such Person of any kind, including, without limitation, any
liability of such Person on any claim, whether or not the right of any creditor
to payment in respect of such claim is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, disputed, undisputed, legal,
equitable, secured or unsecured, and whether or not such claim is discharged,
stayed or otherwise affected by any proceeding referred to in Section 6.01(f). 
Without limiting the generality of the foregoing, the Obligations of any Loan
Party under the Loan Documents include (a) the obligation to pay principal,
interest, Letter of Credit commissions, charges, expenses, fees, attorneys’ fees
and disbursements, indemnities and other amounts payable by such Loan Party
under any Loan Document and (b) the obligation of such Loan Party to reimburse
any amount in respect of any of the foregoing that any Lender Party, in its sole
discretion, may elect to pay or advance on behalf of such Loan Party.

 

“OECD” means the Organization for Economic Cooperation and Development.

 

“OIG” has the meaning specified in Section 4.01(y)(viii).

 

“Operating Expenses” has the meaning specified in the definition of Net
Operating Income.

 

“Operating Revenue” has the meaning specified in the definition of Net Operating
Income.

 

“Other Taxes” has the meaning specified in Section 2.12(b).

 

“Parent Company” means, with respect to a Lender, the bank holding company (as
defined in Federal Reserve Board Regulation Y), if any, of such Lender, and/or
any Person owning, beneficially or of record, directly or indirectly, a majority
of the shares of such Lender.

 

“Participant” has the meaning specified in Section 2.03(c)(i).

 

“Patriot Act” has the meaning specified in Section 9.12.

 

“PBGC” means the Pension Benefit Guaranty Corporation (or any successor).

 

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“Pending Borrowing Base Assets” means those Healthcare Assets identified on
Schedule II hereto as “Pending Borrowing Base Assets”.

 

“Permitted Liens” means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been
commenced:  (a) Liens for taxes, assessments and governmental charges or levies
not yet due and payable or, if due and payable, not yet delinquent, or subject
to a Good Faith Contest; (b) Liens imposed by law, such as materialmen’s,
mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens
arising in the ordinary course of business securing obligations that (i) are
either not overdue for a period of more than 30 days or are subject to a Good
Faith Contest and (ii) individually or together with all other Permitted Liens
outstanding on any date of determination do not materially adversely affect the
use of the property to which they relate; (c) pledges or deposits to secure
obligations under workers’ compensation or unemployment laws or similar
legislation or to secure public or statutory obligations; (d) easements, zoning
restrictions, rights of way and other encumbrances on title to real property
that do not render title to the property encumbered thereby unmarketable or
materially adversely affect the use or value of such property for its present
purposes; (e) Tenancy Leases; (f) Permitted Encumbrances (as defined in each of
the Mortgages); and (g) deposits to secure trade contracts (other than for
debt), statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business.

 

“Person” means an individual, partnership, corporation (including a business
trust or statutory trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.

 

“Plan” means a Single Employer Plan or a Multiple Employer Plan.

 

“Post Petition Interest” has the meaning specified in Section 7.07(b).

 

“Potential Defaulting Lender” means, at any time, (i) any Lender with respect to
which an event of the kind referred to in the definition of “Lender/Insolvency
Event” has occurred and is continuing in respect of any Subsidiary of such
Lender, (ii) any Lender that has notified, or whose Parent Company or a
Subsidiary thereof has notified, the Administrative Agent, the Borrower, the
Issuing Bank or the Swing Line Bank in writing, or has stated publicly, that it
does not intend to comply with its funding obligations under any other loan
agreement or credit agreement or other similar agreement, unless such writing or
statement states that such position is based on such Lender’s determination that
one or more conditions precedent to funding cannot be satisfied (which
conditions precedent, together with the applicable default, if any, will be
specifically identified in such writing or public statement), or (iii) any
Lender that has, or whose Parent Company has been downgraded after the Closing
Date to a non-investment grade rating from Moody’s or S&P or another nationally
recognized rating agency.  Any determination by the Administrative Agent that a
Lender is a Potential Defaulting Lender under any of clauses (i) through
(iii) above will be conclusive and binding absent demonstrable error, and such
Lender will be deemed a Potential Defaulting Lender (subject to Section 2.17(f))
upon notification of such determination by the Administrative Agent to the
Borrower, the Issuing Bank, the Swing Line Bank and the Lenders.

 

“Preferred Interests” means, with respect to any Person, Equity Interests issued
by such Person that are entitled to a preference or priority over any other
Equity Interests issued by such Person upon any distribution of such Person’s
property and assets, whether by dividend or upon liquidation.

 

“Private Pay” means any payment, reimbursement or refund in connection with
healthcare services, products or supplies that does not derive or is unavailable
from Medicare, Medicaid, Tricare,

 

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Veteran’s Administration or any other healthcare reimbursement program
administered by a Governmental Authority.

 

“Property-Level Subsidiary” means any Subsidiary of the Borrower or any Joint
Venture that holds a direct fee or leasehold interest in any single building (or
group of related buildings, including, without limitation, buildings pooled for
purposes of a Non-Recourse Debt financing) or parcel (or group of related
parcels, including, without limitation, parcels pooled for purposes of a
Non-Recourse Debt financing) of real property and related assets and not in any
other building or parcel of real property.

 

“Proposed Borrowing Base Asset” has the meaning specified in Section 5.01(k).

 

“Pro Rata Share” of any amount means, with respect to any Lender at any time,
the product of such amount times a fraction the numerator of which is the amount
of such Lender’s Revolving Credit Commitment at such time (or, if the
Commitments shall have been terminated pursuant to Section 2.05 or 6.01, such
Lender’s Revolving Credit Commitment as in effect immediately prior to such
termination) and the denominator of which is the Revolving Credit Facility at
such time (or, if the Commitments shall have been terminated pursuant to
Section 2.05 or 6.01, the Revolving Credit Facility as in effect immediately
prior to such termination).

 

“Qualifying Ground Lease” means a ground lease of Real Property containing the
following terms and conditions:  (a) a remaining term (exclusive of any
unexercised extension options that are subject to terms or conditions not yet
agreed upon and specified in such ground lease or an amendment thereto, other
than a condition that the lessee not be in default under such ground lease) of
30 years or more from the date the related Healthcare Asset becomes a Borrowing
Base Asset; (b) the right of the lessee to mortgage and encumber its interest in
the leased property without the consent of the lessor; (c) the obligation of the
lessor to give the holder of any mortgage Lien on such leased property written
notice of any defaults on the part of the lessee and agreement of such lessor
that such lease will not be terminated until such holder has had a reasonable
opportunity to cure or complete foreclosures, and fails to do so; (d) reasonable
transferability of the lessee’s interest under such lease, including the ability
to sublease; and (e) such other rights customarily required by mortgagees making
a loan secured by the interest of the holder of a leasehold estate demised
pursuant to a ground lease.

 

“Real Property” means all right, title and interest of the Borrower and each of
its Subsidiaries in and to any land and any improvements located thereon,
together with all equipment, furniture, materials, supplies, personal property
and all other rights and property within the scope of the definition of
Mortgaged Property (as defined in the Form of Mortgage attached hereto as
Exhibit G) in which such Person has an interest now or hereafter located on or
used in connection with such land and improvements, and all appurtenances,
additions, improvements, renewals, substitutions and replacements thereof now or
hereafter acquired by such Person.

 

“Recourse Debt” means Debt for which the Borrower or any of its Subsidiaries has
personal or recourse liability in whole or in part, exclusive of any such Debt
for which such personal or recourse liability is limited to obligations under
Customary Carve-Out Agreements, and provided that no claim shall have been made
under such Customary Carve-Out Agreements.

 

“Reference Banks” means Citibank, N.A. and RBC Capital Markets.

 

“Refinancing Debt” means, with respect to any Debt, any Debt extending the
maturity of, or refunding or refinancing, in whole or in part, such Debt,
provided that (a) the terms of any Refinancing Debt, and of any agreement
entered into and of any instrument issued in connection therewith, (i) do not
provide for any Lien on any Borrowing Base Assets, and (ii) are not otherwise
prohibited by the Loan Documents, (b) the principal amount of such Debt shall
not exceed the

 

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principal amount of the Debt being extended, refunded or refinanced plus the
amount of any applicable premium and expenses, and (c) the other material terms,
taken as a whole, of any such Debt are no less favorable in any material respect
to the Loan Parties or the Lender Parties than the terms governing the Debt
being extended, refunded or refinanced.

 

“Register” has the meaning specified in Section 9.07(d).

 

“Regulation U” means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

 

“Replacement Lender” has the meaning specified in Section 2.18.

 

“Required Lenders” means, at any time, Lenders owed or holding greater than 50%
of the sum of (a) the aggregate principal amount of the Advances outstanding at
such time, (b) the aggregate Available Amount of all Letters of Credit
outstanding at such time and (c) the aggregate Unused Revolving Credit
Commitments at such time.  For purposes of this definition, the aggregate
principal amount of Swing Line Advances owing to the Swing Line Bank and of
Letter of Credit Advances owing to any Issuing Bank and the Available Amount of
each Letter of Credit shall be considered to be owed to the Revolving Lenders
ratably in accordance with their respective Revolving Credit Commitments.

 

“Responsible Officer” means, with respect to any Loan Party, any officer of, or
any officer of any general partner or managing member of, such Loan Party, which
Officer has (a) responsibility for performing the underlying function that is
the subject of the action required of such officer hereunder, or (b) supervisory
responsibility for such an officer.

 

“Revolving Credit Advance” has the meaning specified in Section 2.01(a).

 

“Revolving Credit Commitment” means, (a) with respect to any Lender at any time,
the amount set forth opposite such Lender’s name on Schedule I hereto under the
caption “Revolving Credit Commitment” or (b) if such Lender has entered into one
or more Assignment and Acceptances, set forth for such Lender in the Register
maintained by the Administrative Agent pursuant to Section 9.07(d) as such
Lender’s “Revolving Credit Commitment”, as such amount may be reduced at or
prior to such time pursuant to Section 2.05.

 

“Revolving Credit Exposure” means, at any time, the sum of the aggregate
principal amount of all outstanding Revolving Credit Advances.

 

“Revolving Credit Facility” means, at any time, the aggregate amount of the
Lenders’ Revolving Credit Commitments at such time.

 

“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial
Services LLC business, and any successor thereto.

 

“Sale and Leaseback Transaction” shall mean any arrangement with any Person
providing for the leasing by the Borrower or any of its Subsidiaries of any Real
Property that has been sold or transferred or is to be sold or transferred by
the Borrower or such Subsidiary, as the case may be, to such Person.

 

“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002, as amended.

 

“Second Extension Date” has the meaning specified in Section 2.16.

 

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“Secured Obligations” means, collectively, the “Secured Obligations” as defined
in the Security Agreement and the “Obligations” as defined in the Mortgages.

 

“Secured Parties” means the Agents and the Lender Parties.

 

“Securities Act” means the Securities Act of 1933, as amended to the date hereof
and from time to time hereafter, and any successor statute.

 

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended
to the date hereof and from time to time hereafter, and any successor statute.

 

“Security Agreement” has the meaning specified in Section 3.01(a)(ii).

 

“Single Employer Plan” means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan
Party or any ERISA Affiliate and no Person other than the Loan Parties and the
ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party
or any ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.

 

“SNH” means Senior Housing Properties Trust, a Maryland real estate investment
trust.

 

“Social Security Act” means 42 U.S.C. §301 et seq., as enacted in 1935, and
amended, restated or otherwise supplemented thereafter from time to time and all
rules and regulations promulgated thereunder.

 

“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, on a going-concern
basis, is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person, on a going-concern basis, 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 such debts and liabilities as they mature and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person’s property would constitute
an unreasonably small capital.  The amount of contingent liabilities at any time
shall be computed as the amount that, in the light of all the facts and
circumstances existing at such time (including, without limitation, after taking
into account appropriate discount factors for the present value of future
contingent liabilities), represents the amount that can reasonably be expected
to become an actual or matured liability.

 

“Standby Letter of Credit” means any Letter of Credit issued under the Letter of
Credit Facility, other than a Trade Letter of Credit.

 

“Stark Law” has the meaning specified in Section 4.01(y).

 

“Subordinated Obligations” has the meaning specified in Section 7.07.

 

“Subsidiary” of any Person means any corporation, partnership, joint venture,
limited liability company, trust or estate of which (or in which) 50% or more of
(a) the issued and outstanding capital stock having ordinary voting power to
elect a majority of the Board of Directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership,
joint venture or limited liability company or (c) the beneficial interest in
such trust or estate, in each case, is at the time directly or indirectly owned
or controlled by such

 

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Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person’s other Subsidiaries.

 

“Supplemental Collateral Agent” has the meaning specified in Section 8.01(b).

 

“Surviving Debt” means Debt of each Loan Party and its Subsidiaries outstanding
immediately before and after the Closing Date.

 

“Swing Line Advance” means an advance made by (a) the Swing Line Bank pursuant
to Section 2.01(c) or (b) any Lender pursuant to Section 2.02(b).

 

“Swing Line Bank” means CBNA, in its capacity as the Lender of Swing Line
Advances, and its successors and permitted assigns in such capacity.

 

“Swing Line Borrowing” means a borrowing consisting of a Swing Line Advance made
by the Swing Line Bank pursuant to Section 2.01(c) or the Lenders pursuant to
Section 2.02(b).

 

“Swing Line Commitment” means, with respect to the Swing Line Bank, the amount
of the Swing Line Facility set forth in Section 2.01(c), as such amount may be
reduced at or prior to such time pursuant to Section 2.05.

 

“Swing Line Exposure” means, at any time, the sum of the aggregate principal
amount of all outstanding Swing Line Advances.

 

“Swing Line Facility” has the meaning specified in Section 2.01(c).

 

“Taxes” has the meaning specified in Section 2.12(a).

 

“Tenancy Leases” means operating leases, subleases, licenses, occupancy
agreements and rights-of-use entered into by the Borrower or any of its
Subsidiaries in its capacity as a lessor or a similar capacity in the ordinary
course of business that do not materially and adversely affect the use of any
Healthcare Asset or other Real Property encumbered thereby for its intended
purpose (excluding any lease entered into in connection with a Sale and
Leaseback Transaction).

 

“Termination Date” means the earlier of (a) the third anniversary of the Closing
Date, subject to the extension thereof pursuant to Section 2.16 and (b) the date
of termination in whole of the Revolving Credit Commitments, the Swing Line
Commitment and the Letter of Credit Commitments pursuant to Section 2.05 or
6.01.

 

“Test Date” means (a) the last day of each fiscal quarter of the Borrower for
which financial statements are required to be delivered pursuant to
Sections 5.03(b) or (c), as the case may be, (b) the date of each Advance or the
issuance or renewal of any Letter of Credit, (c) the date of the addition of any
Proposed Borrowing Base Asset to the Collateral pursuant to Section 5.01(k),
(d) the effective date of any merger permitted under Section 5.02(d), (e) the
effective date of any Transfer permitted under Section 5.02(e)(iii), (f) with
respect to an extension of the Termination Date pursuant to Section 2.16, the
date of delivery of financial statements of the Borrower thereunder, and (g) the
date on which any new Material Debt is incurred.

 

“Total Asset Value” means, at any date of determination, the sum of the Asset
Values for all Assets at such date.

 

“Total Borrowing Base Value” means an amount equal to the sum of the Borrowing
Base Values of all Borrowing Base Assets; provided, however, that the following
asset concentration

 

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restrictions shall apply to the calculation of Total Borrowing Base Value:
(i) the number of Borrowing Base Assets shall not be less than 10 at any time or
the Total Borrowing Base Value shall be deemed to be zero ($0.00), (ii) the
aggregate Asset Values of all Borrowing Base Assets shall not be less than
$100,000,000 at any time or the Total Borrowing Base Value shall be deemed to be
zero ($0.00), (iii) the Adjusted Net Operating Income of any individual
Borrowing Base Asset shall not account for more than 25% of the aggregate
Adjusted Net Operating Income of all Borrowing Base Assets at any time
(provided, that to the extent such percentage is exceeded, the Borrowing Base
Value of such Asset for the purposes of the calculation of the Total Borrowing
Base Value shall be reduced by multiplying the Borrowing Base Value of such
Asset by a fraction, (A) the numerator of which is 25% and (B) the denominator
of which is the percentage obtained by dividing the Adjusted Net Operating
Income of such Asset by the Adjusted Net Operating Income of all Borrowing Base
Assets), and (iv) the aggregate Operating Revenue of the Borrowing Base Assets
attributable to Private Pay shall not account for less than 75% of the aggregate
Operating Revenue of all Borrowing Base Assets (provided, that to the extent
such percentage is not met, the Total Borrowing Base Value shall be reduced by
multiplying the Total Borrowing Base Value by a fraction, (A) the numerator of
which is the percentage obtained by dividing the aggregate Operating Revenue of
the Borrowing Base Assets attributable to Private Pay by the aggregate Operating
Revenue of all Borrowing Base Assets and (B) the denominator of which is 75%);
provided further that the value of any Pending Borrowing Base Asset shall be
deemed to be zero ($0.00) until such time as all Collateral Deliverables
relating to such Asset have been received by the Administrative Agent.

 

“Total Debt” means, at any date of determination, all Consolidated Debt of the
Borrower and its Subsidiaries as at the end of the most recently ended fiscal
quarter of the Borrower for which financial statements are required to be
delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case
may be.

 

“Trade Letter of Credit” means any Letter of Credit that is issued under the
Letter of Credit Facility for the benefit of a supplier of Inventory to the
Borrower or any of its Subsidiaries to effect payment for such Inventory.

 

“Transfer” has the meaning specified in Section 5.02(e).

 

“Tricare” means the health care program administered by the Department of
Defense that provides health care benefits to members of the military, military
retirees, certain members of the military reserve, and their dependents.

 

“Type” refers to the distinction between Advances bearing interest at the Base
Rate and Advances bearing interest at the Eurodollar Rate.

 

“UCP” has the meaning specified in Section 2.03(f).

 

“Unrestricted Cash” means an amount (if greater than zero) equal to (a) cash and
Cash Equivalents of the Borrower and its Subsidiaries that are not subject to
any Lien (excluding statutory liens in favor of any depositary bank where such
cash is maintained), minus (b) the sum of amounts included in the foregoing
clause (a) that are with a Person other than the Borrower and its Subsidiaries
as escrows, deposits or security for contractual obligations, minus
(c) insurance and condemnation proceeds received by Borrower to be reinvested
under Section 5.01(s).

 

“Unsecured Debt” means Debt for Borrowed Money not secured in any manner by any
Lien.

 

“Unused Fee” has the meaning specified in Section 2.08(a).

 

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“Unused Revolving Credit Commitment” means, with respect to any Lender at any
date of determination, (a) such Lender’s Revolving Credit Commitment at such
time minus (b) the sum of (i) the aggregate principal amount of all Revolving
Credit Advances, Swing Line Advances and Letter of Credit Advances made by such
Lender (in its capacity as a Lender) and outstanding at such time plus (ii) such
Lender’s Pro Rata Share of (A) the aggregate Available Amount of all Letters of
Credit outstanding at such time, (B) the aggregate principal amount of all
Letter of Credit Advances made by the Issuing Banks pursuant to
Section 2.03(c) and outstanding at such time and (C) the aggregate principal
amount of all Swing Line Advances made by the Swing Line Bank pursuant to
Section 2.01(c) and outstanding at such time.

 

“Veteran’s Administration” means, collectively, the healthcare programs
administered by the U.S. Department of Veteran’s Affairs, Veteran’s Health
Administration and established by Title 38 Chapter 17 of the United States Code
and any statutes succeeding thereto.

 

“Voting Interests” means shares of capital stock issued by a corporation, or
equivalent Equity Interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the election
of directors (or the election or appointment of persons performing similar
functions) of such Person, even if the right so to vote has been suspended by
the happening of such a contingency.

 

“Welfare Plan” means a welfare plan, as defined in Section 3(1) of ERISA, that
is maintained for employees of any Loan Party or in respect of which any Loan
Party could have liability under applicable law.

 

“Withdrawal Liability” has the meaning specified in Part I of Subtitle E of
Title IV of ERISA.

 

Section 1.02           Computation of Time Periods; Other Definitional
Provisions.  In this Agreement and the other Loan Documents in the computation
of periods of time from a specified date to a later specified date, the word
“from” means “from and including” and the words “to” and “until” each mean “to
but excluding”.  References in the Loan Documents to any agreement or contract
“as amended” shall mean and be a reference to such agreement or contract as
amended, amended and restated, supplemented or otherwise modified from time to
time in accordance with its terms.

 

Section 1.03           Accounting Terms.  All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.01(g) (“GAAP”); provided that if
at any time any change in GAAP would affect the computation of any financial
ratio set forth in any Loan Document, and the Borrower or the Required Lenders
shall so request, the Administrative Agent and the Borrower shall negotiate in
good faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change in GAAP (subject to approval by the Required
Lenders and the Borrower); provided that, until so amended, such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein, and the Borrower shall provide to the Administrative Agent and
the Lenders within five days after delivery of each certificate or financial
report required hereunder that is affected thereby a written statement of a
Responsible Officer of the Borrower setting forth in reasonable detail the
differences (including any differences that would affect any calculations
relating to the financial covenants as set forth in Section 5.04) that would
have resulted if such financial statements had been prepared without giving
effect to such change.

 

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ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT

 

Section 2.01           The Advances and the Letters of Credit.  (a)  The
Revolving Credit Advances.  Each Lender severally agrees, on the terms and
conditions hereinafter set forth, to make advances (each, a “Revolving Credit
Advance”) to the Borrower from time to time on any Business Day during the
period from the date hereof until the Termination Date in an amount for each
such Advance not to exceed such Lender’s Unused Revolving Credit Commitment at
such time.  Each Borrowing shall be in an aggregate amount of $1,000,000 or an
integral multiple of $250,000 in excess thereof and shall consist of Revolving
Credit Advances made simultaneously by the Lenders ratably according to their
Revolving Credit Commitments.  Within the limits of each Lender’s Unused
Revolving Credit Commitment in effect from time to time and prior to the
Termination Date, the Borrower may borrow under this Section 2.01(a), prepay
pursuant to Section 2.06(a) and reborrow under this Section 2.01(a).

 

(b)           Letters of Credit.  Each Issuing Bank severally agrees, on the
terms and conditions hereinafter set forth, to issue (or cause its Affiliate
that is a commercial bank to issue on its behalf) letters of credit denominated
in U.S. Dollars (the “Letters of Credit”), for the account of the Borrower from
time to time on any Business Day during the period from the date hereof until 60
days before the Termination Date in an aggregate Available Amount (i) for all
Letters of Credit not to exceed at any time the Letter of Credit Facility at
such time, (ii) for all Letters of Credit issued by such Issuing Bank not to
exceed such Issuing Bank’s Letter of Credit Commitment at such time, and
(iii) for each such Letter of Credit not to exceed the Unused Revolving Credit
Commitments of the Lenders at such time.  No Letter of Credit shall have an
expiration date (including all rights of the Borrower or the beneficiary to
require renewal) later than the Termination Date and (A) in the case of a
Standby Letter of Credit one year after the date of issuance thereof, but may by
its terms be renewable annually upon notice (a “Notice of Renewal”) given to the
Issuing Bank that issued such Standby Letter of Credit and the Administrative
Agent on or prior to any date for notice of renewal set forth in such Letter of
Credit but in any event at least three Business Days prior to the date of the
proposed renewal of such Standby Letter of Credit and upon fulfillment of the
applicable conditions set forth in Article III unless such Issuing Bank has
notified the Borrower (with a copy to the Administrative Agent) on or prior to
the date for notice of termination set forth in such Letter of Credit but in any
event at least 30 Business Days prior to the date of automatic renewal of its
election not to renew such Standby Letter of Credit (a “Notice of Termination”)
and (B) in the case of a Trade Letter of Credit, 60 days after the date of
issuance thereof; provided, however, that the terms of each Standby Letter of
Credit that is automatically renewable annually shall (x) require the Issuing
Bank that issued such Standby Letter of Credit to give the beneficiary named in
such Standby Letter of Credit notice of any Notice of Termination, (y) permit
such beneficiary, upon receipt of such notice, to draw under such Standby Letter
of Credit prior to the date such Standby Letter of Credit otherwise would have
been automatically renewed and (z) not permit the expiration date (after giving
effect to any renewal) of such Standby Letter of Credit in any event to be
extended to a date later than the Termination Date.  If either a Notice of
Renewal is not given by the Borrower or a Notice of Termination is given by the
relevant Issuing Bank pursuant to the immediately preceding sentence, such
Standby Letter of Credit shall expire on the date on which it otherwise would
have been automatically renewed; provided, however, that even in the absence of
receipt of a Notice of Renewal the relevant Issuing Bank may in its discretion,
unless instructed to the contrary by the Administrative Agent or the Borrower,
deem that a Notice of Renewal had been timely delivered and in such case, a
Notice of Renewal shall be deemed to have been so delivered for all purposes
under this Agreement.  Within the limits of the Letter of Credit Facility, and
subject to the limits referred to above, the Borrower may request the issuance
of Letters of Credit under this Section 2.01(b), repay any Letter of Credit
Advances resulting from drawings thereunder pursuant to Section 2.04(c) and
request the issuance of additional Letters of Credit under this Section 2.01(b).

 

(c)           Swing Line Advances.  The Borrower may request the Swing Line Bank
to make, and the Swing Line Bank agrees to make, on the terms and conditions
hereinafter set forth, Swing Line Advances to the Borrower from time to time on
any Business Day during the period from the date hereof until the Termination
Date (i) in an aggregate amount not to exceed at any time outstanding
$25,000,000 (the

 

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“Swing Line Facility”) and (ii) in an amount for each such Swing Line Borrowing
not to exceed the aggregate of the Unused Revolving Credit Commitments of the
Lenders at such time.  No Swing Line Advance shall be used for the purpose of
funding the payment of principal of any other Swing Line Advance.  Each Swing
Line Borrowing shall be in an amount of $250,000 or an integral multiple of
$250,000 in excess thereof and shall be made as a Base Rate Advance.  Within the
limits of the Swing Line Facility and within the limits referred to in
clause (ii) above, the Borrower may borrow under this Section 2.01(c), repay
pursuant to Section 2.04(b) or prepay pursuant to Section 2.06(a) and reborrow
under this Section 2.01(c).

 

Section 2.02           Making the Advances.  (a)  Except as otherwise provided
in Section 2.03, each Borrowing (other than a Swing Line Borrowing) shall be
made on notice, given not later than 12:00 Noon (New York City time) on the
third Business Day prior to the date of the proposed Borrowing in the case of a
Borrowing consisting of Eurodollar Rate Advances, or not later than 1:00 P.M.
(New York City time) on the date one Business Day prior to the date of the
proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances,
by the Borrower to the Administrative Agent, which shall give to each Lender
prompt notice thereof by telex or telecopier.  Each such notice of a Borrowing
(a “Notice of Borrowing”) shall be by telephone, confirmed immediately in
writing, or telex or telecopier or e-mail, in each case in substantially the
form of Exhibit B hereto, specifying therein the requested (i) date of such
Borrowing, (ii) Type of Advances comprising such Borrowing, (iii) aggregate
amount of such Borrowing and (iv) in the case of a Borrowing consisting of
Eurodollar Rate Advances, initial Interest Period for each such Advance.  Each
Lender shall, before 12:00 Noon (New York City time) on the date of such
Borrowing in the case of a Borrowing consisting of Eurodollar Rate Advances and
1:00 P.M. (New York City time) on the date of such Borrowing in the case of a
Borrowing consisting of Base Rate Advances, make available for the account of
its Applicable Lending Office to the Administrative Agent at the Administrative
Agent’s Account, in same day funds, such Lender’s ratable portion of such
Borrowing in accordance with the respective Commitments of such Lender and the
other Lenders.  After the Administrative Agent’s receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III, the
Administrative Agent will make such funds available to the Borrower by crediting
the Borrower’s Account; provided, however, that the Administrative Agent shall
first make a portion of such funds equal to the aggregate principal amount of
any Swing Line Advances and Letter of Credit Advances made by the Swing Line
Bank or any Issuing Bank, as the case may be, and by any other Lender and
outstanding on the date of such Borrowing, plus interest accrued and unpaid
thereon to and as of such date, available to the Swing Line Bank or such Issuing
Bank, as the case may be, and such other Lenders for repayment of such Swing
Line Advances and Letter of Credit Advances.

 

(b)           Each Swing Line Borrowing shall be made on notice, given not later
than 12:00 Noon (New York City time) on the date of the proposed Swing Line
Borrowing, by the Borrower to the Swing Line Bank and the Administrative Agent. 
Each such notice of a Swing Line Borrowing (a “Notice of Swing Line Borrowing”)
shall be by telephone, confirmed immediately in writing or by telecopier or
e-mail, in each case specifying therein the requested (i) date of such
Borrowing, (ii) amount of such Borrowing and (iii) maturity of such Borrowing
(which maturity shall be no later than the earlier of (A) the seventh day after
the requested date of such Borrowing and (B) the Termination Date).  The Swing
Line Bank shall, before 1:00 P.M. (New York City time) on the date of such Swing
Line Borrowing, make the amount thereof available to the Administrative Agent at
the Administrative Agent’s Account, in same day funds.  After the Administrative
Agent’s receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article III, the Administrative Agent will make such funds
available to the Borrower by crediting the Borrower’s Account.  Upon written
demand by the Swing Line Bank, with a copy of such demand to the Administrative
Agent, each other Lender shall purchase from the Swing Line Bank, and the Swing
Line Bank shall sell and assign to each such other Lender, such other Lender’s
Pro Rata Share of such outstanding Swing Line Advance as of the date of such
demand, by making available for the account of its Applicable Lending Office to
the Administrative Agent for the account of the Swing Line Bank, by deposit to
the Administrative Agent’s Account, in same day funds, an amount equal to the
portion of the outstanding principal amount of such Swing Line Advance to be
purchased by such Lender.  The Borrower hereby agrees to each such sale and
assignment.  Each Lender agrees to purchase its Pro Rata Share of an outstanding
Swing Line Advance on (i) the Business Day on which demand therefor is made by
the Swing Line Bank, provided that notice of such demand is given not later than

 

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12:00 Noon (New York City time) on such Business Day or (ii) the first Business
Day next succeeding such demand if notice of such demand is given after such
time.  Upon any such assignment by the Swing Line Bank to any other Lender of a
portion of a Swing Line Advance, the Swing Line Bank represents and warrants to
such other Lender that the Swing Line Bank is the legal and beneficial owner of
such interest being assigned by it, but makes no other representation or
warranty and assumes no responsibility with respect to such Swing Line Advance,
the Loan Documents or any Loan Party.  If and to the extent that any Lender
shall not have so made the amount of such Swing Line Advance available to the
Administrative Agent, such Lender agrees to pay to the Administrative Agent
forthwith on demand such amount together with interest thereon, for each day
from the date of demand by the Swing Line Bank until the date such amount is
paid to the Administrative Agent, at the Federal Funds Rate.  If such Lender
shall pay to the Administrative Agent such amount for the account of the Swing
Line Bank on any Business Day, such amount so paid in respect of principal shall
constitute a Swing Line Advance made by such Lender on such Business Day for
purposes of this Agreement, and the outstanding principal amount of the Swing
Line Advance made by the Swing Line Bank shall be reduced by such amount on such
Business Day.

 

(c)           Anything in subsection (a) above to the contrary notwithstanding,
(i) the Borrower may not select Eurodollar Rate Advances for the initial
Borrowing hereunder or for any Borrowing if the aggregate amount of such
Borrowing is less than $1,000,000 or if the obligation of the Lenders to make
Eurodollar Rate Advances shall then be suspended pursuant to
Section 2.07(d)(ii), 2.09 or 2.10 and (ii) there may not be more than five
separate Interest Periods in effect hereunder at any time.

 

(d)           Each Notice of Borrowing and Notice of Swing Line Borrowing shall
be irrevocable and binding on the Borrower.  In the case of any Borrowing that
the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Borrower shall indemnify each Lender against any loss, cost or
expense incurred by such Lender as a result of any failure to fulfill on or
before the date specified in such Notice of Borrowing for such Borrowing the
applicable conditions set forth in Article III, including, without limitation,
any loss, cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Lender to fund the Advance to be
made by such Lender as part of such Borrowing when such Advance, as a result of
such failure, is not made on such date.

 

(e)           Unless the Administrative Agent shall have received notice from a
Lender prior to (x) the date of any Borrowing consisting of Eurodollar Rate
Advances or (y) 12:00 Noon (New York City time) on the date of any Borrowing
consisting of Base Rate Advances that such Lender will not make available to the
Administrative Agent such Lender’s ratable portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date of such Borrowing in accordance with
subsection (a) of this Section 2.02 and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount.  If and to the extent that such Lender shall not have so
made such ratable portion available to the Administrative Agent, such Lender and
the Borrower severally agree to repay or pay to the Administrative Agent
forthwith on demand such corresponding amount and to pay interest thereon, for
each day from the date such amount is made available to the Borrower until the
date such amount is repaid or paid to the Administrative Agent, at (i) in the
case of the Borrower, the interest rate applicable at such time under
Section 2.07 to Advances comprising such Borrowing and (ii) in the case of such
Lender, the Federal Funds Rate.  If such Lender shall pay to the Administrative
Agent such corresponding amount, such amount so paid shall constitute such
Lender’s Advance as part of such Borrowing for all purposes.

 

(f)            The failure of any Lender to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on the date of any Borrowing.

 

Section 2.03           Issuance of and Drawings and Reimbursement Under Letters
of Credit.  (a)  Request for Issuance.  Each Letter of Credit shall be issued
upon notice, given not later than 12:00 Noon (New

 

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York City time) on the fifth Business Day prior to the date of the proposed
issuance of such Letter of Credit, by the Borrower to any Issuing Bank, which
shall give to the Administrative Agent and each Lender prompt notice thereof by
telex, telecopier or e-mail or by means of the Approved Electronic Platform. 
Each such notice of issuance of a Letter of Credit (a “Notice of Issuance”)
shall be by telephone, confirmed immediately in writing, telex, telecopier or
e-mail, in each case specifying therein the requested (i) date of such issuance
(which shall be a Business Day), (ii) Available Amount of such Letter of Credit,
(iii) expiration date of such Letter of Credit, (iv) name and address of the
beneficiary of such Letter of Credit and (v) form of such Letter of Credit, and
shall be accompanied by such application and agreement for letter of credit as
such Issuing Bank may specify to the Borrower for use in connection with such
requested Letter of Credit (a “Letter of Credit Agreement”).  If (y) the
requested form of such Letter of Credit is acceptable to such Issuing Bank in
its sole discretion and (z) it has not received notice of objection to such
issuance from the Required Lenders, such Issuing Bank will, upon fulfillment of
the applicable conditions set forth in Article III, make such Letter of Credit
available to the Borrower at its office referred to in Section 9.02 or as
otherwise agreed with the Borrower in connection with such issuance.  In the
event and to the extent that the provisions of any Letter of Credit Agreement
shall conflict with this Agreement, the provisions of this Agreement shall
govern.

 

(b)           Letter of Credit Reports.  Each Issuing Bank shall furnish (i) to
each Lender on the first Business Day of each month a written report summarizing
issuance and expiration dates of Letters of Credit issued by such Issuing Bank
during the preceding month and drawings during such month under all Letters of
Credit issued by such Issuing Bank and (ii) to the Administrative Agent and each
Lender on the first Business Day of each calendar quarter a written report
setting forth the average daily aggregate Available Amount during the preceding
calendar quarter of all Letters of Credit issued by such Issuing Bank.

 

(c)           Letter of Credit Participations; Drawing and Reimbursement.  (i) 
Immediately upon the issuance by the Issuing Bank of any Letter of Credit, the
Issuing Bank shall be deemed to have sold and transferred to each Lender, and
each Lender (in its capacity under this Section 2.03(c), a “Participant”) shall
be deemed irrevocably and unconditionally to have purchased and received from
the Issuing Bank, without recourse or warranty, an undivided interest and
participation in such Letter of Credit, to the extent of such Participant’s Pro
Rata Share of the Available Amount of such Letter of Credit, each drawing or
payment made thereunder and the obligations of the Borrower under this Agreement
with respect thereto, and any security therefor or guaranty pertaining thereto. 
Upon any change in the Revolving Credit Commitments or the Lenders’ respective
Pro Rata Shares pursuant to Section 9.07, it is hereby agreed that, with respect
to all outstanding Letters of Credit and unpaid drawings relating thereto, there
shall be an automatic adjustment to the participations pursuant to this
Section 2.03(c) to reflect the new Pro Rata Shares of the assignor and assignee
Lenders, as the case may be.

 

(ii)           In determining whether to pay under any Letter of Credit, the
Issuing Bank shall not have any obligation with respect to the other Revolving
Credit Lenders other than to confirm that any documents required to be delivered
under such Letter of Credit appear to have been delivered and that they appear
to substantially comply on their face with the requirements of such Letter of
Credit.  Any action taken or omitted to be taken by the Issuing Bank under or in
connection with any Letter of Credit issued by it shall not create for the
Issuing Bank any resulting liability to the Borrower, any other Loan Party, any
Revolving Credit Lender or any other Person unless such action is taken or
omitted to be taken with gross negligence or willful misconduct on the part of
the Issuing Bank (as determined by a court of competent jurisdiction in a final
non-appealable judgment).

 

(iii)          The payment by any Issuing Bank of a draft drawn under any Letter
of Credit shall constitute for all purposes of this Agreement the making by such
Issuing Bank of a Letter of Credit Advance, which shall be a Base Rate Advance,
in the amount of such draft.  In the event that the Issuing Bank makes any
payment under any Letter of Credit issued by it and the Borrower shall not have
reimbursed such amount in full to the Issuing Bank pursuant to Section 2.04(c),
the Issuing Bank shall promptly notify the Administrative Agent, which shall
promptly notify each Participant of such failure, and each Participant shall
promptly and unconditionally pay to the Administrative Agent for

 

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the account of the Issuing Bank the amount of such Participant’s Pro Rata Share
of such unreimbursed payment in U.S. dollars and in same day funds.  Upon such
notification by the Administrative Agent to any Participant required to fund a
payment under a Letter of Credit, such Participant shall make available to the
Administrative Agent for the account of the Issuing Bank its Pro Rata Share of
an outstanding Letter of Credit Advance on (i) the Business Day on which demand
therefor is made by the Issuing Bank which made such Advance, provided that
notice of such demand is given not later than 11:00 A.M. (New York City time) on
such Business Day, or (ii) the first Business Day next succeeding such demand if
notice of such demand is given after such time.  If such Lender shall pay to the
Administrative Agent such amount for the account of such Issuing Bank on any
Business Day, such amount so paid in respect of principal shall constitute a
Letter of Credit Advance made by such Lender on such Business Day for purposes
of this Agreement, and the outstanding principal amount of the Letter of Credit
Advance made by such Issuing Bank shall be reduced by such amount on such
Business Day.  If and to the extent that any Lender shall not have so made the
amount of such Letter of Credit Advance available to the Administrative Agent,
such Lender agrees to pay to the Administrative Agent forthwith on demand such
amount together with interest thereon, for each day from the date of demand by
such Issuing Bank until the date such amount is paid to the Administrative
Agent, at the Federal Funds Rate for its account or the account of such Issuing
Bank, as applicable.

 

(iv)          Whenever the Issuing Bank receives a payment of a reimbursement
obligation as to which it has received any payments from the Participants
pursuant to clause (iii) above, the Issuing Bank shall pay to the Administrative
Agent for the account of each such Participant that has paid its Pro Rata Share
thereof, in same day funds, an amount equal to such Participant’s share (based
upon the proportionate aggregate amount originally funded by such Participant to
the aggregate amount funded by all Participants) of the principal amount of such
reimbursement obligation and interest thereon accruing after the purchase of the
respective participations.

 

(d)           Failure to Make Letter of Credit Advances.  The failure of any
Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.

 

(e)           Independence.  The Borrower acknowledges that the rights and
obligations of the Issuing Bank under each Letter of Credit are independent of
the existence, performance or nonperformance of any contract or arrangement
underlying such Letter of Credit, including contracts or arrangements between
the Issuing Bank and the Borrower and between the Borrower and the beneficiary
of such Letter of Credit.

 

(f)            Governing Rules.  The Borrower agrees that each Letter of Credit
shall be governed by the Uniform Customs and Practice for Documentary
Credits, International Chamber of Commerce (“ICC”) Publication No. 600 (2007
Revision) or, at the Issuing Bank’s option, such later revision thereof in
effect at the time of issuance of such Letter of Credit (as so chosen for such
Letter of Credit, the “UCP”) or the International Standby Practices 1998, ICC
Publication No. 590 or, at the Issuing Bank’s option, such later revision
thereof in effect at the time of issuance of such Letter of Credit (as so chosen
for the Letter of Credit, the “ISP”, and each of the UCP and the ISP, an “ICC
Rule”).  The UCP and the ISP (or such later revision of either) shall serve, in
the absence of proof to the contrary, as evidence of general banking usage with
respect to the subject matter thereof.

 

Section 2.04           Repayment of Advances.  (a)  Revolving Credit Advances. 
The Borrower shall repay to the Administrative Agent for the ratable account of
the Lenders on the Termination Date the aggregate outstanding principal amount
of the Revolving Credit Advances then outstanding.

 

(b)           Swing Line Advances.  The Borrower shall repay to the
Administrative Agent for the account of (i) the Swing Line Bank and (ii) each
other Lender that has made a Swing Line Advance by

 

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purchase from the Swing Line Bank pursuant to Section 2.02(b), the outstanding
principal amount of each Swing Line Advance made by each of them on the earlier
of the maturity date specified in the applicable Notice of Swing Line Borrowing
(which maturity shall be no later than the seventh day after the requested date
of such Swing Line Borrowing) and the Termination Date.

 

(c)           Letter of Credit Advances.  (i)  The Borrower shall repay to the
Administrative Agent for the account of each Issuing Bank and each other Lender
that has made a Letter of Credit Advance on the same day on which such Advance
was made the outstanding principal amount of each Letter of Credit Advance made
by each of them.

 

(ii)           The Obligations of the Borrower under this Agreement, any Letter
of Credit Agreement and any other agreement or instrument relating to any Letter
of Credit (and the obligations of each Lender to reimburse the Issuing Bank with
respect thereto) shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, such Letter of Credit
Agreement and such other agreement or instrument under all circumstances,
including, without limitation, the following circumstances:

 

(A)          any lack of validity or enforceability of any Loan Document, any
Letter of Credit Agreement, any Letter of Credit or any other agreement or
instrument relating thereto (all of the foregoing being, collectively, the “L/C
Related Documents”);

 

(B)           any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrower in respect of any
L/C Related Document or any other amendment or waiver of or any consent to
departure from all or any of the L/C Related Documents;

 

(C)           the existence of any claim, set-off, defense or other right that
the Borrower may have at any time against any beneficiary or any transferee of a
Letter of Credit (or any Persons for which any such beneficiary or any such
transferee may be acting), any Issuing Bank or any other Person, whether in
connection with the transactions contemplated by the L/C Related Documents or
any unrelated transaction;

 

(D)          any statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;

 

(E)           payment by any Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit;

 

(F)           any exchange, release or non-perfection of any Collateral or other
collateral, or any release or amendment or waiver of or consent to departure
from the Guaranties or any other guarantee, for all or any of the Obligations of
the Borrower in respect of the L/C Related Documents; or

 

(G)           any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower or any other Loan Party.

 

Section 2.05           Termination or Reduction of the Commitments.  (a) 
Optional.  The Borrower may, upon at least three Business Days’ notice to the
Administrative Agent, terminate in whole or reduce in part the unused portions
of the Swing Line Facility, the Letter of Credit Facility and the Unused
Revolving Credit Commitments; provided, however, that each partial reduction of
a Facility (i) shall be in an

 

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aggregate amount of $1,000,000 (or, in the case of the Swing Line Facility,
$250,000) or an integral multiple of $250,000 in excess thereof and (ii) shall
be made ratably among the Lenders in accordance with their Commitments with
respect to such Facility.

 

(b)           Mandatory.  (i)  The Letter of Credit Facility shall be
permanently reduced from time to time on the date of each reduction in the
Revolving Credit Facility by the amount, if any, by which the amount of the
Letter of Credit Facility exceeds the Revolving Credit Facility after giving
effect to such reduction of the Revolving Credit Facility.

 

(ii)           The Swing Line Facility shall be permanently reduced from time to
time on the date of each reduction in the Revolving Credit Facility by the
amount, if any, by which the amount of the Swing Line Facility exceeds the
Revolving Credit Facility after giving effect to such reduction of the Revolving
Credit Facility.

 

Section 2.06           Prepayments.  (a)  Optional.  The Borrower may, upon same
day notice in the case of Base Rate Advances and two Business Days’ notice in
the case of Eurodollar Rate Advances, in each case to the Administrative Agent
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given the Borrower shall, prepay the outstanding aggregate
principal amount of the Advances comprising part of the same Borrowing in whole
or ratably in part, together with accrued interest to the date of such
prepayment on the aggregate principal amount prepaid; provided, however, that
(i) each partial prepayment shall be in an aggregate principal amount of
$1,000,000 or an integral multiple of $250,000 in excess thereof or, if less,
the amount of the Advances outstanding and (ii) if any prepayment of a
Eurodollar Rate Advance is made on a date other than the last day of an Interest
Period for such Advance, the Borrower shall also pay any amounts owing pursuant
to Section 9.04(c).

 

(b)           Mandatory.  (i)  The Borrower shall, if applicable, on each
Business Day, prepay an aggregate principal amount of the Revolving Credit
Advances comprising part of the same Borrowings, the Swing Line Advances and the
Letter of Credit Advances to cause (A) the Facility Exposure not to exceed the
Revolving Credit Facility on such Business Day, and (B) the Facility Exposure
not to exceed the Total Borrowing Base Value as set forth in
Section 5.04(b)(i) on such Business Day.  If all Advances have been prepaid and
are not sufficient to cause Borrower to comply with each of (A), and (B), the
Borrower shall make a deposit in the L/C Cash Collateral Account in an amount
sufficient to do the same.

 

(ii)           The Borrower shall, on each Business Day, pay to the
Administrative Agent for deposit in the L/C Cash Collateral Account an amount
sufficient to cause the aggregate amount on deposit in the L/C Cash Collateral
Account to equal the amount by which the aggregate Available Amount of all
Letters of Credit then outstanding exceeds the Letter of Credit Facility on such
Business Day.  To the extent the funds on deposit in the L/C Cash Collateral
Account shall at any time exceed the total amount required to be deposited
therein pursuant to the terms of this Agreement, the Administrative Agent shall,
promptly upon request by the Borrower and provided that no Default or Event of
Default shall then have occurred or be continuing or would result therefrom,
return such excess amount to the Borrower.

 

(iii)          Prepayments of the Revolving Credit Facility made pursuant to
clauses (i) and (ii) above shall be first applied to prepay Letter of Credit
Advances then outstanding until such Advances are paid in full, second applied
to prepay Swing Line Advances then outstanding until such Advances are paid in
full, third applied to prepay Revolving Credit Advances then outstanding
comprising part of the same Borrowings until such Advances are paid in full and
fourth deposited in the L/C Cash Collateral Account to Cash Collateralize 100%
of the Available Amount of the Letters of Credit then outstanding.  Upon the
drawing of any Letter of Credit for which funds are on deposit in the L/C Cash
Collateral Account, such funds shall be applied to reimburse the relevant
Issuing Bank or Lenders, as applicable.

 

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(iv)          All prepayments under this subsection (b) shall be made together
with accrued interest to the date of such prepayment on the principal amount
prepaid.

 

Section 2.07           Interest.  (a)  Scheduled Interest.  The Borrower shall
pay interest on the unpaid principal amount of each Advance owing to each Lender
from the date of such Advance until such principal amount shall be paid in full,
at the following rates per annum:

 

(i)            Base Rate Advances.  During such periods as such Advance is a
Base Rate Advance, a rate per annum equal at all times to the sum of (A) the
Base Rate in effect from time to time plus (B) the Applicable Margin in respect
of Base Rate Advances in effect from time to time, payable in arrears quarterly
on the last day of each March, June, September and December during such periods
and on the date such Base Rate Advance shall be Converted or paid in full.

 

(ii)           Eurodollar Rate Advances.  During such periods as such Advance is
a Eurodollar Rate Advance, a rate per annum equal at all times during each
Interest Period for such Advance to the sum of (A) the Eurodollar Rate for such
Interest Period for such Advance plus (B) the Applicable Margin in respect of
Eurodollar Rate Advances in effect on the first day of such Interest Period,
payable in arrears on the last day of such Interest Period and, if such Interest
Period has a duration of more than three months, on each day that occurs during
such Interest Period every three months from the first day of such Interest
Period and on the date such Eurodollar Rate Advance shall be Converted or paid
in full.

 

(b)           Default Interest.  Upon the occurrence and during the continuance
of any Event of Default, the Borrower shall pay interest on (i) the unpaid
principal amount of each Advance owing to each Lender, payable in arrears on the
dates referred to in clause (a)(i) or (a)(ii) above and on demand, at a rate per
annum equal at all times to 2% per annum above the rate per annum required to be
paid on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the
fullest extent permitted by law, the amount of any interest, fee or other amount
payable under the Loan Documents that is not paid when due, from the date such
amount shall be due until such amount shall be paid in full, payable in arrears
on the date such amount shall be paid in full and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid,
in the case of interest, on the Type of Advance on which such interest has
accrued pursuant to clause (a)(i) or (a)(ii) above and, in all other cases, on
Base Rate Advances pursuant to clause (a)(i) above.

 

(c)           Notice of Interest Period and Interest Rate.  Promptly after
receipt of a Notice of Borrowing pursuant to Section 2.02(a), a notice of
Conversion pursuant to Section 2.09 or a notice of selection of an Interest
Period pursuant to the definition of “Interest Period”, the Administrative Agent
shall give notice to the Borrower and each Lender of the applicable Interest
Period and the applicable interest rate determined by the Administrative Agent
for purposes of clause (a)(i) or (a)(ii) above, and the applicable rate, if any,
furnished by each Reference Bank for the purpose of determining the applicable
interest rate under clause (a)(ii) above.

 

(d)           Interest Rate Determination.  (i)  Each Reference Bank agrees to
furnish to the Administrative Agent timely information for the purpose of
determining each Eurodollar Rate.  If any one or more of the Reference Banks
shall not furnish such timely information to the Administrative Agent for the
purpose of determining any such interest rate, the Administrative Agent shall
determine such interest rate on the basis of timely information furnished by the
remaining Reference Banks.

 

(ii)           If the Reuters Screen LIBOR01 Page (or a successor page) is
unavailable and fewer than two Reference Banks are able to furnish timely
information to the Administrative Agent for determining the Eurodollar Rate for
any Eurodollar Rate Advances,

 

(A)          the Administrative Agent shall forthwith notify the Borrower and
the Lenders that the interest rate cannot be determined for such Eurodollar Rate
Advances,

 

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(B)           each such Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance (or if such
Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and

 

(C)           the obligation of the Lenders to make, or to Convert Advances
into, Eurodollar Rate Advances shall be suspended until the Administrative Agent
shall notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist.

 

Section 2.08           Fees.  (a)  Unused Fee.  The Borrower shall pay to the
Administrative Agent for the account of the Lenders an unused commitment fee
(the “Unused Fee”), from the date hereof in the case of each Initial Lender and
from the effective date specified in the Assignment and Acceptance pursuant to
which it became a Lender in the case of each other Lender until the Termination
Date, payable in arrears quarterly on the last day of each March, June,
September and December, commencing June 30, 2012, and on the Termination Date. 
The Unused Fee payable for the account of each Lender shall be calculated for
each period for which the Unused Fee is payable on the average daily Unused
Revolving Credit Commitment of such Lender during such period at the rate of
0.35% per annum.

 

(b)           Letter of Credit Fees, Etc.  (i)  The Borrower shall pay to the
Administrative Agent for the account of each Lender a commission, payable in
arrears, (a) quarterly on the last day of each March, June, September and
December commencing June 30, 2012, (b) on the earliest to occur of the full
drawing, expiration, termination or cancellation of any Letter of Credit, and
(c) on the Termination Date, on such Lender’s Pro Rata Share of the average
daily aggregate Available Amount during such quarter of all Letters of Credit
outstanding from time to time for the applicable period at the rate per annum
equal to the Applicable Margin for Eurodollar Rate Advances in effect from time
to time.

 

(ii)           The Borrower shall pay to each Issuing Bank, for its own account,
(A) a fronting fee for each Letter of Credit issued by such Issuing Bank in an
amount equal to 0.125% of the Available Amount of such Letter of Credit on the
date of issuance of such Letter of Credit, payable on such date and (B) such
other commissions, issuance fees, transfer fees and other fees and charges in
connection with the issuance or administration of each Letter of Credit as the
Borrower and such Issuing Bank shall agree.

 

(c)           Agents’ Fees.  The Borrower shall pay to each Agent for its own
account the fees, in the amounts and on the dates, set forth in the Fee Letter
and such other fees as may from time to time be agreed between the Borrower and
such Agent.

 

(d)           Extension Fees.  The Borrower shall pay to the Administrative
Agent on the First Extension Date and the Second Extension Date, for the account
of each Lender, a Facility extension fee, in an amount equal to 0.20% of each
Lender’s Revolving Credit Commitment then outstanding (each, an “Extension
Fee”).

 

(e)           Defaulting Lender.  Anything herein to the contrary
notwithstanding, during such period as a Lender is a Defaulting Lender, such
Defaulting Lender will not be entitled to any fees accruing during such period
pursuant to Section 2.08(a), Section 2.08(b) and Section 2.08(d) (without
prejudice to the rights of the Non-Defaulting Lenders in respect of such fees),
provided that (a) to the extent that all or a portion of the Letter of Credit
Exposure or the Swing Line Exposure of such Defaulting Lender is reallocated to
the Non-Defaulting Lenders pursuant to Section 2.17(b), such fees that would
have accrued for the benefit of such Defaulting Lender will instead accrue for
the benefit of and be payable to such Non-Defaulting Lenders, pro rata in
accordance with their respective Commitments, and (b) to the extent that all or
any portion of such Letter of Credit Exposure or Swing Line Exposure cannot be
so reallocated, such fees will instead accrue for the benefit of and be payable
to the Issuing Bank and the Swing Line Bank, as applicable (and the pro rata
payment provisions of Section 2.11(f) will automatically be deemed adjusted to
reflect the provisions of this Section).

 

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Section 2.09           Conversion of Advances.  (a)  Optional.  The Borrower may
on any Business Day, upon notice given to the Administrative Agent not later
than 12:00 Noon (New York City time) on the third Business Day prior to the date
of the proposed Conversion and subject to the provisions of Sections 2.07 and
2.10, Convert all or any portion of the Advances of one Type comprising the same
Borrowing into Advances of the other Type; provided, however, that any
Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made
only on the last day of an Interest Period for such Eurodollar Rate Advances,
any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in
an amount not less than the minimum amount specified in Section 2.02(c), no
Conversion of any Advances shall result in more separate Borrowings than
permitted under Section 2.02(c) and each Conversion of Advances comprising part
of the same Borrowing under any Facility shall be made ratably among the Lenders
in accordance with their Commitments under such Facility.  Each such notice of
Conversion shall, within the restrictions specified above, specify (i) the date
of such Conversion, (ii) the Advances to be Converted and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the initial
Interest Period for such Advances.  Each notice of Conversion shall be
irrevocable and binding on the Borrower.

 

(b)           Mandatory.  (i)  On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $1,000,000, such
Advances shall automatically Convert into Base Rate Advances.

 

(ii)           If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of “Interest Period” in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Lenders,
whereupon the Borrower will be deemed to have elected to continue such
Eurodollar Rate Advances as Eurodollar Rate Advances with a one-month Interest
Period.

 

(iii)          Upon the occurrence and during the continuance of any Event of
Default, (y) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(z) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended.

 

Section 2.10           Increased Costs, Etc.  (a)  If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation which change or interpretation is enacted, adopted or issued after
the date hereof or (ii) the compliance with any guideline or request from any
central bank or other Governmental Authority adopted, issued or made after the
date hereof (whether or not having the force of law), there shall be any
increase in the cost to any Lender Party of agreeing to make or of making,
funding or maintaining Eurodollar Rate Advances or of agreeing to issue or of
issuing or maintaining or participating in Letters of Credit or of agreeing to
make or of making or maintaining Letter of Credit Advances (excluding, for
purposes of this Section 2.10, any such increased costs resulting from (y) Taxes
or Other Taxes (as to which Section 2.12 shall govern) and (z) changes in the
basis of taxation (including a change of rate or imposition of tax) of overall
net income or overall gross income by the United States or by the foreign
jurisdiction or state under the laws of which such Lender Party is organized or
has its Applicable Lending Office or any political subdivision thereof), then
the Borrower shall from time to time, upon demand by such Lender Party (with a
copy of such demand to the Administrative Agent), pay to the Administrative
Agent for the account of such Lender Party additional amounts sufficient to
compensate such Lender Party for such increased cost; provided, however, that a
Lender Party claiming additional amounts under this Section 2.10(a) agrees to
use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such a designation would avoid the need for, or reduce the amount
of, such increased cost that may thereafter accrue and would not, in the
reasonable judgment of such Lender Party, be otherwise disadvantageous to such
Lender Party.  A certificate as to the amount of such increased cost, submitted
to the Borrower by such Lender Party, shall be conclusive and binding for all
purposes, absent manifest error.

 

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(b)           If any Lender Party determines that compliance with any law or
regulation or any guideline or request from any central bank or other
Governmental Authority enacted, adopted, issued or made after the date hereof
(whether or not having the force of law) affects or would affect the amount of
capital or liquidity required or expected to be maintained by such Lender Party
or any corporation controlling such Lender Party and that the amount of such
capital or liquidity is increased by or based upon the existence of such Lender
Party’s commitment to lend or to issue or participate in Letters of Credit
hereunder and other commitments of such type or the issuance or maintenance of
or participation in the Letters of Credit (or similar contingent obligations),
then, upon demand by such Lender Party or such corporation (with a copy of such
demand to the Administrative Agent), the Borrower shall pay to the
Administrative Agent for the account of such Lender Party, from time to time as
specified by such Lender Party, additional amounts sufficient to compensate such
Lender Party in the light of such circumstances, to the extent that such Lender
Party reasonably determines such increase in capital or liquidity to be
allocable to the existence of such Lender Party’s commitment to lend or to issue
or participate in Letters of Credit hereunder or to the issuance or maintenance
of or participation in any Letters of Credit.  A certificate as to such amounts
submitted to the Borrower by such Lender Party shall be conclusive and binding
for all purposes, absent manifest error.

 

Notwithstanding anything to the contrary contained in this Agreement, the
Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended, and all
requests, rules, guidelines or directives thereunder or issued in connection
therewith, regardless of the date enacted, adopted or issued, and all requests,
rules, guidelines or directives promulgated by the Bank for International
Settlements or the Basel Committee on Banking Supervision (or any successor or
similar authority) shall be deemed an introduction or change of the type
referred to in Section 2.10(a) above and this Section 2.10(b).

 

(c)           If, with respect to any Eurodollar Rate Advances, the Required
Lenders notify the Administrative Agent that the Eurodollar Rate for any
Interest Period for such Advances will not adequately reflect the cost to such
Lenders of making, funding or maintaining their Eurodollar Rate Advances for
such Interest Period, the Administrative Agent shall forthwith so notify the
Borrower and the Lenders, whereupon (i) each such Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make,
or to Convert Advances into, Eurodollar Rate Advances shall be suspended until
the Administrative Agent shall notify the Borrower that such Lenders have
determined that the circumstances causing such suspension no longer exist.

 

(d)           Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other Governmental
Authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, (i) each Eurodollar Rate Advance will
automatically, upon such demand, Convert into a Base Rate Advance and (ii) the
obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall notify the
Borrower that such Lender has determined that the circumstances causing such
suspension no longer exist; provided, however, that, before making any such
demand, such Lender agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a different
Eurodollar Lending Office if the making of such a designation would allow such
Lender or its Eurodollar Lending Office to continue to perform its obligations
to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar
Rate Advances and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender.

 

(e)           Failure or delay on the part of any Lender Party or Issuing Bank
to demand compensation pursuant to this Section shall not constitute a waiver of
such Lender Party’s or Issuing Bank’s right to demand such compensation;
provided, however, that the Borrower shall not be required to compensate a
Lender Party or Issuing Bank pursuant to this Section for any increased costs
incurred or reductions suffered more than nine months prior to the date that
such Lender Party or Issuing Bank, as the case may be, notifies

 

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the Borrower of the introduction or change of the type referred to in clause
(a) above giving rise to such increased costs or reductions, and of such Lender
Party’s or Issuing Bank’s intention to claim compensation therefor (except that,
if such introduction or change giving rise to such increased costs or reductions
is retroactive, then the nine-month period referred to above shall be extended
to include the period of retroactive effect thereof).

 

Section 2.11           Payments and Computations.  (a)  The Borrower shall make
each payment hereunder and under the Notes, irrespective of any right of
counterclaim or set-off (except as otherwise provided in Section 2.13), not
later than 12:00 Noon (New York City time) on the day when due in U.S. dollars
to the Administrative Agent at the Administrative Agent’s Account in same day
funds, with payments being received by the Administrative Agent after such time
being deemed to have been received on the next succeeding Business Day.  The
Administrative Agent shall promptly thereafter cause like funds to be
distributed (i) if such payment by the Borrower is in respect of principal,
interest, commitment fees or any other Obligation then payable hereunder and
under the Notes to more than one Lender Party, to such Lender Parties for the
account of their respective Applicable Lending Offices ratably in accordance
with the amounts of such respective Obligations then payable to such Lender
Parties and (ii) if such payment by the Borrower is in respect of any Obligation
then payable hereunder to one Lender Party, to such Lender Party for the account
of its Applicable Lending Office, in each case to be applied in accordance with
the terms of this Agreement.  Upon its acceptance of an Assignment and
Acceptance and recording of the information contained therein in the Register
pursuant to Section 9.07(d), from and after the effective date of such
Assignment and Acceptance, the Administrative Agent shall make all payments
hereunder and under the Notes in respect of the interest assigned thereby to the
Lender Party assignee thereunder, and the parties to such Assignment and
Acceptance shall make all appropriate adjustments in such payments for periods
prior to such effective date directly between themselves.

 

(b)           The Borrower hereby authorizes each Lender Party and each of its
Affiliates, if and to the extent payment owed to such Lender Party is not made
when due hereunder or, in the case of a Lender, under the Note held by such
Lender, to charge from time to time, to the fullest extent permitted by law,
against any or all of the Borrower’s accounts with such Lender Party any amount
so due.

 

(c)           All computations of interest based on Citibank’s base rate shall
be made by the Administrative Agent on the basis of a year of 365 or 366 days,
as the case may be, and all computations of interest based on the Eurodollar
Rate or the Federal Funds Rate and of fees and Letter of Credit commissions
shall be made by the Administrative Agent on the basis of a year of 360 days, in
each case for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest, fees or
commissions are payable.  Each determination by the Administrative Agent of an
interest rate, fee or commission hereunder shall be conclusive and binding for
all purposes, absent manifest error.

 

(d)           Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or commitment fee, as the
case may be; provided, however, that if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.

 

(e)           Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to any Lender Party
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each such Lender Party
on such due date an amount equal to the amount then due such Lender Party.  If
and to the extent the Borrower shall not have so made such payment in full to
the Administrative Agent, each such Lender Party shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender
Party together with interest thereon, for each day from the date such

 

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amount is distributed to such Lender Party until the date such Lender Party
repays such amount to the Administrative Agent, at the Federal Funds Rate.

 

(f)            Whenever any payment received by the Administrative Agent under
this Agreement or any of the other Loan Documents is insufficient to pay in full
all amounts due and payable to the Agents and the Lender Parties under or in
respect of this Agreement and the other Loan Documents on any date, such payment
shall be distributed by the Administrative Agent and applied by the Agents and
the Lender Parties in the following order of priority:

 

(i)            first, to the payment of all of the fees, indemnification
payments, costs and expenses that are due and payable to the Agents (solely in
their respective capacities as Agents) under or in respect of this Agreement and
the other Loan Documents on such date, ratably based upon the respective
aggregate amounts of all such fees, indemnification payments, costs and expenses
owing to the Agents on such date;

 

(ii)           second, to the payment of all of the fees, indemnification
payments, costs and expenses that are due and payable to the Issuing Banks
(solely in their respective capacities as such) under or in respect of this
Agreement and the other Loan Documents on such date, ratably based upon the
respective aggregate amounts of all such fees, indemnification payments, costs
and expenses owing to the Issuing Banks on such date;

 

(iii)          third, to the payment of all of the indemnification payments,
costs and expenses that are due and payable to the Lenders under Section 9.04,
the Security Agreement and any similar section of any of the other Loan
Documents on such date, ratably based upon the respective aggregate amounts of
all such indemnification payments, costs and expenses owing to the Lenders on
such date;

 

(iv)          fourth, to the payment of all of the amounts that are due and
payable to the Administrative Agent and the Lender Parties under Sections 2.10
and 2.12 on such date, ratably based upon the respective aggregate amounts
thereof owing to the Administrative Agent and the Lender Parties on such date;

 

(v)           fifth, to the payment of all of the fees that are due and payable
to the Lenders under Section 2.08(a), (b)(i) and (d) on such date, ratably based
upon the respective aggregate Commitments of the Lenders under the Facilities on
such date;

 

(vi)          sixth, to the payment of all of the accrued and unpaid interest on
the Obligations of the Borrower under or in respect of the Loan Documents that
is due and payable to the Administrative Agent and the Lender Parties under
Section 2.07(b) on such date, ratably based upon the respective aggregate
amounts of all such interest owing to the Administrative Agent and the Lender
Parties on such date;

 

(vii)         seventh, to the payment of all of the accrued and unpaid interest
on the Advances that is due and payable to the Administrative Agent and the
Lender Parties under Section 2.07(a) on such date, ratably based upon the
respective aggregate amounts of all such interest owing to the Administrative
Agent and the Lender Parties on such date;

 

(viii)        eighth, to the payment of any other accrued and unpaid interest
comprising Obligations under the Loan Documents that is due and payable to the
Administrative Agent and the Lender Parties on such date, ratably based upon the
respective aggregate amounts of all such interest owing to the Administrative
Agent and the Lender Parties on such date;

 

(ix)           ninth, to the payment of the principal amount of all of the
outstanding Advances that are due and payable to the Administrative Agent and
the Lender Parties on such date, ratably based

 

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upon the respective aggregate amounts of all such principal and reimbursement
obligations owing to the Administrative Agent and the Lender Parties on such
date, and to deposit into the L/C Cash Collateral Account any contingent
reimbursement obligations in respect of outstanding Letters of Credit to the
extent required by Section 6.02; and

 

(x)                                   tenth, to the payment of all other
Obligations of the Loan Parties owing under or in respect of the Loan Documents
that are due and payable to the Administrative Agent and the other Secured
Parties on such date, ratably based upon the respective aggregate amounts of all
such Obligations owing to the Administrative Agent and the other Secured Parties
on such date.

 

Section 2.12                                Taxes.  (a)  Any and all payments by
any Loan Party to or for the account of any Lender Party or any Agent hereunder
or under any other Loan Document shall be made, in accordance with Section 2.11
or the applicable provisions of such other Loan Document, if any, free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding (i) in the case of each Lender Party and each Agent, taxes
that are imposed on its overall net income by the United States, branch profits
taxes imposed by the United States and taxes that are imposed on its overall net
income (and franchise taxes imposed in lieu thereof and branch profits taxes) by
the state or foreign jurisdiction under the laws of which such Lender Party or
such Agent, as the case may be, is organized or any political subdivision
thereof, (ii) in the case of each Lender Party, taxes that are imposed on its
overall net income (and franchise taxes imposed in lieu thereof and branch
profits taxes) by the state or foreign jurisdiction of such Lender Party’s
Applicable Lending Office or any political subdivision thereof and (iii) in the
case of each Lender Party, any U.S. federal withholding tax imposed pursuant to
Sections 1471 through 1474 of the Internal Revenue Code (or any amended or
successor version that is substantively comparable and not materially more
onerous to comply with), including any current or future implementing Treasury
regulations and administrative pronouncements thereunder (collectively, “FATCA”)
(all such non-excluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities in respect of payments hereunder or under any other Loan
Document being hereinafter referred to as “Taxes”).  If any Loan Party shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any other Loan Document to any Lender Party or any Agent, and
unless such requirement arises from the failure of a Lender to furnish the
documentation described in Section 2.12(e), (i) the sum payable by the such Loan
Party shall be increased as may be necessary so that after such Loan Party and
any Agent have made all required deductions (including deductions applicable to
additional sums payable under this Section 2.12) such Lender Party or such
Agent, as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Loan Party shall make all
such deductions and (iii) such Loan Party shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law.

 

(b)                                 In addition, each Loan Party shall pay any
present or future stamp, documentary, excise, property, intangible, mortgage
recording or similar taxes, charges or levies that arise from any payment made
by such Loan Party hereunder or under any other Loan Documents or from the
execution, delivery or registration of, performance under, or otherwise with
respect to, this Agreement, or the other Loan Documents (hereinafter referred to
as “Other Taxes”).

 

(c)                                  The Loan Parties shall indemnify each
Lender Party and each Agent for and hold them harmless against the full amount
of Taxes and Other Taxes, and for the full amount of taxes of any kind imposed
or asserted by any jurisdiction on amounts payable under this Section 2.12,
imposed on or paid by such Lender Party or such Agent (as the case may be) and
any liability (including penalties, additions to tax, interest and expenses)
arising therefrom or with respect thereto.  This indemnification shall be made
within 30 days from the date such Lender Party or such Agent (as the case may
be) makes written demand therefor.

 

(d)                                 Within 30 days after the date of any payment
of Taxes, the appropriate Loan Party shall furnish to the Administrative Agent,
at its address referred to in Section 9.02, the original or a certified copy of
a receipt evidencing such payment, to the extent such receipt is issued
therefor, or other evidence of

 

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payment thereof reasonably satisfactory to the Administrative Agent.  In the
case of any payment hereunder or under the other Loan Documents by or on behalf
of a Loan Party through an account or branch outside the United States or by or
on behalf of a Loan Party by a payor that is not a United States person, if such
Loan Party determines that no Taxes are payable in respect thereof, such Loan
Party shall furnish, or shall cause such payor to furnish, to the Administrative
Agent, at such address, an opinion of counsel acceptable to the Administrative
Agent stating that such payment is exempt from Taxes.  For purposes of
subsections (d) and (e) of this Section 2.12, the terms “United States” and
“United States person” shall have the meanings specified in Section 7701 of the
Internal Revenue Code.

 

(e)                                  Each Lender Party organized under the laws
of a jurisdiction outside the United States shall, on or prior to the date of
its execution and delivery of this Agreement in the case of each Initial Lender
Party, and on the date of the Assignment and Acceptance pursuant to which it
becomes a Lender Party in the case of each other Lender Party, and from time to
time thereafter as reasonably requested in writing by the Borrower (but only so
long thereafter as such Lender Party remains lawfully able to do so), provide
each of the Administrative Agent and the Borrower with two original Internal
Revenue Service Forms W8-BEN or W-8ECI, as appropriate, or any successor or
other form prescribed by the Internal Revenue Service, certifying that such
Lender Party is exempt from or entitled to a reduced rate of United States
withholding tax on payments pursuant to this Agreement or any other Loan
Document or, in the case of a Lender Party claiming the benefit of the exemption
for portfolio interest under section 881(c) of the Internal Revenue Code (x) a
certificate in the form of Exhibit I hereto to the effect that such Lender Party
is not a (A) a “bank” within the meaning of section 881(c)(3)(A) of the Internal
Revenue Code, (B) or a “10 percent shareholder” of any Loan Party within the
meaning of section 881(c)(3)(B) of the Internal Revenue Code, or (C) a
“controlled foreign corporation” described in section 881(c)(3)(C) of the
Internal Revenue Code and (y) two duly completed copies of an IRS W-8BEN.  If
the forms provided by a Lender Party at the time such Lender Party first becomes
a party to this Agreement indicate a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be considered excluded
from Taxes unless and until such Lender Party provides the appropriate forms
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate only shall be considered excluded from Taxes for periods governed by such
forms; provided, however, that if, at the effective date of the Assignment and
Acceptance pursuant to which a Lender Party becomes a party to this Agreement,
the Lender Party assignor was entitled to payments under subsection (a) of this
Section 2.12 in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Lender Party assignee on such date.  If any form
or document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form W8-BEN
or W8-ECI, that the applicable Lender Party reasonably considers to be
confidential, such Lender Party shall give notice thereof to the Borrower and
shall not be obligated to include in such form or document such confidential
information.  Upon the request of the Borrower, any Lender that is a United
States person and is not an exempt recipient for U.S. backup withholding
purposes shall deliver to the Borrower two copies of Internal Revenue Service
form W-9 (or any successor form).  If a payment made to a Lender Party under any
Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA
if such Lender Party were to fail to comply with the applicable reporting
requirements of FATCA (including those contained in Section 1471(b) or
1472(b) of the Internal Revenue Code, as applicable), such Lender Party shall
deliver to the Borrower and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by the Borrower
or the Administrative Agent such documentation prescribed by applicable law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue
Code) and such additional documentation reasonably requested by the Borrower or
the Administrative Agent as may be necessary for the Borrower and the
Administrative Agent to comply with their obligations under FATCA and to
determine that such Lender Party has complied with such Lender Party’s
obligations under FATCA or to determine the amount to deduct and withhold from
such payment.  Solely for the purposes of this subsection (e), “FATCA” shall
include any amendments made to FATCA after the date of this Agreement.

 

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(f)                                    For any period with respect to which a
Lender Party has failed to provide the Borrower with the appropriate form or
other document described in subsection (e) above (other than if such failure is
due to a change in law, or in the interpretation or application thereof,
occurring after the date on which a form or other document originally was
required to be provided or if such form or other document otherwise is not
required under subsection (e) above), such Lender Party shall not be entitled to
indemnification under subsection (a) or (c) of this Section 2.12 with respect to
Taxes imposed by the United States by reason of such failure; provided, however,
that should a Lender Party become subject to Taxes because of its failure to
deliver a form or other document required hereunder, the Loan Parties shall take
such steps as such Lender Party shall reasonably request to assist such Lender
Party to recover such Taxes.

 

(g)                                 Any Lender Party claiming any additional
amounts payable pursuant to this Section 2.12 agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Eurodollar Lending Office if the making of such a
change would avoid the need for, or reduce the amount of, any such additional
amounts that may thereafter accrue and would not, in the reasonable judgment of
such Lender Party, be otherwise disadvantageous to such Lender Party.

 

(h)                                 In the event that an additional payment is
made under Section 2.12(a) or (c) for the account of any Lender Party and such
Lender Party, in its sole discretion, determines that it has finally and
irrevocably received or been granted a credit against or release or remission
for, or repayment of, any tax paid or payable by it in respect of or calculated
with reference to the deduction or withholding giving rise to such payment, such
Lender Party shall, to the extent that it determines that it can do so without
prejudice to the retention of the amount of such credit, relief, remission or
repayment, pay to the applicable Loan Party such amount as such Lender Party
shall, in its sole discretion, have determined to be attributable to such
deduction or withholding and which will leave such Lender Party (after such
payment) in no worse position than it would have been in if the applicable Loan
Party had not been required to make such deduction or withholding.  Nothing
herein contained shall interfere with the right of a Lender Party to arrange its
tax affairs in whatever manner it thinks fit nor oblige any Lender Party to
claim any tax credit or to disclose any information relating to its affairs or
any computations in respect thereof, and no Loan Party shall be entitled to
review the tax records of any Lender Party or the Administrative Agent, or
require any Lender Party to do anything that would prejudice its ability to
benefit from any other credits, reliefs, remissions or repayments to which it
may be entitled.

 

Section 2.13                                Sharing of Payments, Etc.  Subject
to the provisions of Section 2.11(f), if any Lender Party shall obtain at any
time any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise, other than as a result of an assignment pursuant
to Section 9.07) (a) on account of Obligations due and payable to such Lender
Party hereunder and under the Notes at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations due and
payable to such Lender Party at such time to (ii) the aggregate amount of the
Obligations due and payable to all Lender Parties hereunder and under the Notes
at such time) of payments on account of the Obligations due and payable to all
Lender Parties hereunder and under the Notes at such time obtained by all the
Lender Parties at such time or (b) on account of Obligations owing (but not due
and payable) to such Lender Party hereunder and under the Notes at such time in
excess of its ratable share (according to the proportion of (i) the amount of
such Obligations owing to such Lender Party at such time to (ii) the aggregate
amount of the Obligations owing (but not due and payable) to all Lender Parties
hereunder and under the Notes at such time) of payments on account of the
Obligations owing (but not due and payable) to all Lender Parties hereunder and
under the Notes at such time obtained by all of the Lender Parties at such time,
such Lender Party shall forthwith purchase from the other Lender Parties such
interests or participating interests in the Obligations due and payable or owing
to them, as the case may be, as shall be necessary to cause such purchasing
Lender Party to share the excess payment ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender Party, such purchase from each other
Lender Party shall be rescinded and such other Lender Party shall repay to the
purchasing Lender Party the purchase price to the extent of such Lender Party’s
ratable share (according to the proportion of (i) the purchase price paid to
such Lender Party to (ii) the aggregate purchase price paid to all Lender
Parties) of such

 

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recovery together with an amount equal to such Lender Party’s ratable share
(according to the proportion of (i) the amount of such other Lender Party’s
required repayment to (ii) the total amount so recovered from the purchasing
Lender Party) of any interest or other amount paid or payable by the purchasing
Lender Party in respect of the total amount so recovered.  The Borrower agrees
that any Lender Party so purchasing an interest or participating interest from
another Lender Party pursuant to this Section 2.13 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such interest or participating interest, as the case
may be, as fully as if such Lender Party were the direct creditor of the
Borrower in the amount of such interest or participating interest, as the case
may be.

 

Section 2.14                                Use of Proceeds.  The proceeds of
the Advances and issuances of Letters of Credit shall be available (and the
Borrower agrees that it shall use such proceeds and Letters of Credit) solely
for (i) general corporate purposes of the Borrower and its Subsidiaries,
(ii) the acquisition or development of new, and the renovation or expansion of
existing, Healthcare Assets and the acquisition of such other assets and the
making of such other Investments as are permitted by this Agreement,
(iii) capital expenditures relating to Healthcare Assets, (iv) the repayment (or
refinancing) of Debt, and (v) the payment of fees and expenses related to the
Facilities and the other transactions contemplated by the Loan Documents.

 

Section 2.15                                Evidence of Debt.  (a)  Each Lender
Party shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender Party
resulting from each Advance owing to such Lender Party from time to time,
including the amounts of principal and interest payable and paid to such Lender
Party from time to time hereunder.  The Borrower agrees that upon notice by any
Lender Party to the Borrower (with a copy of such notice to the Administrative
Agent) to the effect that a promissory note or other evidence of indebtedness is
required or appropriate in order for such Lender Party to evidence (whether for
purposes of pledge, enforcement or otherwise) the Advances owing to, or to be
made by, such Lender Party, the Borrower shall promptly execute and deliver to
such Lender Party, with a copy to the Administrative Agent, a Note, in
substantially the form of Exhibit A hereto, payable to the order of such Lender
Party in a principal amount equal to the Revolving Credit Commitment of such
Lender Party.  All references to Notes in the Loan Documents shall mean Notes,
if any, to the extent issued hereunder.  To the extent no Note has been issued
to a Lender Party, this Agreement shall be deemed to comprise conclusive
evidence for all purposes of the indebtedness resulting from the Advances and
extensions of credit hereunder.

 

(b)                                 The Register maintained by the
Administrative Agent pursuant to Section 9.07(d) shall include a control
account, and a subsidiary account for each Lender Party, in which accounts
(taken together) shall be recorded (i) the date and amount of each Borrowing
made hereunder, the Type of Advances comprising such Borrowing and, if
appropriate, the Interest Period applicable thereto, (ii) the terms of each
Assignment and Acceptance delivered to and accepted by it, (iii) the amount of
any principal or interest due and payable or to become due and payable from the
Borrower to each Lender Party hereunder, and (iv) the amount of any sum received
by the Administrative Agent from the Borrower hereunder and each Lender Party’s
share thereof.

 

(c)                                  Entries made in good faith by the
Administrative Agent in the Register pursuant to subsection (b) above, and by
each Lender Party in its account or accounts pursuant to subsection (a) above,
shall be prima facie evidence of the amount of principal and interest due and
payable or to become due and payable from the Borrower to, in the case of the
Register, each Lender Party and, in the case of such account or accounts, such
Lender Party, under this Agreement, absent manifest error; provided, however,
that the failure of the Administrative Agent or such Lender Party to make an
entry, or any finding that an entry is incorrect, in the Register or such
account or accounts shall not limit or otherwise affect the obligations of the
Borrower under this Agreement.

 

Section 2.16                                Extensions of Termination Date. 
(a)  At least 30 days but not more than 90 days prior to the Termination Date,
the Borrower, by written notice to the Administrative Agent, may request, with
respect to the Commitments then outstanding, a single one-year extension of the
initial Termination Date.

 

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The Administrative Agent shall promptly notify each Lender of such request and
the Termination Date in effect at such time shall, effective as at the
Termination Date (the “First Extension Date”), be extended for an additional one
year period, provided that the Borrower shall have paid the Extension Fee as
described in Section 2.08(d) and on the First Extension Date the following
statements shall be true and the Administrative Agent shall have received for
the account of each Lender Party a certificate signed by a Responsible Officer
of the Borrower, dated the First Extension Date, stating that:  (i) the
representations and warranties contained in Section 4.01 are true and correct on
and as of the First Extension Date (except those that expressly relate to prior
periods, which shall remain true as of the prior date), (ii) no Default or Event
of Default has occurred and is continuing or would result from such extension,
and (iii) the Loan Parties are in compliance with the covenants contained in
Section 5.04 immediately before and, on a pro forma basis, immediately after the
extension, together with supporting information demonstrating such compliance. 
In the event that an extension is effected pursuant to this Section 2.16(a) (but
subject to the provisions of Sections 2.05, 2.06 and 6.01), the aggregate
principal amount of all Advances shall be repaid in full ratably to the Lenders
on the Termination Date as so extended.  As of the First Extension Date, any and
all references in this Agreement, the Notes, if any, or any of the other Loan
Documents to the “Termination Date” shall refer to the Termination Date as so
extended.

 

(b)                                 Provided that the initial Termination Date
has been extended in accordance with Section 2.16(a), at least 30 days but not
more than 90 days prior to the Termination Date as extended in accordance with
Section 2.16(a), the Borrower, by written notice to the Administrative Agent,
may request, with respect to the Commitments then outstanding, a single one-year
extension of such Termination Date.  The Administrative Agent shall promptly
notify each Lender of such request and the Termination Date in effect at such
time shall, effective as at such Termination Date (the “Second Extension Date”),
be extended for an additional one year period, provided that the Borrower shall
have paid the Extension Fees as described in Section 2.08(d) and on the Second
Extension Date the following statements shall be true and the Administrative
Agent shall have received for the account of each Lender Party a certificate
signed by a Responsible Officer of the Borrower, dated the Second Extension
Date, stating that:  (i) the representations and warranties contained in
Section 4.01 are true and correct on and as of the Second Extension Date (except
those that expressly relate to prior periods, which shall remain true as of the
prior date), (ii) no Default or Event of Default has occurred and is continuing
or would result from such extension, and (iii) the Loan Parties are in
compliance with the covenants contained in Section 5.04 immediately before and,
on a pro forma basis, immediately after the extension, together with supporting
information demonstrating such compliance.  In the event that an extension is
effected pursuant to this Section 2.16(b) (but subject to the provisions of
Sections 2.05, 2.06 and 6.01), the aggregate principal amount of all Advances
shall be repaid in full ratably to the Lenders on the Termination Date as so
extended.  As of the Second Extension Date, any and all references in this
Agreement, the Notes, if any, or any of the other Loan Documents to the
“Termination Date” shall refer to the Termination Date as so extended.

 

Section 2.17                                Defaulting Lenders.  (a) If a Lender
becomes, and during the period it remains, a Defaulting Lender or a Potential
Defaulting Lender, if any Letter of Credit or Swing Line Advance is at the time
outstanding, the Issuing Bank and the Swing Line Bank, as the case may be, may
(except, in the case of a Defaulting Lender, to the extent the Commitments have
been fully reallocated pursuant to Section 2.17(b)), by notice to the Borrower
and such Defaulting Lender or Potential Defaulting Lender through the
Administrative Agent, require the Borrower to Cash Collateralize the obligations
of the Borrower to the Issuing Bank and the Swing Line Bank in respect of such
Letter of Credit or Swing Line Advance in amount at least equal to the aggregate
amount of the unreallocated obligations (contingent or otherwise) of such
Defaulting Lender or such Potential Defaulting Lender to be applied pro rata in
respect thereof, or to make other arrangements satisfactory to the
Administrative Agent, and to the Issuing Bank and the Swing Line Bank, as the
case may be, in their sole discretion to protect them against the risk of
non-payment by such Defaulting Lender or Potential Defaulting Lender.

 

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(b)                                 If a Lender becomes, and during the period
it remains, a Defaulting Lender, the following provisions shall apply with
respect to any outstanding Letter of Credit Exposure and any outstanding Swing
Line Exposure of such Defaulting Lender:

 

(i)                                     the Letter of Credit Exposure and the
Swing Line Exposure of such Defaulting Lender will, subject to the limitation in
the first proviso below, automatically be reallocated (effective on the day such
Lender becomes a Defaulting Lender) among the Non-Defaulting Lenders pro rata in
accordance with their respective Commitments; provided that (a) the sum of each
Non-Defaulting Lender’s total Revolving Credit Exposure, total Swing Line
Exposure and total Letter of Credit Exposure may not in any event exceed the
Commitment of such Non-Defaulting Lender as in effect at the time of such
reallocation and (b) neither such reallocation nor any payment by a
Non-Defaulting Lender pursuant thereto will constitute a waiver or release of
any claim the Borrower, the Administrative Agent, the Issuing Bank, the Swing
Line Bank or any other Lender may have against such Defaulting Lender or cause
such Defaulting Lender to be a Non-Defaulting Lender;

 

(ii)                                  to the extent that any portion (the
“unreallocated portion”) of the Defaulting Lender’s Letter of Credit Exposure
and Swing Line Exposure cannot be so reallocated, whether by reason of the first
proviso in clause (i) above or otherwise, the Borrower will, not later than
three (3) Business Days after demand by the Administrative Agent (at the
direction of the Issuing Bank and/or the Swing Line Bank, as the case may be),
(a) Cash Collateralize the obligations of the Borrower to the Issuing Bank and
the Swing Line Bank in respect of such Letter of Credit Exposure or Swing Line
Exposure, as the case may be, in an amount at least equal to the aggregate
amount of the unreallocated portion of such Letter of Credit Exposure or Swing
Line Exposure, or (b) in the case of such Swing Line Exposure, prepay (subject
to clause (c) below) and/or Cash Collateralize in full the unreallocated portion
thereof, or (c) make other arrangements satisfactory to the Administrative
Agent, and to the Issuing Bank and the Swing Line Bank, as the case may be, in
their sole discretion to protect them against the risk of non-payment by such
Defaulting Lender; and

 

(iii)                               any amount paid by the Borrower or otherwise
received by the Administrative Agent for the account of a Defaulting Lender
under this Agreement (whether on account of principal, interest, fees, indemnity
payments or other amounts) will not be paid or distributed to such Defaulting
Lender, but will instead be retained by the Administrative Agent in a segregated
non-interest bearing account until (subject to Section 2.17(f)) the termination
of the Commitments and payment in full of all obligations of the Borrower
hereunder and will be applied by the Administrative Agent, to the fullest extent
permitted by law, to the making of payments from time to time in the following
order of priority:  first to the payment of any amounts owing by such Defaulting
Lender to the Administrative Agent under this Agreement, second to the payment
of any amounts owing by such Defaulting Lender to the Issuing Bank or the Swing
Line Bank (pro rata as to the respective amounts owing to each of them) under
this Agreement, third to the payment of post-default interest and then current
interest due and payable to the Lenders hereunder other than Defaulting Lenders,
ratably among them in accordance with the amounts of such interest then due and
payable to them, fourth to the payment of fees then due and payable to the
Non-Defaulting Lenders hereunder, ratably among them in accordance with the
amounts of such fees then due and payable to them, fifth to pay principal and
unreimbursed Letter of Credit Advances then due and payable to the
Non-Defaulting Lenders hereunder ratably in accordance with the amounts thereof
then due and payable to them, sixth to the ratable payment of other amounts then
due and payable to the Non-Defaulting Lenders, and seventh after the termination
of the Commitments and payment in full of all obligations of the Borrower
hereunder, to pay amounts owing under this Agreement to such Defaulting Lender
or as a court of competent jurisdiction may otherwise direct.

 

(c)                                  In furtherance of the foregoing, if any
Lender becomes, and during the period it remains, a Defaulting Lender or a
Potential Defaulting Lender, each of the Issuing Bank and the Swing Line Bank is
hereby authorized by the Borrower (which authorization is irrevocable and
coupled with an interest) to

 

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give, in its discretion, through the Administrative Agent, Notices of Borrowing
pursuant to Section 2.02 in such amounts and in such times as may be required to
(i) reimburse an outstanding Letter of Credit Disbursement, (ii) repay an
outstanding Swing Line Advance, and/or (iii) Cash Collateralize the obligations
of the Borrower in respect of outstanding Letters of Credit or Swing Line
Advances in an amount at least equal to the aggregate amount of the obligations
(contingent or otherwise) of such Defaulting Lender or Potential Defaulting
Lender in respect of such Letter of Credit or Swing Line Advance.

 

(d)                                 Anything herein to the contrary
notwithstanding, if at any time the Required Lenders determine that a Person
serving as an Agent is (without taking into account any provision in the
definition of “Defaulting Lender” requiring notice from the Administrative Agent
or any other party) a Defaulting Lender pursuant to clause (v) of the definition
thereof, the Required Lenders (determined after giving effect to Section 9.01)
may by notice to the Borrower and such Person remove such Person as Agent and,
in consultation with the Borrower, appoint a replacement Agent hereunder.  Such
removal will, to the fullest extent permitted by applicable law, be effective on
the earlier of (i) the date a replacement Agent is appointed and (ii) the date
thirty (30) days after the giving of such notice by the Required Lenders
(regardless of whether a replacement Agent has been appointed).

 

(e)                                  The Borrower may terminate the unused
amount of the Commitment of a Defaulting Lender upon not less than thirty (30)
Business Days’ prior notice to the Administrative Agent (which will promptly
notify the Lenders thereof), and in such event the provisions of
Section 2.17(b)(iii) will apply to all amounts thereafter paid by the Borrower
for the account of such Defaulting Lender under this Agreement (whether on
account of principal, interest, fees, indemnity or other amounts), provided that
such termination will not be deemed to be a waiver or release of any claim the
Borrower, the Administrative Agent, the Issuing Bank, the Swing Line Bank or any
Lender may have against such Defaulting Lender.

 

(f)                                    If the Borrower, the Administrative
Agent, the Issuing Bank and the Swing Line Bank agree in writing, in their
reasonable discretion, that a Lender is no longer a Defaulting Lender or a
Potential Defaulting Lender, as the case may be, the Administrative Agent will
so notify the parties hereto, whereupon as of the effective date specified in
such notice and subject to any conditions set forth therein (which may include
arrangements with respect to any amounts then held in the segregated account
referred to in Section 2.17(b)), such Lender will, to the extent applicable,
purchase at par such portion of outstanding Advances of the other Lenders and/or
make such other adjustments as the Administrative Agent may determine to be
necessary to cause the Revolving Credit Exposure, Letter of Credit Exposure and
Swing Line Exposure of the Lenders to be on a pro rata basis in accordance with
their respective Commitments, whereupon such Lender will cease to be a
Defaulting Lender or Potential Defaulting Lender and will be a Non-Defaulting
Lender (and such Exposure of each Lender will automatically be adjusted on a
prospective basis to reflect the foregoing); provided that no adjustments will
be made retroactively with respect to fees accrued or payments made by or on
behalf of the Borrower while such Lender was a Defaulting Lender; and provided
further that except to the extent otherwise expressly agreed by the affected
parties, no change hereunder from Defaulting Lender or Potential Defaulting
Lender to Non-Defaulting Lender will constitute a waiver or release of any claim
of any party hereunder arising from such Lender’s having been a Defaulting
Lender or Potential Defaulting Lender.

 

Section 2.18                                Replacement of Lenders.  If any
Lender requests compensation under Section 2.10, or if the Borrower is required
to pay any additional amounts to any Lender or any Governmental Authority for
the account of any Lender pursuant to Section 2.12 and, in each case, such
Lender has declined or is unable to designate a different Applicable Lending
Office, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then
the Borrower may, at its sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Sections 9.01(b) and 9.07), all of its interests, rights
(other than its existing rights to payments pursuant to Section 2.10 or
Section 2.12) and obligations under this Agreement and the other Loan Documents
to an Eligible Assignee designated by the Borrower and approved by the
Administrative Agent (such approval not to be unreasonably withheld) that

 

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shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment) (a “Replacement Lender”); provided that:

 

(a)                                  the Borrower shall have paid to the
Administrative Agent the assignment fee (if any) specified in Section 9.07;

 

(b)                                 such Lender shall have received payment of
an amount equal to the outstanding principal of its Advances, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder and under
the other Loan Documents from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts);

 

(c)                                  in the case of any such assignment
resulting from a claim for compensation under Section 2.10 or payments required
to be made pursuant to Section 2.12, such assignment will result in a reduction
in such compensation or payments thereafter;

 

(d)                                 such assignment does not conflict with
applicable law; and

 

(e)                                  in the case of any assignment resulting
from a Lender becoming a Non-Consenting Lender, the applicable assignee shall
have consented to the applicable amendment, waiver or consent.

 

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.  Each Lender required to make an assignment pursuant to this
Section 2.18 shall promptly execute and deliver an Assignment and Acceptance
with the applicable Replacement Lender.

 

ARTICLE III
CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT

 

Section 3.01                                Conditions Precedent to Initial
Extension of Credit.  The obligation of each Lender to make an Advance or of any
Issuing Bank to issue a Letter of Credit on the occasion of the Initial
Extension of Credit hereunder is subject to the satisfaction of the following
conditions precedent before or concurrently with the Initial Extension of
Credit:

 

(a)                                  The Administrative Agent shall have
received on or before the day of the Initial Extension of Credit the following,
each dated such day (unless otherwise specified), in form and substance
satisfactory to the Administrative Agent (unless otherwise specified) and
(except for the Notes, as to which one original of each shall be sufficient) in
sufficient copies for each Lender Party:

 

(i)                                     A Note duly executed by the Borrower and
payable to the order of each Lender which has requested one.

 

(ii)                                  A security agreement in substantially the
form of Exhibit F hereto (together with each other security agreement and
security agreement supplement delivered pursuant to Section 5.01(j), in each
case as amended, the “Security Agreement”), duly executed by each Loan Party
that owns Borrowing Base Assets, together with:

 

(A)                              acknowledgment copies of proper financing
statements, duly filed on or before the day of the Initial Extension of Credit
under the Uniform Commercial Code of all jurisdictions that the Administrative
Agent may deem necessary or desirable in order to perfect and protect the first
priority liens and security interests created under the Collateral Documents,
covering the Collateral described therein,

 

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(B)                                completed requests for information dated a
recent date, including UCC, judgment, tax, litigation and bankruptcy searches
with respect to each applicable Loan Party, and, in the case of UCC searches,
listing all effective financing statements filed in the jurisdictions referred
to in clause (A) above and in such other jurisdictions specified by the
Administrative Agent that name any Loan Party as debtor, together with copies of
such financing statements,

 

(C)                                evidence of the completion of all other
recordings and filings of or with respect to the Security Agreement that the
Administrative Agent may deem necessary or desirable in order to perfect and
protect the Liens created thereby,

 

(D)                               certified copies of the Management Agreements
and all amendments thereto entered into on or before the Closing Date with
respect to each Borrowing Base Asset;

 

(E)                                 a subordination agreement executed and
delivered by the property manager of each Borrowing Base Asset, and

 

(F)                                 evidence that all other action that the
Collateral Agent may reasonably deem necessary or desirable in order to perfect
and protect the first priority liens and security interests created under the
Security Agreement has been taken (including, without limitation, receipt of
duly executed payoff letters, UCC termination statements and landlords’ and
bailees’ waiver and consent agreements).

 

(iii)                               Deeds of trust, trust deeds and mortgages in
substantially the form of Exhibit G hereto (together with each other deed of
trust, trust deed and mortgage delivered pursuant to Section 5.01(j), in each
case as amended, the “Mortgages”) (with such changes as may be required to
account for local law matters and otherwise satisfactory in form and substance
to the Administrative Agent) covering all Borrowing Base Assets, duly executed
by the appropriate Loan Party, together with:

 

(A)                              evidence that counterparts of the Mortgages
have been duly executed, acknowledged and delivered on or before the day of the
Initial Extension of Credit and are in form suitable for filing or recording in
all filing or recording offices that the Administrative Agent may deem necessary
or desirable in order to create a valid first and subsisting Lien on the
collateral described therein in favor of the Administrative Agent for the
benefit of the Secured Parties and that all required affidavits, tax forms and
filings pertaining to any applicable documentary stamp, intangible and mortgage
recordation taxes have been executed and delivered by all appropriate parties
and are in form suitable for filing with all applicable governmental
authorities,

 

(B)                                fully paid American Land Title Association
Lender’s Extended Coverage title insurance policies (the “Mortgage Policies”) in
form and substance, with endorsements (including zoning endorsements where
available) and in amount acceptable to the Administrative Agent, issued by a
title insurer acceptable to the Administrative Agent, insuring the Mortgages to
be valid first and subsisting Liens on the property described therein, free and
clear of all defects (including, but not limited to, mechanics’ and
materialmen’s Liens) and encumbrances, excepting only Permitted Encumbrances,
and providing for such other affirmative insurance (including endorsements for
future advances under the Loan Documents and for mechanics’ and materialmen’s
Liens) as the Administrative Agent may deem necessary or desirable,

 

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(C)                                American Land Title Association/American
Congress on Surveying and Mapping form surveys for which all necessary fees have
been paid, dated no more than 30 days before the date of their delivery to the
Collateral Agent, certified to the Administrative Agent, the Collateral Agent
and the issuer of the Mortgage Policies in a manner satisfactory to the
Collateral Agent by a land surveyor duly registered and licensed in the States
in which the property described in such surveys is located and acceptable to the
Collateral Agent, showing, as to the Borrowing Base Assets, all buildings and
other improvements, any off-site improvements, the location of any easements,
parking spaces, rights of way, building set-back lines and other dimensional
regulations and the absence of encroachments, either by such improvements or on
to such property, and other defects, other than encroachments and other defects
acceptable to the Collateral Agent, or existing surveys in lieu thereof so long
as each such survey is accompanied by an affidavit of no-change, satisfactory to
the Collateral Agent and sufficient for the applicable title insurer to
eliminate all standard survey-related exceptions to the applicable Mortgage
Policy,

 

(D)                               engineering, soils, seismic, environmental and
other similar reports as to the Borrowing Base Assets, in form and substance and
from professional firms acceptable to the Administrative Agent,

 

(E)                                 estoppel and consent agreements, in form and
substance satisfactory to the Administrative Agent, executed by each of the
lessors of any Borrowing Base Assets subject to a Qualifying Ground Lease, along
with (1) a memorandum of lease in recordable form with respect to such leasehold
interest, executed and acknowledged by the owner of the affected Borrowing Base
Asset, as lessor, or (2) evidence that the applicable lease with respect to such
leasehold interest or memorandum thereof has been recorded in all places
necessary or desirable, in the Administrative Agent’s reasonable judgment, to
give constructive notice to third-party purchasers of such leasehold interest or
(3) if such leasehold interest was acquired or subleased from the holder of a
recorded leasehold interest, the applicable assignment or sublease document,
executed and acknowledged by such holder, in each case in form sufficient to
give such constructive notice upon recordation and otherwise in form
satisfactory to the Administrative Agent,

 

(F)                                 an Appraisal of each Borrowing Base Asset
described in the Mortgages,

 

(G)                                copies of all material licenses, permits and
approvals, including, without limitation, all Healthcare Licenses relating to
each Borrowing Base Asset and, if available, the certificate of occupancy for
each Borrowing Base Asset,

 

(H)                               a zoning report for each Borrowing Base Asset
issued by Planning and Zoning Resources Corp. or another professional firm
acceptable to the Administrative Agent,

 

(I)                                    copies of each Management Agreement,
Qualifying Ground Lease, and all amendments thereto, entered into with respect
to each of the Borrowing Base Assets,

 

(J)                                   copies of all leases (including, without
limitation, all leases with Affiliates, but excluding all Tenancy Leases) and
Material Contracts relating to each of the Borrowing Base Assets,

 

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(K)                               copies of all Liens on each of the Borrowing
Base Assets, including, without limitation, any reciprocal easement agreements,
easements and other items of record, and

 

(L)                                 such other consents, agreements and
confirmations of lessors and third parties as the Administrative Agent may
reasonably deem necessary or desirable and evidence that all other action that
the Collateral Agent may reasonably deem necessary or desirable in order to
create valid first and subsisting Liens on the property described in the
Mortgages has been taken.

 

(iv)                              This Agreement duly executed by the Loan
Parties and the other parties thereto.

 

(v)                                 Certified copies of the resolutions of the
Board of Directors of the Borrower on its behalf and on behalf of each Loan
Party for which it is the ultimate signatory approving the transactions
contemplated by the Loan Documents and each Loan Document to which it or such
Loan Party is or is to be a party, and of all documents evidencing other
necessary corporate action and governmental and other third party approvals and
consents, if any, with respect to the transactions under the Loan Documents and
each Loan Document to which it or such Loan Party is or is to be a party.

 

(vi)                              A copy of a certificate of the Secretary of
State (or equivalent authority) of the jurisdiction of incorporation,
organization or formation of each Loan Party and of each general partner or
managing member (if any) of each Loan Party, dated reasonably near the Closing
Date, certifying, if and to the extent such certification is generally available
for entities of the type of such Loan Party, (A) as to a true and correct copy
of the charter, certificate of limited partnership, limited liability company
agreement or other organizational document of such Loan Party, general partner
or managing member, as the case may be, and each amendment thereto on file in
such Secretary’s office, (B) that (1) such amendments are the only amendments to
the charter, certificate of limited partnership, limited liability company
agreement or other organizational document, as applicable, of such Loan Party,
general partner or managing member, as the case may be, on file in such
Secretary’s office, (2) such Loan Party, general partner or managing member, as
the case may be, has paid all franchise taxes to the date of such certificate
and (C) such Loan Party, general partner or managing member, as the case may be,
is duly incorporated, organized or formed and in good standing or presently
subsisting under the laws of the jurisdiction of its incorporation, organization
or formation.

 

(vii)                           A copy of a certificate of the Secretary of
State (or equivalent authority) of each jurisdiction in which any Loan Party or
any general partner or managing member of a Loan Party owns or leases property
or in which the conduct of its business requires it to qualify or be licensed as
a foreign corporation except where the failure to so qualify or be licensed
could not reasonably be expected to result in a Material Adverse Effect, dated
reasonably near (but prior to) the Closing Date, stating, with respect to each
such Loan Party, general partner or managing member, that such Loan Party,
general partner or managing member, as the case may be, is duly qualified and in
good standing as a foreign corporation, limited partnership or limited liability
company in such State and has filed all annual reports required to be filed to
the date of such certificate.

 

(viii)                        A certificate of each Loan Party and of each
general partner or managing member (if any) of each Loan Party, signed on behalf
of such Loan Party, general partner or managing member, as applicable, by its
President or a Vice President (or other Responsible Officer) and its Secretary
or any Assistant Secretary (or those of its general partner or

 

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managing member, if applicable), dated the Closing Date (the statements made in
which certificate shall be true on and as of the date of the Initial Extension
of Credit), certifying as to (A) the absence of any amendments to the
constitutive documents of such Loan Party, general partner or managing member,
as applicable, since the date of the certificate referred to in
Section 3.01(a)(vi), (B) a true and correct copy of the bylaws, operating
agreement, partnership agreement or other governing document of such Loan Party,
general partner or managing member, as applicable, as in effect on the date on
which the resolutions referred to in Section 3.01(a)(v) were adopted and on the
date of the Initial Extension of Credit, (C) the due incorporation, organization
or formation and good standing or valid existence of such Loan Party, general
partner or managing member, as applicable, as a corporation, limited liability
company or partnership organized under the laws of the jurisdiction of its
incorporation, organization or formation and the absence of any proceeding for
the dissolution or liquidation of such Loan Party, general partner or managing
member, as applicable, (D) the truth of the representations and warranties
contained in the Loan Documents as though made on and as of the date of the
Initial Extension of Credit and (E) the absence of any event occurring and
continuing, or resulting from the Initial Extension of Credit, that constitutes
a Default.  Notwithstanding the foregoing, items (D) and (E) in the previous
sentence may be certified in a separate officer’s certificate by the Treasurer
and Chief Financial Officer of each Loan Party, or general partner or managing
member (if any) of each Loan Party.

 

(ix)                                A certificate of the Secretary or an
Assistant Secretary of each Loan Party (or Responsible Officer of the general
partner or managing member of any Loan Party) and of each general partner or
managing member (if any) of each Loan Party certifying the names and true
signatures of the officers of such Loan Party, or of the general partner or
managing member of such Loan Party, authorized to sign each Loan Document to
which it is or is to be a party and the other documents to be delivered
hereunder and thereunder.

 

(x)                                   Such financial, business and other
information regarding each Loan Party and its Subsidiaries as the Lender Parties
shall have reasonably requested.

 

(xi)                                Evidence of insurance (which may consist of
binders or certificates of insurance) naming the Administrative Agent as loss
payee and additional insured with such responsible and reputable insurance
companies or associations, and in such amounts and covering such risks, as is
satisfactory to the Lender Parties, including, without limitation, the insurance
required by the terms of the Security Agreement and the Mortgages.

 

(xii)                             An opinion of Sullivan & Worcester LLP, New
York counsel for the Loan Parties, with respect to the matters (and in
substantially the form) set forth in Exhibit E-1 hereto and as to such other
matters as any Lender Party through the Administrative Agent may reasonably
request

 

(xiii)                          An opinion of local counsel for the Loan Parties
(A) in the states in which the Borrowing Base Assets are located, in
substantially the form of Exhibit E-2 hereto, and (B) in the states in which the
Loan Parties are organized or formed, in substantially the form of Exhibit E-3
hereto, in each case covering such other matters as any Lender Party through the
Administrative Agent may reasonably request

 

(xiv)                         An opinion of Venable LLP, Maryland counsel for
the Loan Parties, with respect to the matters (and in substantially the form)
set forth in Exhibit E-3 hereto and as to such other matters as any Lender Party
through the Administrative Agent may reasonably request.

 

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(xv)                            An opinion of Shearman & Sterling LLP, counsel
for the Administrative Agent, in form and substance satisfactory to the
Administrative Agent.

 

(xvi)                         A Notice of Borrowing or Notice of Issuance, as
applicable, relating to the Initial Extension of Credit.

 

(xvii)                      A certificate signed by a Responsible Officer of the
Borrower, dated the Closing Date, stating that after giving effect to the
Initial Extension of Credit, the Borrower shall be in compliance with the
covenants contained in Section 5.04, together with supporting information in
form satisfactory to the Administrative Agent showing the computations used in
determining compliance with such covenants.

 

(xviii)                   (i) Evidence as to whether each Borrowing Base Asset
is in an area designated by the Federal Emergency Management Agency as having
special flood or mud slide hazards (a “Flood Hazard Property”) pursuant to a
standard flood hazard determination form ordered and received by the
Administrative Agent, and (ii) if such Borrowing Base Asset is a Flood Hazard
Property, (A) evidence as to whether the community in which such Borrowing Base
Asset is located is participating in the National Flood Insurance Program,
(B) the applicable Guarantor’s written acknowledgment of receipt of written
notification from the Administrative Agent as to the fact that such Borrowing
Base Asset is a Flood Hazard Property and as to whether the community in which
each such Flood Hazard Property is located is participating in the National
Flood Insurance Program and (C) copies of the applicable Guarantor’s application
for a flood insurance policy plus proof of premium payment, a declaration
page confirming that flood insurance has been issued, or such other evidence of
flood insurance satisfactory to the Administrative Agent and naming the
Administrative Agent as sole loss payee on behalf of the Secured Parties.

 

(b)                                 The Lender Parties shall be satisfied with
the corporate and legal structure and capitalization of each Loan Party and its
Subsidiaries, including the terms and conditions of the charter and bylaws,
operating agreement, partnership agreement or other governing document of each
of them.

 

(c)                                  The Lender Parties shall be satisfied that
all Existing Debt, other than Surviving Debt, has been prepaid, redeemed or
defeased in full or otherwise satisfied and extinguished and that all Surviving
Debt shall be on terms and conditions satisfactory to the Lender Parties.

 

(d)                                 Before and after giving effect to the
transactions contemplated by the Loan Documents, there shall have occurred no
Material Adverse Change since December 31, 2011.

 

(e)                                  There shall exist no action, suit,
investigation, litigation or proceeding affecting any Loan Party or any of its
Subsidiaries pending or threatened before any court, governmental agency or
arbitrator that (i) could reasonably be expected to result in a Material Adverse
Effect other than the matters described on Schedule 4.01(f) hereto (the
“Material Litigation”) or (ii) purports to affect the legality, validity or
enforceability of any Loan Document or the consummation of the transactions
contemplated thereby, and there shall have been no adverse change in the status,
or financial effect on any Loan Party or any of its Subsidiaries, of the
Material Litigation from that described on Schedule 4.01(f) hereto.

 

(f)                                    All governmental and third party consents
and approvals necessary in connection with the transactions contemplated by the
Loan Documents shall have been obtained (without the imposition of any
conditions that are not acceptable to the Lender Parties) and shall remain in
effect, and no law or regulation shall be applicable in the reasonable judgment
of the Lender Parties that

 

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restrains, prevents or imposes materially adverse conditions upon the
transactions contemplated by the Loan Documents.

 

(g)                                 The Borrower shall have paid all accrued
fees of the Agents and the Lender Parties and all reasonable, out-of-pocket
expenses of the Agents (including the reasonable fees and expenses of counsel to
the Administrative Agent).

 

For avoidance of doubt, to the extent that with respect to the Pending Borrowing
Base Assets the Borrower shall elect to satisfy any of the foregoing conditions
precedent (in each case which are susceptible of being so satisfied) by
delivering Collateral Deliverables with respect thereto to the Agents within 90
days after the Closing Date pursuant to the definition of Borrowing Base Assets,
then notwithstanding anything to the contrary contained in this Section 3.01,
the Borrower shall not be required to satisfy such conditions before or
concurrently with the Initial Extension of Credit pursuant to this Section 3.01.

 

Section 3.02                                Conditions Precedent to Each
Borrowing, Issuance, Renewal and Extension.  (a)  The obligation of each Lender
to make an Advance (other than a Letter of Credit Advance made by an Issuing
Bank or a Lender pursuant to Section 2.03(c) and a Swing Line Advance made by a
Lender pursuant to Section 2.02(b)) on the occasion of each Borrowing (including
the initial Borrowing) and the obligation of each Issuing Bank to issue a Letter
of Credit (including the initial issuance) or renew a Letter of Credit, the
extension of Commitments pursuant to Section 2.16 and the right of the Borrower
to request a Swing Line Borrowing shall be subject to the satisfaction of the
conditions set forth in Section 3.01 (to the extent not previously satisfied
pursuant to that Section) and such further conditions precedent that on the date
of such Borrowing, issuance, renewal or extension (a) the following statements
shall be true and the Administrative Agent shall have received for the account
of such Lender, the Swing Line Bank or such Issuing Bank (w) a Notice of
Borrowing or Notice of Issuance, as applicable, and a Borrowing Base
Certificate, in each case dated the date of such Borrowing, issuance, renewal or
extension and, in the case of the Borrowing Base Certificate, demonstrating that
the Facility Available Amount as of such date (calculated on a pro forma basis
after giving effect to such Borrowing or issuance) will be greater than or equal
to the Facility Exposure, (x) all Collateral Deliverables and all items
described in the definition of “BBA Proposal Package” herein (to the extent not
previously delivered with respect to each Borrowing Base Asset pursuant to
Section 3.01, Section 5.01(k) or this Section 3.02), (y) in the case of an
addition of any Person as an Additional Guarantor, all Guarantor Deliverables
(to the extent not previously delivered pursuant to Section 3.01,
Section 5.01(k) or this Section 3.02), and (z) a certificate signed by a
Responsible Officer of the Borrower, dated the date of such Borrowing, issuance,
renewal or extension, stating that:

 

(i)                                     the representations and warranties
contained in each Loan Document are true and correct on and as of such date
(except that those that expressly relate to a prior date shall be true as though
made on and as of such prior date), before and after giving effect to (A) such
Borrowing, issuance, renewal or extension and (B) in the case of any Borrowing
or issuance or renewal, the application of the proceeds therefrom;

 

(ii)                                  no Default or Event of Default has
occurred and is continuing, or would result from (A) such Borrowing, issuance,
renewal or extension or (B) in the case of any Borrowing or issuance or renewal,
from the application of the proceeds therefrom; and

 

(iii)                               for each Revolving Credit Advance, or Swing
Line Advance made by the Swing Line Bank or issuance or renewal of any Letter of
Credit, (A) the Facility Available Amount equals or exceeds the Facility
Exposure that will be outstanding after giving effect to such Advance, issuance
or renewal, respectively, and (B) before and after giving effect to such
Advance, issuance or renewal, the Borrower shall be in compliance with the
covenants contained in Section 5.04, together with supporting information in
form satisfactory to the Administrative Agent showing the computations used in
determining compliance with such covenants;

 

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and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Lender Party through the Administrative Agent may
reasonably request.

 

(b)                                 In addition to the other conditions
precedent herein set forth, if any Lender becomes, and during the period it
remains, a Defaulting Lender or a Potential Defaulting Lender, the Issuing Bank
will not be required to issue any Letter of Credit or to amend any outstanding
Letter of Credit and the Swing Line Bank will not be required to make any Swing
Line Advance, unless the Issuing Bank or the Swing Line Bank, as the case may
be, is satisfied that any exposure that would result therefrom is fully covered
or eliminated by any combination satisfactory to the Issuing Bank or Swing Line
Bank of the following:

 

(i)                                     in the case of a Defaulting Lender, the
Letter of Credit Exposure and the Swing Line Exposure of such Defaulting Lender
is reallocated, as to outstanding and future Letters of Credit and Swing Line
Advances, to the Non-Defaulting Lenders as provided in clause (i) of
Section 2.17(b);

 

(ii)                                  in the case of a Defaulting Lender or a
Potential Defaulting Lender, without limiting the provisions of Section 2.17(a),
the Borrower Cash Collateralizes the obligations of the Borrower in respect of
such Letter of Credit or Swing Line Advance in an amount at least equal to the
aggregate amount of the unreallocated obligations (contingent or otherwise) of
such Defaulting Lender or Potential Defaulting Lender in respect of such Letter
of Credit or Swing Line Advance, or makes other arrangements satisfactory to the
Administrative Agent, the Issuing Bank and the Swing Line Bank in their sole
discretion to protect them against the risk of non-payment by such Defaulting
Lender or Potential Defaulting Lender; and

 

(iii)                               in the case of a Defaulting Lender or a
Potential Defaulting Lender, then in the case of a proposed issuance of a Letter
of Credit or making of a Swing Line Advance, by an instrument or instruments in
form and substance satisfactory to the Administrative Agent, and to the Issuing
Bank and the Swing Line Bank, as the case may be, the Borrower agrees that the
face amount of such requested Letter of Credit or the principal amount of such
requested Swing Line Advance will be reduced by an amount equal to the
unreallocated, non-Cash Collateralized portion thereof as to which such
Defaulting Lender or Potential Defaulting Lender would otherwise be liable, in
which case the obligations of the Non-Defaulting Lenders in respect of such
Letter of Credit or Swing Line Advance will, subject to the first proviso below,
be on a pro rata basis in accordance with the Commitments of the Non-Defaulting
Lenders, and the pro rata payment provisions of Section 2.11(f) will be deemed
adjusted to reflect this provision;

 

provided that (a) the sum of each Non-Defaulting Lender’s total Revolving Credit
Exposure, total Swing Line Exposure and total Letter of Credit Exposure may not
in any event exceed the Commitment of such Non-Defaulting Lender, and
(b) neither any such reallocation nor any payment by a Non-Defaulting Lender
pursuant thereto nor any such Cash Collateralization or reduction will
constitute a waiver or release of any claim the Borrower, the Administrative
Agent, the Issuing Bank, the Swing Line Bank or any other Lender may have
against such Defaulting Lender, or cause such Defaulting Lender or Potential
Defaulting Lender to be a Non-Defaulting Lender.

 

Section 3.03                                Determinations Under Section 3.01
and 3.02.  For purposes of determining compliance with the conditions specified
in Sections 3.01 and 3.02, each Lender Party 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 the Lender Parties unless an officer of the Administrative Agent
responsible for the transactions contemplated by the Loan Documents shall have
received notice from such Lender Party prior to the Initial Extension of Credit
specifying its objection thereto and, if the Initial Extension of Credit
consists of a Borrowing, such Lender Party shall not have made available to the
Administrative Agent such Lender Party’s ratable portion of such Borrowing.

 

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES

 

Section 4.01                                Representations and Warranties of
the Loan Parties.  Each Loan Party represents and warrants as follows:

 

(a)                                  Organization and Powers; Qualifications and
Good Standing.  Each Loan Party and each of its Subsidiaries and each general
partner or managing member, if any, of each Loan Party (i) is a corporation,
limited liability company or partnership duly incorporated, organized or formed,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, organization or formation, (ii) is duly qualified and in good
standing as a foreign corporation, limited liability company or partnership in
each other jurisdiction in which it owns or leases property or in which the
conduct of its business requires it to so qualify or be licensed except where
the failure to so qualify or be licensed could not reasonably be expected to
result in a Material Adverse Effect and (iii) has all requisite corporate,
limited liability company or partnership power and authority to own or lease and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted.  All of the outstanding Equity Interests in the
Borrower have been validly issued, are fully paid and non-assessable.

 

(b)                                 Subsidiaries.  Set forth on
Schedule 4.01(b) hereto is a complete and accurate list of all Subsidiaries of
each Loan Party, showing as of the date hereof (as to each such Subsidiary) the
jurisdiction of its incorporation, organization or formation, the number of
shares (or the equivalent thereof) of each class of its Equity Interests
authorized on the date hereof and the percentage of each such class of its
Equity Interests owned (directly or indirectly) by such Loan Party.  As of the
date hereof, there are no outstanding options, warrants, rights of conversion or
purchase and similar rights with respect to the shares of any Subsidiary of any
Loan Party.  All of the outstanding Equity Interests in each Loan Party’s
Subsidiaries has been validly issued, are fully paid and non-assessable and to
the extent owned by such Loan Party or one or more of its Subsidiaries, are
owned by such Loan Party or Subsidiaries free and clear of all Liens.

 

(c)                                  Due Authorization; No Conflict.  The
execution and delivery by each Loan Party and of each general partner or
managing member (if any) of each Loan Party of each Loan Document to which it is
or is to be a party, and the performance of its obligations thereunder, and the
consummation of the transactions contemplated by the Loan Documents, are within
the corporate, limited liability company or partnership powers of such Loan
Party, general partner or managing member, have been duly authorized by all
necessary corporate, limited liability company or partnership action, and do not
(i) contravene the charter or bylaws, operating agreement, partnership agreement
or other governing document of such Loan Party, general partner or managing
member, (ii) violate any law, rule, regulation (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve System), order,
writ, judgment, injunction, decree, determination or award, (iii) conflict with
or result in the breach of, or constitute a default or require any payment to be
made under, any Material Contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument binding on or affecting any Loan Party, any of
its Subsidiaries or any of their properties, or any general partner or managing
member of any Loan Party or (iv) except for the Liens created under the Loan
Documents, result in or require the creation or imposition of any Lien upon or
with respect to any of the properties of any Loan Party or any of its
Subsidiaries.  No Loan Party or any of its Subsidiaries is in violation of any
such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or in breach of any such contract, loan agreement,
indenture, mortgage, deed of trust, lease or other instrument, the violation or
breach of which could reasonably be expected to result in a Material Adverse
Effect.

 

(d)                                 Authorizations and Consents.  Except for
those filings and/or other actions listed on Schedule 4.01(d), and the approval
of any federal or state licensing agencies or permitting boards that

 

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may be required in connection with any change of ownership or other state or
federal review process triggered by an exercise of certain remedies available to
the Administrative Agent or the Secured Parties under this Agreement, the
Guaranty or the other Loan Documents, no authorization or approval or other
action by, and no notice to or filing with, any Governmental Authority or
regulatory body or any other third party is required for (i) the due execution,
delivery, recordation, filing or performance by any Loan Party or any general
partner or managing member of any Loan Party of any Loan Document to which it is
or is to be a party or for the consummation of the transactions contemplated by
the Loan Documents, (ii) the grant by any Loan Party (or the general partner or
managing member of such Loan Party) of the Liens granted by it pursuant to the
Collateral Documents, (iii) the perfection or maintenance of the Liens created
under the Collateral Documents (including the first priority nature thereof) or
(iv) the exercise by any Agent, the Collateral Agent or any Lender Party of its
rights under the Loan Documents or the remedies in respect of the Collateral
pursuant to the Collateral Documents, except for (A) authorizations, approvals,
actions, notices and filings which have been duly obtained, taken, given or made
and are in full force and effect and (B) prior to the date on which all
Collateral Deliverables in respect of a Pending Borrowing Base Asset are
delivered as contemplated in the definition of Borrowing Base Assets, any
authorizations, approvals, actions, notices and filings in respect of such
Pending Borrowing Base Asset.

 

(e)                                  Binding Obligation.  This Agreement has
been, and each other Loan Document when delivered hereunder will have been, duly
executed and delivered by each Loan Party party thereto.  This Agreement is, and
each other Loan Document when delivered hereunder will be, the legal, valid and
binding obligation of each Loan Party party thereto, enforceable against such
Loan Party in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditor’s rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.

 

(f)                                    Litigation.  There is no action, suit,
investigation, litigation or proceeding affecting any Loan Party or any of its
Subsidiaries or any general partner or managing member (if any) of any Loan
Party, including any Environmental Action, pending or threatened before any
court, governmental agency or arbitrator that (i) could reasonably be expected
to result in a Material Adverse Effect (other than the Material Litigation) or
(ii) purports to affect the legality, validity or enforceability of any Loan
Document or the consummation of the transactions contemplated by the Loan
Documents, and there has been no adverse change in the status, or financial
effect on any Loan Party or any of its Subsidiaries or any general partner or
managing member (if any) of any Loan Party, of the Material Litigation from that
described on Schedule 4.01(f) hereto.

 

(g)                                 Financial Condition.  The Consolidated
balance sheets of the Borrower as at December 31, 2010 and the related
Consolidated statements of income and Consolidated statements of cash flows of
the Borrower for the fiscal year then ended, accompanied by unqualified opinions
of Ernst & Young LLP, and the Consolidated balance sheets of the Borrower as at
December 31, 2011, and the related Consolidated statements of income and
Consolidated statements of cash flows of the Borrower for the 12 months then
ended, copies of which have been furnished to each Lender Party, fairly present
the Consolidated financial condition of the Borrower as at such dates and the
Consolidated results of operations of the Borrower for the periods ended on such
dates, all in accordance with generally accepted accounting principles applied
on a consistent basis.  Since December 31, 2011, there has been no Material
Adverse Change.

 

(h)                                 Forecasts.  The Consolidated forecasted
balance sheets, statements of income and statements of cash flows of the
Borrower and its Subsidiaries delivered to the Lender Parties pursuant to
Section 3.01(a)(x) or 5.03 were prepared in good faith on the basis of the
assumptions stated therein, which assumptions were fair in light of the
conditions existing at the time of delivery of such forecasts, and represented,
at the time of delivery, the Borrower’s best estimate of its future financial
performance.

 

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(i)                                     Full Disclosure.  Neither the
Information Memorandum nor any other information, exhibit or report furnished by
or on behalf of any Loan Party to any Agent or any Lender Party in connection
with the negotiation and syndication of the Loan Documents or pursuant to the
terms of the Loan Documents (in each case, as modified or supplemented by other
information so furnished) contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements made therein
not misleading.  The Loan Parties have disclosed to the Administrative Agent, in
writing, any and all existing facts that have or may have (to the extent any of
the Loan Parties can now reasonably foresee) a Material Adverse Effect
(including the likelihood of material reductions in the rates of reimbursement
currently payable to the Borrower and its Subsidiaries by the Medicare and/or
Medicaid programs).

 

(j)                                     Margin Regulations.  No Loan Party is
engaged in the business of extending credit for the purpose of purchasing or
carrying Margin Stock, and no proceeds of any Advance or drawings under any
Letter of Credit will be used to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock.

 

(k)                                  Certain Governmental Regulations.  Neither
any Loan Party nor any of its Subsidiaries nor any general partner or managing
member of any Loan Party, as applicable, is an “investment company”, or
“promoter” or “principal underwriter” for, an “investment company”, as such
terms are defined in the Investment Company Act of 1940, as amended.  Without
limiting the generality of the foregoing, each Loan Party and each of its
Subsidiaries and each general partner or managing member of any Loan Party, as
applicable:  (i) is primarily engaged, directly or through a wholly-owned
subsidiary or subsidiaries, in a business or businesses other than that of
(A) investing, reinvesting, owning, holding or trading in securities or
(B) issuing face-amount certificates of the installment type; (ii) is not
engaged in, does not propose to engage in and does not hold itself out as being
engaged in the business of (A) investing, reinvesting, owning, holding or
trading in securities or (B) issuing face-amount certificates of the installment
type; (iii) does not own or propose to acquire investment securities (as defined
in the Investment Company Act of 1940, as amended) having a value exceeding
forty percent (40%) of the value of such company’s total assets (exclusive of
government securities and cash items) on an unconsolidated basis; (iv) has not
in the past been engaged in the business of issuing face-amount certificates of
the installment type; and (v) does not have any outstanding face-amount
certificates of the installment type.  Neither the making of any Advances, nor
the issuance of any Letters of Credit, nor the application of the proceeds or
repayment thereof by the Borrower, nor the consummation of the other
transactions contemplated by the Loan Documents, will violate any provision of
any such Act or any rule, regulation or order of the Securities and Exchange
Commission thereunder.

 

(l)                                     Materially Adverse Agreements.  Neither
any Loan Party nor any of its Subsidiaries is a party to any indenture, loan or
credit agreement or any lease or other agreement or instrument or subject to any
charter, corporate, partnership, membership or other governing restriction that
could reasonably be expected to result in a Material Adverse Effect (absent a
material default under a Material Contract).

 

(m)                               Perfection and Priority of Security
Interests.  Upon the completion of all filings and other actions contemplated by
this Agreement, all filings, recordings and other actions necessary to perfect
and protect the security interest in the Collateral created under the Collateral
Documents will have been duly made or taken and will be in full force and
effect, and the Collateral Documents will create in favor of the Collateral
Agent for the benefit of the Secured Parties a valid and, together with such
filings, recordings and other actions, perfected first priority security
interest in the Collateral, securing the payment of the Secured Obligations, and
all filings, recordings and other actions necessary to perfect and protect such
security interest will have been duly taken.  The Guarantors are the legal and
beneficial owners of the Collateral free and clear of any Lien, except for
Permitted Liens and the liens and security interests created under the Loan
Documents.

 

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(n)                                 Existing Debt.  Set forth on
Schedule 4.01(n) hereto is a complete and accurate list of all Existing Debt
(other than Surviving Debt), showing as of the date hereof the obligor and the
principal amount outstanding thereunder immediately prior to the Closing Date.

 

(o)                                 Surviving Debt.  Set forth on
Schedule 4.01(o) hereto is a complete and accurate list of all Surviving Debt,
showing as of the date hereof the obligor and the principal amount outstanding
thereunder, the maturity date thereof and the amortization schedule therefor.

 

(p)                                 Liens.  Set forth on Schedule 4.01(p) hereto
is a complete and accurate list of (i) all Liens on the property or assets of
any Loan Party that directly or indirectly owns any Borrowing Base Asset, and
(ii) all Liens on the property or assets of any Loan Party or any of its
Subsidiaries in excess of $1,000,000.00 securing Debt for Borrowed Money; in
each case showing as of the date hereof the lienholder thereof, the principal
amount of the obligations secured thereby and the property or assets of such
Loan Party or such Subsidiary subject thereto, provided however, that easements
and other real property restrictions, covenants and conditions of record
(exclusive of Liens securing Debt) shall not be listed on Schedule 4.01(p).

 

(q)                                 Real Property.  (i)  Set forth on Part I of
Schedule 4.01(q) hereto is a complete and accurate list of all real property
having a fair market value reasonably estimated by the applicable Loan Party to
be in excess of $1,000,000, owned in fee by any Loan Party or any of its
Subsidiaries as of the date hereof showing the street address, state, record
owner and gross book value thereof.  Each such Loan Party or Subsidiary has
good, marketable and insurable fee simple title to such Real Property, free and
clear of all Liens except for Liens permitted by Section 5.02(a).

 

(ii)                                  Set forth on Part II of
Schedule 4.01(q) hereto is a complete and accurate list of all leases of Real
Property under which any Loan Party or any of its Subsidiaries is the lessee as
of the date hereof showing the street address, state, lessor, lessee, expiration
date and annual rental cost thereof.  Each such lease is the legal, valid and
binding obligation of the lessor thereof, enforceable in accordance with its
terms.

 

(iii)                               Each Borrowing Base Asset is operated and
managed by an Approved Manager pursuant to a Management Agreement listed on
Part III of Schedule 4.01(q).

 

(iv)                              Each Borrowing Base Asset satisfies all
Borrowing Base Conditions, other than, in connection with the initial Borrowing,
the Pending Borrowing Base Assets for which the Borrower shall have up to 90
days after the Closing Date to satisfy the Borrowing Base Conditions, provided,
that failure to satisfy the Borrowing Base Conditions with respect to any
Pending Borrowing Base Asset within such 90 day period shall not constitute a
violation of this Section 4.01(q) so long as the Collateral Deliverables for
such Pending Borrowing Base Asset have not been received by the Administrative
Agent and the Borrowing Base Value for such Pending Borrowing Base Asset remains
$0.00 in accordance with the proviso in the definition of “Total Borrowing Base
Value”; in the event the Collateral Deliverables for a Pending Borrowing Base
Asset are not received within such 90 day period, each such Pending Borrowing
Base Asset shall cease to be a Borrowing Base Asset under this Agreement upon
the expiration of such 90 day period.

 

(r)                                    Environmental Matters.  (i)  Except as
otherwise set forth on Part I of Schedule 4.01(r) hereto, or as could not
reasonably be expected to have a Material Adverse Effect, the operations and
properties of each Loan Party and each of its Subsidiaries comply in all
material respects with all applicable Environmental Laws and Environmental
Permits, all past material non-compliance with such Environmental Laws and
Environmental Permits has been resolved without ongoing material obligations or
costs.  To the knowledge of each Loan Party and its Subsidiaries, no
circumstances exist that could be reasonably likely to (A) form the basis of an
Environmental Action

 

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against any Loan Party or any of its Subsidiaries or any of their properties
that could have a Material Adverse Effect or (B) cause any such property that is
a Borrowing Base Asset to be subject to any material restrictions on ownership,
occupancy, use or transferability under any Environmental Law.

 

(ii)                                  Except as otherwise set forth on Part II
of Schedule 4.01(r) hereto or as could not reasonably be expected to have a
Material Adverse Effect; to the knowledge of the Loan Parties none of the
properties currently or formerly owned or operated by any Loan Party or any of
its Subsidiaries is listed or proposed for listing on the NPL or on the CERCLIS
or any analogous foreign, state or local list or is adjacent to any such listed
property; to the knowledge of the Loan Parties, there are no underground or
above ground storage tanks or any surface impoundments, septic tanks, pits,
sumps or lagoons in which Hazardous Materials are being or have been treated,
stored or disposed on any property currently owned or operated by any Loan Party
or any of its Subsidiaries other than in compliance with applicable law; to the
knowledge of the Loan Parties, there is no asbestos or asbestos-containing
material on any property currently owned or operated by any Loan Party or any of
its Subsidiaries except for any asbestos-containing material that is being
managed pursuant to, and in compliance with, an operations and maintenance plan
(if required by Environmental Law) and that does not currently require removal,
remediation, abatement or encapsulation under Environmental Law; and, to the
knowledge of each Loan Party and its Subsidiaries, Hazardous Materials have not
been released, discharged or disposed of in violation of any Environmental Law
or Environmental Permit on any property currently owned or operated by any Loan
Party or any of its Subsidiaries or, to the knowledge of each Loan Party and its
Subsidiaries, during the period of their ownership or operation thereof, on any
property formerly owned or operated by any Loan Party or any of its
Subsidiaries.

 

(iii)                               Except as otherwise set forth on Part III of
Schedule 4.01(r) hereto, neither any Loan Party nor any of its Subsidiaries is
undertaking, and has not completed, either individually or together with other
potentially responsible parties, any investigation or assessment or remedial or
response action relating to any actual or threatened release, discharge or
disposal of Hazardous Materials at any site, location or operation, either
voluntarily or pursuant to the order of any governmental or regulatory authority
or the requirements of any Environmental Law, which in any such case could
reasonably be expected to have a Material Adverse Effect; all Hazardous
Materials generated, used, treated, handled or stored at, or transported to or
from, any property currently or formerly owned or operated by any Loan Party or
any of its Subsidiaries have been disposed of in a manner not reasonably
expected to result in a Material Adverse Effect; and, with respect to any
property formerly owned or operated by any Loan Party or any of its
Subsidiaries, all Hazardous Materials generated, used, treated, handled, stored
or transported by or, to the knowledge of each Loan Party and its Subsidiaries,
on behalf of any Loan Party or any of its Subsidiaries have been disposed of in
a manner that could not reasonably be expected to result in a Material Adverse
Effect.

 

(s)                                  Compliance with Laws.  Each Loan Party and
each Subsidiary is in compliance with the requirements of all laws, rules and
regulations (including, without limitation, the Securities Act and the
Securities Exchange Act, and the applicable rules and regulations thereunder,
state securities law and “Blue Sky” laws) applicable to it and its business,
where the failure to so comply could reasonably be expected to result in a
Material Adverse Effect.

 

(t)                                    Force Majeure.  Neither the business nor
the properties of any Loan Party or any of its Subsidiaries are affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) that could reasonably be expected
to result in a Material Adverse Effect.

 

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(u)                                 Loan Parties’ Credit Decisions.  Each Loan
Party has, independently and without reliance upon the Administrative Agent or
any other Lender Party and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement (and in the case of the Guarantors, to give the guaranty under this
Agreement) and each other Loan Document to which it is or is to be a party, and
each Loan Party has established adequate means of obtaining from each other Loan
Party on a continuing basis information pertaining to, and is now and on a
continuing basis will be completely familiar with, the business, condition
(financial or otherwise), operations, performance, properties and prospects of
such other Loan Party.

 

(v)                                 Solvency.  Each Loan Party is, individually
and together with its Subsidiaries, Solvent.

 

(w)                               Sarbanes-Oxley.  No Loan Party has made any
extension of credit to any of its directors or executive officers in
contravention of any applicable restrictions set forth in Section 402(a) of
Sarbanes-Oxley.

 

(x)                                   ERISA Matters.  (i)  Set forth on
Schedule 4.01(x) hereto is a complete and accurate list of all Plans and Welfare
Plans.

 

(ii)                                  No ERISA Event has occurred within the
preceding five plan years or is reasonably expected to occur with respect to any
Plan that has resulted in or is reasonably expected to result in a material
liability of any Loan Party or any ERISA Affiliate.

 

(iii)                               Schedule B (Actuarial Information) to the
most recent annual report (Form 5500 Series) for each Plan, copies of which have
been filed with the Internal Revenue Service and furnished to the Lender
Parties, is complete and accurate and fairly presents the funding status of such
Plan as of the date of such Schedule B, and since the date of such Schedule B
there has been no material adverse change in such funding status.

 

(iv)                              Neither any Loan Party nor any ERISA Affiliate
has incurred or is reasonably expected to incur any Withdrawal Liability to any
Multiemployer Plan.

 

(v)                                 Neither any Loan Party nor any ERISA
Affiliate has been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated, within the
meaning of Title IV of ERISA, and no such Multiemployer Plan is reasonably
expected to be in reorganization or to be terminated, within the meaning of
Title IV of ERISA.

 

(y)                                 Healthcare Matters.  (i)  Except as set
forth on Schedule 4.01(y) or except as would not reasonably be expected to have
a Material Adverse Effect, the Borrower, each Subsidiary thereof, each
Healthcare Asset and each Healthcare Service has obtained and maintains in full
force and effect all Healthcare Licenses, that it or they, as the case may be,
are required to obtain by any Healthcare Requirement.

 

(ii)                                  Except as set forth on Schedule 4.01(y) or
except as would not reasonably be expected to have a Material Adverse Effect,
each Healthcare Asset and Healthcare Service is duly licensed as a
skilled-nursing facility, assisted living facility, independent living facility,
hospice, or home health agency, as applicable, as and if required by any
Healthcare Requirements.

 

(iii)                               Except as set forth on Schedule 4.01(y) or
except as would not reasonably be expected to have a Material Adverse Effect,
none of the Borrower or any of its Subsidiaries has applied to reduce the number
of licensed or certified beds of any Borrowing Base Asset,

 

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including beds authorized for use in Medicare, Medicaid, Tricare, Veteran’s
Administration, any other Federal or state healthcare reimbursement program, or
a managed care company, insurance company, and/or any other third-party payor
arrangement, plan or program, or to move or transfer the right to any and all of
the licensed or certified beds of any Borrowing Base Asset to any other location
or to amend or otherwise change any Borrowing Base Asset and/or the number of
beds approved by the applicable Governmental Authority or if beds are not
required to be licensed or certified, to reduce the number of available beds,
and, to the knowledge of the Borrower and the other Loan Parties, there are no
proceedings or actions pending or contemplated to reduce the number of licensed
or certified beds or, if not required to be licensed or certified, to reduce the
number of available beds of any Borrowing Base Asset.  The existing number of
licensed, certified and/or available bed capacity of each Borrowing Base Asset
as of the Closing Date is listed on Schedule II hereto.

 

(iv)                              Except as set forth on Schedule 4.01(y) or
except as would not reasonably be expected to have a Material Adverse Effect,
each Healthcare License with respect to a Borrowing Base Asset (A) has not been
and will not be transferred to any new location, (B) is held free from
restrictions or known conflicts that would materially impair the use or
operation of the applicable Borrowing Base Asset as intended, and (C) is not
provisional, probationary, or restricted in any way.

 

(v)                                 Except as set forth on Schedule 4.01(y) or
except as would not reasonably be expected to have a Material Adverse Effect,
neither the Borrower nor any Subsidiary thereof has taken any action to rescind,
withdraw, revoke, materially amend, modify, supplement or otherwise materially
alter the nature, tenor or scope of any Healthcare License with respect to any
Borrowing Base Asset.  No Loan Party has, other than in the normal course of
business, changed the terms of its participation in any third party payor
arrangements, plans or programs, including, without limitation, Medicare or
Medicaid, or its normal billing payment or reimbursement policies and related
procedures, including the amount and timing of finance charges, fees and
write-offs with respect to any Borrowing Base Asset.

 

(vi)                              Except as set forth on Schedule 4.01(y) or
except as would not reasonably be expected to have a Material Adverse Effect,
the Borrower and its Subsidiaries (and the operation of each Healthcare Asset,
each Healthcare Service, Healthcare Staffing Company and Group Purchasing
Organization) are and have been within all applicable statutes of limitation in
material compliance with all applicable Healthcare Requirements, including,
without limitation (A) those relating to staffing requirements, (B) those
relating to staff licensure and training, (C) health and fire safety codes,
including quality and safety standards, accepted professional standards and
principles that apply to professionals providing services at each Healthcare
Asset and each Healthcare Service, (D) to the knowledge of any Responsible
Officer of Borrower or its Subsidiaries, or any administrator, manager or
director of any Healthcare Asset, Healthcare Service, Healthcare Staffing
Company or Group Purchasing Organization, 31 U.S.C. §3729 et seq. (the “False
Claims Act”), 42 U.S.C. §1320a-7b(b) (the “Anti-Kickback Statute”), and 42
U.S.C. §1395nn and the regulations promulgated thereunder (the “Stark Law”) and
all other Federal, state and local laws, rules, regulations or published
interpretations or policies relating to the prevention of fraud and abuse and
has not committed any act for which it would be prosecuted under 42 U.S.C.
§1320a-7a (the “Civil Monetary Penalty Law”), (E) those relating to insurance,
reimbursement and cost reporting, (F) government payment program requirements
and disclosure of ownership and related information requirements,
(G) requirements of applicable Governmental Authorities, including without
limitation, those relating to physical structure and environment, licensing,
quality and adequacy of care, distributions of pharmaceuticals, rate setting,
equipment, personnel, operating policies and services, and fee splitting, and
(H) any other applicable laws, regulations or agreements for reimbursement for
the type of

 

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care or services provided by the Borrower or its Subsidiaries with respect to
any Healthcare Asset, Healthcare Service, Healthcare Staffing Company or Group
Purchasing Organization.

 

(vii)                           Except as set forth on Schedule 4.01(y) or
except as would not reasonably be expected to have a Material Adverse Effect,
the Borrower and each Subsidiary of the Borrower, with respect to each
Healthcare Asset and each Healthcare Service (A) as applicable, is and has been
within all applicable statutes of limitation in material compliance with the
requirements for participation in the Medicare, Medicaid, Tricare, Veteran’s
Administration, or any other Federal or state healthcare reimbursement program
with respect to each Healthcare Asset and each Healthcare Service that currently
participates in such programs, (B) as applicable, if it participates in such
programs, has a current provider agreement under Medicare, Medicaid or any other
Federal or state healthcare reimbursement program, which is in full force and
effect, and (C) has no knowledge of any fact which would prevent any third party
from assuming or accepting assignment of any Loan Party’s or Borrowing Base
Asset’s participation in Medicare, Medicaid or any other Federal or state
healthcare reimbursement program, in each case as permitted by and in accordance
with applicable law.

 

(viii)                        Except as set forth on Schedule 4.01(y) or except
as would not reasonably be expected to have a Material Adverse Effect, neither
the Borrower nor any Subsidiary thereof is or has been within all applicable
statutes of limitation, a named target of, or named participant in, any action,
proceeding, suit, audit (other than an audit in the ordinary course of
business), subpoena, survey, investigation, sanction or arbitration, at law or
equity, or before, by or on behalf of any Governmental Authority or any other
administrative, accreditation or investigative body or entity or any other
third-party payor or any patient, resident or qui tam relator (including,
without limitation, any suit brought pursuant to False Claims Act, the
Anti-Kickback Statute, the Stark Law, Civil Monetary Penalty Law, any similar
law or any other Federal or state fraud and abuse law), which has resulted or
may result, directly or indirectly or with the passage of time, in the
imposition of a fine, remedy, penalty, alternative, interim or final sanction, a
lower rate certification, a denial of payment, ban on admissions, termination,
delicensure, decertification, debarment, recoupment, recovery, suspension or
discontinuance of all or part of reimbursement or exclusion from any
Governmental Authority, third-party payor, insurance carrier or private payor, a
lower reimbursement rate for services rendered to eligible patients or
residents, or any other civil or criminal remedy, or which could result in the
appointment of a receiver or manager, or in the modification, limitation,
annulment, revocation, transfer, surrender, suspension or other impairment of a
Healthcare License or affect the Borrower’s, any Subsidiary’s, any Healthcare
Asset’s or and Healthcare Service’s participation in Medicare, Medicaid,
Tricare, Veteran’s Administration, any other Federal or state healthcare
reimbursement program, or a managed care company, insurance company, and/or any
other third-party payor arrangement, plan or program, as applicable, or any
successor program thereto, at current rate certification, nor to its knowledge
has any such action, proceeding, suit, investigation, sanction, arbitration or
audit been threatened.  An audit, investigation, or written inquiry by a State
Medicaid Fraud Control Unit or State Attorney General, by the United States
Department of Justice, or by the Office of Inspector General (“OIG”) of the
United States Department of Health and Human Services (“HHS”) shall not be
considered “in the ordinary course of business”.

 

(ix)                                To the knowledge of the Borrower and the
other Loan Parties, except as would not reasonably be expected to have a
Material Adverse Effect, there are no agreements with patients or residents of
any Healthcare Asset or Healthcare Service or with any other Persons that
deviate in any adverse respect from, or which conflict with, any Healthcare
Requirements.

 

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(x)                                   To the knowledge of the Borrower and the
other Loan Parties, except as would not reasonably be expected to have a
Material Adverse Effect, all patient and/or resident records at each Healthcare
Asset and the records of individuals that receive services at a Healthcare Asset
or from a Healthcare Service, including, without limitation, patient and/or
resident accounts records, are true, complete, and correct in all material
respects and are and have been within all applicable statutes of limitation
maintained in all material respects in accordance with applicable law and
Healthcare Requirements.

 

(xi)                                Except as would not cause any Loan Party or
any Subsidiary thereof to fail to be in material compliance with any applicable
Healthcare Requirements, or as would not reasonably be expected to have a
Material Adverse Effect, all claims submitted to Medicare, Medicaid, Tricare,
Veteran’s Administration, any other Federal or state healthcare reimbursement
program, or a managed care company, insurance company, and/or any other third
party payor arrangement, plan or program by each Healthcare Asset and each
Healthcare Service are for items and services actually rendered and in material
compliance with Healthcare Requirements, and, all items and services are
properly coded and all claims were submitted in material compliance with all
Healthcare Requirements regarding billing and claims submission and are
supported by adequate and appropriate documentation.

 

(xii)                             None of the execution and delivery of this
Agreement or any other Loan Document, the performance hereunder or thereunder by
any Loan Party or, to the knowledge of the Borrower, any other party thereto,
will, on the Closing Date, (A) adversely affect, in any material respect, the
right of the Borrower or any Subsidiary to receive Medicare, Medicaid, Tricare,
Veteran’s Administration, any other Federal or state healthcare reimbursement
program, or a managed care company, insurance company, and/or any other third
party payor arrangement, plan or program payments or reimbursements, (B) delay
or materially reduce the Medicare, Medicaid, Tricare, Veteran’s Administration,
any other Federal or state healthcare reimbursement program, or a managed care
company, insurance company, and/or any other third party payor arrangement, plan
or program payments or reimbursements that the Borrower or any Subsidiary is
receiving as of the date hereof, (C) materially adversely affect any of the
Healthcare Licenses; or (D) violate any of the Healthcare Requirements.

 

(xiii)                          Except as could not reasonably be expected to
have a Material Adverse Effect, no Loan Party or any Subsidiary thereof has
received written notice, or is aware, of any violation of applicable antitrust
laws.

 

(xiv)                         To the knowledge of the Loan Parties, the
Healthcare Licenses and Medicare, Medicaid, Tricare, Veteran’s Administration,
any other Federal or state healthcare reimbursement program, or a managed care
company, insurance company, and/or any other third party payor arrangement, plan
or program accounts receivable with respect to each Borrowing Base Asset are
free of any Liens (other than the Liens created under the Loan Documents and
Liens permitted by Section 5.02(a)), and neither the Borrower nor any Subsidiary
has pledged any of its receivables as collateral security for any Debt (other
than the Obligations of the Loan Parties under the Loan Documents and pledges
permitted by Section 5.02(a)).

 

(xv)                            Schedule 4.01(y) sets forth the collective
bargaining agreements and other labor contracts applicable to all persons
employed by it at any Borrowing Base Asset as of the Closing Date.

 

(xvi)                         Except as could not reasonably be expected to have
a Material Adverse Effect, the Borrower and its Subsidiaries have instituted,
and each Healthcare Asset and

 

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Healthcare Service is operated in compliance with a compliance plan addressing
fraud and abuse laws, and the compliance plan for each Healthcare Asset or
Healthcare Service complies in all material respects with the compliance
guidance issued by the OIG.

 

(xvii)                      Except as could not reasonably be expected to have a
Material Adverse Effect, the Borrower and its Subsidiaries, the Healthcare
Assets and Healthcare Services are and have been within all applicable statutes
of limitation in compliance with HIPAA and each Healthcare Asset and each
Healthcare Service has in place a HIPAA compliance program and is in material
compliance with its HIPAA compliance program.

 

(xviii)                   Except as would not reasonably be expected to have a
Material Adverse Effect, there is no threatened or pending revocation,
suspension, termination, probation, restriction, limitation, reimbursement
recoupment, sanction, penalty or nonrenewal affecting the Borrower, any
Subsidiary thereof or any Healthcare Asset, Healthcare Service, or provider
agreement with Medicare, Medicaid, Tricare, Veteran’s Administration, any other
Federal or state healthcare reimbursement program, or a managed care company,
insurance company, and/or any other third party payor arrangement, plan or
program.

 

(xix)                           Except as would not cause any Loan Party to fail
to be in compliance with any Healthcare Requirement in such a manner as would
reasonably be expected to have a Material Adverse Effect, or as set forth on
Schedule 4.01(y), all Medicare, Medicaid and any other applicable third party
payor arrangement, plan or program cost reports and other financial reports
required to be submitted by or on behalf of each Healthcare Asset and Healthcare
Service has been timely filed, and each cost report and other financial report
is accurate and complete in all material respects and not misleading in any
material respect.

 

(xx)                              Except as set forth on Schedule 4.01(y) or
except as would not reasonably be expected to have a Material Adverse Effect,
(A) there are no cost report years that are subject to audits and no cost
reports that remain “open” or unsettled, and (B) there are no current or pending
Medicare, Medicaid, Tricare, Veteran’s Administration, any other Federal or
state healthcare reimbursement program, or a managed care company, insurance
company, and/or any other third-party payor arrangement, plan or program
recoupment efforts against any Healthcare Asset or Healthcare Service.

 

(xxi)                           Except as would not reasonably be expected to
have a Material Adverse Effect, each Healthcare Asset and the use thereof
complies with all applicable material local, state, and Federal building codes,
fire codes, healthcare, nursing facility, and other similar regulatory
requirements and no material waivers of such physical plant standards exist at
any of the Healthcare Assets.

 

(xxii)                        Except as would not reasonably be expected to have
a Material Adverse Effect, none of the Borrower, any Subsidiary thereof, any
Healthcare Asset or any Healthcare Service is excluded from participation in any
Federal or state healthcare program nor as a result of a judicial or
administrative proceeding is any of them subject to mandatory or permissive
exclusion by the OIG.  Except as would not reasonably be expected to have a
Material Adverse Effect, no officers, directors, managers, employees or
contractors of the Borrower, any Subsidiary thereof, any Healthcare Asset or any
Healthcare Service are excluded from participation in any Federal or state
healthcare program, or as a result of a judicial or administrative proceeding
subject to mandatory or permissive exclusion by the OIG, or have failed to
obtain or maintain any licenses or permits required for the provision of
healthcare or related services by such officers, directors, managers, employees
or contractors; provided, however, that this Section 4.01(y)(xxii) shall only
apply to contractors to the extent any Responsible Officer of Borrower or its
Subsidiaries, or any administrator, manager,

 

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director, or employee involved in the hiring of such contractor has knowledge of
such condition.

 

(xxiii)                     Except as would not reasonably be expected to result
in a Material Adverse Effect (A) each Group Purchasing Organization and each
Healthcare Staffing Company is operated and has been within all applicable
statutes of limitation in material compliance with the Anti-Kickback Statute,
the False Claims Act and all other Healthcare Requirements, (B) each GPO meets
the GPO safe harbor under the Anti-Kickback Statute and (C) all personnel placed
by each Healthcare Staffing Company are appropriately licensed.

 

ARTICLE V
COVENANTS OF THE LOAN PARTIES

 

Section 5.01                                Affirmative Covenants.  So long as
any Advance or any other Obligation of any Loan Party under any Loan Document
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
Party shall have any Commitment hereunder, each Loan Party will:

 

(a)                                  Compliance with Laws, Etc.  Comply, and
cause each of its Subsidiaries to comply, in all material respects, with all
applicable laws, rules, regulations and orders, such compliance to include,
without limitation, compliance with ERISA and the Racketeer Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of 1970;
provided, however, that the failure to comply with the provisions of this
Section 5.01(a) shall not constitute a default hereunder so long as such
non-compliance is the subject of a Good Faith Contest.

 

(b)                                 Payment of Taxes, Etc.  Pay and discharge,
and cause each of its Subsidiaries to pay and discharge, before the same shall
become delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property and (ii) all lawful claims that, if unpaid,
might by law become a Lien upon its property; provided, however, that neither
the Loan Parties nor any of their Subsidiaries shall be required to pay or
discharge any such tax, assessment, charge or claim that is the subject of a
Good Faith Contest, unless and until any Lien resulting therefrom attaches to
its property and becomes enforceable against its other creditors.

 

(c)                                  Compliance with Environmental Laws. 
Comply, and cause each of its Subsidiaries and all lessees and other Persons
operating or occupying its properties to comply, in all material respects, with
all applicable Environmental Laws and Environmental Permits; obtain and renew
and cause each of its Subsidiaries to obtain and renew all Environmental Permits
necessary for its operations and properties; and conduct, and cause each of its
Subsidiaries to conduct, any investigation, study, sampling and testing, and
undertake any cleanup, removal, remedial or other action necessary to remove and
clean up all Hazardous Materials from any of its properties in material
compliance with the requirements of all Environmental Laws; provided, however,
that neither the Loan Parties nor any of their Subsidiaries shall be required to
undertake any such cleanup, removal, remedial or other action to the extent that
its obligation to do so is the subject of a Good Faith Contest or where the
failure to undertake any such cleanup, removal, remedial or other action could
not reasonably be expected to result in a Material Adverse Effect.

 

(d)                                 Maintenance of Insurance.  Maintain, and
cause each of its Subsidiaries to maintain, insurance (including, with respect
to the Borrowing Base Assets, the insurance required by the terms of the
Mortgages) with responsible and reputable insurance companies or associations in
such amounts and covering such risks as is usually carried by companies engaged
in similar businesses and owning similar properties in the same general areas in
which such Loan Party or such Subsidiaries operate, but in no event shall such
amounts with respect to the Borrowing Base Assets be lower or coverages be less
comprehensive than the respective insurance amounts and coverages set forth on

 

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Schedule 5.01(d); provided, however, that professional liability insurance
coverage shall be required only to the extent that such coverage is available at
commercially reasonable rates.

 

(e)                                  Preservation of Partnership or Corporate
Existence, Etc.  Preserve and maintain, and cause each of its Subsidiaries to
preserve and maintain, its existence (corporate or otherwise), legal structure,
legal name, rights (charter and statutory), permits, licenses, approvals,
privileges and franchises, except, in the case of Subsidiaries of the Borrower
only, if in the reasonable business judgment of such Subsidiary it is in its
best economic interest not to preserve and maintain such rights or franchises
and such failure to preserve such rights or franchises could not reasonably be
expected to result in a Material Adverse Effect (it being understood that the
foregoing shall not prohibit, or be violated as a result of, any transactions by
or involving any Loan Party or Subsidiary thereof otherwise permitted under
Section 5.02(c) or (d) below).

 

(f)                                    Visitation Rights.  At any reasonable
time and from time to time, permit any of the Agents or Lender Parties, or any
agent or representatives thereof, upon reasonable prior notice and during
regular business hours, to examine and make copies of and abstracts from the
records and books of account of, and visit the Borrowing Base Assets, and to
discuss the affairs, finances and accounts of any Loan Party with any of their
general partners, managing members, officers or directors and with their
independent certified public accountants.

 

(g)                                 Keeping of Books.  Keep, and cause each of
its Subsidiaries to keep, proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of such Loan Party and each such Subsidiary in accordance with GAAP.

 

(h)                                 Maintenance of Properties, Etc.  Maintain
and preserve, and cause each of its Subsidiaries to maintain and preserve, all
of its properties that are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted and will from time
to time make or cause to be made all appropriate repairs, renewals and
replacement thereof, except in each case where failure to do so could not
reasonably be expected to result in a Material Adverse Effect.

 

(i)                                     Transactions with Affiliates.  Conduct,
and cause each of its Subsidiaries to conduct, all transactions otherwise
permitted under the Loan Documents with any of their Affiliates (other than
transactions exclusively among or between the Borrower and/or one or more of the
Guarantors or other direct or indirect wholly-owned Subsidiaries) on terms that
are fair and reasonable and no less favorable to such Loan Party or such
Subsidiary than it would obtain in a comparable arm’s-length transaction with a
Person not an Affiliate.

 

(j)                                     Covenant to Guarantee Obligations and
Give Additional Security.  (i) Concurrently with the delivery of Collateral
Deliverables pursuant to Section 5.01(k) with respect to a Proposed Borrowing
Base Asset owned or leased by a Subsidiary of a Loan Party or (ii) within 10
days after the formation or acquisition of any new direct or indirect Subsidiary
of a Loan Party that directly owns or leases a Borrowing Base Asset, cause each
such Subsidiary (if it has not already done so), to duly execute and deliver to
the Administrative Agent (x) a Guaranty Supplement in substantially the form of
Exhibit C hereto, or such other guaranty supplement in form and substance
reasonably satisfactory to the Administrative Agent, guaranteeing the other Loan
Parties’ Obligations under the Loan Documents and (y) a security agreement
supplement in form and substance reasonably satisfactory to the Administrative
Agent.

 

(k)                                  Borrowing Base Additions.  With the
Borrower’s written request to the Administrative Agent that any Asset (a
“Proposed Borrowing Base Asset”) be added as a Borrowing Base Asset, deliver (or
cause to be delivered) to the Administrative Agent, at the Borrower’s expense, a
BBA Proposal Package with respect to such Proposed Borrowing Base Asset.  Within
ten (10)

 

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Business Days after receipt of a complete BBA Proposal Package, the
Administrative Agent shall give notice to the Borrower of whether the
Administrative Agent and the Required Lenders have approved such Proposed
Borrowing Base Asset as a Borrowing Base Asset subject to the delivery of all
applicable Collateral Deliverables and Guarantor Deliverables pursuant to the
following sentence (any such notice comprising an approval, a “Conditional
Approval Notice”).  Within 45 days after receipt by the Borrower of a
Conditional Approval Notice (which period may be extended in the discretion of
the Administrative Agent, at the Borrower’s request, for an additional 30 days
without the approval of the Required Lenders), the Borrower shall, at its
expense, deliver (or cause to be delivered) to the Administrative Agent all
applicable Collateral Deliverables and Guarantor Deliverables, and the
Administrative Agent will promptly make copies of the applicable Collateral
Deliverables and Guarantor Deliverables available for inspection by the Lenders,
which may be via the Approved Electronic Platform.  Notwithstanding the
foregoing, the failure of any Proposed Borrowing Base Asset to comply with one
or more of the Borrowing Base Conditions shall not preclude the addition of such
Proposed Borrowing Base Asset as a Borrowing Base Asset so long as the
Administrative Agent and the Required Lenders shall have expressly consented to
the addition of such Proposed Borrowing Base Asset as a Borrowing Base Asset
notwithstanding the failure to satisfy such conditions.

 

(l)                                     Further Assurances.  (i)  Promptly upon
request by any Agent, or any Lender Party through the Administrative Agent,
correct, and cause each Loan Party to promptly correct, any material defect or
error that may be discovered in any Loan Document or in the execution,
acknowledgment, filing or recordation thereof.

 

(ii)                                  Promptly upon request by any Agent, or any
Lender Party through the Administrative Agent, do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register any and all
such further acts, deeds, conveyances, pledge agreements, account control
agreements, mortgages, deeds of trust, trust deeds, assignments of leases and
rents, assignments, financing statements and continuations thereof, termination
statements, notices of assignment, transfers, certificates, assurances and other
instruments as any Agent, or any Lender Party through the Administrative Agent,
may reasonably require from time to time in order (A) to carry out more
effectively the purposes of the Loan Documents, (B) to the fullest extent
permitted by applicable law, to subject any Loan Party’s or any of its
Subsidiaries’ properties, assets, rights or interests to the Liens now or
hereafter intended to be covered by any of the Collateral Documents, (C) to
perfect and maintain the validity, effectiveness and priority of any of the
Collateral Documents and any of the Liens intended to be created thereunder and
(D) to assure, convey, grant, assign, transfer, preserve, protect and confirm
more effectively unto the Secured Parties the rights granted or now or hereafter
intended to be granted to the Secured Parties under any Loan Document or under
any other instrument executed in connection with any Loan Document to which any
Loan Party or any of its Subsidiaries is or is to be a party, and cause each of
its Subsidiaries to do so.

 

(m)                               Performance of Material Contracts.  Except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect, perform and observe, and cause each of its Subsidiaries to
perform and observe, all the terms and provisions of each Material Contract to
be performed or observed by it, maintain each such Material Contract in full
force and effect, enforce each such Material Contract in accordance with its
terms, take all such action to such end as may be from time to time reasonably
requested by the Administrative Agent, in each case with respect to any
Borrowing Base Asset, and, upon the reasonable request of the Administrative
Agent, make to each other party to each such Material Contract with respect to a
Borrowing Base Asset, such demands and requests for information and reports or
for action as any Loan Party or any of its Subsidiaries is entitled to make
under such Material Contract, and cause each of its Subsidiaries to do so.

 

(n)                                 Compliance with Leases.  Except where, in
each case, the failure to do so could not reasonably be expected to have a
Material Adverse Effect, (a) make all payments and otherwise perform all
obligations in respect of all leases of real property to which the Borrower or
any of its

 

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Subsidiaries is a party, keep such leases in full force and effect and not allow
such leases to lapse or be terminated or any rights to renew such leases to be
forfeited or cancelled (except, in the case of Subsidiaries of the Borrower
only, if in the reasonable business judgment of such Subsidiary it is in its
best economic interest not to maintain such lease or prevent such lapse,
termination, forfeiture or cancellation and such failure to maintain such lease
or prevent such lapse, termination, forfeiture or cancellation is not in respect
of a Qualifying Ground Lease of a Borrowing Base Asset and could not otherwise
reasonably be expected to result in a Material Adverse Effect), (b) notify the
Administrative Agent of any material default by any party with respect to such
leases and (c) cooperate with the Administrative Agent in all respects to cure
any such default, and cause each of its Subsidiaries to do so.

 

(o)                                 Qualifying Ground Leases.  With respect to
any Qualifying Ground Lease related to any Borrowing Base Asset:

 

(i)                                     pay when due the rent and other amounts
due and payable thereunder (subject to applicable cure or grace periods);

 

(ii)                                  timely perform and observe all of the
material terms, covenants and conditions required to be performed and observed
by it as tenant thereunder (subject to applicable cure or grace periods);

 

(iii)                               do all things necessary to preserve and keep
unimpaired such Qualifying Ground Lease and its rights thereunder;

 

(iv)                              diligently and continuously enforce the
material obligations of the lessor or other obligor thereunder;

 

(v)                                 deliver to the Administrative Agent all
default and other material notices received by it or sent by it under the
applicable Qualifying Ground Lease;

 

(vi)                              upon the Administrative Agent’s reasonable
written request and at reasonable intervals, unless an Event of Default shall
have occurred and be continuing, in which case, upon written request at any
time, provide to the Administrative Agent any information or materials relating
to such Qualifying Ground Lease and evidencing the applicable Guarantor’s due
observance and performance of its material obligations thereunder;

 

(vii)                           execute and deliver (to the extent permitted to
do so under such Qualifying Ground Lease), upon the request of the
Administrative Agent, any documents, instruments or agreements as may be
required to permit the Administrative Agent to cure any default of the Loan
Party under such Qualifying Ground Lease;

 

(viii)                        provide to the Collateral Agent written notice of
its intention to exercise any option or renewal or extension rights with respect
to such Qualifying Ground Lease at least thirty (30) days prior to the
expiration of the time to exercise such right or option and, upon the direction
of the Administrative Agent, duly exercise any renewal or extension option with
respect to such Qualifying Ground Lease (provided that each Loan Party hereby
appoints the Collateral Agent its attorney-in-fact, coupled with an interest, to
execute and deliver, for and in the name of such Person, all instruments,
documents or agreements necessary to extend or renew such Qualifying Ground
Lease);

 

(ix)                                in connection with the bankruptcy or other
insolvency proceedings of any ground lessor or other obligor, ratify the
legality, binding effect and enforceability of the

 

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applicable Qualifying Ground Lease within the applicable time period therefore
in such proceedings, notwithstanding any rejection by such ground lessor or
obligor or trustee, custodian or receiver related thereto;

 

(x)                                   provide to the Administrative Agent not
less than thirty (30) days prior written notice of the date on which the
applicable Guarantor shall apply to any court or other Governmental Authority
for authority or permission to reject the applicable Qualifying Ground Lease in
the event that there shall be filed by or against any Guarantor any petition,
action or proceeding under Bankruptcy Law or any similar federal or state law;
provided, however, that the Administrative Agent shall have the right, but not
the obligation, to serve upon the applicable Guarantor within such thirty (30)
day period a notice stating that (1) the Administrative Agent demands that such
Guarantor assume and then assign the relevant Qualifying Ground Lease to the
Administrative Agent subject to and in accordance with Bankruptcy Law and
(2) the Administrative Agent covenants to cure or provide reasonably adequate
assurance thereof with respect to all defaults susceptible of being cured by the
Administrative Agent and of future performance under the applicable Qualifying
Ground Lease; provided further that if the Administrative Agent serves such
notice upon the applicable Guarantor, such Guarantor shall not seek to reject
the applicable Qualifying Ground Lease and shall promptly comply with such
demand;

 

(xi)                                permit the Collateral Agent (at its option),
during the continuance of any Event of Default, to (1) perform and comply with
all obligations under the applicable Qualifying Ground Lease; (2) do and take
such action as the Collateral Agent reasonably deems necessary or desirable to
prevent or cure any default by such Guarantor under such Qualifying Ground Lease
and (3) enter in and upon the applicable premises related to such Qualifying
Ground Lease to the extent and as often as the Administrative Agent reasonably
deems necessary or desirable in order to prevent or cure any default under the
applicable Qualifying Ground Lease;

 

(xii)                             if such event could reasonably be expected to
result in a Material Adverse Effect, in the event of any arbitration, court or
other adjudicative proceedings under or with respect to any such Qualifying
Ground Lease, permit the Administrative Agent (at its option) to exercise all
right, title and interest of the applicable Guarantor in connection with such
proceedings, provided that (i) each Loan Party hereby irrevocably appoints the
Administrative Agent as its attorney-in-fact (which appointment shall be deemed
coupled with an interest) to exercise such right, interest and title and
(ii) the Loan Parties shall bear all costs, fees and expenses related to such
proceedings; provided further that each Loan Party hereby further agrees that
the Administrative Agent shall have the right, but not the obligation, to
proceed in respect of any claim, suit, action or proceeding relating to the
rejection of any of the Qualifying Ground Lease referenced above by the relevant
ground lessor as a result of bankruptcy or similar proceedings (including,
without limitation, the right to file and prosecute all proofs of claims,
complaints, notices and other documents in any such bankruptcy case or similar
proceeding); and

 

(xiii)                          at reasonable times and at reasonable intervals,
deliver to the Collateral Agent (or, subject to the requirements of the subject
Qualifying Ground Lease, cause the applicable lessor or other obligor to deliver
to the Administrative Agent), an estoppel certificate and consent agreement in
relation to such Qualifying Ground Lease in form and substance reasonably
acceptable to the Collateral Agent, in its discretion, and, in the case of the
estoppel certificate, setting forth (i) the name of lessee and lessor under the
Qualifying Ground Lease (if applicable); (ii) that such Qualifying Ground Lease
is in full force and effect and has not been modified except to the extent the
Collateral Agent has received notice of such modification; (iii) that no rental
and other payments due thereunder are delinquent as of

 

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the date of such estoppel; and (iv) whether such Person knows of any actual or
alleged defaults or events of default under the applicable Qualifying Ground
Lease,

 

provided that each Loan Party hereby agrees to execute and deliver to the
Administrative Agent, within ten (10) days of any request therefor, such
documents, instruments, agreements, assignments or other conveyances reasonably
requested by the Administrative Agent in connection with or in furtherance of
any of the provisions set forth above or the rights granted to the
Administrative Agent in connection therewith.

 

(p)                                 Management Agreements.  At all times cause
each Borrowing Base Asset to be managed and operated by an Approved Manager that
has (i) entered into a management agreement with respect to such Asset in form
and substance reasonably satisfactory to the Administrative Agent, and
(ii) executed and delivered a management agreement subordination agreement in
form and substance reasonably satisfactory to the Administrative Agent.  Lender
Parties acknowledge that the Management Agreements in effect as of the date
hereof are satisfactory.

 

(q)                                 Exchange Listing.  In the case of the
Borrower, at all times cause its common shares to be, and remain, duly listed on
the New York Stock Exchange, the American Stock Exchange or NASDAQ.

 

(r)                                    Sarbanes-Oxley.  Comply at all times in
all material respects with all applicable provisions of Section 402(a) of
Sarbanes-Oxley, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.

 

(s)                                  Insurance Proceeds and Condemnation
Awards.  (i)  In the event of any loss or damage to any portion of any Borrowing
Base Asset due to fire or other casualty, or any taking of any portion of any
Borrowing Base Asset by condemnation or under power of eminent domain and
provided that the Borrower does not designate the Borrowing Base Asset suffering
such loss as a non-Borrowing Base Asset in accordance with Section 5.02(e), the
Collateral Agent shall have the right, but not the obligation, after the
occurrence and during the continuation of an Event of Default, to settle
insurance claims and condemnation claims or awards, unless the loss or damage is
less than $5,000,000.  If (A) the loss or damage is less than $5,000,000 or
(B) if the Collateral Agent elects not to settle such claim or award, then the
applicable Loan Party shall have the right to settle such claim or award without
the consent of the Collateral Agent, provided that (1) such Loan Party shall use
the proceeds of any claim or award to rebuild or restore the applicable
Borrowing Base Asset substantially to its condition prior to the casualty or
condemnation to the extent permitted by applicable law and (2) such Loan Party
shall provide the Collateral Agent with notice of the casualty or condemnation. 
In all other cases, the applicable Loan Party shall not settle such claim or
award without the prior or concurrent written consent of the Collateral Agent. 
So long as such Borrowing Base Asset remains a Borrowing Base Asset, failure to
use the insurance proceeds received directly from the insurance company to
rebuild and restore the Borrowing Base Asset shall constitute an Event of
Default.  The Collateral Agent shall have the right (but not the obligation) to
collect, retain and apply to the Obligations all insurance and condemnation
proceeds (after deduction of all expense of collection and settlement, including
reasonable attorney and adjusters’ fees and expenses) in the event that an Event
of Default exists under this Agreement or the other Loan Documents or the
Borrowing Base Asset no longer meets the Borrowing Base Conditions (other than
as a result of such loss or damage).  Otherwise, all proceeds shall be delivered
to the Borrower.  Any proceeds remaining after application to the Obligations
shall be paid by the Collateral Agent to the Borrower or the party then entitled
thereto.

 

(ii)                                  Provided that the Borrower has not
designated the affected asset as a non-Borrowing Base Asset in accordance with
Section 5.02(e), if the Collateral Agent does not elect to or is not entitled to
apply casualty proceeds or condemnation awards to the Obligations and if the
Loan Parties

 

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are not entitled to settle such claims, all as provided under the foregoing
subsection (i), the Collateral Agent shall have the right (but not the
obligation) to settle, collect and retain such proceeds, and after deduction of
all reasonable expenses of collection and settlement, including reasonable
attorney and adjusters’ fees and expenses, to release the same to the applicable
Loan Party periodically, provided that such Loan Party shall:

 

(A)                              expeditiously repair and restore all damage to
the portion of the Borrowing Base Asset in question resulting from such casualty
or condemnation, including completion of the construction if such fire or other
casualty shall have occurred prior to completion, so that the Borrowing Base
Asset continues to qualify as a Borrowing Base Asset following such
construction; and

 

(B)                                if the casualty proceeds or condemnation
awards are, in the Collateral Agent’s reasonable judgment, insufficient to
complete the repair and restoration of the buildings, structures and other
improvements constituting the Borrowing Base Asset as aforesaid, then the Loan
Parties shall promptly deposit with the Collateral Agent the amount of such
deficiency.

 

Any request by a Loan Party for a disbursement by the Collateral Agent of
casualty proceeds or condemnation awards by the Borrower pursuant to this
Section 5.01(s) and the disbursement thereof shall be conditioned upon the Loan
Parties’ compliance with and satisfaction of the same conditions precedent as
would be applicable in connection with construction loans made by institutional
lenders for projects similar to the affected Borrowing Base Asset, including
approval of plans and specifications, submittal of evidence of completion,
updated title insurance, lien waivers, and other customary safeguards.

 

(t)                                    Healthcare Requirements.  Except where
the failure to do so would not reasonably be expected to have a Material Adverse
Effect, cause the operations conducted or to be conducted at each Healthcare
Asset and each Healthcare Service, at a minimum, to be conducted in a manner
consistent in all material respects with all applicable Healthcare Requirements
and, in connection therewith, the Borrower and the Loan Parties further covenant
that (in each case, except to the extent that the same would not reasonably be
expected to have a Material Adverse Effect):

 

(i)                                     the storage, use, transportation and
disposal of all medical equipment, medical supplies, medical products or gases,
and medical waste, of any kind and in any form, will be maintained in material
compliance with all Healthcare Requirements;

 

(ii)                                  each Healthcare Asset and each Healthcare
Service will be operated in material compliance with applicable Healthcare
Requirements relating thereto, reimbursement or care contracts, and any other
agreements necessary for the certification, licensure or operation of such
Healthcare Asset or Healthcare Service as may be necessary for participation in
Medicare, Medicaid, Tricare, Veteran’s Administration, any other Federal or
state healthcare reimbursement program, or a managed care company, insurance
company, and/or any other third party payor arrangement, plan or program, to the
extent applicable;

 

(iii)                               each Healthcare Asset that is a Borrowing
Base Asset will remain in effect without material reduction in the number of
licensed beds or certified beds;

 

(iv)                              all deposits relating to Healthcare
Requirements, including deposits relating to residents or residency agreements
will be maintained in material compliance with all applicable regulatory
requirements.  If such deposits are in cash, the Borrower and its Subsidiaries
shall deposit and hold such deposits in accordance with applicable law;

 

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(v)                                 the Borrower and its Subsidiaries shall file
all required Medicare or Medicaid cost reports on or prior to the date such
reports are due and make available to the Administrative Agent, if requested
(within 90 days of the date of such request), a complete and accurate copy of
the annual Medicare or Medicaid cost report for the Borrower and its
Subsidiaries with respect to the Borrowing Base Assets and subject to privacy
limitations under applicable law, which will be prepared by the Borrower or
applicable Subsidiary and accompanied by a certificate from a Responsible
Officer of the Borrower certifying as of the date thereof that such report is
accurate, complete and not misleading, and promptly furnish the Administrative
Agent any amendments filed with respect to such reports and all notices,
responses, audit reports or inquiries with respect to such reports; and

 

(vi)                              the Borrower shall cause all residency and
other agreements with residents of the Healthcare Assets to comply with all
legal requirements and Healthcare Requirements.

 

Section 5.02                                Negative Covenants.  So long as any
Advance or any other Obligation of any Loan Party under any Loan Document shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender Party
shall have any Commitment hereunder, no Loan Party will, at any time:

 

(a)                                  Liens, Etc.  Create, incur, assume or
suffer to exist, or permit any of its Subsidiaries to create, incur, assume or
suffer to exist, any Lien on or with respect to any Borrowing Base Asset of any
character (including, without limitation, accounts), except:

 

(i)                                     Liens created under the Loan Documents;

 

(ii)                                  Permitted Liens;

 

(iii)                               Liens described on Schedule 4.01(p) hereto;

 

(iv)                              purchase money Liens upon or in equipment
acquired or held by any Guarantor in the ordinary course of business to secure
the purchase price of such equipment or to secure Debt incurred solely for the
purpose of financing the acquisition of any such equipment to be subject to such
Liens, or Liens existing on any such equipment at the time of acquisition (other
than any such Liens created in contemplation of such acquisition that do not
secure the purchase price), or extensions, renewals or replacements of any of
the foregoing for the same or a lesser amount; provided, however, that no such
Lien shall extend to or cover any property other than the equipment being
acquired, and no such extension, renewal or replacement shall extend to or cover
any property not theretofore subject to the Lien being extended, renewed or
replaced; provided further that the aggregate principal amount of the Debt
secured by Liens permitted by this clause (iv) shall not exceed the amount
permitted under Section 5.02(b)(iii);

 

(v)                                 Liens arising in connection with Capitalized
Leases permitted under Section 5.02(b)(iv), provided that no such Lien shall
extend to or cover any Collateral or assets other than the assets subject to
such Capitalized Leases; and

 

(vi)                              any other Liens, provided, that the Loan
Parties shall be in compliance with the covenants contained in Section 5.04 both
immediately prior to and on a pro forma basis immediately after giving effect to
the incurrence of such Liens.

 

(b)                                 Debt.  With respect to the Guarantors only,
create, incur, assume or suffer to exist, or permit any of its Subsidiaries to
create, incur, assume or suffer to exist, any Debt, except:

 

(i)                                     Debt under the Loan Documents;

 

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(ii)                                  Debt owed to any other Loan Party or any
wholly-owned Subsidiary of any Loan Party, provided that, in each case, such
Debt (y) shall be on terms reasonably acceptable to the Administrative Agent and
(z) shall be evidenced by promissory notes in form and substance satisfactory to
the Administrative Agent, which promissory notes shall (unless payable to the
Borrower) by their terms be subordinated to the Obligations of the Loan Parties
under the Loan Documents;

 

(iii)                               Debt secured by Liens permitted by
Section 5.02(a)(iv) not to exceed in the aggregate $5,000,000 at any time
outstanding,

 

(iv)                              Capitalized Leases not to exceed in the
aggregate $5,000,000 at any time outstanding,

 

(v)                                 the Surviving Debt described on
Schedule 4.01(o) hereto and any Refinancing Debt extending, refunding or
refinancing such Surviving Debt,

 

(vi)                              Debt represented by cash management
obligations and other obligations in respect of netting services, automatic
clearinghouse arrangements, overdraft protections and similar arrangements in
each case in connection with deposit accounts,

 

(vii)                           endorsements of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business, and

 

(viii)                        any other Debt, provided, that the Loan Parties
shall be in compliance with the covenants contained in Section 5.04 both
immediately prior to and on a pro forma basis immediately after giving effect to
the incurrence of such Debt.

 

(c)                                  Change in Nature of Business.  Make, or
permit any of its Subsidiaries to make, any material change in the nature of its
business as carried at the Closing Date (after giving effect to the transactions
contemplated by the Loan Documents).

 

(d)                                 Mergers, Etc.  Merge or consolidate with or
into, or convey, transfer (except as permitted by Section 5.02(e)), lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its assets (whether now owned or hereafter acquired)
to, any Person, or permit any of its Subsidiaries to do so; provided, however,
that (i) any Subsidiary of a Loan Party may merge or consolidate with or into,
or dispose of assets to, any other Subsidiary of such Loan Party (provided that
if one or more of such Subsidiaries is also a Loan Party, a Loan Party shall be
the surviving entity) or any other Loan Party other than the Borrower (provided
that such Loan Party or, in the case of any Loan Party other than the Borrower,
another Loan Party shall be the surviving entity), and (ii) any Loan Party may
merge with any Person that is not a Loan Party so long as such Loan Party is the
surviving entity or (except in the case of a merger with the Borrower, which
shall always be the surviving entity) such other Person is the surviving party
and shall promptly become a Loan Party, provided, in each case, that (A) no
Default shall have occurred and be continuing at the time of such proposed
transaction or would result therefrom and (B) the Borrower shall have delivered
to the Administrative Agent a Borrowing Base Certificate demonstrating that the
Facility Available Amount (calculated on a pro forma basis after giving effect
to such merger) will be greater than or equal to the Facility Exposure. 
Notwithstanding any other provision of this Agreement, (x) any Subsidiary of a
Loan Party that is not itself a Loan Party may merge or consolidate with or
into, or convey all or substantially all of its assets (whether now owned or
hereafter acquired) to, any Person, so long as such transaction, to the extent
resulting in a direct or indirect Transfer of assets, complies with
Section 5.02(e), mutatis mutandis, the Borrower determines in good faith that
such proposed transaction is in the best interests of the Borrower, and no
Default or Event of Default shall have occurred and be continuing at the time of
such proposed transaction or

 

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would result therefrom, (y) any Subsidiary of a Loan Party that is not itself a
Loan Party may liquidate or dissolve if the Borrower determines in good faith
that such liquidation or dissolution is in the best interests of the Borrower
and the assets or proceeds from the liquidation or dissolution of such
Subsidiary are transferred to the Borrower or a wholly-owned Subsidiary of
Borrower, provided that no Default or Event of Default shall have occurred and
be continuing at the time of such proposed transaction or would result
therefrom, and (z) any Loan Party or Subsidiary of a Loan Party shall be
permitted to effect any Transfer of Assets through the sale or transfer of
direct or indirect Equity Interests in the Person (other than the Borrower) that
owns such Assets so long as Section 5.02(e) would otherwise permit the Transfer
of all Assets owned by such Person at the time of such sale or transfer of such
Equity Interests.  Upon the sale or transfer of Equity Interests in any Person
that is a Guarantor permitted under clause (z) above, provided that no Default
or Event of Default shall have occurred and be continuing or would result
therefrom, the Administrative Agent shall, upon the request of the Borrower,
release such Guarantor from the Guaranty and the Collateral Documents.

 

(e)                                  Sales, Etc. of Assets.  Sell, lease (other
than by entering into Tenancy Leases), transfer or otherwise dispose of, or
grant any option or other right to purchase, lease (other than any option or
other right to enter into Tenancy Leases) or otherwise acquire, or permit any of
its Subsidiaries to sell, lease (other than by entering into Tenancy Leases),
transfer or otherwise dispose of, or grant any option or other right to
purchase, lease (other than any option or other right to enter into Tenancy
Leases) or otherwise acquire (each such action described in this subsection (e),
including, without limitation, any Sale and Leaseback Transaction, being a
“Transfer”), any Asset or Assets (or any direct or indirect Equity Interests in
the owner thereof), in each case other than (x) the Transfer of any asset with a
gross book value equal to $1,000,000 or less in the ordinary course of business
on arm’s length terms, and (y) the following Transfers, which shall be permitted
hereunder only so long as no Default or Event of Default shall exist or would
result therefrom:

 

(i)                                     the Transfer of any assets that are not
Borrowing Base Assets or direct or indirect Equity Interests in Borrowing Base
Assets to any Person, provided, that the Loan Parties shall be in compliance
with the covenants contained in Section 5.04 both immediately prior to and on a
pro forma basis immediately after giving effect to such Transfer;

 

(ii)                                  the lease or sublease of assets, as lessor
or sublessor (as the case may be), in the ordinary course of business,

 

(iii)                               the Transfer of any Borrowing Base Asset or
Borrowing Base Assets to any Person, or the designation of a Borrowing Base
Asset or Borrowing Base Assets as a non-Borrowing Base Asset or non-Borrowing
Base Assets, in each case with the intention that such Borrowing Base Asset or
Borrowing Base Assets, upon consummation of such Transfer or designation, shall
no longer constitute a Borrowing Base Asset or Borrowing Base Assets, provided
that:

 

(A)                              immediately after giving effect to such
Transfer or designation, as the case may be, the remaining Borrowing Base Assets
shall continue to satisfy the requirements set forth in clauses (a) through
(h) of the definition of Borrowing Base Conditions,

 

(B)                                immediately after giving effect to such
Transfer or designation, as the case may be, the Borrowing Base Debt Service
Coverage Ratio of all remaining Borrowing Base Assets (measured on a pro forma
basis as of the date immediately following such Transfer) shall not be less than
1.50:1.00,

 

(C)                                the Loan Parties shall be in compliance with
the covenants contained in Section 5.04 both immediately prior to and on a pro
forma basis immediately after giving effect to such Transfer or designation,

 

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(D)                               on or prior to the date of such Transfer or
designation, as the case may be, the Borrower shall have delivered to the
Administrative Agent (A) a Borrowing Base Certificate demonstrating that the
Facility Available Amount (calculated on a pro forma basis after giving effect
to such Transfer and to any repayment of Advances made at the time thereof) will
be greater than or equal to the Facility Exposure, and (B) a certificate of the
Chief Financial Officer (or other Responsible Officer performing similar
functions) of the Borrower demonstrating compliance with the foregoing
clauses (A) through (D) and confirming that no Default or Event of Default shall
exist on the date of such Transfer or will result therefrom, together with
supporting information in detail reasonably satisfactory to the Administrative
Agent, and

 

(E)                                 the Administrative Agent and the Required
Lenders shall have consented in writing to such Transfer or designation prior to
the consummation thereof (except in the case of the Transfer or designation of
up to five Borrowing Base Assets in the aggregate during the term of the
Facility that the Borrower or any other Loan Party may elect to Transfer or
designate without the consent of the Administrative Agent and the Required
Lenders), it being agreed that the Administrative Agent shall give notice to the
Borrower of whether the Administrative Agent and the Required Lenders have
consented to such Transfer or designation within ten (10) Business Days after
receipt of request therefor from the Borrower together with such supporting
information in reasonable detail consistent with the requirements of clauses
(A) through (D) above as the Administrative Agent shall reasonably request,

 

(iv)                              the Transfer of inventory in the ordinary
course of business, and

 

(v)                                 the sale, transfer or disposal of assets in
transactions solely among one or more of the Borrower and its Subsidiaries
(other than the Transfer of any Borrowing Base Asset or Borrowing Base Assets or
any direct or indirect Equity Interests therein, except to the extent permitted
by Section 5.02(e)(iii)).

 

Following (I) a Transfer of a portion or all Borrowing Base Assets owned and
leased by a Guarantor in accordance with Section 5.02(e)(iii) or (II) the
designation by a Guarantor of a portion or all Borrowing Base Assets owned or
leased by it as non-Borrowing Base Assets pursuant to Section 5.02(e)(iii), the
Administrative Agent shall, upon the request of the Borrower and at the
Borrower’s expense, promptly release any mortgages, deeds of trust, security
agreement, and UCC financing statements from such transferred Borrower Base
Assets or assets designated as non-Borrowing Base Assets.  Further, following
(x) a Transfer of all Borrowing Base Assets owned or leased by a Guarantor in
accordance with Section 5.02(e)(iii) or (y) the designation by a Guarantor of
all Borrowing Base Assets owned or leased by it as non-Borrowing Base Assets
pursuant to Section 5.02(e)(iii), the Administrative Agent shall, upon the
request of the Borrower and at the Borrower’s expense, promptly release such
Guarantor from the Guaranty and the Security Agreement.

 

(f)                                    Investments.  Make or hold, or permit any
of its Subsidiaries to make or hold, any Investment, or otherwise own the
following items such that the aggregate value of such Investments of such
Persons exceeds at any time the specified percentages of Total Asset Value set
forth below:

 

(i)                                     Investments in Healthcare Assets
(including by asset or Equity Interest acquisitions or investments in Joint
Ventures, in each case subject, where applicable, to the limitations set forth
below in this Section 5.02(f));

 

(ii)                                  Investments in Joint Ventures such that
the aggregate value of such Investments (determined in a manner consistent with
the definition of Total Asset Value or, if

 

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not contemplated under the definition of Total Asset Value, as determined in
accordance with GAAP) exceeds 20% of Total Asset Value at any time;

 

(iii)                               Investments in Development Assets such that
the aggregate Construction Budget for all such Development Assets exceeds 15% of
Total Asset Value at any time.  For purposes of this clause: (x) “Construction
Budget” means the fully budgeted costs for the acquisition and construction of a
given piece of real property (including, without limitation, the cost of
acquiring such piece of real property (except to the extent any portion thereof
is unimproved land included in clause (iv) below), reserves for construction
interest and operating deficits, tenant improvements, leasing commissions, and
infrastructure costs), as reasonably determined by the Borrower in good faith
and (y) real property under construction to be (but not yet) acquired by the
Borrower or a Subsidiary thereof upon completion of construction pursuant to a
contract in which the seller of such real property is required to complete
construction prior to, and as a condition precedent to, such acquisition, shall
be subject to this clause (ii);

 

(iv)                              Investments in Mortgage Receivables such that
the aggregate book value of such Mortgage Receivables exceeds 10% of Total Asset
Value at any time;

 

(v)                                 Investments in unimproved land such that the
aggregate book value of all such unimproved land exceeds 5% of Total Asset Value
at any time;

 

(vi)                              Investments in Cash Equivalents;

 

(vii)                           Investments consisting of intercompany Debt
permitted under Section 5.02(b)(ii);

 

(viii)                        Investments outstanding on the date hereof in
Subsidiaries that are not wholly-owned by any Loan Party;

 

(ix)                                Investments in Subsidiaries that are
wholly-owned by any Loan Party;

 

(x)                                   Investments by the Borrower in Hedge
Agreements permitted under Section 5.02(j);

 

(xi)                                To the extent permitted by applicable law,
loans or other extensions of credit to officers, directors and employees of any
Loan Party or any Subsidiary of any Loan Party in the ordinary course of
business, for travel, entertainment, relocation and analogous ordinary business
purposes, which Investments shall not exceed at any time $1,000,000 in the
aggregate for all Loan Parties; and

 

(xii)                             Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors to the
extent reasonably necessary in order to prevent or limit loss.

 

(g)                                 Restricted Payments.  In the case of the
Borrower, without the prior consent of the Required Lenders, declare or pay any
dividends, purchase, redeem, retire, defease or otherwise acquire for value any
of its Equity Interests now or hereafter outstanding, return any capital to its
stockholders, partners or members (or the equivalent Persons thereof) as such,
make any distribution of assets, Equity Interests, obligations or securities to
its stockholders, partners or members (or the equivalent Persons thereof) as
such; provided, however, that (i) the Borrower may take such actions only so
long as no Default or Event of Default shall have occurred and be continuing,
and (ii) payments described in this Section 5.02(g) shall only be permitted so
long as after giving effect to

 

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each such payment, the sum of (A) the Facility Available Amount less the
Facility Exposure plus (B) the aggregate amount of Unrestricted Cash held by the
Borrower is not less than $10,000,000.

 

(h)                                 Amendments of Constitutive Documents. 
Amend, or permit any of its Subsidiaries to amend, in each case in a manner that
could reasonably be expected to have a Material Adverse Effect, its limited
liability company agreement, partnership agreement, certificate of incorporation
or bylaws or other constitutive documents, provided that any amendment to any
such constitutive document that would be adverse to any of the Secured Parties
shall be deemed “material” for purposes of this Section; and provided further
that any amendment to any such constitutive document that would designate such
Subsidiary as a “special purpose entity” or otherwise confirm such Subsidiary’s
status as a “special purpose entity” shall be deemed “not material” for purposes
of this Section.

 

(i)                                     Accounting Changes.  Make or permit, or
permit any of its Subsidiaries to make or permit, any change in (i) accounting
policies or reporting practices, except as required or permitted by generally
accepted accounting principles, or (ii) Fiscal Year.

 

(j)                                     Speculative Transactions.  Engage, or
permit any of its Subsidiaries to engage, in any transaction involving commodity
options or futures contracts or any similar speculative transactions, provided,
however, that the Borrower shall be permitted to enter into Hedge Agreements
designed to hedge against fluctuations in interest rates or foreign exchange
rates incurred in the ordinary course of business and consistent with prudent
business practices.

 

(k)                                  [Intentionally Omitted].

 

(l)                                     Amendment, Etc. of Material Contracts. 
Cancel or terminate any Material Contract or consent to or accept any
cancellation or termination thereof, amend or otherwise modify any Material
Contract or give any consent, waiver or approval thereunder, waive any default
under or breach of any Material Contract, agree in any manner to any other
amendment, modification or change of any term or condition of any Material
Contract or take any other action in connection with any Material Contract that
would impair in any material respect the value of the interest or rights of any
Loan Party thereunder or that would impair or otherwise adversely affect in any
material respect the interest or rights, if any, of any Agent or any Lender
Party, or permit any of its Subsidiaries to do any of the foregoing in each case
taking into account the effect of any agreements that supplement or serve to
substitute for, in whole or in part, such Material Contract, and in the case of
a Material Contract not affecting any Borrowing Base Asset, in a manner that
could reasonably be expected to have a Material Adverse Effect.

 

(m)                               [Intentionally Omitted].

 

(n)                                 [Intentionally Omitted].

 

(o)                                 Multiemployer Plans.  Contribute to or be
required to contribute to, nor will any ERISA Affiliate contribute to or be
required to contribute to, any Multiemployer Plan.

 

(p)                                 Ground Leases.  With respect to any
Qualifying Ground Lease with respect to any Borrowing Base Asset:

 

(i)                                     waive, excuse or discharge any of the
material obligations of the lessor or other obligor thereunder;

 

(ii)                                  do, permit or suffer (1) any act, event or
omission which would be likely to result in a default or permit the applicable
lessor or other obligor to terminate or exercise any other remedy with respect
to the applicable Qualifying Ground Lease or (2) any act, event or

 

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omission which, with the giving of notice or the passage of time, or both, would
constitute a default or permit the lessor or such other obligor to exercise any
other remedy under the applicable Qualifying Ground Lease;

 

(iii)                               cancel, terminate, surrender, modify or
amend any of the provisions of any such Qualifying Ground Lease or agree to any
termination, amendment, modification or surrender thereof without the prior
written consent of the Administrative Agent;

 

(iv)                              permit or consent to the subordination of such
Qualifying Ground Lease to any mortgage or other leasehold interest of the
premises related thereto; or

 

(v)                                 treat, in connection with the bankruptcy or
other insolvency proceedings of any ground lessor or other obligor, any
Qualifying Ground Lease as terminated, cancelled or surrendered pursuant to
Bankruptcy Law without the Administrative Agent’s prior written consent.

 

(q)                                 Healthcare.  Without the prior written
consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) and authorization and/or approval under all applicable law
and Healthcare Requirements, assign or transfer (or permit any Subsidiary
thereof to assign or transfer), except to the Borrower or another Subsidiary
thereof as authorized under all applicable law and Healthcare Requirements, any
of its interest in any Healthcare License or reimbursement or care contracts
(including rights to payment thereunder), including any Medicare, Medicaid,
Tricare, Veteran’s Administration, any other Federal or state healthcare
reimbursement program, or a managed care company, insurance company, and/or any
other third party payor agreements, pertaining to the Borrower, any Subsidiary
thereof or any Healthcare Asset or Healthcare Service, provided that the
foregoing shall not be prohibited by this Agreement to the extent it is in
connection with a sale or other transfer of a Healthcare Asset permitted under
Section 5.02(e); and provided further that this Section 5.02(q) shall only apply
to Assets other than Borrowing Base Assets where such assignment or transfer
could reasonably be expected to have a Material Adverse Effect.

 

(r)                                    Healthcare Licenses.  (i) Fail to
maintain in effect all Healthcare Licenses necessary to the operation of its
business or necessary for each Healthcare Asset or each Healthcare Service, or
(ii) engage in any activity that (a) constitutes or, with the giving of notice,
the passage of time, or both, would result in a material violation of any
Healthcare License necessary for the lawful conduct of its business or
operations or necessary for each Healthcare Asset or each Healthcare Service or
(b) constitutes or, with the giving of notice, the passage of time, or both,
would result in the loss by any Healthcare Asset or any Healthcare Service that
is owned, leased, managed or operated by any Loan Party or any Subsidiary
thereof of the right to participate in, and/or receive payment or reimbursement
under, the appropriate Medicare, Medicaid, Tricare, Veteran’s Administration and
related reimbursement programs, and any other Federal or state healthcare
reimbursement programs, to the extent that any Loan Party or any Subsidiary
thereof participates in and/or receives payment or reimbursement under any such
program, and to receive payment or reimbursement from private and commercial
payors, managed care companies, insurance companies and/or any other third-party
payor arrangements, plans or programs to the extent applicable thereto, in each
case under (i) and (ii), except, in each case, where the loss of such Healthcare
License or rights to participate in or receive payments or reimbursement under
or from such programs or payors could not reasonably be expected to have a
Material Adverse Effect.

 

Section 5.03                                Reporting Requirements.  So long as
any Advance or any other Obligation of any Loan Party under any Loan Document
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
Party shall have any Commitment hereunder, the Borrower will furnish to the
Agents and the Lender Parties in accordance with Section 9.02(b):

 

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(a)                                  Default Notice.  As soon as possible and in
any event within two Business Days after a Responsible Officer becomes aware of
the occurrence of each Default or any event, development or occurrence
reasonably expected to result in a Material Adverse Effect continuing on the
date of such statement, a statement of the Chief Financial Officer (or other
Responsible Officer) of the Borrower setting forth details of such Default or
such event, development or occurrence and the action that the Borrower has taken
and proposes to take with respect thereto.

 

(b)                                 Annual Financials.  As soon as available and
in any event within 90 days after the end of each Fiscal Year, a copy of the
annual audit report for such year for the Borrower and its Subsidiaries,
including therein Consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such Fiscal Year and Consolidated statements of
income and a Consolidated statement of cash flows of the Borrower and its
Subsidiaries for such Fiscal Year (it being acknowledged that a copy of the
annual audit report filed by the Borrower with the Securities and Exchange
Commission shall satisfy the foregoing requirements), all of which shall be
(a) certified by the Chief Financial Officer or Chief Accounting Officer (or
other Responsible Officer) of the Borrower, in his or her opinion, to present
fairly, in accordance with GAAP and in all material respects, the financial
position of the Borrower and its Subsidiaries as at the date thereof and the
result of operations for such period and (b) accompanied by the report thereon
of Ernst & Young LLP or any other independent certified public accountants of
recognized national standing, whose report shall be unqualified.  Together with
such financial statements, the Borrower shall deliver a Compliance Certificate
duly executed by the Chief Financial Officer or Chief Accounting Officer (or
other Responsible Officer) of the Borrower, which Compliance Certificate shall
(A) have attached a schedule in form satisfactory to the Administrative Agent of
the computations used by the Borrower in determining, as of the end of such
Fiscal Year, compliance with the covenants contained in Section 5.04, provided
that in the event of any change in GAAP used in the preparation of such
financial statements, the Borrower shall also provide, if necessary for the
determination of compliance with Section 5.04, a statement of reconciliation
conforming such financial statements to GAAP and (B) state that no Default has
occurred and is continuing or, if a Default has occurred and is continuing, a
statement as to the nature thereof and the action that the Borrower has taken
and proposes to take with respect thereto.

 

(c)                                  Quarterly Financials.  As soon as available
and in any event within 45 days after the end of each of the first three
quarters of each Fiscal Year, Consolidated balance sheets of the Borrower and
its Subsidiaries as of the end of such quarter and Consolidated statements of
income and a Consolidated statement of cash flows of the Borrower and its
Subsidiaries for the period commencing at the end of the previous fiscal quarter
and ending with the end of such fiscal quarter and Consolidated statements of
income and a Consolidated statement of cash flows of the Borrower and its
Subsidiaries for the period commencing at the end of the previous Fiscal Year
and ending with the end of such quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding date or period
of the preceding Fiscal Year, all in reasonable detail and duly certified
(subject to normal year-end audit adjustments) by the Chief Executive Officer,
Chief Financial Officer or Treasurer (or other Responsible Officer performing
similar functions) of the Borrower as having been prepared in accordance with
GAAP (it being acknowledged that a copy of the quarterly financials filed by the
Borrower with the Securities and Exchange Commission shall satisfy the foregoing
requirements), together with a Compliance Certificate duly executed by the Chief
Financial Officer (or other Responsible Officer) of the Borrower, which
Compliance Certificate shall (i) state that no Default has occurred and is
continuing or, if a Default has occurred and is continuing, a statement as to
the nature thereof and the action that the Borrower has taken and proposes to
take with respect thereto and (ii) attach a schedule in form satisfactory to the
Administrative Agent of the computations used by the Borrower in determining
compliance with the covenants contained in Section 5.04, provided that in the
event of any change in GAAP used in the preparation of such financial
statements, the Borrower shall also provide, if necessary for the determination
of compliance with Section 5.04, a statement of reconciliation conforming such
financial statements to GAAP.

 

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(d)                                 Borrowing Base Certificate.  As soon as
available and in any event within 30 days after the end of each calendar month,
a Borrowing Base Certificate, as at the end of such month, certified by the
Chief Financial Officer (or other Responsible Officer performing similar
functions) of the Borrower, in each case showing calculations which reflect the
asset concentration limits set forth in the definition of Total Borrowing Base
Value.

 

(e)                                  Borrowing Base Financials.  As soon as
available and in any event within 30 days after the end of each calendar month,
financial information in respect of all Borrowing Base Assets, in form and
detail reasonably satisfactory to the Administrative Agent.

 

(f)                                    Annual Budgets.  As soon as available and
in any event not later than 90 days after the end of each Fiscal Year, forecasts
prepared by management of the Borrower, in form reasonably satisfactory to the
Administrative Agent, of balance sheets, income statements and cash flow
statements on a quarterly basis for the then current Fiscal Year and on an
annual basis for each Fiscal Year thereafter until the Termination Date.

 

(g)                                 Material Litigation.  Promptly after the
commencement thereof, notice of all actions, suits, investigations, litigation
and proceedings before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting any Loan Party
or any of its Subsidiaries of the type described in Section 4.01(f), and
promptly after the occurrence thereof, notice of any adverse change in the
status or the financial effect on any Loan Party or any of its Subsidiaries of
the Material Litigation from that described on Schedule 4.01(f) hereto.

 

(h)                                 Securities Reports.  Promptly after the
sending or filing thereof, copies of all proxy statements, financial statements
and reports that any Loan Party or any of its Subsidiaries sends to the holders
of its Equity Interests, and copies of all regular, periodic and special
reports, and all registration statements, that any Loan Party or any of its
Subsidiaries files with the Securities and Exchange Commission or any
Governmental Authority that may be substituted therefor, or with any national
securities exchange.

 

(i)                                     [Intentionally Omitted].

 

(j)                                     Assets Reports.  As soon as available
and in any event within 45 days after the end of each quarter of each Fiscal
Year, a report listing and describing (in detail reasonably satisfactory to the
Administrative Agent) all Assets of the Guarantors as of the end of such quarter
in form and substance reasonably satisfactory to the Administrative Agent.

 

(k)                                  Environmental Conditions.  Notice to the
Administrative Agent (i) promptly upon obtaining knowledge of any material
violation of any Environmental Law affecting any Asset or the operations
thereof, (ii) promptly upon obtaining knowledge of any known release, discharge
or disposal of any Hazardous Materials at, from, or into any Asset which it
reports in writing or is legally required to report in writing to any
Governmental Authority and which is material in amount or nature or which could
reasonably be expected to materially adversely affect the value of such Asset,
(iii) promptly upon its receipt of any written notice of material violation of
any Environmental Laws or of any material release, discharge or disposal of
Hazardous Materials in violation of any Environmental Laws or any matter that
could reasonably be expected to result in an Environmental Action, including a
notice or claim of liability or potential responsibility from any third party
(including without limitation any federal, state or local governmental
officials) and including notice of any formal inquiry, proceeding, demand,
investigation or other action with regard to (A) such Loan Party’s or any other
Person’s operation of any Asset in compliance with Environmental Laws,
(B) Hazardous Materials contamination on, from or into any Asset, or
(C) investigation or remediation of off-site locations at which such Loan Party
or any of its predecessors are alleged to have directly or indirectly disposed
of Hazardous Materials from such Asset, or (iv) upon such Loan Party’s obtaining

 

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knowledge that any expense or loss has been incurred by such Governmental
Authority in connection with the assessment, containment, removal or remediation
of any Hazardous Materials with respect to which such Loan Party or any Joint
Venture could reasonably be expected to incur material liability or for which a
Lien may be imposed on any Asset, provided that notice is required only for any
of the events described in clauses (i) through (iv) above that could reasonably
be expected to result in a Material Adverse Effect, could reasonably be expected
to result in a material Environmental Action with respect to any Borrowing Base
Asset or could reasonably be expected to result in a Lien against any Borrowing
Base Asset.

 

(l)                                     Borrowing Base Asset Value.  Promptly
after obtaining actual knowledge of any setoff, claim, withholding or defense
asserted or effected against any Loan Party, or to which any Borrowing Base
Asset is subject, which could reasonably be expected to (i) have a material
adverse effect on the value of a Borrowing Base Asset, (ii) have a Material
Adverse Effect or (iii) result in the imposition or assertion of a Lien against
any Borrowing Base Asset which is not a Permitted Lien, notice to the
Administrative Agent thereof.

 

(m)                               Compliance with Borrowing Base Conditions. 
Promptly after obtaining actual knowledge of any condition or event which causes
any Borrowing Base Asset to fail to satisfy any of the Borrowing Base Conditions
(other than those Borrowing Base Conditions, if any, that have theretofore been
waived by the Administrative Agent and the Required Lenders with respect to any
particular Borrowing Base Asset, to the extent of such waiver), notice to the
Administrative Agent thereof.

 

(n)                                 Appraisals.  Promptly upon the written
request of the Administrative Agent, Appraisals of the Borrowing Base Assets
that are the subject of such request; provided that so long as no Event of
Default then exists, the Administrative Agent shall be entitled to request an
updated Appraisal (which, for the avoidance of doubt, shall not alter the
Appraised Value of such Borrowing Base Asset for purposes of the calculation of
Asset Value or the financial covenants contained in Section 5.04 of this
Agreement and related definitions) to the extent such Appraisal is required by
any (x) regulatory authority or quasi regulatory authority or (y) applicable law
or regulation.

 

(o)                                 Reconciliation Statements.  If, as a result
of any change in accounting principles and policies from those used in the
preparation of the audited financial statements referred to in
Section 4.01(g) and forecasts referred to in Section 4.01(h), the Consolidated
and consolidating financial statements and forecasts of the Borrower and its
Subsidiaries delivered pursuant to Section 5.03(b), (c) or (f) will differ in
any material respect from the Consolidated and consolidating financial
statements that would have been delivered pursuant to such Section had no such
change in accounting principles and polices been made, then (i) together with
the first delivery of financial statements or forecasts pursuant to
Section 5.03(b), (c) or (f) following such change, Consolidated and
consolidating financial statements and forecasts of the Borrower and its
Subsidiaries for the fiscal quarter immediately preceding the fiscal quarter in
which such change is made, prepared on a pro forma basis as if such change had
been in effect during such fiscal quarter, and (ii) if requested by
Administrative Agent, a written statement of the Chief Executive Officer, Chief
Financial Officer or Treasurer (or other Responsible Officer performing similar
functions) of the Borrower setting forth the differences (including any
differences that would affect any calculations relating to the financial
covenants set forth in Section 5.04) which would have resulted if such financial
statements and forecasts had been prepared without giving effect to such change.

 

(p)                                 Material Contract.  As soon as available, a
copy of any Material Contract entered into with respect to any Borrowing Base
Asset after the date hereof.

 

(q)                                 Healthcare Matters.  (i) Promptly after
receipt thereof by the Borrower or any Subsidiary thereof, notice of any notices
or charges relating to the non-compliance by the Borrower or

 

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any Subsidiary with any Governmental Authority, Healthcare Requirements, laws,
regulations, requirements, licenses, permits, certificates, authorizations or
approvals that would reasonably be expected to have a Material Adverse Effect;
and (ii) promptly after receipt thereof by the Borrower or any Subsidiary
thereof, copies of any and all notices (regardless of form) that any Healthcare
License or Medicare or Medicaid certification or other applicable payment
program participation is being, or could be, downgraded, terminated, revoked, or
suspended, or that action is pending, being considered or being, or could be,
taken to downgrade, terminate, revoke, or suspend any Healthcare License, or to
fine, penalize or impose remedies or sanctions upon, discontinue, suspend, deny,
decrease or recoup any payments due, made or coming due, or that action is
pending, being considered, or being, or could be, taken, to fine, penalize or
impose remedies or sanctions upon, discontinue, suspend, deny, decrease or
recoup any payments due, made or coming due any of which individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect;
provided, however, that the Administrative Agent shall be promptly notified by
the Borrower of an inquiry or an investigation, in each case of a non-routine
nature, or audit by a State Medicaid Fraud Control Unit, a State Attorney
General, the United States Department of Justice or the OIG, affecting any
Borrowing Base Asset.  The Borrower shall promptly provide supporting
documentation or additional information regarding any of the foregoing
reasonably requested by the Administrative Agent, other than documents subject
to attorney-client privilege.

 

(r)                                    Other Information.  Promptly, such other
information respecting the business, condition (financial or otherwise),
operations, performance, properties or prospects of any Loan Party or any of its
Subsidiaries as the Administrative Agent, or any Lender Party through the
Administrative Agent, may from time to time reasonably request.

 

Information required to be delivered pursuant to Section 5.03(b) or
Section 5.03(c) shall be deemed to have been delivered on the date on which the
Borrower provides notice to the Administrative Agent that such information has
been posted on the Borrower’s website on the Internet at
http://www.fivestarseniorliving.com or at another website identified in such
notice and accessible by the Lender Parties without charge; provided that the
Borrower shall deliver paper copies of the information referred to in such
Sections to the Administrative Agent for distribution to (x) any Lender Party to
which the above referenced websites are for any reason not available if such
Lender Party or the Administrative Agent has so notified the Borrower and
(y) any Lender Party that has notified the Borrower that it desires paper copies
of all such information; and provided further that the Administrative Agent
shall notify the Lender Parties in accordance with Section 9.02 of any materials
delivered pursuant to this Section 5.03.

 

Section 5.04                                Financial Covenants.  So long as any
Advance or any other Obligation of any Loan Party under any Loan Document shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender Party
shall have, at any time after the Initial Extension of Credit, any Commitment
hereunder, the Borrower will:

 

(a)                                  Borrower Financial Covenants.

 

(i)                                     Maximum Leverage Ratio.  Maintain at all
times a Leverage Ratio of not greater than 5.00:1.00.

 

(ii)                                  Minimum Tangible Net Worth.  Maintain at
all times tangible net worth of the Borrower and its Subsidiaries, as determined
in accordance with GAAP (but exclusive of depreciation and amortization), of not
less than the sum of $240,447,000.00 plus an amount equal to 75% times the net
cash proceeds of all issuances and primary sales of Equity Interests of the
Borrower or any of its Subsidiaries consummated following the Closing Date.

 

(iii)                               Minimum Fixed Charge Coverage Ratio. 
Maintain at all times a Fixed Charge Coverage Ratio of not less than 1.50:1.00.

 

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(b)                                 Borrowing Base Financial Covenants.

 

(i)                                     Maximum Facility Exposure.  Not permit
at any time the Facility Exposure at such time to exceed the Facility Available
Amount at such time.

 

(ii)                                  Minimum Borrowing Base Debt Service
Coverage Ratio.  Maintain at all times a Borrowing Base Debt Service Coverage
Ratio of not less than 1.50:1.00.

 

To the extent any calculations described in Sections 5.04(a) or 5.04(b) are
required to be made on any date of determination other than the last day of a
fiscal quarter of the Borrower, such calculations shall be made on a pro forma
basis to account for any acquisitions or dispositions of Assets, and the
incurrence or repayment of any Debt for Borrowed Money relating to such Assets,
that have occurred since the last day of the fiscal quarter of the Borrower most
recently ended.  To the extent any calculations described in Sections 5.04(a) or
5.04(b) are required to be made on a Test Date relating to an Advance, a merger
permitted under Section 5.02(d), a Transfer permitted under
Section 5.02(e)(iii) or new Material Debt, such calculations shall be made both
before and on a pro forma basis after giving effect to such Advance, merger,
Transfer or such other event, as applicable.  All calculations under this
Section 5.04 shall be made on a pro forma basis to account for any applicable
monthly or 30-day financial statements or reports required to be delivered
pursuant to Section 5.03 since the date of the most recently delivered quarterly
statements or reports.  All such calculations shall be reasonably acceptable to
the Administrative Agent.

 

ARTICLE VI
EVENTS OF DEFAULT

 

Section 6.01                                Events of Default.  If any of the
following events (“Events of Default”) shall occur and be continuing:

 

(a)                                  Failure to Make Payments When Due.  (i) The
Borrower shall fail to pay any principal of any Advance when the same shall
become due and payable or (ii) the Borrower shall fail to pay any interest on
any Advance, or any Loan Party shall fail to make any other payment under any
Loan Document, in each case under this clause (ii) within three Business Days
after the same becomes due and payable; or

 

(b)                                 Breach of Representations and Warranties. 
Any representation or warranty made by any Loan Party (or any of its officers or
the officers of its general partner or managing member, as applicable) under or
in connection with any Loan Document shall prove to have been incorrect in any
material respect when made; or

 

(c)                                  Breach of Certain Covenants.  The Borrower
shall fail to perform or observe any term, covenant or agreement contained in
Section 2.14, 5.01(d), (e), (f), (i), (j), (n), (o), (p) or (t), 5.02, 5.03(a),
(d), (e), (f), (g), (h), (j), (k), (l), (m), (n), (o), (p), (q) and
(r) (provided that in the case of Section 5.03(g), (h), (k), (l), (m), (o),
(p) and (q) only, if such failure shall remain unremedied for three Business
Days after the earlier of the date on which (i) a Responsible Officer becomes
aware of such failure or (ii) written notice thereof shall have been given to
the Borrower by any Agent or any Lender Party) or 5.04; or

 

(d)                                 Other Defaults under Loan Documents.  Any
Loan Party shall fail to perform or observe any other term, covenant or
agreement contained in any Loan Document on its part to be performed or observed
if such failure shall remain unremedied for 30 days after the earlier of the
date on which (i) a Responsible Officer becomes aware of such failure or
(ii) written notice thereof shall have been given to the Borrower by any Agent
or any Lender Party; or

 

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(e)                                  Cross Defaults.  (i) Any Loan Party or any
Subsidiary thereof shall fail to pay any principal of, premium or interest on or
any other amount payable in respect of any Material Debt when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise); or (ii) any other event shall occur or
condition shall exist under any agreement or instrument relating to any such
Material Debt, if (A) the effect of such event or condition is to permit the
acceleration of the maturity of such Material Debt or otherwise permit the
holders thereof to cause such Material Debt to mature, and (B) such event or
condition shall remain unremedied or otherwise uncured for a period of 30 days;
or (iii) the maturity of any such Material Debt shall be accelerated or any such
Material Debt shall be declared to be due and payable or required to be prepaid
or redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Material Debt shall be required to be made, in each case prior to
the stated maturity thereof; or

 

(f)                                    Insolvency Events.  Any Loan Party shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
any Loan Party seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it) that is
being diligently contested by it in good faith, either such proceeding shall
remain undismissed or unstayed for a period of 60 days or any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or any substantial part of its property) shall
occur; or any Loan Party shall take any corporate action to authorize any of the
actions set forth above in this subsection (f); or

 

(g)                                 Monetary Judgments.  Any judgments or
orders, either individually or in the aggregate, for the payment of money in
excess of $10,000,000 shall be rendered against any Loan Party or any Subsidiary
thereof and either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; provided,
however, that any such judgment or order shall not give rise to an Event of
Default under this Section 6.01(g) if and so long as (A) the amount of such
judgment or order which remains unsatisfied is covered by a valid and binding
policy of insurance between the respective Loan Party or Subsidiary and the
insurer covering full payment of such unsatisfied amount and (B) such insurer,
which shall be rated at least “A” by A.M. Best Company, has been notified, and
has not disputed the claim made for payment, of the amount of such judgment or
order; or

 

(h)                                 Non-Monetary Judgments.  Any non-monetary
judgment or order shall be rendered against any Loan Party or Subsidiary thereof
that could reasonably be expected to result in a Material Adverse Effect, and
there shall be any period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or

 

(i)                                     Unenforceability of Loan Documents.  Any
material provision of any Loan Document after delivery thereof pursuant to
Section 3.01 or 5.01(j) shall for any reason (other than pursuant to the terms
thereof) cease to be valid and binding on or enforceable against any Loan Party
which is party to it, or any such Loan Party shall so state in writing; or

 

(j)                                     Security Failure.  Any Collateral
Document or financing statement after delivery thereof pursuant to Section 3.01
or 5.01(j) shall for any reason (other than pursuant to the terms

 

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thereof) cease to create a valid and perfected first priority lien on and
security interest in the Collateral purported to be covered thereby; or

 

(k)                                  Change of Control.  A Change of Control
shall occur; or

 

(l)                                     ERISA Events.  Any ERISA Event shall
have occurred with respect to a Plan and the sum (determined as of the date of
occurrence of such ERISA Event) of the Insufficiency of such Plan and the
Insufficiency of any and all other Plans with respect to which an ERISA Event
shall have occurred and then exist (or the liability of the Loan Parties and the
ERISA Affiliates related to such ERISA Event) exceeds $5,000,000,

 

then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the Commitments of each Lender Party and the obligation of each Lender
Party to make Advances (other than Letter of Credit Advances by an Issuing Bank
or a Lender pursuant to Section 2.03(c) and Swing Line Advances by a Lender
pursuant to Section 2.02(b)) and of each Issuing Bank to issue Letters of Credit
to be terminated, whereupon the same shall forthwith terminate, and (ii) shall
at the request, or may with the consent, of the Required Lenders, (A) by notice
to the Borrower, declare the Advances, all interest thereon and all other
amounts payable under this Agreement and the other Loan Documents to be
forthwith due and payable, whereupon the Advances, all such interest and all
such amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower, and (B) by notice to each party required under the terms
of any agreement in support of which a Letter of Credit is issued, request that
all Obligations under such agreement be declared to be due and payable;
provided, however, that in the event of an actual or deemed entry of an order
for relief with respect to the Borrower under any Bankruptcy Law, (y) the
Commitments of each Lender Party and the obligation of each Lender Party to make
Advances (other than Letter of Credit Advances by an Issuing Bank or a Lender
pursuant to Section 2.03(c) and Swing Line Advances by a Lender pursuant to
Section 2.02(b)) and of each Issuing Bank to issue Letters of Credit shall
automatically be terminated and (z) the Advances, all such interest and all such
amounts shall automatically become and be due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by the Borrower.

 

Section 6.02                                Actions in Respect of the Letters of
Credit upon Default.  If any Event of Default shall have occurred and be
continuing, the Administrative Agent may, or shall at the request of the
Required Lenders, irrespective of whether it is taking any of the actions
described in Section 6.01 or 2.17(e) or otherwise, make demand upon the Borrower
to, and forthwith upon such demand the Borrower will, pay to the Administrative
Agent on behalf of the Lender Parties in same day funds at the Administrative
Agent’s office designated in such demand, for deposit in the L/C Cash Collateral
Account, an amount equal to the aggregate Available Amount of all Letters of
Credit then outstanding.  If at any time the Administrative Agent or the Issuing
Bank determines that any funds held in the L/C Cash Collateral Account are
subject to any right or claim of any Person other than the Agents and the Lender
Parties with respect to the Obligations of the Loan Parties under the Loan
Documents, or that the total amount of such funds is less than the aggregate
Available Amount of all Letters of Credit, the Borrower will, forthwith upon
demand by the Administrative Agent, pay to the Administrative Agent, as
additional funds to be deposited and held in the L/C Cash Collateral Account, an
amount equal to the excess of (a) such aggregate Available Amount over (b) the
total amount of funds, if any, then held in the L/C Cash Collateral Account that
the Administrative Agent, as the case may be, determines to be free and clear of
any such right and claim.  Upon the drawing of any Letter of Credit for which
funds are on deposit in the L/C Cash Collateral Account, such funds shall be
applied to reimburse the relevant Issuing Bank or Lenders, as applicable, to the
extent permitted by applicable law.

 

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ARTICLE VII
GUARANTY

 

Section 7.01                                Guaranty; Limitation of Liability. 
(a)  Each Guarantor hereby absolutely, unconditionally and irrevocably
guarantees the punctual payment when due, whether at scheduled maturity or on
any date of a required prepayment or by acceleration, demand or otherwise, of
all Obligations of each other Loan Party now or hereafter existing under or in
respect of the Loan Documents (including, without limitation, any extensions,
modifications, substitutions, amendments or renewals of any or all of the
foregoing Obligations), whether direct or indirect, absolute or contingent, and
whether for principal, interest, premiums, fees, indemnities, contract causes of
action, costs, expenses or otherwise (such Obligations being the “Guaranteed
Obligations”), and agrees to pay any and all expenses (including, without
limitation, fees and expenses of counsel) incurred by the Administrative Agent
or any other Secured Party in enforcing any rights under this Agreement or any
other Loan Document.  Without limiting the generality of the foregoing, each
Guarantor’s liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by any other Loan Party to any Secured
Party under or in respect of the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such other Loan Party.  This
Guaranty is and constitutes a guaranty of payment and not merely of collection.

 

(b)                                 Each Guarantor, the Administrative Agent and
each other Lender Party and, by its acceptance of the benefits of this Guaranty,
each other Secured Party, hereby confirms that it is the intention of all such
Persons that this Guaranty and the Obligations of each Guarantor hereunder not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar foreign, federal or state law to the extent applicable to this
Guaranty and the Obligations of each Guarantor hereunder.  To effectuate the
foregoing intention, the Guarantors, the Administrative Agent, the other Lender
Parties and, by their acceptance of the benefits of this Guaranty, the other
Secured Parties hereby irrevocably agree that the Obligations of each Guarantor
under this Guaranty at any time shall be limited to the maximum amount as will
result in the Obligations of such Guarantor under this Guaranty not constituting
a fraudulent transfer or conveyance.

 

(c)                                  Each Guarantor hereby unconditionally and
irrevocably agrees that in the event any payment shall be required to be made to
any Secured Party under this Guaranty or any other guaranty, such Guarantor will
contribute, to the maximum extent permitted by law, such amounts to each other
Guarantor and each other guarantor so as to maximize the aggregate amount paid
to the Secured Parties under or in respect of the Loan Documents.

 

Section 7.02                                Guaranty Absolute.  Each Guarantor
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of this Agreement and the other Loan Documents, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Administrative Agent or any
other Secured Party with respect thereto.  The Obligations of each Guarantor
under or in respect of this Guaranty are independent of the Guaranteed
Obligations or any other Obligations of any other Loan Party under or in respect
of this Agreement or the other Loan Documents, and a separate action or actions
may be brought and prosecuted against each Guarantor to enforce this Guaranty,
irrespective of whether any action is brought against the Borrower or any other
Loan Party or whether the Borrower or any other Loan Party is joined in any such
action or actions.  The liability of each Guarantor under this Guaranty shall be
irrevocable, absolute and unconditional irrespective of, and each Guarantor
hereby irrevocably waives any defenses it may now have or hereafter acquire in
any way relating to, any or all of the following:

 

(a)                                  any lack of validity or enforceability of
any Loan Document or any agreement or instrument relating thereto;

 

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(b)                                 any change in the time, manner or place of
payment of, or in any other term of, all or any of the Guaranteed Obligations or
any other Obligations of any other Loan Party under or in respect of the Loan
Documents, or any other amendment or waiver of or any consent to departure from
any Loan Document, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to the Borrower,
any other Loan Party or any of their Subsidiaries or otherwise;

 

(c)                                  any taking, exchange, release or
non-perfection of any collateral, or any taking, release or amendment or waiver
of, or consent to departure from, any other guaranty, for all or any of the
Guaranteed Obligations;

 

(d)                                 any manner of application of collateral, or
proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any collateral for all or any of the Guaranteed
Obligations or any other Obligations of any Loan Party under the Loan Documents
or any other assets of any Loan Party or any of its Subsidiaries;

 

(e)                                  any change, restructuring or termination of
the corporate structure or existence of any Loan Party or any of its
Subsidiaries;

 

(f)                                    any failure of the Administrative Agent
or any other Secured Party to disclose to any Loan Party any information
relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of any other Loan Party now or hereafter
known to the Administrative Agent or such other Secured Party (each Guarantor
waiving any duty on the part of the Administrative Agent and each other Secured
Party to disclose such information);

 

(g)                                 the failure of any other Person to execute
or deliver this Agreement, any other Loan Document, any Guaranty Supplement or
any other guaranty or agreement or the release or reduction of liability of any
Guarantor or other guarantor or surety with respect to the Guaranteed
Obligations; or

 

(h)                                 any other circumstance (including, without
limitation, any statute of limitations) or any existence of or reliance on any
representation by the Administrative Agent or any other Secured Party that might
otherwise constitute a defense available to, or a discharge of, any Loan Party
or any other guarantor or surety.

 

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Secured Party or any other Person upon the
insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party
or otherwise, all as though such payment had not been made.

 

Section 7.03                                Waivers and Acknowledgments.  (a) 
Each Guarantor hereby unconditionally and irrevocably waives promptness,
diligence, notice of acceptance, presentment, demand for performance, notice of
nonperformance, default, acceleration, protest or dishonor and any other notice
with respect to any of the Guaranteed Obligations and this Guaranty and any
requirement that the Administrative Agent or any other Secured Party protect,
secure, perfect or insure any Lien or any property subject thereto or exhaust
any right or take any action against any Loan Party or any other Person or any
collateral.

 

(b)                                 Each Guarantor hereby unconditionally and
irrevocably waives any right to revoke this Guaranty and acknowledges that this
Guaranty is continuing in nature and applies to all Guaranteed Obligations,
whether existing now or in the future.

 

(c)                                  Each Guarantor hereby unconditionally and
irrevocably waives (i) any defense arising by reason of any claim or defense
based upon an election of remedies by the Administrative Agent or

 

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any other Secured Party that in any manner impairs, reduces, releases or
otherwise adversely affects the subrogation, reimbursement, exoneration,
contribution or indemnification rights of such Guarantor or other rights of such
Guarantor to proceed against any of the other Loan Parties, any other guarantor
or any other Person or any collateral and (ii) any defense based on any right of
set-off or counterclaim against or in respect of the Obligations of such
Guarantor hereunder.

 

(d)                                 Each Guarantor acknowledges that the
Administrative Agent may, without notice to or demand upon such Guarantor and
without affecting the liability of such Guarantor under this Guaranty, foreclose
under any mortgage by nonjudicial sale, and each Guarantor hereby waives any
defense to the recovery by the Administrative Agent and the other Secured
Parties against such Guarantor of any deficiency after such nonjudicial sale and
any defense or benefits that may be afforded by applicable law.

 

(e)                                  Each Guarantor hereby unconditionally and
irrevocably waives any duty on the part of the Administrative Agent or any other
Secured Party to disclose to such Guarantor any matter, fact or thing relating
to the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower, any other Loan Party or any of their
Subsidiaries now or hereafter known by the Administrative Agent or such other
Secured Party.

 

(f)                                    Each Guarantor acknowledges that it will
receive substantial direct and indirect benefits from the financing arrangements
contemplated by this Agreement and the other Loan Documents and that the waivers
set forth in Section 7.02 and this Section 7.03 are knowingly made in
contemplation of such benefits.

 

Section 7.04                                Subrogation.  Each Guarantor hereby
unconditionally and irrevocably agrees not to exercise any rights that it may
now have or hereafter acquire against the Borrower, any other Loan Party or any
other insider guarantor that arise from the existence, payment, performance or
enforcement of such Guarantor’s Obligations under or in respect of this
Guaranty, this Agreement or any other Loan Document, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of any
Secured Party against the Borrower, any other Loan Party or any other insider
guarantor or any collateral, whether or not such claim, remedy or right arises
in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from the Borrower, any other Loan Party
or any other insider guarantor, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim, remedy or right, unless and until all of the Guaranteed Obligations
and all other amounts payable under this Guaranty shall have been indefeasibly
paid in full in cash, all Letters of Credit shall have expired or been
terminated and the Commitments shall have expired or been terminated.  If any
amount shall be paid to any Guarantor in violation of the immediately preceding
sentence at any time prior to the latest of (a) the indefeasible payment in full
in cash of the Guaranteed Obligations and all other amounts payable under this
Guaranty, (b) the termination in whole of the Commitments and (c) the latest
date of expiration or termination of all Letters of Credit, such amount shall be
received and held in trust for the benefit of the Secured Parties, shall be
segregated from other property and funds of such Guarantor and shall forthwith
be paid or delivered to the Administrative Agent in the same form as so received
(with any necessary endorsement or assignment) to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Guaranty,
whether matured or unmatured, in accordance with the terms of the Loan
Documents.  If (i) any Guarantor shall make payment to any Secured Party of all
or any part of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall have been
indefeasibly paid in full in cash, (iii) the termination in whole of the
Commitments shall have occurred and (iv) all Letters of Credit shall have
expired or been terminated, the Administrative Agent and the other Secured
Parties will, at such Guarantor’s request and expense, execute and deliver to
such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Guaranteed Obligations resulting from such
payment made by such Guarantor pursuant to this Guaranty.

 

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Section 7.05                                Guaranty Supplements.  Upon the
execution and delivery by any Person of a Guaranty Supplement, (i) such Person
shall be referred to as an “Additional Guarantor” and shall become and be a
Guarantor hereunder, and each reference in this Agreement to a “Guarantor” or a
“Loan Party” shall also mean and be a reference to such Additional Guarantor,
and each reference in any other Loan Document to a “Guarantor” shall also mean
and be a reference to such Additional Guarantor, and (ii) each reference herein
to “this Agreement”, “this Guaranty”, “hereunder”, “hereof” or words of like
import referring to this Agreement and this Guaranty, and each reference in any
other Loan Document to the “Loan Agreement”, “Guaranty”, “thereunder”, “thereof”
or words of like import referring to this Agreement and this Guaranty, shall
mean and be a reference to this Agreement and this Guaranty as supplemented by
such Guaranty Supplement.

 

Section 7.06                                Indemnification by Guarantors.  (a) 
Without limitation on any other Obligations of any Guarantor or remedies of the
Administrative Agent or the Secured Parties under this Agreement, this Guaranty
or the other Loan Documents, each Guarantor shall, to the fullest extent
permitted by law, indemnify, defend and save and hold harmless the
Administrative Agent, the Arrangers, each other Secured Party and each of their
Affiliates and their respective officers, directors, employees, agents and
advisors (each, an “Indemnified Party”) from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party in
connection with or as a result of any failure of any Guaranteed Obligations to
be the legal, valid and binding obligations of any Loan Party enforceable
against such Loan Party in accordance with their terms.

 

(b)                                 Each Guarantor hereby also agrees that no
Indemnified Party shall have any liability (whether direct or indirect, in
contract, tort or otherwise) to any of the Guarantors or any of their respective
Affiliates or any of their respective officers, directors, employees, agents and
advisors, and each Guarantor hereby agrees not to assert any claim against any
Indemnified Party on any theory of liability, for special, incidental, indirect,
consequential or punitive damages arising out of or otherwise relating to the
Facilities, the actual or proposed use of the proceeds of the Advances or the
Letters of Credit, the Loan Documents or any of the transactions contemplated by
the Loan Documents.

 

Section 7.07                                Subordination.  Each Guarantor
hereby subordinates any and all debts, liabilities and other Obligations owed to
such Guarantor by each other Loan Party (the “Subordinated Obligations”) to the
Guaranteed Obligations to the extent and in the manner hereinafter set forth in
this Section 7.07.

 

(a)                                  Prohibited Payments, Etc.  Except during
the continuance of an Event of Default (including the commencement and
continuation of any proceeding under any Bankruptcy Law relating to any other
Loan Party), each Guarantor may receive regularly scheduled payments or payments
made in the ordinary course of business from any other Loan Party on account of
the Subordinated Obligations.  After the occurrence and during the continuance
of any Event of Default (including the commencement and continuation of any
proceeding under any Bankruptcy Law relating to any other Loan Party), however,
unless the Administrative Agent otherwise agrees, no Guarantor shall demand,
accept or take any action to collect any payment on account of the Subordinated
Obligations.

 

(b)                                 Prior Payment of Guaranteed Obligations.  In
any proceeding under any Bankruptcy Law relating to any other Loan Party, each
Guarantor agrees that the Secured Parties shall be entitled to receive payment
in full in cash of all Guaranteed Obligations (including all interest and
expenses accruing after the commencement of a proceeding under any Bankruptcy
Law, whether or not constituting an allowed claim in such proceeding (“Post
Petition Interest”)) before such Guarantor receives payment of any Subordinated
Obligations.

 

(c)                                  Turn-Over.  After the occurrence and during
the continuance of any Event of Default (including the commencement and
continuation of any proceeding under any Bankruptcy Law relating to any other
Loan Party), each Guarantor shall, if the Administrative Agent so requests,
collect, enforce and receive

 

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payments on account of the Subordinated Obligations as trustee for the Secured
Parties and deliver such payments to the Administrative Agent on account of the
Guaranteed Obligations (including all Post Petition Interest), together with any
necessary endorsements or other instruments of transfer, but without reducing or
affecting in any manner the liability of such Guarantor under the other
provisions of this Guaranty.

 

(d)                                 Administrative Agent Authorization.  After
the occurrence and during the continuance of any Event of Default (including the
commencement and continuation of any proceeding under any Bankruptcy Law
relating to any other Loan Party), the Administrative Agent is authorized and
empowered (but without any obligation to so do), in its discretion, (i) in the
name of each Guarantor, to collect and enforce, and to submit claims in respect
of, Subordinated Obligations and to apply any amounts received thereon to the
Guaranteed Obligations (including any and all Post Petition Interest), and
(ii) to require each Guarantor (A) to collect and enforce, and to submit claims
in respect of, Subordinated Obligations and (B) to pay any amounts received on
such obligations to the Administrative Agent for application to the Guaranteed
Obligations (including any and all Post Petition Interest).

 

Section 7.08                                Continuing Guaranty.  This Guaranty
is a continuing guaranty and shall (a) remain in full force and effect until the
latest of (i) the indefeasible payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Guaranty, (ii) the
termination in whole of the Commitments and (iii) the latest date of expiration
or termination of all Letters of Credit, (b) be binding upon the Guarantors,
their successors and assigns and (c) inure to the benefit of and be enforceable
by the Administrative Agent and the other Secured Parties and their successors,
transferees and assigns.

 

ARTICLE VIII
THE AGENTS

 

Section 8.01                                Authorization and Action;
Appointment of Supplemental Collateral Agents.  (a)  Each Lender Party (in its
capacities as a Lender, the Swing Line Bank (if applicable) and as an Issuing
Bank (if applicable)) hereby appoints and authorizes each Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement and the other Loan Documents as are delegated to such Agent by
the terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto.  As to any matters not expressly provided for by
the Loan Documents (including, without limitation, enforcement or collection of
the Notes), no Agent shall be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all Lender
Parties and all holders of Notes; provided, however, that no Agent shall be
required to take any action that exposes such Agent to personal liability or
that is contrary to this Agreement or applicable law.  Each Agent agrees to give
to each Lender Party prompt notice of each notice given to it by the Borrower
pursuant to the terms of this Agreement.  Notwithstanding anything to the
contrary in any Loan Document, no Person identified as a syndication agent,
joint lead arranger or joint book running manager, in such Person’s capacity as
such, shall have any obligations or duties to any Loan Party, the Administrative
Agent or any other Secured Party under any of such Loan Documents.  In its
capacity as the Lender Parties’ contractual representative, Agents are each a
“representative” of the Lender Parties as used within the meaning of “Secured
Party” under Section 9-102 of the Uniform Commercial Code.

 

(b)                                 Anything contained herein or in the
Collateral Documents to the contrary notwithstanding, the Collateral Agent may
from time to time, when the Collateral Agent deems it to be necessary, appoint
one or more trustees, co-trustees, collateral co-agents or collateral subagents
(each, a “Supplemental Collateral Agent”) with respect to all or any part of the
Collateral.  In the event that the Collateral Agent so appoints any Supplemental
Collateral Agent with respect to any Collateral, (i) such Supplemental
Collateral Agent shall automatically be vested, in addition to the Collateral
Agent, with all rights, powers, privileges, interests and remedies of the
Collateral Agent under the Collateral Documents with respect to such Collateral;
(ii) such Supplemental Collateral Agent shall be deemed to be an “Agent” for
purposes of this Agreement and the other Loan Documents, and the provisions of
the Security Agreement, this

 

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Article and Section 9.04 hereof that refer to the Agents (or either of them)
shall inure to the benefit of such Supplemental Collateral Agent, and all
references therein and in the other Loan Documents to the Collateral Agent shall
be deemed to be references to the Collateral Agent and/or such Supplemental
Collateral Agent, as the context may require; and (iii) the term “Collateral
Agent”, when used herein or in any applicable Collateral Document in relation to
the Liens on or security interests in such Collateral granted in favor of the
Collateral Agent, and any rights, powers, privileges, interests and remedies of
the Collateral Agent with respect to such Collateral, shall be deemed to include
such Supplemental Collateral Agent; provided, however, that no such Supplemental
Collateral Agent shall be authorized to take any action with respect to any such
Collateral unless and except to the extent expressly authorized in writing by
the Collateral Agent.  Should any instrument in writing from the Borrower or any
other Loan Party be required by any Supplemental Collateral Agent so appointed
by the Collateral Agent to more fully or certainly vest in and confirming to
such Supplemental Collateral Agent such rights, powers, privileges and duties,
the Borrower shall, or shall cause such Loan Party to, execute, acknowledge and
deliver any and all such instruments promptly upon request by the Collateral
Agent.  If any Supplemental Collateral Agent, or successor thereto, shall die,
become incapable of acting, resign or be removed, all the rights, powers,
privileges and duties of such Supplemental Collateral Agent, to the extent
permitted by law, shall automatically vest in and be exercised by the Collateral
Agent until the appointment of a new Supplemental Collateral Agent.

 

Section 8.02                                Agents’ Reliance, Etc.  Neither any
Agent nor any of its directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with the Loan Documents, except for its or their own gross negligence or willful
misconduct.  Without limitation of the generality of the foregoing, each Agent: 
(a) in the case of the Administrative Agent, may treat the payee of any Note as
the holder thereof until the Administrative Agent receives and accepts an
Assignment and Acceptance entered into by the Lender that is the payee of such
Note, as assignor, and an Eligible Assignee, as assignee, or, in the case of any
other Agent, such Agent has received notice from the Administrative Agent that
it has received and accepted such Assignment and Acceptance as provided in
Section 9.07; (b) may consult with legal counsel (including counsel for any Loan
Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts;
(c) makes no warranty or representation to any Lender Party and shall not be
responsible to any Lender Party for any statements, warranties or
representations (whether written or oral) made in or in connection with the Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance, observance or satisfaction of any of the terms, covenants or
conditions of any Loan Document on the part of any Loan Party or the existence
at any time of any Default under the Loan Documents or to inspect the property
(including the books and records) of any Loan Party; (e) shall not be
responsible to any Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; (f) shall incur no liability under or in
respect of any Loan Document by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telegram, telecopy or telex or
other electronic communication) believed by it to be genuine and signed or sent
by the proper party or parties; and (g) shall not be required to take any action
that, in its opinion or the opinion of its counsel, may expose the
Administrative Agent to liability or that is contrary to any Loan Document or
Applicable Law, including for the avoidance of doubt, any action that may be in
violation of the automatic stay under any Bankruptcy Law or that may effect a
forfeiture, modification or termination of property of a Defaulting Lender in
violation of any Bankruptcy Law.

 

Section 8.03                                CBNA and Affiliates.  With respect
to its Commitments, the Advances made by it and the Notes issued to it, CBNA
shall have the same rights and powers under the Loan Documents as any other
Lender Party and may exercise the same as though it were not an Agent; and the
term “Lender Party” or “Lender Parties” shall, unless otherwise expressly
indicated, include CBNA in its individual capacity.  CBNA and its Affiliates may
accept deposits from, lend money to, act as trustee under indentures of, accept
investment banking engagements from and generally engage in any kind of business
with, any Loan Party, any Subsidiary of any Loan Party and any Person that may
do business with or own securities of any Loan Party or

 

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any such Subsidiary, all as if CBNA were not the Administrative Agent or the
Collateral Agent and without any duty to account therefor to the Lender Parties.

 

Section 8.04                                Lender Party Credit Decision.  Each
Lender Party acknowledges that it has, independently and without reliance upon
any Agent or any other Lender Party and based on the financial statements
referred to in Section 4.01 and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement.  Each Lender Party also acknowledges that it will, independently and
without reliance upon any Agent or any other Lender Party and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement.  Nothing in this Agreement or any other Loan Document shall require
any Agent or any of its respective directors, officers, agents or employees to
carry out any “know your customer” or other checks in relation to any Person on
behalf of any Lender Party and each Lender Party confirms to the Agents that it
is solely responsible for any such checks it is required to carry out and that
it may not rely on any statement in relation to such checks made by any Agent or
any of its respective directors, officers, agents or employees.

 

Section 8.05                                Indemnification by Lender Parties. 
(a)  Each Lender Party severally agrees to indemnify each Agent (to the extent
not promptly reimbursed by the Borrower) from and against such Lender Party’s
ratable share (determined as provided below) of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against such Agent in any way relating to or
arising out of the Loan Documents or any action taken or omitted by such Agent
under the Loan Documents (collectively, the “Indemnified Costs”); provided,
however, that no Lender Party shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from any Agent’s gross negligence or
willful misconduct as found in a final, non-appealable judgment by a court of
competent jurisdiction.  Without limitation of the foregoing, each Lender Party
severally agrees to reimburse each Agent promptly upon demand for its ratable
share of any costs and expenses (including, without limitation, fees and
expenses of counsel) payable by the Borrower under Section 9.04, to the extent
that such Agent is not promptly reimbursed for such costs and expenses by the
Borrower.  In the case of any investigation, litigation or proceeding giving
rise to any Indemnified Costs, this Section 8.05 applies whether any such
investigation, litigation or proceeding is brought by any Lender Party or any
other Person.

 

(b)                                 Each Lender Party severally agrees to
indemnify each Issuing Bank (to the extent not promptly reimbursed by the
Borrower) from and against such Lender Party’s ratable share (determined as
provided below) of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against such Issuing Bank in any way relating to or arising out of the Loan
Documents or any action taken or omitted by such Issuing Bank under the Loan
Documents; provided, however, that no Lender Party shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from such Issuing
Bank’s gross negligence or willful misconduct as found in a final,
non-appealable judgment by a court of competent jurisdiction.  Without
limitation of the foregoing, each Lender Party severally agrees to reimburse
such Issuing Bank promptly upon demand for its ratable share of any costs and
expenses (including, without limitation, fees and expenses of counsel) payable
by the Borrower under Section 9.04, to the extent that such Issuing Bank is not
promptly reimbursed for such costs and expenses by the Borrower.

 

(c)                                  For purposes of this Section 8.05, the
Lender Parties’ respective ratable shares of any amount shall be determined, at
any time, according to their respective Revolving Credit Commitments at such
time.  The failure of any Lender Party to reimburse any Agent or any Issuing
Bank, as the case may be, promptly upon demand for its ratable share of any
amount required to be paid by the Lender Parties to such Agent or such Issuing
Bank, as the case may be, as provided herein shall not relieve any other Lender
Party of its obligation hereunder to reimburse such Agent or such Issuing Bank,
as the case may be, for its ratable share

 

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of such amount, but no Lender Party shall be responsible for the failure of any
other Lender Party to reimburse such Agent or such Issuing Bank, as the case may
be, for such other Lender Party’s ratable share of such amount.  Without
prejudice to the survival of any other agreement of any Lender Party hereunder,
the agreement and obligations of each Lender Party contained in this
Section 8.05 shall survive the payment in full of principal, interest and all
other amounts payable hereunder and under the other Loan Documents.

 

Section 8.06                                Successor Agents.  (a)  Any Agent
may resign at any time by giving 30 days’ prior written notice thereof to the
Lender Parties and the Borrower and may be removed at any time with or without
cause by the Required Lenders; provided, however, that any removal of the
Administrative Agent will not be effective until it has been replaced as
Collateral Agent and it (or its Affiliate) has been replaced as an Issuing Bank
and released from all obligations in respect thereof.  Upon any such resignation
or removal, the Required Lenders shall have the right to appoint a successor
Agent.  If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Agent’s giving of notice of resignation or the Required Lenders’
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lender Parties, appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States or of any State thereof and having
a combined capital and surplus of at least $250,000,000.  Upon the acceptance of
any appointment as an Agent hereunder by a successor Agent, and, in the case of
a successor Collateral Agent, upon the execution and filing or recording of such
financing statements, or amendments thereto, and such amendments or supplements
to the Mortgages and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, such successor Agent shall succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under the
Loan Documents.  If within 45 days after written notice is given of the retiring
Agent’s resignation or removal under this Section 8.06 no successor Agent shall
have been appointed and shall have accepted such appointment, then on such 45th
day (i) the retiring Agent’s resignation or removal shall become effective,
(ii) the retiring Agent shall thereupon be discharged from its duties and
obligations under the Loan Documents and (iii) the Required Lenders shall
thereafter perform all duties of the retiring Agent under the Loan Documents
until such time, if any, as the Required Lenders appoint a successor Agent as
provided above.  After any retiring Agent’s resignation or removal hereunder as
an Agent shall have become effective, the provisions of this Article VIII shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was an Agent under this Agreement.

 

(b)                                 In addition to the foregoing, if a Lender
becomes, and during the period it remains, a Defaulting Lender or a Potential
Defaulting Lender, the Issuing Bank and/or the Swing Line Bank may, upon prior
written notice to the Borrower and the Administrative Agent, resign as Issuing
Bank or Swing Line Bank, respectively, effective at the close of business New
York time on a date specified in such notice (which date may not be less than
thirty (30) days after the date of such notice), provided that such resignation
by the Issuing Bank will have no effect on the validity or enforceability of any
Letter of Credit then outstanding or on the obligations of the Borrower or any
Lender under this Agreement with respect to any such outstanding Letter of
Credit or otherwise to the Issuing Bank; and provided, further, that such
resignation by the Swing Line Bank will have no effect on its rights in respect
of any outstanding Swing Line Advances or on the obligations of the Borrower or
any Lender under this Agreement with respect to any such outstanding Swing Line
Advance.

 

Section 8.07                                Relationship of Agents and Lenders. 
The relationship between Agents (or either of them) and the Lenders, and the
relationship among the Lenders, is not intended by the parties to create, and
shall not create, any trust, joint venture or partnership relation between them.

 

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ARTICLE IX
MISCELLANEOUS

 

Section 9.01                                Amendments, Etc.  (a)  No amendment
or waiver of any provision of this Agreement or the Notes or any other Loan
Document, nor consent to any departure by any Loan Party therefrom, shall in any
event be effective unless the same shall be in writing and signed (or, in the
case of the Collateral Documents, consented to) by the Required Lenders, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all of the Lenders
(except as otherwise provided in this Section 9.01(a)), do any of the following
at any time:  (i) modify the definition of Required Lenders or otherwise change
the percentage vote of the Lenders required to take any action under this
Agreement or any other Loan Document, (ii) release the Borrower with respect to
the Obligations or, except to the extent expressly permitted under this
Agreement, reduce or limit the obligations of any Guarantor or the Borrower
under Article VII or release such Guarantor or the Borrower or otherwise limit
such Guarantor’s or the Borrower’s liability with respect to the Guaranteed
Obligations or the Obligations, as the case may be, (iii) release all or
substantially all of the Collateral (other than pursuant to Section 5.02(e) or
9.11) or permit the Loan Parties to encumber the Collateral, except as expressly
permitted in the Loan Documents, (iv) amend this Section 9.01, (v) increase the
Commitments of any Lender or subject any Lender to any additional obligations
without the prior written consent of such Lender, (vi) forgive or reduce the
principal of, or interest on, the Obligations of the Loan Parties under the Loan
Documents or any fees or other amounts payable thereunder without the prior
written consent of each Lender affected thereby, (vii) postpone or extend any
scheduled payment date for any payment of principal of, or interest on, the
Notes or any scheduled payment date for any fees or other amounts payable
hereunder or extend the Termination Date, other than in each case as provided by
Section 2.16, without the prior written consent of each Lender affected thereby,
(viii) provide for payment of the Facility in any manner other than in cash in
U.S. Dollars, (ix) take any other action specifically requiring the consent of
all Lenders under the Loan Documents, (x) change Section 2.11(f) or
Section 2.13, or (xi) change the definition of “Facility Available Amount” or
any other definition used in the determination thereof; provided further that no
amendment, waiver or consent shall, unless in writing and signed by the Swing
Line Bank or each Issuing Bank, as the case may be, in addition to the Lenders
required above to take such action, affect the rights or obligations of the
Swing Line Bank or of the Issuing Banks, as the case may be, under this
Agreement; and provided further that no amendment, waiver or consent shall,
unless in writing and signed by the Administrative Agent or the Collateral Agent
in addition to the Lenders required above to take such action, affect the rights
or duties of the Administrative Agent or the Collateral Agent, as the case may
be, under this Agreement or the other Loan Documents.

 

(b)                                 In the event that any Lender (a
“Non-Consenting Lender”) shall refuse to consent to a waiver or amendment to, or
a departure from, the provisions of this Agreement which requires the consent of
all Lenders and that has been consented to by the Administrative Agent and the
Required Lenders, then the Borrower shall have the right, upon written demand to
such Non-Consenting Lender and the Administrative Agent given within 30 days
after the first date on which such consent was solicited in writing from the
Lenders by the Administrative Agent (a “Consent Request Date”), to cause such
Non-Consenting Lender to assign its rights and obligations under this Agreement
(including, without limitation, its Commitment or Commitments, the Advances
owing to it and the Note or Notes, if any, held by it) to a Replacement Lender,
provided that (i) as of such Consent Request Date, no Default or Event of
Default shall have occurred and be continuing, (ii) as of the date of the
Borrower’s written demand to replace such Non-Consenting Lender, no Default or
Event of Default shall have occurred and be continuing other than a Default or
Event of Default that resulted solely from the subject matter of the waiver or
amendment for which such consent was being solicited from the Lenders by the
Administrative Agent, (iii) the replacement of any Non-Consenting Lender shall
be consummated in accordance with and subject to the provisions of Section 2.18,
and (iv) such Replacement Lender shall have consented to such waiver or
amendment.  The Replacement Lender shall purchase such interests of the
Non-Consenting Lender and shall assume the rights and obligations of the
Non-Consenting Lender under this Agreement upon execution by the Replacement
Lender of an Assignment and Acceptance delivered pursuant to Section 9.07.

 

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(c)                                  Anything herein to the contrary
notwithstanding, during such period as a Lender is a Defaulting Lender, to the
fullest extent permitted by applicable law, such Lender will not be entitled to
vote in respect of amendments and waivers hereunder and the Commitment and the
outstanding Advances or other extensions of credit of such Lender hereunder will
not be taken into account in determining whether the Required Lenders or all of
the Lenders, as required, have approved any such amendment or waiver (and the
definition of “Required Lenders” will automatically be deemed modified
accordingly for the duration of such period, provided that any such amendment or
waiver that would increase or extend the term of the Commitment of such
Defaulting Lender, extend the date fixed for the payment of principal or
interest owing to such Defaulting Lender hereunder, reduce the principal amount
of any obligation owing to such Defaulting Lender, reduce the amount of or the
rate or amount of interest on any amount owing to such Defaulting Lender or of
any fee payable to such Defaulting Lender hereunder, or alter the terms of this
proviso, will require the consent of such Defaulting Lender.

 

Section 9.02                                Notices, Etc.  (a)  All notices and
other communications provided for hereunder shall be either (x) in writing
(including telecopier communication) and mailed, telecopied or delivered by hand
or by overnight courier service, (y) as and to the extent set forth in
Section 9.02(b) and in the proviso to this Section 9.02(a), in an electronic
medium and delivered as set forth in Section 9.02(b) or (z) as and to the extent
expressly permitted in this Agreement, transmitted by e-mail, provided that such
e-mail shall in all cases include an attachment (in PDF format or similar
format) containing a legible signature of the person providing such notice, if
to the Borrower, at its address at 400 Centre Street, Newton, MA 02458,
Attention:  Bruce J. Mackey, Jr., President and Chief Executive Officer, or, if
applicable, at bmackey@5sqc.com (and in the case of transmission by e-mail, with
a copy by U.S. mail to the attention of Bruce J. Mackey, Jr., President and
Chief Executive Officer, 400 Centre Street, Newton, MA 02458), with a copy to
Katherine E. Potter, Vice President and General Counsel, Five Star Quality
Care, Inc., 400 Centre Street, Newton, MA 02458 or, if applicable, at
kpotter@5sqc.com (and in the case of transmission by e-mail, with a copy by U.S.
mail to the attention of Katherine E. Potter, Vice President and General
Counsel, at 400 Centre Street, Newton, MA 02458); if to any Initial Lender, at
its Domestic Lending Office or, if applicable, at the telecopy number or e-mail
address specified opposite its name on Schedule I hereto (and in the case of a
transmission by e-mail, with a copy by U.S. mail to its Domestic Lending
Office); if to any other Lender Party, at its Domestic Lending Office or, if
applicable, at the telecopy number or e-mail address specified in the Assignment
and Acceptance pursuant to which it became a Lender Party (and in the case of a
transmission by e-mail, with a copy by U.S. mail to its Domestic Lending
Office); if to the Initial Issuing Bank, at its address at 1615 Brett Road OPS
III, New Castle, DE 19720, Attention:  Bank Loan Syndications Department, or, if
applicable, at robert.ross@citigroup.com (and in the case of a transmission by
e-mail, with a copy by U.S. mail to 1615 Brett Road OPS III, New Castle, DE
19720, Attention:  Bank Loan Syndications Department); and if to the
Administrative Agent, the Collateral Agent or the Swing Line Bank, at its
address at 1615 Brett Road OPS III, New Castle, DE 19720, Attention:  Bank Loan
Syndications Department, or, if applicable, at robert.ross@citigroup.com (and in
the case of a transmission by e-mail, with a copy by U.S. mail to 1615 Brett
Road OPS III, New Castle, DE 19720, Attention:  Bank Loan Syndications
Department) or, as to the Borrower or any Agent, at such other address as shall
be designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Borrower and the Administrative Agent.  All notices,
demands, requests, consents and other communications described in this
clause (a) shall be effective (i) if delivered by hand, including any overnight
courier service, upon personal delivery, (ii) if delivered by mail, when
deposited in the mails, (iii) if delivered by posting to an Approved Electronic
Platform, an Internet website or a similar telecommunication device requiring
that a user have prior access to such Approved Electronic Platform, website or
other device (to the extent permitted by Section 9.02(b) to be delivered
thereunder), when such notice, demand, request, consent and other communication
shall have been made generally available on such Approved Electronic
Platform, Internet website or similar device to the class of Person being
notified (regardless of whether any such Person must accomplish, and whether or
not any such Person shall have accomplished, any action prior to obtaining
access to such items, including registration, disclosure of contact information,
compliance with a standard user agreement or undertaking a duty of
confidentiality) and such Person has been notified in respect of such posting
that a communication has been posted to the Approved Electronic Platform,
provided that if requested

 

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by any Lender Party, the Administrative Agent shall deliver a copy of the
Communications to such Lender Party by e-mail or telecopier and (iv) if
delivered by electronic mail or any other telecommunications device, when
receipt is confirmed by electronic mail as provided in this clause (a);
provided, however, that notices and communications to any Agent pursuant to
Article II, III or VIII or to the Collateral Agent under the Collateral
Documents shall not be effective until received by such Agent or the Collateral
Agent, as the case may be.  Delivery by telecopier of an executed counterpart of
a signature page to any amendment or waiver of any provision of this Agreement
or the Notes or of any Exhibit hereto to be executed and delivered hereunder
shall be effective as delivery of an original executed counterpart thereof. 
Each Lender Party agrees (i) to notify the Administrative Agent in writing of
such Lender Party’s e-mail address to which a notice may be sent by electronic
transmission (including by electronic communication) on or before the date such
Lender Party becomes a party to this Agreement (and from time to time thereafter
to ensure that the Administrative Agent has on record an effective e-mail
address for such Lender Party) and (ii) that any notice may be sent to such
e-mail address.

 

(b)                                 Notwithstanding clause (a) (unless the
Administrative Agent requests that the provisions of clause (a) be followed) and
any other provision in this Agreement or any other Loan Document providing for
the delivery of any Approved Electronic Communication by any other means, the
Loan Parties shall deliver all Approved Electronic Communications to the
Administrative Agent by properly transmitting such Approved Electronic
Communications in an electronic/soft medium in a format acceptable to the
Administrative Agent to oploanswebadmin@citigroup.com or such other electronic
mail address (or similar means of electronic delivery) as the Administrative
Agent may notify to the Borrower.  Nothing in this clause (b) shall prejudice
the right of the Administrative Agent or any Lender Party to deliver any
Approved Electronic Communication to any Loan Party in any manner authorized in
this Agreement or to request that the Borrower effect delivery in such manner.

 

(c)                                  Each of the Lender Parties and each Loan
Party agrees that the Administrative Agent may, but shall not be obligated to,
make the Approved Electronic Communications available to the Lender Parties by
posting such Approved Electronic Communications on IntraLinks™ or a
substantially similar electronic platform chosen by the Administrative Agent to
be its electronic transmission system (the “Approved Electronic Platform”). 
Although the Approved Electronic Platform and its primary web portal are secured
with generally-applicable security procedures and policies implemented or
modified by the Administrative Agent from time to time (including, as of the
Closing Date, a dual firewall and a User ID/Password Authorization System) and
the Approved Electronic Platform is secured through a single-user-per-deal
authorization method whereby each user may access the Approved Electronic
Platform only on a deal-by-deal basis, each of the Lender Parties and each Loan
Party acknowledges and agrees that the distribution of material through an
electronic medium is not necessarily secure and that there are confidentiality
and other risks associated with such distribution.  In consideration for the
convenience and other benefits afforded by such distribution and for the other
consideration provided hereunder, the receipt and sufficiency of which is hereby
acknowledged, each of the Lender Parties and each Loan Party hereby approves
distribution of the Approved Electronic Communications through the Approved
Electronic Platform and understands and assumes the risks of such distribution.

 

(d)                                 THE APPROVED ELECTRONIC PLATFORM AND THE
APPROVED ELECTRONIC COMMUNICATIONS ARE PROVIDED “AS IS” AND “AS AVAILABLE”. 
NONE OF THE ADMINISTRATIVE AGENT NOR ANY OF ITS DIRECTORS, OFFICERS, AGENTS OR
EMPLOYEES WARRANT THE ACCURACY, ADEQUACY OR COMPLETENESS OF THE APPROVED
ELECTRONIC COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM AND EACH EXPRESSLY
DISCLAIMS ANY LIABILITY FOR ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC
COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM.  NO WARRANTY OF ANY KIND,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE
ADMINISTRATIVE AGENT OR ANY OF ITS

 

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DIRECTORS, OFFICERS, AGENTS OR EMPLOYEES IN CONNECTION WITH THE APPROVED
ELECTRONIC COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM.

 

(e)                                  Each of the Lender Parties and each Loan
Party agrees that the Administrative Agent may, but (except as may be required
by applicable law) shall not be obligated to, store the Approved Electronic
Communications on the Approved Electronic Platform in accordance with the
Administrative Agent’s generally-applicable document retention procedures and
policies.

 

Section 9.03                                No Waiver; Remedies.  No failure on
the part of any Lender Party or any Agent to exercise, and no delay in
exercising, any right hereunder or under any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right.  The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.

 

Section 9.04                                Costs and Expenses.  (a)  Each Loan
Party agrees jointly and severally to pay on demand (i) all reasonable
out-of-pocket costs and expenses of each Agent in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Loan Documents (including, without limitation, (A) all due diligence,
collateral review, syndication, transportation, computer, duplication,
appraisal, audit, insurance, consultant, search, filing and recording fees and
expenses, (B) the reasonable fees and expenses of counsel for such Agent with
respect thereto (including, without limitation, with respect to reviewing and
advising on any matters required to be completed by the Loan Parties on a
post-closing basis), with respect to advising such Agent as to its rights and
responsibilities, or the perfection, protection or preservation of rights or
interests, under the Loan Documents, with respect to negotiations with any Loan
Party or with other creditors of any Loan Party or any of its Subsidiaries
arising out of any Default or any events or circumstances that may give rise to
a Default and with respect to presenting claims in or otherwise participating in
or monitoring any bankruptcy, insolvency or other similar proceeding involving
creditors’ rights generally and any proceeding ancillary thereto and (C) the
reasonable fees and expenses of counsel for such Agent with respect to the
preparation, execution, delivery and review of any documents and instruments at
any time delivered pursuant to Sections 3.01, 3.02, 5.01(j) or 5.01(k) and
(ii) all reasonable out-of-pocket costs and expenses of each Agent and each
Lender Party in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of the Loan Documents, whether in any action,
suit or litigation, or any bankruptcy, insolvency or other similar proceeding
affecting creditors’ rights generally (including, without limitation, the
reasonable fees and expenses of counsel for such Agent and each Lender Party
with respect thereto).

 

(b)                                 Each Loan Party agrees to indemnify, defend
and save and hold harmless each Indemnified Party from and against, and shall
pay on demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation or proceeding or
preparation of a defense in connection therewith) (i) the Facilities, the actual
or proposed use of the proceeds of the Advances or the Letters of Credit, the
Loan Documents or any of the transactions contemplated thereby or (ii) the
actual or alleged presence of Hazardous Materials on any property of any Loan
Party or any of its Subsidiaries or any Environmental Action relating in any way
to any Loan Party or any of its Subsidiaries, except to the extent such claim,
damage, loss, liability or expense is found in a final, non-appealable judgment
by a court of competent jurisdiction to have resulted from such Indemnified
Party’s gross negligence or willful misconduct.  In the case of an
investigation, litigation or other proceeding to which the indemnity in this
Section 9.04(b) applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by any Loan Party, its
directors, shareholders or creditors or an Indemnified Party, whether or not any
Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated by the Loan Documents are consummated.  Each Loan
Party also agrees not to assert any claim against any Agent, any Lender Party or
any of their Affiliates, or any of their respective officers, directors,
employees, agents and advisors, on any theory of liability, for special,
indirect, incidental, consequential or

 

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punitive damages arising out of or otherwise relating to the Facilities, the
actual or proposed use of the proceeds of the Advances or the Letters of Credit,
the Loan Documents or any of the transactions contemplated by the Loan
Documents.

 

(c)                                  If any payment of principal of, or
Conversion of, any Eurodollar Rate Advance is made by the Borrower to or for the
account of a Lender Party other than on the last day of the Interest Period for
such Advance, as a result of a payment or Conversion pursuant to Section 2.06,
2.09(b)(i) or 2.10(d), acceleration of the maturity of the Notes pursuant to
Section 6.01 or for any other reason, or if the Borrower fails to make any
payment or prepayment of an Advance for which a notice of prepayment has been
given or that is otherwise required to be made, whether pursuant to
Section 2.04, 2.06 or 6.01 or otherwise, the Borrower shall, upon demand by such
Lender Party (with a copy of such demand to the Administrative Agent), pay to
the Administrative Agent for the account of such Lender Party any amounts
required to compensate such Lender Party for any additional losses, costs or
expenses that it may reasonably incur as a result of such payment or Conversion
or such failure to pay or prepay, as the case may be, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender Party to fund or
maintain such Advance.

 

(d)                                 If any Loan Party fails to pay when due any
costs, expenses or other amounts payable by it under any Loan Document,
including, without limitation, fees and expenses of counsel and indemnities,
such amount may be paid on behalf of such Loan Party by any Agent or any Lender
Party, in its sole discretion.

 

(e)                                  Without prejudice to the survival of any
other agreement of any Loan Party hereunder or under any other Loan Document,
the agreements and obligations of the Borrower and the other Loan Parties
contained in Sections 2.10 and 2.12, Section 7.06 and this Section 9.04 shall
survive the payment in full of principal, interest and all other amounts payable
hereunder and under any of the other Loan Documents.

 

Section 9.05                                Right of Set-off.  Upon (a) the
occurrence and during the continuance of any Event of Default and (b) the making
of the request or the granting of the consent specified by Section 6.01 to
authorize the Administrative Agent to declare the Notes due and payable pursuant
to the provisions of Section 6.01, each Agent and each Lender Party and each of
their respective Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and otherwise apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Agent, such
Lender Party or such Affiliate to or for the credit or the account of the
Borrower or any other Loan Party against any and all of the Obligations of the
Borrower or such Loan Party now or hereafter existing under the Loan Documents,
irrespective of whether such Agent or such Lender Party shall have made any
demand under this Agreement or such Note or Notes and although such obligations
may be unmatured.  Each Agent and each Lender Party agrees promptly to notify
the Borrower or such Loan Party after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application.  The rights of each Agent and each
Lender Party and their respective Affiliates under this Section 9.05 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Agent, such Lender Party and their respective
Affiliates may have; provided, however, that in the event that any Defaulting
Lender exercises such right of setoff, (x) all amounts so set off will be paid
over immediately to the Administrative Agent for further application in
accordance with the provisions of Section 2.17(b) and, pending such payment,
will be segregated by such Defaulting Lender from its other funds and deemed
held in trust for the benefit of the Administrative Agent, the Issuing Bank, the
Swing Line Bank and the Lenders and (y) the Defaulting Lender will provide
promptly to the Administrative Agent a statement describing in reasonable detail
the Obligations owing to such Defaulting Lender as to which it exercised such
right of setoff.

 

Section 9.06                                Binding Effect.  This Agreement
shall become effective when it shall have been executed by the Borrower, each
Guarantor named on the signature pages hereto and the Administrative

 

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Agent shall have been notified by each Initial Lender and each Initial Issuing
Bank that such Initial Lender or such Initial Issuing Bank, as the case may be,
has executed it and thereafter shall be binding upon and inure to the benefit of
the Borrower, the Guarantors named on the signature pages hereto and each Agent
and each Lender Party and their respective successors and assigns, except that
neither the Borrower nor any other Loan Party shall have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Lender Parties.

 

Section 9.07                                Assignments and Participations;
Replacement Notes.  (a)  Each Lender may (and, if demanded by the Borrower in
accordance with Section 9.01(b) will) assign to one or more Eligible Assignees
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment or Commitments, the
Advances owing to it and the Note or Notes held by it); provided, however, that
(i) each such assignment shall be of a uniform, and not a varying, percentage of
all rights and obligations under and in respect of one or more of the
Facilities, (ii) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Lender, an Affiliate of any Lender
or a Fund Affiliate of any Lender or an assignment of all of a Lender’s rights
and obligations under this Agreement, the aggregate amount of the Commitments
being assigned to such Eligible Assignee pursuant to such assignment (determined
as of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than $5,000,000 under each Facility or an integral
multiple of $1,000,000 in excess thereof (or such lesser amount as shall be
approved by the Administrative Agent and, so long as no Default shall have
occurred and be continuing at the time of effectiveness of such assignment, the
Borrower), (iii) each such assignment shall be to an Eligible Assignee,
(iv) each such assignment made as a result of a demand by the Borrower pursuant
to Section 9.01(b) shall be an assignment at par of all rights and obligations
of the assigning Lender under this Agreement, (v) no such assignments shall be
permitted without the consent of the Administrative Agent (which consent shall
not be unreasonably withheld), except if such assignment is being made by a
Lender to an Affiliate or Fund Affiliate of such Lender, (vi) no such
assignments shall be made to any Defaulting Lender or Potential Defaulting
Lender or any of their respective subsidiaries, or any Person who, upon becoming
a Lender hereunder, would constitute any of the foregoing Persons described in
this clause, and (vii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with any Note or Notes subject
to such assignment and, except if such assignment is being made by a Lender to
an Affiliate or Fund Affiliate of such Lender, a processing and recordation fee
of $3,500; provided, however, that for each such assignment made as a result of
a demand by the Borrower pursuant to Section 9.01(b), the Borrower shall pay to
the Administrative Agent the applicable processing and recordation fee.  In
connection with any assignment of rights and obligations of any Defaulting
Lender hereunder, no such assignment will be effective unless and until, in
addition to the other conditions thereto set forth herein, the parties to the
assignment make such additional payments to the Administrative Agent in an
aggregate amount sufficient, upon distribution thereof as appropriate (which may
be outright payment, purchases by the assignee of participations or
subparticipations, or other compensating actions, including funding, with the
consent of the Borrower and the Administrative Agent, the applicable pro rata
share of Advances previously requested but not funded by the Defaulting Lender,
to each of which the applicable assignee and assignor hereby irrevocably
consent), to (x) pay and satisfy in full all payment liabilities then owed by
such Defaulting Lender to the Administrative Agent, the Issuing Bank, the Swing
Line Bank and each other Lender hereunder (and interest accrued thereon), and
(y) acquire (and fund as appropriate) its full pro rata share of all Advances
and participants in Letters of Credit and Swing Line Advances in accordance with
its Applicable Percentage.  Notwithstanding the foregoing, in the event that any
assignment of rights and obligations of any Defaulting Lender hereunder becomes
effective under applicable law without compliance with the provisions of this
paragraph, then the assignee of such interest will be deemed to be a Defaulting
Lender for all purposes of this Agreement until such compliance occurs.

 

(b)                                 Upon such execution, delivery, acceptance
and recording, from and after the effective date specified in such Assignment
and Acceptance, (i) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, have the rights and obligations of a Lender
or Issuing Bank, as the case may be, hereunder

 

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and (ii) the Lender or Issuing Bank assignor thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (other than its rights under
Sections 2.10, 2.12, 7.06, 8.05 and 9.04 to the extent any claim thereunder
relates to an event arising prior to such assignment) and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the remaining portion of an assigning Lender’s or
Issuing Bank’s rights and obligations under this Agreement, such Lender or
Issuing Bank shall cease to be a party hereto).

 

(c)                                  By executing and delivering an Assignment
and Acceptance, each Lender Party assignor thereunder and each assignee
thereunder confirm to and agree with each other and the other parties thereto
and hereto as follows:  (i) other than as provided in such Assignment and
Acceptance, such assigning Lender Party makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with any Loan Document or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, any Loan Document or any
other instrument or document furnished pursuant thereto; (ii) such assigning
Lender Party makes no representation or warranty and assumes no responsibility
with respect to the financial condition of any Loan Party or the performance or
observance by any Loan Party of any of its obligations under any Loan Document
or any other instrument or document furnished pursuant thereto; (iii) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon any Agent, such assigning
Lender Party or any other Lender Party and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes each Agent to take such action as agent on its behalf and to
exercise such powers and discretion under the Loan Documents as are delegated to
such Agent by the terms hereof and thereof, together with such powers and
discretion as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations that
by the terms of this Agreement are required to be performed by it as a Lender or
Issuing Bank, as the case may be.

 

(d)                                 The Administrative Agent shall maintain at
its address referred to in Section 9.02 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lender Parties and the Commitment under each Facility of,
and principal amount of the Advances owing under each Facility to, each Lender
Party from time to time (the “Register”).  The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agents and the Lender Parties may treat each Person whose name is
recorded in the Register as a Lender Party hereunder for all purposes of this
Agreement.  The Register shall be available for inspection by the Borrower or
any Agent or any Lender Party at any reasonable time and from time to time upon
reasonable prior notice.

 

(e)                                  Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender Party and an assignee, together with
any Note or Notes subject to such assignment, the Administrative Agent shall, if
such Assignment and Acceptance has been completed and is in substantially the
form of Exhibit D hereto, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower and each other Agent.  In the case of any assignment by
a Lender, within five Business Days after its receipt of such notice, the
Borrower, at its own expense, shall, if requested by the applicable Lender,
execute and deliver to the Administrative Agent in exchange for the surrendered
Note or Notes a substitute Note to the order of such Eligible Assignee in an
amount equal to the Commitment assumed by it under each Facility pursuant to
such Assignment and Acceptance and, if any assigning Lender has retained a
Commitment hereunder under such Facility, a substitute Note to the order of such
assigning Lender in an amount equal to the Commitment retained by it hereunder. 
Such substitute Note or Notes, if any, shall be in an aggregate principal amount
equal to the

 

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aggregate principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit A hereto.

 

(f)                                    Each Issuing Bank may assign to one or
more Eligible Assignees all or a portion of its rights and obligations under the
undrawn portion of its Letter of Credit Commitment at any time; provided,
however, that (i) except in the case of an assignment to a Person that
immediately prior to such assignment was an Issuing Bank or an assignment of all
of an Issuing Bank’s rights and obligations under this Agreement, the amount of
the Letter of Credit Commitment of the assigning Issuing Bank being assigned
pursuant to each such assignment (determined as of the date of the Assignment
and Acceptance with respect to such assignment) shall in no event be less than
$5,000,000 and shall be in an integral multiple of $1,000,000 in excess thereof,
(ii) each such assignment shall be to an Eligible Assignee and (iii) the parties
to each such assignment shall execute and deliver to the Administrative Agent,
for its acceptance and recording in the Register, an Assignment and Acceptance,
together with a processing and recordation fee of $3,500, provided that such fee
shall not be payable if the assigning Issuing Bank is making such assignment
simultaneously with the assignment in its capacity as a Lender of all or a
portion of its Revolving Credit Commitment to the same Eligible Assignee.

 

(g)                                 Each Lender Party may sell participations to
one or more Persons (other than any Loan Party or any of its Affiliates) in or
to all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the
Advances owing to it and the Note or Notes (if any) held by it); provided,
however, that (i) such Lender Party’s obligations under this Agreement
(including, without limitation, its Commitments) shall remain unchanged,
(ii) such Lender Party shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Lender Party shall
remain the holder of any such Note for all purposes of this Agreement, (iv) the
Borrower, the Agents and the other Lender Parties shall continue to deal solely
and directly with such Lender Party in connection with such Lender Party’s
rights and obligations under this Agreement, (v) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by any Loan
Party therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation, or postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, or release all or
substantially all of the Collateral and (vi) if, at the time of such sale, such
Lender Party was entitled to payments under Section 2.12(a) in respect of United
States withholding tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes that may
be imposed in the future or other amounts otherwise includable in Taxes) United
States withholding tax, if any, applicable with respect to such participant on
such date, provided that such participant complies with the requirements of
Section 2.12(e) as if it were a Lender hereunder.

 

(h)                                 Any Lender Party may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 9.07, disclose to the assignee or participant or proposed assignee
or participant any information relating to the Loan Parties (or any of them)
furnished to such Lender Party by or on behalf of any Loan Party; provided,
however, that prior to any such disclosure, the assignee or participant or
proposed assignee or participant shall agree to preserve the confidentiality of
any Information received by it from such Lender Party on the same terms as
provided in Section 9.10.

 

(i)                                     Notwithstanding any other provision set
forth in this Agreement, any Lender Party may at any time create a security
interest in all or any portion of its rights under this Agreement (including,
without limitation, the Advances owing to it and the Note or Notes held by it),
including in favor of any Federal Reserve Bank in accordance with Regulation A
of the Board of Governors of the Federal Reserve System.

 

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(j)                                     Upon notice to the Borrower from the
Administrative Agent or any Lender of the loss, theft, destruction or mutilation
of any Lender’s Note, the Borrower will execute and deliver, in lieu of such
original Note, a replacement promissory note, identical in form and substance
to, and dated as of the same date as, the Note so lost, stolen or mutilated,
subject to delivery by such Lender to the Borrower of an affidavit of lost note
and indemnity in customary form.  Upon the execution and delivery of the
replacement Note, all references herein or in any of the other Loan Documents to
the lost, stolen or mutilated Note shall be deemed references to the replacement
Note.

 

Section 9.08                                Execution in Counterparts.  This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.  Delivery of an executed counterpart of a signature page to this
Agreement by telecopier or by email with a pdf or similar attachment shall be
effective as delivery of an original executed counterpart of this Agreement.

 

Section 9.09                                No Liability of the Issuing Banks. 
(a)  The Borrower assumes all risks of the acts or omissions of any beneficiary
or transferee of any Letter of Credit with respect to its use of such Letter of
Credit.  Neither any Issuing Bank nor any of its officers or directors shall be
liable or responsible for:  (a) the use that may be made of any Letter of Credit
or any acts or omissions of any beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) payment by such
Issuing Bank against presentation of documents that do not comply with the terms
of a Letter of Credit, including failure of any documents to bear any reference
or adequate reference to the Letter of Credit; or (d) any other circumstances
whatsoever in making or failing to make payment under any Letter of Credit,
except that the Borrower shall have a claim against such Issuing Bank, and such
Issuing Bank shall be liable to the Borrower, to the extent of any direct, but
not consequential, damages suffered by the Borrower that the Borrower proves
were caused by (i) such Issuing Bank’s willful misconduct or gross negligence as
determined in a final, non-appealable judgment by a court of competent
jurisdiction in determining whether documents presented under any Letter of
Credit comply with the terms of the Letter of Credit or (ii) such Issuing Bank’s
willful failure to make lawful payment under a Letter of Credit after the
presentation to it of a draft and certificates strictly complying with the terms
and conditions of the Letter of Credit.  In furtherance and not in limitation of
the foregoing, such Issuing Bank may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of
any notice or information to the contrary.

 

Section 9.10                                Confidentiality.  (a)  Each of the
Agents, the Lender Parties and the Issuing Bank agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (i) to its Affiliates and to its and its Affiliates’ respective
managers, administrators, trustees, partners, directors, officers, employees,
agents, advisors and other representatives (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), (ii) to
the extent requested by any regulatory authority purporting to have jurisdiction
over it (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (iii) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process,
(iv) to any other party hereto, (v) in connection with the exercise of any
remedies hereunder or under any other Loan Document or any action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (vi) subject to an agreement containing
provisions at least as restrictive as those of this Section, (vii) to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (viii) to any actual or
prospective party (or its managers, administrators, trustees, partners,
directors, officers, employees, agents, advisors and other representatives) to
any swap, derivative or other transaction under which payments are to be made by
reference to the Borrower and its obligations, this Agreement or payments
hereunder, (ix) to any rating agency, (x) the CUSIP Service Bureau or any
similar organization, (xi) with the consent of the Borrower or (xii) to the
extent such Information (A) becomes publicly available other than as a result of
a breach of this Section 9.10 or (B) becomes available to such Agent, such
Lender Party, the Issuing Bank or any

 

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of their respective Affiliates on a non-confidential basis from a source other
than the Borrower or any of its Subsidiaries without such Agent, such Lender
Party, the Issuing Bank or any of their respective Affiliates having knowledge
that a duty of confidentiality to the Borrower or any of its Subsidiaries has
been breached.  For purposes of this Section, “Information” means all
information that any Loan Party furnishes to the Administrative Agent or any
Lender Party in writing designated as confidential, but does not include any
such information that is or becomes generally available to the public other than
by way of a breach of the confidentiality provisions of this Section 9.10 or
that is or becomes available to the Administrative Agent or such Lender Party
from a source other than the Loan Parties or the Administrative Agent or any
other Lender Party and not in violation of any confidentiality agreement with
respect to such information that is actually known to the Administrative Agent
or such Lender Party.  Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if 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.

 

(b)                                 Certain of the Lender Parties may enter into
this Agreement and take or not take action hereunder or under the other Loan
Documents on the basis of information that does not contain material non-public
information with respect to any of the Borrower, any of its Subsidiaries or
their respective securities (“Restricting Information”).  Other Lender Parties
may enter into this Agreement and take or not take action hereunder or under the
other Loan Documents on the basis of information that may contain Restricting
Information.  Each Lender Party acknowledges that United States federal and
state securities laws prohibit any person from purchasing or selling securities
on the basis of material, non-public information concerning the issuer of such
securities or, subject to certain limited exceptions, from communicating such
information to any other Person.  None of any Agent or any of its respective
directors, officers, agents or employees shall, by making any Communications
(including Restricting Information) available to a Lender Party, by
participating in any conversations or other interactions with a Lender Party or
otherwise, make or be deemed to make any statement with regard to or otherwise
warrant that any such information or Communication does or does not contain
Restricting Information nor shall any Agent or any of its respective directors,
officers, agents or employees be responsible or liable in any way for any
decision a Lender Party may make to limit or to not limit its access to
Restricting Information.  In particular, none of any Agent or any of its
respective directors, officers, agents or employees (i) shall have, and each
Agent, on behalf of itself and each of its directors, officers, agents and
employees, hereby disclaims, any duty to ascertain or inquire as to whether or
not a Lender Party has or has not limited its access to Restricting Information,
such Lender Party’s policies or procedures regarding the safeguarding of
material, nonpublic information or such Lender Party’s compliance with
applicable laws related thereto or (ii) shall have, or incur, any liability to
any Loan Party, any Lender Party or any of their respective Affiliates,
directors, officers, agents or employees arising out of or relating to any Agent
or any of its respective directors, officers, agents or employees providing or
not providing Restricting Information to any Lender Party, other than as found
by a court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of any Agent or any of its respective directors, officers,
agents or employees.

 

(c)                                  Each Loan Party agrees that (i) all
Communications it provides to any Agent intended for delivery to the Lender
Parties whether by posting to the Approved Electronic Platform or otherwise
shall be clearly and conspicuously marked “PUBLIC” if such Communications are
determined by the Loan Parties in good faith not to contain Restricting
Information which, at a minimum, shall mean that the word “PUBLIC” shall appear
prominently on the first page thereof, (ii) by marking Communications “PUBLIC,”
each Loan Party shall be deemed to have authorized the Agents and the Lender
Parties to treat such Communications as either publicly available information or
not material information (although such Communications shall remain subject to
the confidentiality undertakings of Section 9.10(a)) with respect to such Loan
Party or its securities for purposes of United States Federal and state
securities laws, (iii) all Communications marked “PUBLIC” may be delivered to
all Lender Parties and may be made available through a portion of the Approved
Electronic Platform designated “Public Side Information” and (iv) the Agents
shall be entitled to treat any Communications that are not marked “PUBLIC” as
Restricting Information and may post such Communications to a portion of the
Approved Electronic Platform not

 

105

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designated “Public Side Information” (and shall not post such Communications to
a portion of the Approved Electronic Platform designated “Public Side
Information”).  Neither Agent nor any of its respective Affiliates shall be
responsible for any statement or other designation by a Loan Party regarding
whether a Communication contains or does not contain material non-public
information with respect to any of the Loan Parties or their securities nor
shall the Agents or any of their respective Affiliates incur any liability to
any Loan Party, any Lender Party or any other Person for any action taken by any
Agent or any of its respective Affiliates based upon such statement or
designation, including any action as a result of which Restricting Information
is provided to a Lender Party that may decide not to take access to Restricting
Information.  Nothing in this Section 9.10(c) shall modify or limit a Person’s
obligations under Section 9.10 with regard to Communications and the maintenance
of the confidentiality of or other treatment of Information.

 

(d)                                 Each Lender Party acknowledges that
circumstances may arise that require it to refer to Communications that might
contain Restricting Information.  Accordingly, each Lender Party agrees that it
will nominate at least one designee to receive Communications (including
Restricting Information) on its behalf and identify such designee (including
such designee’s contact information) in writing to the Administrative Agent. 
Each Lender Party agrees to notify the Administrative Agent from time to time of
such Lender Party’s designee’s e-mail address to which notice of the
availability of Restricting Information may be sent by electronic transmission.

 

(e)                                  Each Lender Party acknowledges that
Communications delivered hereunder and under the other Loan Documents may
contain Restricting Information and that such Communications are available to
all Lender Parties generally.  Each Lender Party that elects not to take access
to Restricting Information does so voluntarily and, by such election,
acknowledges and agrees that the Agents and other Lender Parties may have access
to Restricting Information that is not available to such electing Lender Party. 
Each such electing Lender Party acknowledges the possibility that, due to its
election not to take access to Restricting Information, it may not have access
to any Communications (including, without being limited to, the items required
to be made available to the Administrative Agent in Section 5.03 unless or until
such Communications (if any) have been filed or incorporated into documents
which have been filed with the Securities and Exchange Commission by the
Borrower).  None of the Loan Parties, Agents or any Lender Party with access to
Restricting Information shall have any duty to disclose such Restricting
Information to such electing Lender Party or to use such Restricting Information
on behalf of such electing Lender Party, and shall not be liable for the failure
to so disclose or use, such Restricting Information.

 

(f)                                    Sections 9.10(b), (c), (d) and (e) are
designed to assist the Agents, the Lender Parties and the Loan Parties, in
complying with their respective contractual obligations and applicable law in
circumstances where certain Lender Parties express a desire not to receive
Restricting Information notwithstanding that certain Communications hereunder or
under the other Loan Documents or other information provided to the Lender
Parties hereunder or thereunder may contain Restricting Information.  None of
any Agent or any of its respective directors, officers, agents or employees
warrants or makes any other statement with respect to the adequacy of such
provisions to achieve such purpose nor does any Agent or any of its respective
directors, officers, agents or employees warrant or make any other statement to
the effect that a Loan Party’s or Lender Party’s adherence to such provisions
will be sufficient to ensure compliance by such Loan Party or Lender Party with
its contractual obligations or its duties under applicable law in respect of
Restricting Information and each of the Lender Parties and each Loan Party
assumes the risks associated therewith.

 

Section 9.11                                Release of Collateral.  (a)  Upon
(i) the sale, lease, transfer or other disposition of any item of Collateral of
any Loan Party (including, without limitation, (x) as a result of a sale of the
Equity Interests in the Loan Party that owns such Collateral, and (y) any
Transfer pursuant to Section 5.02(e)(ii) or (iii)) that is permitted by the
terms of the Loan Documents or (ii) any designation of any Borrowing Base Asset
as a non-Borrowing Base Asset that is permitted by Section 5.02(e)(iii), then,
in either such event, the Collateral Agent will, at the Borrower’s expense,
execute and deliver to the applicable Loan Party such documents as such Loan
Party may reasonably request to evidence the release of such item of

 

106

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Collateral from the assignment and security interest granted under the
Collateral Document in accordance with the terms of the Loan Documents.

 

(b)                                 Upon the latest to occur of (i) the
indefeasible payment in full in cash of the Secured Obligations, (ii) the
termination in whole of the Commitments and (iii) the termination or expiration
of all Letters of Credit, the Liens granted by the Collateral Documents shall
terminate and all rights to the Collateral shall revert to the applicable Loan
Party.  Upon any such termination, the Collateral Agent will, at the Borrower’s
expense, execute and deliver to the applicable Loan Parties such documents as
such Loan Parties shall reasonably request to evidence such termination.

 

Section 9.12                                Patriot Act Notification.  Each
Lender and each Agent (for itself and not on behalf of any Lender) hereby
notifies the Loan Parties 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”), it is required to obtain, verify and record information that
identifies each Loan Party, which information includes the name and address of
such Loan Party and other information that will allow such Lender or such Agent,
as applicable, to identify such Loan Party in accordance with the Patriot Act. 
The Borrower shall, and shall cause each of its Subsidiaries to, provide, to the
extent commercially reasonable, such information and take such actions as are
reasonably requested by any Agents or any Lenders in order to assist the
Administrative Agent and the Lenders in maintaining compliance with the Patriot
Act.

 

Section 9.13                                Jurisdiction, Etc.  (a)  Each of the
parties hereto hereby irrevocably and unconditionally submits, for itself and
its property, to the exclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in the City, County and
State of New York and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or any of the other Loan
Documents to which it is a party, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding shall be
heard and determined in any such New York State court or, to the extent
permitted by law, in such Federal court.  Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this Agreement shall affect any right that any
Agent may otherwise have to bring any action or proceeding relating to this
Agreement or any of the other Loan Documents with respect to any Collateral in
the courts of any applicable jurisdiction.

 

(b)                                 Each of the parties hereto irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any of the other Loan Documents to which it is a party in any New York State or
Federal court sitting in City, County and State of New York.  Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

 

Section 9.14                                Governing Law.  This Agreement and
the Notes shall be governed by, and construed in accordance with, the law of the
State of New York.

 

Section 9.15                                WAIVER OF JURY TRIAL.  EACH OF THE
BORROWER, THE OTHER LOAN PARTIES, THE AGENTS AND THE LENDER PARTIES IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY
OF THE LOAN DOCUMENTS, THE ADVANCES, THE LETTERS OF CREDIT OR THE ACTIONS OF ANY
AGENT OR ANY LENDER PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT THEREOF.

 

Section 9.16                                No Fiduciary Duties.  Each Loan
Party agrees that nothing in the Loan Documents or otherwise will be deemed to
create an advisory, fiduciary or agency relationship or fiduciary or

 

107

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other implied duty between the Administrative Agent, the Collateral Agent, any
Lender Party or any Affiliate thereof, on the one hand, and such Loan Party, its
stockholders or its Affiliates, on the other.  The Loan Parties agree that the
transactions contemplated by the Loan Documents (including the exercise of
rights and remedies hereunder and thereunder) are arm’s-length commercial
transactions.  Each Loan Party agrees that it has consulted its own legal and
financial advisors to the extent it deemed appropriate and that it is
responsible for making its own independent judgment with respect to such
transactions and the process leading thereto.  Each of the Loan Parties
acknowledges that the Administrative Agent, the Collateral Agent, the Lender
Parties and their respective Affiliates may have interests in, or may be
providing or may in the future provide financial or other services to other
parties with interests which a Loan Party may regard as conflicting with its
interests and may possess information (whether or not material to the Loan
Parties) other than as a result of (x) the Administrative Agent acting as
administrative agent hereunder, (y) the Collateral Agent acting as the
collateral agent hereunder or (z) the Lender Parties acting as lenders
hereunder, that the Administrative Agent, the Collateral Agent or any such
Lender Party may not be entitled to share with any Loan Party.  Without
prejudice to the foregoing, each of the Loan Parties agrees that the
Administrative Agent, the Collateral Agent, the Lender Parties and their
respective Affiliates may (a) deal (whether for its own or its customers’
account) in, or advise on, securities of any Person, and (b) accept deposits
from, lend money to, act as trustee under indentures of, accept investment
banking engagements from and generally engage in any kind of business with other
Persons in each case, as if the Administrative Agent were not the Administrative
Agent, as if the Collateral Agent were not the Collateral Agent and as if the
Lender Parties were not Lender Parties, and without any duty to account therefor
to the Loan Parties.  Each of the Loan Parties hereby irrevocably waives, in
favor of the Administrative Agent, the Collateral Agent, the Lender Parties and
the Arrangers, any conflict of interest which may arise by virtue of the
Administrative Agent, the Collateral Agent, the Arrangers and/or the Lender
Parties acting in various capacities under the Loan Documents or for other
customers of the Administrative Agent, the Collateral Agent, any Arranger or any
Lender Party as described in this Section 9.16.

 

[Balance of page intentionally left blank]

 

108

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers or representatives thereunto duly authorized, as of
the date first above written.

 

 

BORROWER:

 

 

 

FIVE STAR QUALITY CARE, INC.,

 

a Maryland corporation

 

 

 

By:

/s/ Paul V. Hoagland

 

 

Name:

Paul V. Hoagland

 

 

Title:

Treasurer and Chief Financial Officer

 

S-1

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

 

 

 

GUARANTORS:

 

 

 

FSQ THE PALMS AT FORT MYERS BUSINESS TRUST,

 

a Maryland statutory trust

 

 

 

By

/s/ Paul V. Hoagland

 

 

Name: Paul V. Hoagland

 

 

Title: Treasurer and Chief Financial Officer

 

 

 

FVE MW LLC,

 

a Maryland limited liability company

 

 

 

By

/s/ Paul V. Hoagland

 

 

Name: Paul V. Hoagland

 

 

Title: Treasurer and Chief Financial Officer

 

 

 

FSQ VILLA AT RIVERWOOD BUSINESS TRUST,

 

a Maryland statutory trust

 

 

 

By

/s/ Paul V. Hoagland

 

 

Name: Paul V. Hoagland

 

 

Title: Treasurer and Chief Financial Officer

 

 

 

MORNINGSIDE OF CONCORD, LLC,

 

a Delaware limited liability company

 

 

 

By

/s/ Paul V. Hoagland

 

 

Name: Paul V. Hoagland

 

 

Title: Treasurer and Chief Financial Officer

 

 

 

MORNINGSIDE OF GASTONIA, LLC,

 

a Delaware limited liability company

 

 

 

By

/s/ Paul V. Hoagland

 

 

Name: Paul V. Hoagland

 

 

Title: Treasurer and Chief Financial Officer

 

 

 

MORNINGSIDE OF GREENSBORO, LLC,

 

a Delaware limited liability company

 

 

 

By

/s/ Paul V. Hoagland

 

 

Name: Paul V. Hoagland

 

 

Title: Treasurer and Chief Financial Officer

 

 

 

MORNINGSIDE OF RALEIGH, LLC,

 

a Delaware limited liability company

 

 

 

By

/s/ Paul V. Hoagland

 

 

Name: Paul V. Hoagland

 

 

Title: Treasurer and Chief Financial Officer

 

S-2

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

 

 

FVE EC LLC,

 

a Maryland limited liability company

 

 

 

By

/s/ Paul V. Hoagland

 

 

Name: Paul V. Hoagland

 

 

Title: Treasurer and Chief Financial Officer

 

 

 

MORNINGSIDE OF PARIS, LLC,

 

a Delaware limited liability company

 

 

 

By

/s/ Paul V. Hoagland

 

 

Name: Paul V. Hoagland

 

 

Title: Treasurer and Chief Financial Officer

 

 

 

MORNINGSIDE OF WILLIAMSBURG, LLC,

 

a Delaware limited liability company

 

 

 

By

/s/ Paul V. Hoagland

 

 

Name: Paul V. Hoagland

 

 

Title: Treasurer and Chief Financial Officer

 

S-3

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

 

 

ADMINISTRATIVE AGENT, COLLATERAL AGENT, SWING LINE BANK, AND INITIAL LENDER:

 

 

 

CITIBANK, N.A.

 

 

 

 

 

By

/s/ Michael Chlopak

 

 

Name:

Michael Chlopak

 

 

Title:

Vice President

 

 

 

INITIAL ISSUING BANK:

 

 

 

CITIBANK, N.A.

 

 

 

 

 

By

/s/ Michael Chlopak

 

 

Name:

Michael Chlopak

 

 

Title:

Vice President

 

S-4

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

 

 

INITIAL LENDERS:

 

 

 

COMPASS BANK,

 

as a Lender

 

 

 

 

 

By

/s/ S.K. Gorman

 

 

Name: S.K. Gorman

 

 

Title: Sr. VP

 

S-5

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

 

 

COMERICA BANK,

 

as a Lender

 

 

 

 

 

By

/s/ Mark A. Rafdal

 

 

Name: Mark A. Rafdal

 

 

Title: Vice President

 

S-6

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

 

 

THE HUNTINGTON NATIONAL BANK,

 

as a Lender

 

 

 

 

 

By

/s/ Patrick D. Lease

 

 

Name: Patrick D. Lease

 

 

Title: Vice President

 

S-7

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

 

 

RBS CITIZENS, N.A.,

 

as a Lender

 

 

 

 

 

By

/s/ Lisa M. Greeley

 

 

Name: Lisa M. Greeley

 

 

Title: Senior Vice President

 

S-8

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

 

 

PNC BANK, NATIONAL ASSOCIATION,

 

as a Lender

 

 

 

 

 

By

/s/ Jason Schreiber

 

 

Name:

Jason Schreiber

 

 

Title:

Senior Vice President

 

S-9

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

 

 

ROYAL BANK OF CANADA,

 

as a Lender

 

 

 

 

 

By

/s/ Joshua Freedman

 

 

Name:

Joshua Freedman

 

 

Title:

Authorized Signatory

 

S-10

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

 

 

UBS LOAN FINANCE LLC,

 

as a Lender

 

 

 

 

 

By

/s/ Mary E. Evans

 

 

Name:

Mary E. Evans

 

 

Title:

Associate Director Banking Products Services US

 

 

 

 

 

By

/s/ Irja R. Otsa

 

 

Name:

Irja R. Otsa

 

 

Title:

Associate Director Banking Products Services US

 

S-11

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

 

 

CIT BANK,

 

as a Lender

 

 

 

 

 

By

/s/ Kelly Hartnett

 

 

Name:

Kelly Hartnett

 

 

Title:

Authorized Signatory

 

S-12

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

 

SCHEDULE I

 

COMMITMENTS AND APPLICABLE LENDING OFFICES

 

Name of Initial

 

 

 

 

 

 

 

 

 

 

Lender/

 

 

 

 

 

 

 

 

 

 

Initial Issuing

 

Commitments

 

 

 

 

Bank

 

Revolving Credit

 

Letter of Credit

 

Swing Line

 

Domestic Lending Office

 

Eurodollar Lending Office

Citibank, N.A.

 

$

20,000,000

 

$

10,000,000

 

$

25,000,000

 

1615 Brett Road OPS III
New Castle, DE 19720
Attn: Citi Loan Operations
Tel: 302-894-6052
Fax: 212-994-0847
email: GLOriginationOps@citi.com

 

1615 Brett Road OPS III
New Castle, DE 19720
Attn: Citi Loan Operations
Tel: 302-894-6052
Fax: 212-994-0847

email: GLOriginationOps@citi.com

Royal Bank of Canada

 

$

20,000,000

 

—

 

—

 

Royal Bank of Canada
Three World Financial Center
200 Vesey Street
New York, NY 10281
Attn: GLA Administrator
Tel: 1-877-332-7455
Fax: 212-428-2372

 

Royal Bank of Canada
Three World Financial Center
200 Vesey Street
New York, NY 10281
Attn: GLA Administrator
Tel: 1-877-332-7455
Fax: 212-428-2372

CIT Bank

 

$

20,000,000

 

—

 

—

 

11 West 42nd Street
New York, NY 10036
Attn: Cecilia Amarga
Tel: 212-461-7839
Fax: 212-461-7852
email: maria_cecilia.amarga@cit.com

 

11 West 42nd Street
New York, NY 10036
Attn: Cecilia Amarga
Tel: 212-461-7839
Fax: 212-461-7852
email: maria_cecilia.amarga@cit.com

Comerica Bank

 

$

15,000,000

 

—

 

—

 

411 W. Lafayette, 3rd Floor
Mail Code 3266
Detroit, MI 48226
Attn: Laura Gigliotti
Tel: 313-222-7804
Fax: 313-222-3420
email: lagigliotti@comerica.com

 

411 W. Lafayette, 3rd Floor
Mail Code 3266
Detroit, MI 48226
Attn: Laura Gigliotti
Tel: 313-222-7804
Fax: 313-222-3420
email: lagigliotti@comerica.com

 

1

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

 

Name of Initial

 

 

 

 

 

 

 

 

 

 

Lender/

 

 

 

 

 

 

 

 

 

 

Initial Issuing

 

Commitments

 

 

 

 

Bank

 

Revolving Credit

 

Letter of Credit

 

Swing Line

 

Domestic Lending Office

 

Eurodollar Lending Office

Compass Bank

 

$

20,000,000

 

—

 

—

 

8333 Douglas Ave, Suite 505
Dallas, TX 75525
Attn: Ben David
Tel: 214-346-2734
Fax: 214-360-1930
email: Ben.David@bbvacompass.com

 

8333 Douglas Ave, Suite 505
Dallas, TX 75525
Attn: Ben David
Tel: 214-346-2734
Fax: 214-360-1930
email: Ben.David@bbvacompass.com

The Huntington National Bank

 

$

15,000,000

 

—

 

—

 

2361 Morse Road NC1W26
Columbus, OH 43229
Attn: Chuck Alan
Tel: 614-480-5677
Fax: 614-480-2249
email: Charles.Alan@Huntington.com

 

2361 Morse Road NC1W26
Columbus, OH 43229
Attn: Chuck Alan
Tel: 614-480-5677
Fax: 614-480-2249
email: Charles.Alan@Huntington.com

PNC Bank, National Association

 

$

20,000,000

 

—

 

—

 

Midland Construction Loan Administration Services
249 Fifth Avenue, 18th Floor
Pittsburgh, PA 15222-2707
Attn: Denise Giacomino
Tel: 412-762-9033
Fax: 412-762-5984
email: denise.giacomino@pnc.com

 

Midland Construction Loan Administration Services
249 Fifth Avenue, 18th Floor
Pittsburgh, PA 15222-2707
Attn: Denise Giacomino
Tel: 412-762-9033
Fax: 412-762-5984
email: denise.giacomino@pnc.com

RBS Citizens, N.A.

 

$

10,000,000

 

—

 

—

 

1701 JFK Blvd
Mailstop: PJ2255
Philadelphia, PA 19103-2838
Attn: Sharon A. Jacobs
Tel: 267-671-1070
Fax: 267-671-1799
email: Sharon.A.Jacobs@rbscitizens.com

 

1701 JFK Blvd
Mailstop: PJ2255
Philadelphia, PA 19103-2838
Attn: Sharon A. Jacobs
Tel: 267-671-1070
Fax: 267-671-1799
email: Sharon.A.Jacobs@rbscitizens.com

 

2

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

 

Name of Initial

 

 

 

 

 

 

 

 

 

 

Lender/

 

 

 

 

 

 

 

 

 

 

Initial Issuing

 

Commitments

 

 

 

 

Bank

 

Revolving Credit

 

Letter of Credit

 

Swing Line

 

Domestic Lending Office

 

Eurodollar Lending Office

UBS Loan Finance LLC

 

$

10,000,000

 

—

 

—

 

677 Washington Blvd
Stamford, CT 06901
Attn: Jitesh Hotwani
Tel: 203-719-6391
Fax: 203-719-3888
email: sh-obp@ubs.com

 

677 Washington Blvd
Stamford, CT 06901
Attn: Jitesh Hotwani
Tel: 203-719-6391
Fax: 203-719-3888
email: sh-obp@ubs.com

Totals

 

$

 150,000,000

 

$

10,000,000

 

$

25,000,000

 

 

 

 

 

3

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

 

SCHEDULE II

 

BORROWING BASE ASSETS

 

 

 

 

 

 

 

 

 

Beds in Use

 

Licensed Beds

 

 

 

 

Trade Name:

 

Address:

 

Total Units

 

No. of
IL beds

 

No. of
AL
beds

 

No. of
ALZ
beds

 

No. of
IL
beds

 

No. of
AL
beds

 

No.
of
ALZ
beds

 

Total
Bed
Capacity

1

 

Palms of Fort Myers
(Pending Borrowing Base Asset)

 

2674 Winkler Avenue, Fort Myers, FL, 33901

 

216

 

140

 

56

 

24

 

 

 

80

 

 

 

220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

Clearwater Commons Assisted Living

 

4519 E. 82nd Street, Indianapolis, IN, 46250

 

88

 

7

 

81

 

 

 

 

 

 

 

 

 

88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

Rosewalk Commons
Retirement Community

 

250 Shenandoah Drive, Lafayette, IN, 47905

 

109

 

22

 

87

 

 

 

 

 

 

 

 

 

109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

Riverwalk Commons

 

7235 Riverwalk Way North, Noblesville, IN, 46062

 

146

 

54

 

75

 

22

 

 

 

105

 

 

 

159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

Villa at Riverwood

 

No. One Pratt Place, Florissant, MO, 63031

 

111

 

111

 

 

 

 

 

 

 

 

 

 

 

111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

Morningside at Concord

 

500 Penny Lane, N.E., Concord, NC, 28025

 

86

 

 

 

59

 

34

 

 

 

105*

 

39

 

105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

Morningside of Gastonia

 

2755 Union Road, Gastonia, NC, 28054

 

89

 

 

 

71

 

28

 

 

 

105*

 

28

 

105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

Morningview at Irving Park — per license

 

3200 North Elm Street, Greensboro, NC, 27408

 

91

 

 

 

61

 

30

 

 

 

105*

 

30

 

105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

Fox Hollow Senior Living Community

 

190 Fox Hollow Road, Pinehurst, NC, 28374

 

72

 

 

 

62

 

18

 

 

 

85*

 

20

 

85

 

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

 

 

 

 

 

 

 

 

 

Beds in Use

 

Licensed Beds

 

 

 

 

Trade Name:

 

Address:

 

Total Units

 

No. of
IL beds

 

No. of
AL
beds

 

No. of
ALZ
beds

 

No. of
IL
beds

 

No. of
AL
beds

 

No.
of
ALZ
beds

 

Total
Bed
Capacity

10

 

Morningside of Raleigh

 

801 Dixie Trail, Raleigh, NC, 27607

 

88

 

 

 

46

 

43

 

 

 

110*

 

53

 

110

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

Washington Township Senior Living

 

600 Medical Center Drive, Sewell, NJ, 08080

 

93

 

 

 

98

 

 

 

 

 

103

 

 

 

103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

Voorhees Senior Living

 

501 Laurel Oak Road, Voorhees, NJ, 08043

 

93

 

 

 

104

 

 

 

 

 

104

 

 

 

104

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

 

Morningside of Paris

 

350 Volunteer Drive, Paris, TN, 38242

 

70

 

 

 

76

 

 

 

 

 

84

 

 

 

84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

Morningside of Williamsburg

 

440 McLaws Circle, Williamsburg, VA, 23185

 

87

 

 

 

57

 

30

 

 

 

100

 

 

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15

 

Huntington Place Retirement
(inclusive of The Huntington, Huntington Place Memory Care 1, Huntington Place
Memory Care 2, and Huntington Place Memory Care 3)

 

3801 North Wright Road, Janesville, WI, 53546

 

110

 

35

 

48

 

28

 

 

 

48

 

44

 

127

 

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

*As provided on the facility’s license, the licensed bed capacity reflected in
the “AL beds” column includes the number of Alzheimer’s/Dementia special care
unit beds reflected in the “ALZ beds” column.

 

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

 

Schedule 4.01(b)

Subsidiaries

 

Subsidiaries of each Loan Party

 

Jurisdiction of
Incorporation,
Organization
or Formation

 

Number of Shares (or
the equivalent thereof)
of each class of Equity
Interests Authorized

 

Ownership Structure

Alliance Pharmacy Services, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care Trust — 100%

Annapolis Heritage Partners, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care-Somerford, LLC — 100%

CCC Boynton Beach, Inc.

 

Delaware

 

100 shares of common stock, no par value.

 

FSQ, Inc. — 100%

Columbia Heritage Partners, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care-Somerford, LLC — 100%

Encinitas Heritage Partners, LLC

 

Delaware

 

Membership interest.

 

Somerford Place LLC — 100%

Five Star Aspenwood LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Brookside LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Cary Heartfields LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Coral Oaks LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Coral Springs LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Covington LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care - OBX Operator, LLC — 100%

Five Star Crossing LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Desert Harbor LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Easton Heartfields LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Ellicott City LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Forest Creek LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care - OBX Operator, LLC — 100%

Five Star Foulk Manor North LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Frederick Heartfields LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Gables LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Home Health, Inc.

 

Maryland

 

3,000 shares of common stock, $.01 par value.

 

FSQ, Inc. — 100%

Five Star Insurance, Inc.

 

Maryland

 

3,000 shares of common stock, $.01 par value.

 

Five Star Quality Care, Inc. — 100%

Five Star Knightsbridge LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Lincoln Heights LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Memorial Woods LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Montebello LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Morningside Bellgrade LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Morningside Charlottesville LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Newport News LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Northshore LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Northwoods LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care - OBX Operator, LLC — 100%

Five Star Overland Park LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Quality Care - BW Club Holdings, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care-KS, LLC — 100%

Five Star Quality Care - BW Club, LLC

 

Kansas

 

Membership interest.

 

Five Star Quality Care - BW Club Holdings, LLC — 100%

 

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

 

Subsidiaries of each Loan Party

 

Jurisdiction of
Incorporation,
Organization
or Formation

 

Number of Shares (or
the equivalent thereof)
of each class of Equity
Interests Authorized

 

Ownership Structure

Five Star Quality Care - Farmington, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care Trust — 100%

Five Star Quality Care - Granite Gate, LLC

 

Delaware

 

Membership interest.

 

FVEST.JOE, INC. — 100%

Five Star Quality Care - Howell, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care Trust — 100%

Five Star Quality Care - North Carolina, LLC

 

Maryland

 

Membership interest.

 

The Heartlands Retirement Community-Ellicott City I, Inc. — 100%

Five Star Quality Care - OBX Operator, LLC

 

Maryland

 

Membership interest.

 

The Heartlands Retirement Community-Ellicott City II, Inc. — 100%

Five Star Quality Care - OBX Owner, LLC

 

Maryland

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Quality Care Trust

 

Maryland

 

1,000 shares of beneficial interest, $.01 par value.

 

FSQ, Inc. — 100%

Five Star Quality Care-AZ, LLC

 

Delaware

 

Membership interest.

 

FVEST.JOE, INC. — 100%

Five Star Quality Care-CA II, Inc.

 

Maryland

 

1,000 shares of common stock, $.01 par value.

 

FSQ, Inc. — 100%

Five Star Quality Care-CA II, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care-CA II, Inc. — 100%

Five Star Quality Care-CA, Inc.

 

Delaware

 

3,000 shares of common stock, $.01 par value.

 

FSQ, Inc. — 100%

Five Star Quality Care-CA, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care-CA, Inc. — 100%

Five Star Quality Care-CO, Inc.

 

Maryland

 

1,000 shares of common stock, $.01 par value.

 

FSQ, Inc. — 100%

Five Star Quality Care-Colorado, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care-CO, Inc. — 100%

Five Star Quality Care-CT, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care Trust — 100%

Five Star Quality Care-FL, LLC

 

Delaware

 

Membership interest.

 

The Heartlands Retirement Community-Ellicott City I, Inc. — 100%

Five Star Quality Care-GA, Inc.

 

Maryland

 

1,000 shares of common stock, $.01 par value.

 

FSQ, Inc. — 100%

Five Star Quality Care-GA, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care-GA, Inc. — 100%

Five Star Quality Care-GHV, LLC

 

Maryland

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Quality Care-IA, Inc.

 

Delaware

 

3,000 shares of common stock, $.01 par value.

 

FSQ, Inc. — 100%

Five Star Quality Care-IA, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care-IA, Inc. — 100%

Five Star Quality Care-IL, LLC

 

Maryland

 

Membership interest.

 

FVEST.JOE, INC. — 100%

Five Star Quality Care-IN, LLC

 

Maryland

 

Membership interest.

 

The Heartlands Retirement Community-Ellicott City II, Inc. — 100%

Five Star Quality Care-KS, LLC

 

Delaware

 

Membership interest.

 

FVEST.JOE, INC. — 100%

Five Star Quality Care-MD, LLC

 

Delaware

 

Membership interest.

 

The Heartlands Retirement Community-Ellicott City I, Inc. — 100%

 

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

 

Subsidiaries of each Loan Party

 

Jurisdiction of
Incorporation,
Organization
or Formation

 

Number of Shares (or
the equivalent thereof)
of each class of Equity
Interests Authorized

 

Ownership Structure

Five Star Quality Care-MI, Inc.

 

Delaware

 

3,000 shares of common stock, $.01 par value.

 

FSQ, Inc. — 100%

Five Star Quality Care-MI, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care-MI, Inc. — 100%

Five Star Quality Care-MN, LLC

 

Maryland

 

Membership interest.

 

The Heartlands Retirement Community-Ellicott City II, Inc. — 100%

Five Star Quality Care-MO, LLC

 

Delaware

 

Membership interest.

 

FVEST.JOE, INC. — 100%

Five Star Quality Care-MS, LLC

 

Maryland

 

Membership interest.

 

FVEST.JOE, INC. — 100%

Five Star Quality Care-NE, Inc.

 

Delaware

 

3,000 shares of common stock, $.01 par value.

 

FSQ, Inc. — 100%

Five Star Quality Care-NE, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care-NE, Inc. — 100%

Five Star Quality Care-NJ, LLC

 

Maryland

 

Membership interest.

 

The Heartlands Retirement Community-Ellicott City II, Inc. — 100%

Five Star Quality Care-NS Operator, LLC

 

Maryland

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Quality Care-NS Owner, LLC

 

Maryland

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Quality Care-NS Tenant, LLC

 

Maryland

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Quality Care-RMI, LLC

 

Maryland

 

Membership interest.

 

The Heartlands Retirement Community-Ellicott City II, Inc. — 100%

Five Star Quality Care-Savannah, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care-GA, Inc. — 100%

Five Star Quality Care-Somerford, LLC

 

Maryland

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Quality Care-TX, LLC

 

Maryland

 

Membership interest.

 

FVEST.JOE, INC. — 100%

Five Star Quality Care-VA, LLC

 

Delaware

 

Membership interest.

 

The Heartlands Retirement Community-Ellicott City I, Inc. — 100%

Five Star Quality Care-WI, Inc.

 

Maryland

 

1,000 shares of common stock, $.01 par value.

 

FSQ, Inc. — 100%

Five Star Quality Care-WI, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care-WI, Inc. — 100%

Five Star Quality Care-WY, LLC

 

Delaware

 

Membership interest.

 

FVEST.JOE, INC. — 100%

Five Star Rehabilitation and Wellness Services, LLC

 

Maryland

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Remington Club LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Rio Las Palmas LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Savannah Square LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Severna Park LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Tucson Forum LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Five Star Woodlands LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

Frederick Heritage Partners, LLC

 

Delaware

 

Membership interest.

 

Somerford Place LLC — 100%

Fresno Heritage Partners, a California Limited Partnership

 

California

 

General partnership interest and limited partnership interest.

 

Somerford Place LLC — 98%
Hamilton Place, LLC — 2%

FS Commonwealth LLC

 

Maryland

 

Membership interest.

 

FSQ, Inc. — 100%

 

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

 

Subsidiaries of each Loan Party

 

Jurisdiction of
Incorporation,
Organization
or Formation

 

Number of Shares (or
the equivalent thereof)
of each class of Equity
Interests Authorized

 

Ownership Structure

FS Lafayette Tenant Trust

 

Maryland

 

1,000 shares of beneficial interest, $.01 par value.

 

FS Tenant Holding Company Trust — 100%

FS Leisure Park Tenant Trust

 

Maryland

 

1,000 shares of beneficial interest, $.01 par value.

 

FS Tenant Holding Company Trust — 100%

FS Lexington Tenant Trust

 

Maryland

 

1,000 shares of beneficial interest, $.01 par value.

 

FS Tenant Holding Company Trust — 100%

FS Patriot LLC

 

Maryland

 

Membership interest.

 

FSQ, Inc. — 100%

FS Tenant Holding Company Trust

 

Maryland

 

1,000 shares of beneficial interest, $.01 par value.

 

FSQ, Inc. — 100%

FS Tenant Pool I Trust

 

Maryland

 

1,000 shares of beneficial interest, $.01 par value.

 

FS Tenant Holding Company Trust — 100%

FS Tenant Pool II Trust

 

Maryland

 

1,000 shares of beneficial interest, $.01 par value.

 

FS Tenant Holding Company Trust — 100%

FS Tenant Pool III Trust

 

Maryland

 

1,000 shares of beneficial interest, $.01 par value.

 

FS Tenant Holding Company Trust — 100%

FS Tenant Pool IV Trust

 

Maryland

 

1,000 shares of beneficial interest, $.01 par value.

 

FS Tenant Holding Company Trust — 100%

FSQ Pharmacy Holdings, LLC

 

Delaware

 

Membership interest.

 

FSQ, Inc. — 100%

FSQ The Palms at Fort Myers Business Trust

 

Maryland

 

1,000 shares of beneficial interest, $.01 par value.

 

FSQ, Inc. — 100%

FSQ Villa at Riverwood Business Trust

 

Maryland

 

1,000 shares of beneficial interest, $.01 par value.

 

FSQ, Inc. — 100%

FSQ, Inc.

 

Delaware

 

3,000 shares of common stock, $.01 par value.

 

Five Star Quality Care, Inc. — 100%

FSQ/LTA Holdings Inc.

 

Delaware

 

3,000 shares of common stock, $.01 par value.

 

FSQ, Inc. — 100%

FSQC Tellico Village LLC

 

Maryland

 

Membership interest.

 

LifeTrust Properties, LLC — 100%

FSQC-AL, LLC

 

Maryland

 

Membership interest.

 

The Heartlands Retirement Community-Ellicott City I, Inc. — 100%

FVE EC LLC

 

Maryland

 

Membership interest.

 

FSQ, Inc. — 100%

FVE FM Financing, Inc.

 

Maryland

 

1,000 shares of common stock, $.01 par value.

 

FSQ, Inc. — 100%

FVE IL Managers, Inc.

 

Maryland

 

3,000 shares of common stock, $.01 par value.

 

Five Star Quality Care, Inc. — 100%

FVE Managers, Inc.

 

Maryland

 

3,000 shares of common stock, $.01 par value.

 

Five Star Quality Care, Inc. — 100%

FVE MW LLC

 

Maryland

 

Membership interest.

 

FSQ, Inc. — 100%

FVE SE Home Place New Bern LLC

 

Delaware

 

Membership interest.

 

The Heartlands Retirement Community-Ellicott City I, Inc. — 100%

FVE SE McCarthy New Bern LLC

 

Delaware

 

Membership interest.

 

The Heartlands Retirement Community-Ellicott City I, Inc. — 100%

FVE SE Wilson LLC

 

Delaware

 

Membership interest.

 

The Heartlands Retirement Community-Ellicott City I, Inc. — 100%

FVEST.JOE, INC.

 

Delaware

 

3,000 shares of common stock, $.01 par value.

 

FSQ, Inc. — 100%

Hagerstown Heritage Partners, LLC

 

Delaware

 

Membership interest.

 

Somerford Place LLC — 100%

 

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

 

Subsidiaries of each Loan Party

 

Jurisdiction of
Incorporation,
Organization
or Formation

 

Number of Shares (or
the equivalent thereof)
of each class of Equity
Interests Authorized

 

Ownership Structure

Hamilton Place, LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care-Somerford, LLC — 100%

Heartland Pharmacy Care, Inc.

 

Nebraska

 

10,000 shares of common stock, $1.00 par value.

 

FSQ Pharmacy Holdings, LLC — 100%

LifeTrust America, Inc.

 

Tennessee

 

1,000,000 shares of common stock, no par value.

 

FSQ/LTA Holdings, Inc. — 100%

LifeTrust Properties, LLC

 

Delaware

 

Membership interest.

 

LifeTrust America, Inc. — 100%

Morningside of Alabama, L.P.

 

Delaware

 

General partnership interest and limited partnership interest.

 

LifeTrust America, Inc. — 2%

LifeTrust Properties, LLC — 98%

Morningside of Anderson, L.P.

 

Delaware

 

General partnership interest and limited partnership interest.

 

LifeTrust America, Inc. — 2%

LifeTrust Properties, LLC — 98%

Morningside of Athens, Limited Partnership

 

Delaware

 

General partnership interest and limited partnership interest.

 

LifeTrust America, Inc. — 2%

LifeTrust Properties, LLC — 98%

Morningside of Beaufort, LLC

 

Delaware

 

Membership interest.

 

Morningside of South Carolina, L.P. — 100%

Morningside of Bellgrade, Richmond, LLC

 

Delaware

 

Membership interest.

 

LifeTrust America, Inc. — 100%

Morningside of Belmont, LLC

 

Delaware

 

Membership interest.

 

LifeTrust Properties, LLC — 100%

Morningside of Bowling Green, LLC

 

Delaware

 

Membership interest.

 

Morningside of Kentucky, Limited Partnership — 100%

Morningside of Camden, LLC

 

Delaware

 

Membership interest.

 

Morningside of South Carolina, L.P. — 100%

Morningside of Charlottesville, LLC

 

Delaware

 

Membership interest.

 

LifeTrust America, Inc. — 100% membership interest.

Morningside of Cleveland, LLC

 

Delaware

 

Membership interest.

 

Morningside of Tennessee, LLC — 100%

Morningside of Columbus, L.P.

 

Delaware

 

General partnership interest and limited partnership interest.

 

LifeTrust America, Inc. — 2%

LifeTrust Properties, LLC — 98%

Morningside of Concord, LLC

 

Delaware

 

Membership interest.

 

LifeTrust America, Inc. — 100%

Morningside of Conyers, LLC

 

Delaware

 

Membership interest.

 

Morningside of Georgia, L.P. — 100%

Morningside of Cookeville, LLC

 

Delaware

 

Membership interest.

 

Morningside of Tennessee, LLC — 100%

Morningside of Cullman, LLC

 

Delaware

 

Membership interest.

 

Morningside of Alabama, L.P. — 100%

Morningside of Dalton, Limited Partnership

 

Delaware

 

General partnership interest and limited partnership interest.

 

LifeTrust America, Inc. — 2%

LifeTrust Properties, LLC — 98%

Morningside of Decatur, L.P.

 

Delaware

 

General partnership interest and limited partnership interest.

 

LifeTrust America, Inc. — 2%

LifeTrust Properties, LLC — 98%

Morningside of Evans, Limited Partnership

 

Delaware

 

General partnership interest and limited partnership interest.

 

LifeTrust America, Inc. — 2%

LifeTrust Properties, LLC — 98%

Morningside of Fayette, L.P.

 

Delaware

 

General partnership interest and limited partnership interest.

 

LifeTrust America, Inc. — 2%

LifeTrust Properties, LLC — 98%

Morningside of Franklin, LLC

 

Delaware

 

Membership interest.

 

LifeTrust Properties, LLC — 100%

 

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

 

Subsidiaries of each Loan Party

 

Jurisdiction of
Incorporation,
Organization
or Formation

 

Number of Shares (or
the equivalent thereof)
of each class of Equity
Interests Authorized

 

Ownership Structure

Morningside of Gainesville, LLC

 

Delaware

 

Membership interest.

 

Morningside of Georgia, L.P. — 100%

Morningside of Gallatin, LLC

 

Delaware

 

Membership interest.

 

LifeTrust Properties, LLC — 100%

Morningside of Gastonia, LLC

 

Delaware

 

Membership interest.

 

LifeTrust America, Inc. — 100%

Morningside of Georgia, L.P.

 

Delaware

 

General partnership interest and limited partnership interest.

 

LifeTrust America, Inc. — 2%

LifeTrust Properties, LLC — 98%

Morningside of Greensboro, LLC

 

Delaware

 

Membership interest.

 

LifeTrust America, Inc. — 100%

Morningside of Greenwood, L.P.

 

Delaware

 

General partnership interest and limited partnership interest.

 

LifeTrust America, Inc. — 2%

LifeTrust Properties, LLC — 98%

Morningside of Hartsville, LLC

 

Delaware

 

Membership interest.

 

Morningside of South Carolina, L.P. — 100%

Morningside of Hopkinsville, Limited Partnership

 

Delaware

 

General partnership interest and limited partnership interest.

 

LifeTrust America, Inc. — 2%

LifeTrust Properties, LLC — 98%

Morningside of Jackson, LLC

 

Delaware

 

Membership interest.

 

Morningside of Tennessee, LLC — 100%

Morningside of Kentucky, Limited Partnership

 

Delaware

 

General partnership interest and limited partnership interest.

 

LifeTrust America, Inc. — 2%

LifeTrust Properties, LLC — 98%

Morningside of Knoxville, LLC

 

Delaware

 

Membership interest.

 

LifeTrust Properties, LLC — 100%

Morningside of Lexington, LLC

 

Delaware

 

Membership interest.

 

Morningside of South Carolina, L.P. — 100%

Morningside of Macon, LLC

 

Delaware

 

Membership interest.

 

LifeTrust America, Inc. — 100%

Morningside of Madison, LLC

 

Delaware

 

Membership interest.

 

Morningside of Alabama, L.P. — 100%

Morningside of Newport News, LLC

 

Delaware

 

Membership interest.

 

LifeTrust America, Inc. — 100%

Morningside of Orangeburg, LLC

 

Delaware

 

Membership interest.

 

Morningside of South Carolina, L.P. — 100%

Morningside of Paducah, LLC

 

Delaware

 

Membership interest.

 

Morningside of Kentucky, Limited Partnership — 100%

Morningside of Paris, LLC

 

Delaware

 

Membership interest.

 

LifeTrust America, Inc. — 2%

LifeTrust Properties, LLC — 98%

Morningside of Raleigh, LLC

 

Delaware

 

Membership interest.

 

LifeTrust America, Inc. — 100%

Morningside of Seneca, L.P.

 

Delaware

 

General partnership interest and limited partnership interest.

 

LifeTrust America, Inc. — 2%

LifeTrust Properties, LLC — 98%

Morningside of Sheffield, LLC

 

Delaware

 

Membership interest.

 

Morningside of Alabama, L.P. — 100%

Morningside of Skipwith-Richmond, LLC

 

Delaware

 

Membership interest.

 

LifeTrust America, Inc. — 100%

Morningside of South Carolina, L.P.

 

Delaware

 

General partnership interest and limited partnership interest.

 

LifeTrust America, Inc. — 2%

LifeTrust Properties, LLC — 98%

Morningside of Springfield, LLC

 

Delaware

 

Membership interest.

 

LifeTrust Properties, LLC — 100%

Morningside of Tennessee, LLC

 

Delaware

 

Membership interest.

 

LifeTrust Properties, LLC — 100%

Morningside of Williamsburg, LLC

 

Delaware

 

Membership interest.

 

LifeTrust America, Inc. — 100%

National LTC Pharmacy Services LLC

 

Delaware

 

Membership interest.

 

FSQ Pharmacy Holdings, LLC — 100%

Newark Heritage Partners I, LLC

 

Delaware

 

Membership interest.

 

Somerford Place LLC — 100%

Newark Heritage Partners II, LLC

 

Delaware

 

Membership interest.

 

Somerford Place LLC — 100%

 

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

 

Subsidiaries of each Loan Party

 

Jurisdiction of
Incorporation,
Organization
or Formation

 

Number of Shares (or
the equivalent thereof)
of each class of Equity
Interests Authorized

 

Ownership Structure

O.F.C. Properties, LLC

 

Indiana

 

Membership interest.

 

The Heartlands Retirement Community-Ellicott City II, Inc. — 100%

Orthopedic Rehabilitation Systems LLC

 

Maryland

 

Membership interest.

 

FS Patriot LLC — 100%

Progress Pharmacy LTD

 

Delaware

 

1,500 shares of common stock, no par value.

 

FSQ Pharmacy Holdings, LLC — 100%

Redlands Heritage Partners, LLC

 

Delaware

 

Membership interest.

 

Somerford Place LLC — 100%

Roseville Heritage Partners, a California Limited Partnership

 

California

 

General partnership interest and limited partnership interest.

 

Somerford Place LLC — 99%

Hamilton Place, LLC — 1%

Senior Living Insurance Company Limited

 

Cayman Islands

 

50,000 shares, $1.00 par value.

 

Five Star Quality Care, Inc. — 100%

Senior Living of Boynton Beach Limited Partnership

 

Delaware

 

General partnership interest and limited partnership interest.

 

CCC Boynton Beach, Inc. — 3%

Paloma Industries Limited — 97%

Somerford Place LLC

 

Delaware

 

Membership interest.

 

Five Star Quality Care-Somerford, LLC — 100%

Stockton Heritage Partners, LLC

 

Delaware

 

Membership interest.

 

Somerford Place LLC — 100%

The Heartlands Retirement Community-Ellicott City I, Inc.

 

Maryland

 

5,000 shares of common stock, no par value.

 

FSQ, Inc. — 100%

The Heartlands Retirement Community-Ellicott City II, Inc.

 

Maryland

 

5,000 shares of common stock, no par value.

 

FSQ, Inc. — 100%

 

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

 

Schedule 4.01(d)

Authorizations and Approvals

 

None

 

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

 

Schedule 4.01(f)

Material Litigation

 

None.

 

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

 

Schedule 4.01(n)

Existing Debt

 

Debt

 

Obligor(s)

 

Principal Amount
Outstanding
(As of 2/29/2012)

 

Maturity
Date

 

Lender(s)/Lienholder(s)

 

Bridge Loan

 

Five Star Quality Care, Inc.

 

Morningside of Concord, LLC

 

Morningside of Raleigh, LLC

 

Morningside of Gastonia, LLC

 

Morningside of Greensboro, LLC

 

Five Star Quality Care — OBX Operator, LLC

 

$

38,000,000

 

7/1/2012

 

Senior Housing Properties Trust

 

 

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

 

Schedule 4.01(o)

Surviving Debt

 

Debt

 

Obligor(s)

 

Principal Amount
Outstanding
(As of 2/29/2012)

 

Maturity
Date

 

Lender(s)/Lienholder(s)

 

Secured Debt of Borrower:

 

 

 

 

 

 

 

 

 

Credit and Security Agreement

 

Five Star Quality Care, Inc. and the Guarantors identified therein

 

$

0

 

3/18/2013

 

Jefferies Finance LLC and Jefferies Bank Inc.

 

Mortgage Debt:

 

 

 

 

 

 

 

 

 

Farmington Health Care Center

34225 Grand River Avenue

Farmington, MI 48355

 

Five Star Quality Care — Farmington, LLC

 

$

3,103,000

 

6/1/2035

 

Midland Loan Services/United States Department of Housing and Urban Development

 

Howell Care Center

3003 West Grand River Avenue

Howell, MI 48843

 

Five Star Quality Care — Howell, LLC

 

$

4,563,000

 

5/1/2039

 

Heartland Bank/United States Department of Housing and Urban Development

 

Granite Gate Community

3850 North U.S. Highway 89

Prescott, AZ 86301

 

Five Star Quality Care — Granite Gate, LLC

 

$

19,713,000

 

6/1/2023

 

Greystone Servicing Corporation, Inc./Federal National Mortgage Association

 

Covington Commons

2601 Covington Commons Drive

Fort Wayne, IN 46804

 

Five Star Covington LLC

 

$

7,029,000

 

2/1/2025

 

P/R Mortgage & Investment Corp./Federal National Mortgage Association

 

Forest Creek Commons

6510 U.S. 31 South

Indianapolis, IN 46227

 

Five Star Forest Creek LLC

 

$

9,778,000

 

9/1/2032

 

P/R Mortgage & Investment Corp./Federal National Mortgage Association

 

Northwoods Commons

2501 Friendship Boulevard

Kokomo, IN 46901

 

Five Star Northwoods LLC

 

$

3,054,000

 

9/1/2028

 

P/R Mortgage & Investment Corp./Federal National Mortgage Association

 

Unsecured Debt:

 

 

 

 

 

 

 

 

 

Convertible Senior Notes

 

Five Star Quality Care, Inc. and the Guarantors identified therein

 

$

37,282,000

 

10/15/2026

 

U.S. Bank, National Association

 

Letter of Credit

 

Morningside of South Carolina, L.P.

 

$

106,217

 

9/1/2012

 

HCPI Trust

 

Letter of Credit

 

Morningside of South Carolina, L.P.

 

$

105,179

 

9/1/2012

 

HCPI Trust

 

 

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

 

Debt

 

Obligor(s)

 

Principal Amount
Outstanding
(As of 2/29/2012)

 

Maturity
Date

 

Lender(s)/Lienholder(s)

 

Letter of Credit

 

Morningside of South Carolina, L.P.

 

$

105,191

 

9/1/2012

 

HCPI Trust

 

Letter of Credit

 

Morningside of South Carolina, L.P.

 

$

94,125

 

9/1/2012

 

HCPI Trust

 

Letter of Credit

 

Five Star Quality Care, Inc.

 

$

225,000

 

4/29/2012

 

Fannie Mae, Multifamily Operations — Asset Management

 

 

The amortization schedule for the foregoing Surviving Debt, if applicable, has
previously been provided to the Agents.

 

In addition to the foregoing, various Subsidiaries of Borrower (other than the
Guarantors) have pledged their personal property, accounts receivable,
intangibles, fixtures and other property relating to the real property operated
by such Subsidiaries, but owned by Subsidiaries of Senior Housing Properties
Trust, as security for debt of Senior Housing Properties Trust and such of its
Subsidiaries.  For more information, see Schedule 4.01(p), Part II.

 

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

 

Schedule 4.01(p)

Existing Liens

 

Part I:

 

None, other than Permitted Liens and the Liens securing the obligations under
the Loan Documents.

 

Part II:

 

A.            Credit Facility

 

Lienholder:  Jefferies Finance LLC and Jefferies Bank Inc.

Outstanding Principal Balance as of 2/29/12:  $0

Assets/Property:  Accounts receivable of all Subsidiaries of Borrower, other
than certain Excluded Subsidiaries as identified in such Credit Facility and the
Guarantors.

 

B.            Existing Mortgage Debt

 

Subsidiary:  Five Star Quality Care-Howell, LLC

Lienholder:  Heartland Bank

Outstanding Principal Balance as of 2/29/12:  $4,563,000

Assets/Property:  Howell Care Center, 3003 West Grand River Avenue, Howell, MI 
48843

 

Subsidiary:  Five Star Quality Care-Farmington, LLC

Lienholder:  Midland Loan Services, Inc.

Outstanding Principal Balance as of 2/29/12:  $3,103,000

Assets/Property:  Farmington Health Care Center, 34225 Grand River Avenue,
Farmington, MI 48335

 

Subsidiary:  Five Star Quality Care-Granite Gate, LLC

Lienholder:  Federal National Mortgage Association (FNMA)

Outstanding Principal Balance as of 2/29/12:  $19,713,000

Assets/Property:  Granite Gate Community, 3850 North U.S. Highway 89, Prescott,
AZ 86301

 

Subsidiary:  Five Star Covington LLC

Lienholder:  Federal Home Loan Mortgage Corporation (FMCC)

Outstanding Principal Balance as of 2/29/12:  $7,029,000

Assets/Property:  Covington Commons, 2601 Covington Commons Drive, Fort
Wayne, IN 46804

 

Subsidiary:  Five Star Forest Creek LLC

Lienholder:  Federal Home Loan Mortgage Corporation (FMCC)

Outstanding Principal Balance as of 2/29/12:  $9,778,000

 

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

 

Assets/Property:  Forest Creek Commons, 6510 U.S. 31 South, Indianapolis, IN
46227

 

Subsidiary:  Five Star Northwoods LLC

Lienholder: Federal Home Loan Mortgage Corporation (FMCC)

Outstanding Principal Balance as of 2/29/12:  $3,054,000

Assets/Property:  Northwoods Commons, 2501 Friendship Boulevard, Kokomo, IN 
46901

 

C.            Liens Securing Debt Obligations of Senior Housing Properties Trust
and its Subsidiaries

 

Subsidiary:  FVE SE Wilson LLC

Lienholder:  U.S. Bank, National Association, successor to Bank of America, N.A.
(successor by merger to LaSalle Bank, National Association), as Trustee for the
Registered Holders of  Wachovia Bank Commercial Mortgage Trust, Commercial
Mortgage Pass-Through Certificates, Series 2005-C20

Outstanding Principal Balance as of 2/29/12: $2,935,373

Assets/Property:  In connection with that certain $3,300,000 mortgage loan made
by the Lienholder’s predecessor in interest, Wachovia Bank, N.A., and assumed by
SNH/LTA SE Wilson LLC as borrower, FVE SE Wilson LLC granted a security interest
in the personal property, intangibles, fixtures and other property located at or
relating to the property located at 1730 Parkwood Boulevard, Wilson, NC 27893.

 

Subsidiary:  FVE SE Home Place New Bern LLC

Lienholder:  Federal National Mortgage Association (FNMA)

Outstanding Principal Balance as of 2/29/12:  $3,162,950

Assets/Property:  In connection with that certain $3,625,000 mortgage loan
between FNMA (as successor by assignment from Prudential Multifamily
Mortgage, Inc.) and SNH/LTA SE Home Place New Bern LLC, FVE SE Home Place New
Bern LLC granted a security interest in the leases, rents, personalty,
intangibles and other property located at or relating to the property located at
1309 McCarthy Boulevard, New Bern, NC 28562.

 

Subsidiary:  FVE SE McCarthy New Bern LLC

Lienholder:  Bank of America, formerly known as LaSalle Bank National
Association, as Trustee for the Registered Holders of Bear Stearns Commercial
Mortgage Securities Inc., Commercial Mortgage Pass-Through Certificates,
Series 2005-PWR8

Outstanding Principal Balance as of 2/29/12:  $5,200,563

Assets/Property:  In connection with that certain $5,650,000 mortgage loan made
by Lienholder’s predecessor in interest, Nationwide Life Insurance Company, and
assumed by SNH/LTA SE McCarthy New Bern LLC as borrower, FVE SE McCarthy New
Bern LLC granted a security interest in the personal property, intangibles,
fixtures and other property located at or relating to the property located at
1321 McCarthy Boulevard, New Bern, NC 28562.

 

(See attached spreadsheet for additional Lien information)

 

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

 

Schedule 4.01(p) to Credit Agreement

Part (ii)(C) continued

 

Subsidiaries:  See chart below

Lienholder:  Federal National Mortgage Association (FNMA)

Outstanding Principal Balance as of 2/29/12:  $499,877,362

Assets/Property:  The personal property, accounts receivable, intangibles,
fixtures and other property of the Subsidiaries listed below located at or
relating to the properties listed below.

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

FVE FM Financing, Inc.

 

Five Star Desert Harbor LLC

 

Forum at Desert Harbor

 

13840 North Desert Harbor Drive

 

Peoria

 

AZ

 

85381

FVE FM Financing, Inc.

 

Five Star Rio Las Palmas LLC

 

Rio Las Palmas

 

877 East March Lane

 

Stockton

 

CA

 

95207

FVE FM Financing, Inc.

 

Five Star Aspenwood LLC

 

Aspenwood

 

14400 Homecrest Road

 

Silver Spring

 

MD

 

20906-1871

FVE FM Financing, Inc.

 

Five Star Easton Heartfields LLC

 

HeartFields at Easton

 

700 Port Street

 

Easton

 

MD

 

21601-8184

FVE FM Financing, Inc.

 

Five Star Severna Park LLC

 

Heartlands at Severna Park

 

715 Benfield Road

 

Severna Park

 

MD

 

21146-2210

FVE FM Financing, Inc.

 

Five Star Cary Heartfields LLC

 

HeartFields at Cary

 

1050 Crescent Green Drive

 

Cary

 

NC

 

27511-8100

FVE FM Financing, Inc.

 

Five Star Savannah Square LLC

 

Savannah Square

 

One Savannah Square Drive

 

Savannah

 

GA

 

31406

FVE FM Financing, Inc.

 

Five Star Frederick Heartfields LLC

 

HeartFields at Fredericksburg

 

20 HeartFields Lane

 

Fredericksburg

 

VA

 

22405-2368

FVE FM Financing, Inc.

 

Five Star Northshore LLC

 

Meadowmere-Northshore Assisted Living

 

10803 North Port Washington Road

 

Mequon

 

WI

 

53902

FVE FM Financing, Inc.

 

Five Star Tucson Forum LLC

 

Forum at Tucson

 

2500 North Rosemont Boulevard

 

Tucson

 

AZ

 

85712

FVE FM Financing, Inc.

 

Five Star Foulk Manor North LLC

 

Foulk Manor North

 

1212 Foulk Road

 

Wilmington

 

DE

 

19803

FVE FM Financing, Inc.

 

Five Star Coral Springs LLC

 

Park Summit at Coral Springs

 

8500 Royal Palm Boulevard

 

Coral Springs

 

FL

 

33065

FVE FM Financing, Inc.

 

Five Star Montebello LLC

 

Montebello on Academy

 

10500 Academy Road, N.E.

 

Albuquerque

 

NM

 

87111

FVE FM Financing, Inc.

 

Five Star Lincoln Heights LLC

 

Forum at Lincoln Heights

 

311 Nottingham West

 

San Antonio

 

TX

 

78209

FVE FM Financing, Inc.

 

Five Star Remington Club LLC

 

Remington Club I & II

 

16925 and 16916 Hiebra Drive

 

San Diego

 

CA

 

92128

FVE FM Financing, Inc.

 

Five Star Coral Oaks LLC

 

Coral Oaks

 

900 West Lake Road

 

Palm Harbor

 

FL

 

34684

FVE FM Financing, Inc.

 

Five Star Crossing LLC

 

Forum at the Crossing

 

8505 Woodfield Crossing Boulevard

 

Indianapolis

 

IN

 

46240

FVE FM Financing, Inc.

 

Five Star Gables LLC

 

Gables at Winchester

 

299 Cambridge Street

 

Winchester

 

MA

 

01890

FVE FM Financing, Inc.

 

Five Star Woodlands LLC

 

Forum at Woodlands

 

5055 W. Panther Creek Drive

 

Woodlands

 

TX

 

77381

FVE FM Financing, Inc.

 

Five Star Overland Park LLC

 

Forum at Overland Park

 

3501 West 95th Street

 

Overland Park

 

KS

 

66206

FVE FM Financing, Inc.

 

Five Star Brookside LLC

 

Forum at Brookside

 

200 Brookside Drive

 

Louisville

 

KY

 

40243

FVE FM Financing, Inc.

 

Five Star Knightsbridge LLC

 

Forum at Knightsbridge

 

4590 and 4625 Knightsbridge Boulevard

 

Columbus

 

OH

 

43214

FVE FM Financing, Inc.

 

Five Star Memorial Woods LLC

 

Forum at Memorial Woods

 

777 North Post Oak Road

 

Houston

 

TX

 

77024

FVE FM Financing, Inc.

 

Five Star Morningside Bellgrade LLC

 

Morningside of Bellgrade (Midlothian)

 

2800 Polo Parkway

 

Midlothian

 

VA

 

23113

FVE FM Financing, Inc.

 

Five Star Morningside Charlottesville LLC

 

Morningside of Charlottesville

 

491 Crestwood Drive

 

Charlottesville

 

VA

 

22903

FVE FM Financing, Inc.

 

Five Star Newport News LLC

 

Morningside of Newport News

 

655 Denbigh Boulevard

 

Newport News

 

VA

 

23608

FVE FM Financing, Inc.

 

Five Star Ellicott City LLC

 

Heartlands at Ellicott City

 

3004 North Ridge Road

 

Ellicott City

 

MD

 

21043-3381

 

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

 

Schedule 4.01(p) to Credit Agreement

Part (ii)(C) continued

 

Subsidiaries:  See chart below

Lienholder:  GMAC Commercial Mortgage Corporation

Outstanding Principal Balance as of 2/29/12:  $30,416,802

Assets/Property:  The personal property, accounts receivable, intangibles,
fixtures and other property of the Subsidiaries listed below located at or
relating to the properties listed below.

 

Tenant/Lessee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

Morningside of Beaufort, LLC

 

Morningside of Beaufort

 

109 Old Salem Road

 

Beaufort

 

SC

 

29901

Morningside of Bowling Green, LLC

 

Morningside of Bowling Green

 

981 Campbell Lane

 

Bowling Green

 

KY

 

42104

Morningside of Camden, LLC

 

Morningside of Camden

 

719 Kershaw Highway

 

Camden

 

SC

 

29020

Morningside of Cleveland, LLC

 

Morningside of Cleveland

 

2900 Westside Drive, N.W.

 

Cleveland

 

TN

 

37312

Morningside of Conyers, LLC

 

Morningside of Conyers

 

1352 Wellbrook Circle

 

Conyers

 

GA

 

30012

Morningside of Cookeville, LLC

 

Morningside of Cookeville

 

1010 East Spring Street

 

Cookeville

 

TN

 

38501

Morningside of Cullman, LLC

 

Morningside of Cullman

 

2021 Dahlke Dr. N.E.

 

Cullman

 

AL

 

35058

Morningside of Gainesville, LLC

 

Morningside of Gainesville

 

2435 Limestone Parkway

 

Gainesville

 

GA

 

30501

Morningside of Hartsville, LLC

 

Morningside of Hartsville

 

1901 West Carolina Avenue

 

Hartsville

 

SC

 

29550

Morningside of Lexington, LLC

 

Morningside of Lexington

 

218 Old Chapin Road

 

Lexington

 

SC

 

29072

Morningside of Macon, LLC

 

Morningside of Macon

 

6191 Peake Road

 

Macon

 

GA

 

31220

Morningside of Madison, LLC

 

Morningside of Madison

 

49 Hughes Road

 

Madison

 

AL

 

35758

Morningside of Orangeburg, LLC

 

Morningside of Orangeburg

 

2306 Riverbank Drive

 

Orangeburg

 

SC

 

29118

Morningside of Paducah, LLC

 

Morningside of Paducah

 

1700 Elmdale Road

 

Paducah

 

KY

 

42003

Morningside of Seneca, L.P.

 

Morningside of Seneca

 

15855 Wells Highway

 

Seneca

 

SC

 

29678

Morningside of Sheffield, LLC

 

Morningside of Sheffield

 

413 Cox Boulevard

 

Sheffield

 

AL

 

35660

 

Subsidiaries:  See chart below

Lienholder:  GMAC Commercial Mortgage Bank

Outstanding Principal Balance as of 2/29/12:  $10,863,803

Assets/Property:  The personal property, accounts receivable, intangibles,
fixtures and other property of the Subsidiaries listed below located at or
relating to the properties listed below.

 

Tenant/Lessee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

Morningside of Franklin, LLC

 

Morningside of Franklin

 

105 Sunrise Circle

 

Franklin

 

TN

 

37067

Morningside of Hopkinsville, Limited Partnership

 

Morningside of Hopkinsville

 

4190 Lafayette Road

 

Hopkinsville

 

KY

 

42240

Morningside of Jackson, LLC

 

Morningside of Jackson

 

1200 North Parkway

 

Jackson

 

TN

 

38305

Morningside of Knoxville, LLC

 

Williamsburg Villas (Knoxville)

 

3020 Heatherton Way

 

Knoxville

 

TN

 

37920

 

Subsidiary:  Five Star Quality Care-RMI, LLC

Lienholder:  Federal National Mortgage Association (FNMA)

Outstanding Principal Balance as of 2/29/12:  $47,536,672

Assets/Property:  The personal property, accounts receivable, intangibles,
fixtures and other property of the Subsidiaries listed below located at or
relating to the properties listed below.

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

Fox Ridge Manor

 

150 Fox Ridge Drive

 

Vincennes

 

IN

 

47591

Jefferson Manor

 

601 Saint Joseph Drive

 

Kokomo

 

IN

 

46901

McKay Manor

 

1473 East McKay Road

 

Shelbyville

 

IN

 

46176

Northwood Manor

 

1590 West Timberview Drive

 

Marion

 

IN

 

46952

Oak Woods Manor

 

1211 Longwood Drive

 

LaPorte

 

IN

 

46350

Park Square Manor

 

6990 East County Road 100 North

 

Avon

 

IN

 

46123

Smith Farm Manor

 

406 Smith Drive

 

Auburn

 

IN

 

46706

Sycamore Manor

 

222 South 25th Street

 

Terre Haute

 

IN

 

47803

 

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

 

Schedule 4.01(q)

Real Property

 

Part I: Owned Assets

 

Owner Entity

 

Property Address

 

State

 

Gross Book Value
(as of 2/29/12)

 

FVE MW LLC

 

Riverwalk Commons and Garden Homes 7235 Riverwalk Way North Noblesville, IN
46062

 

IN

 

$

30,495,820

 

FVE MW LLC

 

Clearwater Commons 4519 E. 82nd Street Indianapolis, IN 46250

 

IN

 

$

17,165,666

 

FVE MW LLC

 

Rosewalk Commons and Garden Homes 250 Shenandoah Drive Lafayette, IN 47905

 

IN

 

$

23,584,851

 

FVE MW LLC

 

Huntington Place 3801 N. Wright Road Janesville, WI 53546

 

WI

 

$

16,063,266

 

FSQ Villa at Riverwood Business Trust

 

Villa at Riverwood No. One Pratt Place Florissant, MO 63031

 

MO

 

$

5,800,419

 

FVE EC LLC

 

Washington Township Senior Living 600 Medical Center Drive Sewell, NJ 08080

 

NJ

 

$

8,854,368

 

FVE EC LLC

 

Voorhees Senior Living 501 Laurel Oak Road Voorhees, NJ 08043

 

NJ

 

$

9,013,186

 

FSQ The Palms at Fort Myers Business Trust

 

The Palms at Fort Myers 2674 Winkler Avenue Fort Myers, FL 33901

 

FL

 

$

19,144,634

 

Morningside of Concord, LLC

 

Fox Hollow 190 Fox Hollow Road Pinehurst, NC 28374

 

NC

 

$

10,648,494

 

Morningside of Concord, LLC

 

Morningside of Concord 500 Penny Lane, N.E. Concord, NC 28025

 

NC

 

$

6,464,837

 

Morningside of Gastonia, LLC

 

Morningside of Gastonia 2755 Union Road Gastonia, NC 28054

 

NC

 

$

6,737,654

 

Morningside of Greensboro, LLC

 

Morningview at Irving Park 3200 North Elm Street Greensboro, NC 27408

 

NC

 

$

6,098,253

 

Morningside of Raleigh, LLC

 

Morningside of Raleigh 801 Dixie Trail Raleigh, NC 27607

 

NC

 

$

9,161,756

 

Morningside of Williamsburg, LLC

 

Morningside of Williamsburg 440 McLaws Circle Williamsburg, VA 23185

 

VA

 

$

6,658,829

 

 

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

 

Owner Entity

 

Property Address

 

State

 

Gross Book Value
(as of 2/29/12)

 

Morningside of Paris, LLC

 

Morningside of Paris 350 Volunteer Drive Paris, TN 38242

 

TN

 

$

6,776,314

 

Five Star Quality Care - NS Owner, LLC

 

The Devon Senior Living 445 North Valley Forge Road Devon, PA 19333

 

PA

 

$

5,770,988

 

Five Star Quality Care — OBX Owner, LLC

 

Legacy Heights 11230 Ballantyne Trace Court Charlotte, NC 28277

 

NC

 

$

10,958,344

 

Five Star Quality Care - OBX Owner, LLC

 

Carriage House 3896 North Elm Street Greensboro, NC 27455

 

NC

 

$

7,603,102

 

Five Star Quality Care - OBX Owner, LLC

 

Forest Heights 2500 Polo Ridge Court Winston-Salem, NC 27106

 

NC

 

$

12,672,155

 

Five Star Quality Care - OBX Owner, LLC

 

Legacy of Anderson 3501 North Highway 81 Anderson, SC 29621

 

SC

 

$

710,110

 

Five Star Quality Care - OBX Owner, LLC

 

Sweetgrass Court 1010 Anna Knapp Boulevard Mt. Pleasant, SC 29464

 

SC

 

$

2,381,991

 

Five Star Quality Care - OBX Owner, LLC

 

Sweetgrass Village 601 Mathis Ferry Road Mt. Pleasant, SC 29464

 

SC

 

$

3,806,789

 

Five Star Quality Care-Farmington, LLC

 

Farmington Health Care Center 34225 Grand River Avenue Farmington, MI 48335-3440

 

MI

 

$

5,298,285

 

Five Star Quality Care-Howell, LLC

 

Howell Care Center 3003 West Grand River Avenue Howell, MI 48843-8539

 

MI

 

$

6,382,756

 

Morningside of Decatur, L.P.

 

Morningside of Decatur 2115 Point Mallard Drive S.E. Decatur, AL 35601

 

AL

 

$

3,582,823

 

Morningside of Fayette, L.P.

 

Morningside of Fayette 404 25th Street N.W. Fayette, AL 35555

 

AL

 

$

1,279,747

 

Morningside of Alabama, L.P.

 

Morningside of Auburn 871 Twin Forks Avenue Auburn, AL 36830

 

AL

 

$

1,509,901

 

FSQC-AL, LLC

 

Vacant Land 2630 Valleydale Road Birmingham, AL 35244

 

AL

 

$

890,000

 

O.F.C. Properties, LLC

 

Meadowood Development Parcel 2620 N. Dunn Street, 787 & 791 E. Tamarack Trail
Bloomington, IN 47408

 

IN

 

$

800,000

 

Morningside of Springfield, LLC

 

Morningside of Springfield 205 Westgate Drive Springfield, TN 37172

 

TN

 

$

2,505,632

 

FSQC Tellico Village LLC

 

The Neighborhood at Tellico Village 100 Chatuga Drive West Loudon, TN 37774

 

TN

 

$

5,257,260

 

 

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

 

Owner Entity

 

Property Address

 

State

 

Gross Book Value
(as of 2/29/12)

 

Five Star Quality Care-Granite Gate, LLC

 

Granite Gate Community 3850 North US Highway 89 Prescott, AZ 86301

 

AZ

 

$

27,112,978

 

Five Star Covington LLC

 

Covington Commons 2601 Covington Commons Drive Fort Wayne, IN 46804

 

IN

 

$

22,910,310

 

Five Star Forest Creek LLC

 

Forest Creek Commons 6510 U.S. 31 South Indianapolis, IN 46227

 

IN

 

$

16,223,618

 

Five Star Northwoods LLC

 

Northwoods Commons 2501 Friendship Boulevard Kokomo, IN 46901

 

IN

 

$

13,433,843

 

Five Star Quality Care-OBX Operator, LLC

 

Northwoods 5-Plex Mallard Court Kokomo, IN 46901

 

IN

 

$

600,000

 

 

Part II: Leased Assets

 

See attached spreadsheet.

 

Part III: Management Agreements

 

1.               Management Agreement, dated as of April 13, 2012, by and
between FVE MW LLC, as owner, and FSQ, Inc., as manager, relating to the
Riverwalk Commons and Garden Homes property.

 

2.              Management Agreement, dated as of April 13, 2012, by and between
FVE MW LLC, as owner, and FSQ, Inc., as manager, relating to the Clearwater
Commons property.

 

3.               Management Agreement, dated as of April 13, 2012, by and
between FVE MW LLC, as owner, and FSQ, Inc., as manager, relating to the
Rosewalk Commons and Garden Homes property.

 

4.               Management Agreement, dated as of April 13, 2012, by and
between FVE MW LLC, as owner, and FSQ, Inc., as manager, relating to the
Huntington Place property.

 

5.               Management Agreement, dated as of April 13, 2012, by and
between FSQ Villa at Riverwood Business Trust, as owner, and FSQ, Inc., as
manager, relating to the Villa at Riverwood property.

 

6.               Management Agreement, dated as of April 13, 2012, by and
between FVE EC LLC, as owner, and FSQ, Inc., as manager, relating to the
Washington Township Senior Living property.

 

7.               Management Agreement, dated as of April 13, 2012, by and
between FVE EC LLC, as owner, and FSQ, Inc., as manager, relating to the
Voorhees Senior Living property.

 

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

 

8.               Management Agreement, dated as of April 13, 2012, by and
between FSQ The Palms at Fort Myers Business Trust, as owner, and FSQ, Inc., as
manager, relating to The Palms at Fort Myers property.

 

9.               Management Agreement, dated as of April 13, 2012, by and
between Morningside of Concord, LLC, as owner, and FSQ, Inc., as manager,
relating to the Fox Hollow property.

 

10.         Management Agreement, dated as of April 13, 2012, by and between
Morningside of Concord, LLC, as owner, and FSQ, Inc., as manager, relating to
the Morningside of Concord property.

 

11.         Management Agreement, dated as of April 13, 2012, by and between
Morningside of Gastonia, LLC, as owner, and FSQ, Inc., as manager, relating to
the Morningside of Gastonia property.

 

12.         Management Agreement, dated as of April 13, 2012, by and between
Morningside of Greensboro, LLC, as owner, and FSQ, Inc., as manager, relating to
the Morningview at Irving Park property.

 

13.         Management Agreement, dated as of April 13, 2012, by and between
Morningside of Raleigh, LLC, as owner, and FSQ, Inc., as manager, relating to
the Morningside of Raleigh property.

 

14.         Management Agreement, dated as of April 13, 2012, by and between
Morningside of Williamsburg, LLC, as owner, and FSQ, Inc., as manager, relating
to the Morningside of Williamsburg property.

 

15.         Management Agreement, dated as of April 13, 2012, by and between
Morningside of Paris, LLC, as owner, and FSQ, Inc., as manager, relating to the
Morningside of Paris property.

 

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

 

Schedule 4.01(q) to Credit Agreement

Part II: Leased Assets

 

PROPERTIES LEASED  FROM SENIOR HOUSING TO FIVE STAR

 

Amended and Restated Master Lease Agreement (Lease No. 1) dated as of August 4,
2009, by and among certain affiliates of Senior Housing Properties Trust, as
Landlord, and Five Star Quality Care Trust, as Tenant, as amended from time to
time.

 

Lease Expiration Date:

12/31/2024

Annual Rent:

$42,093,818

 

Real Estate Owner/Lessor

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

SNH Somerford Properties Trust

 

Five Star Quality Care Trust

 

Annapolis Heritage Partners, LLC

 

Somerford Place - Annapolis

 

2717 Riva Road

 

Annapolis

 

MD

 

21401

SNH Somerford Properties Trust

 

Five Star Quality Care Trust

 

Columbia Heritage Partners, LLC

 

Somerford Place - Columbia

 

8220 Snowden River Parkway

 

Columbia

 

MD

 

21401

SNH Somerford Properties Trust

 

Five Star Quality Care Trust

 

Encinitas Heritage Partners, LLC

 

Somerford Place - Encinitas

 

1350 S. El Camino Real

 

Encinitas

 

CA

 

92024

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-AZ, LLC

 

La Mesa Healthcare Center

 

2470 S. Arizona Avenue

 

Yuma

 

AZ

 

85364-8598

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-AZ, LLC

 

SunQuest Village of Yuma

 

265 E. 24th Street

 

Yuma

 

AZ

 

85364-8546

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-CA, LLC

 

Lancaster Healthcare Center

 

1642 West Avenue J

 

Lancaster

 

CA

 

93534-2896

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-CA, LLC

 

Van Nuys Healthcare Center

 

6835 Hazeltine Avenue

 

Van Nuys

 

CA

 

91405-3299

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-CA, LLC

 

Leisure Pointe

 

1371 Parkside Drive

 

San Bernardino

 

CA

 

92404

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-Colorado, LLC

 

Mantey Heights Rehabilitation & Care Center

 

2825 Patterson Road

 

Grand Junction

 

CO

 

81506-6081

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-Colorado, LLC

 

Cherrelyn Healthcare Center

 

5555 South Elati Street

 

Littleton

 

CO

 

80120-1699

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-FL, LLC

 

Tuscany Villa of Naples (aka Buena Vista)

 

8901 Tamiami Trail East

 

Naples

 

FL

 

34113

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-GHV, LLC

 

Ridgepointe Assisted Living

 

5301 Brownsville Road

 

Pittsburgh

 

PA

 

15236

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-GHV, LLC

 

Mount Vernon of South Park

 

1400 Riggs Road

 

South Park

 

PA

 

15129

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-IA, Inc.

 

Park Place

 

114 East Green Street

 

Glenwood

 

IA

 

51534-1902

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-IA, Inc.

 

Union Park Health Services

 

2401 E. 8th Street

 

Des Moines

 

IA

 

50316-1798

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-IA, LLC

 

Prairie Ridge Care & Rehabilitation

 

608 Prairie Street

 

Mediapolis

 

IA

 

52637-0815

SNH/LTA Properties GA LLC

 

Five Star Quality Care Trust

 

Five Star Quality Care-IL, LLC

 

Crimson Pointe

 

7130 Crimson Ridge Drive

 

Rockford

 

IL

 

61107

SNH CHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-MN, LLC

 

Wellstead of Rogers

 

20500 & 20600 S. Diamond Lake Road

 

Rogers

 

MN

 

55374

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-MO, LLC

 

Arbor View Healthcare and Rehabilitation Center

 

1317 N. 36th Street

 

St. Joseph

 

MO

 

64506

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-MS, LLC

 

Hermitage Gardens at Oxford

 

1488 Belk Boulevard

 

Oxford

 

MS

 

38655

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-MS, LLC

 

Hermitage Gardens at Southaven

 

108 Clarington Drive

 

Southaven

 

MS

 

38671

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-NE, Inc.

 

Central City Care Center

 

2720 South 17th Avenue

 

Central City

 

NE

 

68826-9621

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-NE, LLC

 

Blue Hill Care Center

 

414 North Wilson Street, P.O. Box 156

 

Blue Hill

 

NE

 

68930-3507

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-NE, LLC

 

Sutherland Care Center

 

333 Maple Street, P.O. Box 307

 

Sutherland

 

NE

 

69165-0307

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-NE, LLC

 

Ashland Care Center

 

1700 Furnace Street

 

Ashland

 

NE

 

68003-1254

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-NE, LLC

 

Gretna Community Living Center

 

700 South Highway 6

 

Gretna

 

NE

 

68028-7923

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-NE, LLC

 

Waverly Care Center

 

11041 North 137th Street

 

Waverly

 

NE

 

68462-1022

SNH CHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-North Carolina, LLC

 

The Haven in Highland Creek

 

5920 McChesney Drive

 

Charlotte

 

NC

 

28269

SNH CHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-North Carolina, LLC

 

The Laurels in Highland Creek

 

6101 Clark Creek Parkway

 

Charlotte

 

NC

 

28269

SNH CHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-North Carolina, LLC

 

The Haven in the Village at Carolina Place

 

13150 Dorman Road

 

Pineville

 

NC

 

28134

SNH CHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-North Carolina, LLC

 

The Laurels in the Village at Carolina Place

 

13180 Dorman Road

 

Pineville

 

NC

 

28134

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-North Carolina, LLC

 

Landing at Parkwood

 

1720 Parkwood Boulevard

 

Wilson

 

NC

 

27893-2167

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-TX, LLC

 

The Haven in the Texas Hill Country

 

747 Alpine Drive

 

Kerrville

 

TX

 

78028

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-TX, LLC

 

The Haven in Stone Oak

 

511 Knights Cross Drive

 

San Antonio

 

TX

 

78258

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-TX, LLC

 

The Laurels in Stone Oak

 

575 Knights Cross Drive

 

San Antonio

 

TX

 

78258

SNH CHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-VA, LLC

 

Dominion Village of Chesapeake

 

2856 Forehand Drive

 

Chesapeake

 

VA

 

23323

SNH CHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-VA, LLC

 

Dominion Village of Williamsburg

 

4132 Longhill Road

 

Williamsburg

 

VA

 

23188

 

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

 

Schedule 4.01(q) to Credit Agreement

Part II: Leased Assets

 

SNH CHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-VA, LLC

 

HeartFields at Richmond

 

500 North Allen Avenue

 

Richmond

 

VA

 

23220-2903

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-VA, LLC

 

Talbot Park

 

6311 Granby Street

 

Norfolk

 

VA

 

23505-4454

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-WI, LLC

 

Sunny Hill Health Care Center

 

4325 Nakoma Road

 

Madison

 

WI

 

53711-3796

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-WI, LLC

 

Brookfield Rehab & Specialty (aka Woodland Healthcare Center)

 

18741 W. Bluemound Road

 

Brookfield

 

WI

 

53045-2939

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-WI, LLC

 

Meadowmere-Madison Assisted Living

 

5601 Burke Road

 

Madison

 

WI

 

53718

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-WI, LLC

 

Meadowmere-Southport Assisted Living

 

8350 & 8351 Sheridan Road

 

Kenosha

 

WI

 

53143

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-WI, LLC

 

Mitchell Manor Senior Living

 

5301 West Lincoln Avenue

 

West Allis

 

WI

 

53219

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-WY, LLC

 

Laramie Care Center

 

503 South 18th Street

 

Laramie

 

WY

 

82070-4391

SNH Somerford Properties Trust

 

Five Star Quality Care Trust

 

Frederick Heritage Partners, LLC

 

Somerford Place and Somerford House - Frederick

 

2100 Whittier Drive

 

Frederick

 

MD

 

21702

SNH Somerford Properties Trust

 

Five Star Quality Care Trust

 

Fresno Heritage Partners, A California Limited Partnership

 

Somerford Place - Fresno

 

6075 N. Marks Avenue

 

Fresno

 

CA

 

93711

SNH Somerford Properties Trust

 

Five Star Quality Care Trust

 

Hagerstown Heritage Partners, LLC

 

Somerford Place and Somerford House - Hagerstown

 

10114 & 10116 Sharpsburg Pike

 

Hagerstown

 

MD

 

21740

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Morningside of Anderson, L.P.

 

The Haven in the Summit

 

3 Summit Terrace

 

Columbia

 

SC

 

29229

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Morningside of Anderson, L.P.

 

The Haven in the Village at Chanticleer

 

355 Berkmans Lane

 

Greenville

 

SC

 

29605

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Morningside of Belmont, LLC

 

Walking Horse Meadow

 

207 Uffelman Drive

 

Clarksville

 

TN

 

37043

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Morningside of Belmont, LLC

 

Morningside of Belmont (Nashville)

 

1710 Magnolia Boulevard

 

Nashville

 

TN

 

37212

SNH/LTA Properties GA LLC

 

Five Star Quality Care Trust

 

Morningside of Columbus, L.P.

 

Morningside of Columbus

 

7100 South Stadium Drive

 

Columbus

 

GA

 

31909

SNH/LTA Properties GA LLC

 

Five Star Quality Care Trust

 

Morningside of Dalton, Limited Partnership

 

Morningside of Dalton

 

2470 Dug Gap Road

 

Dalton

 

GA

 

30720

SNH/LTA Properties GA LLC

 

Five Star Quality Care Trust

 

Morningside of Evans, Limited Partnership

 

Morningside of Evans

 

353 N. Belair Road

 

Evans

 

GA

 

30809

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Morningside of Gallatin, LLC

 

Morningside of Gallatin

 

1085 Hartsville Pike

 

Gallatin

 

TN

 

37066

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Morningside of Kentucky, Limited Partnership

 

Ashwood Place

 

102 Leonardwood

 

Frankfort

 

KY

 

40601

SNH Somerford Properties Trust

 

Five Star Quality Care Trust

 

Newark Heritage Partners I, LLC

 

Somerford House - Newark

 

501 S. Harmony Road

 

Newark

 

DE

 

19713

SNH Somerford Properties Trust

 

Five Star Quality Care Trust

 

Newark Heritage Partners II, LLC

 

Somerford Place - Newark

 

4175 Ogletown Road

 

Newark

 

DE

 

19713

SNH Somerford Properties Trust

 

Five Star Quality Care Trust

 

Redlands Heritage Partners, LLC

 

Somerford Place - Redlands

 

1319 Brookside Avenue

 

Redlands

 

CA

 

92373

SNH Somerford Properties Trust

 

Five Star Quality Care Trust

 

Roseville Heritage Partners, A California Limited Partnership

 

Somerford Place - Roseville

 

110 Sterling Court

 

Roseville

 

CA

 

95661

SNH/LTA Properties GA LLC

 

Five Star Quality Care Trust

 

Five Star Quality Care-GA, LLC

 

Eastside Gardens

 

2078 Scenic Highway North

 

Snellville

 

GA

 

30078

 

Amended and Restated Master Lease Agreement (Lease No. 2) dated as of August 4,
2009, by and among certain affiliates of Senior Housing Properties Trust, as
Landlord, and Five Star Quality Care Trust, FS Commonwealth LLC, FS Patriot LLC,
and FS Tenant Holding Company Trust, as Tenants, as amended from time to time.

 

Lease Expiration Date:

6/30/2026

Annual Rent:

$52,538,411

 

Real Estate Owner/Lessor

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-CA II, LLC

 

La Salette Health and Rehabilitation Center

 

537 East Fulton Street

 

Stockton

 

CA

 

95204-2227

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-CA II, LLC

 

Thousand Oaks Healthcare Center

 

93 W Avenida de Los Arboles

 

Thousand Oaks

 

CA

 

91360-2900

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-Colorado, LLC

 

Skyline Ridge Nursing & Rehabilitation Center

 

515 Fairview Avenue

 

Canon City

 

CO

 

81212-2863

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-Colorado, LLC

 

Willow Tree Care Center

 

2050 South Main Street

 

Delta

 

CO

 

81416-2400

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-Colorado, LLC

 

Cedars Healthcare Center

 

1599 Ingalls Street

 

Lakewood

 

CO

 

80214-1505

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-Colorado, LLC

 

Springs Village Care Center

 

110 West Van Buren Street

 

Colorado Springs

 

CO

 

80907-8400

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-FL, LLC

 

Palms at St. Lucie West

 

501 N.W. Cashmere Boulevard

 

Port St. Lucie

 

FL

 

34986-1908

SNH/LTA Properties GA LLC

 

Five Star Quality Care Trust

 

Five Star Quality Care-GA, LLC

 

Senior Living of Marsh View

 

7410 Skidaway Road

 

Savannah

 

GA

 

31406

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-GHV, LLC

 

Overlook Green

 

5250 Meadowgreen Drive

 

Whitehall

 

PA

 

15236

 

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

 

Schedule 4.01(q) to Credit Agreement

Part II: Leased Assets

 

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-GHV, LLC

 

Franciscan Manor

 

71 Darlington Road

 

Patterson Township, Beaver Falls

 

PA

 

15010

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-GHV, LLC

 

Mount Vernon of Elizabeth

 

145 Broadlawn Drive

 

Elizabeth

 

PA

 

15037

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-IA, LLC

 

Pacific Place

 

P.O. Box 157, 20937 Kane Avenue

 

Pacific Junction

 

IA

 

51561

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-IA, LLC

 

West Bridge Care & Rehabilitation

 

1015 West Summit Street

 

Winterset

 

IA

 

50273-2209

O.F.C. Corporation

 

Five Star Quality Care Trust

 

Five Star Quality Care-IN, LLC

 

Meadowood Retirement Community

 

2455 Tamarack Trail

 

Bloomington

 

IN

 

47408

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-KS, LLC

 

Woodhaven Care Center

 

510 W. 7th Street

 

Ellinwood

 

KS

 

67526-1101

SNH CHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-MD, LLC

 

HeartFields at Bowie

 

7600 Laurel Bowie Road

 

Bowie

 

MD

 

20715-1075

SNH CHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-MD, LLC

 

HeartFields at Frederick

 

1820 Latham Drive

 

Frederick

 

MD

 

21701-9393

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-NE, Inc.

 

Morys Haven

 

1112 15th Street

 

Columbus

 

NE

 

68601-5304

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-NE, Inc.

 

Utica Community Care Center

 

1350 Centennial Avenue

 

Utica

 

NE

 

68456-6094

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-NE, LLC

 

Crestview Health Care Center

 

1100 West First Street, P.O. Box D

 

Milford

 

NE

 

68405-0614

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-NE, LLC

 

Wedgewood Care Center

 

800 Stoeger Drive

 

Grand Island

 

NE

 

68803-4404

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-TX, LLC

 

Heritage Place at Boerne

 

120 Crosspoint Drive

 

Boerne

 

TX

 

78006

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-TX, LLC

 

Heritage Place at Fredericksburg

 

96 E. Frederick Road

 

Fredericksburg

 

TX

 

78624

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-VA, LLC

 

Formerly known as Alta Reserve

 

1005 Elysian Place

 

Chesapeake

 

VA

 

23320-2989

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-WI, LLC

 

River Hills West Healthcare Center

 

321 Riverside Drive

 

Pewaukee

 

WI

 

53072-4678

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-WI, LLC

 

Manorpointe-Oak Creek Independent Senior Apartments

 

700 East Stonegate Drive

 

Oak Creek

 

WI

 

53154

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-WI, LLC

 

Meadowmere/Mitchell Manor-Oak Creek Assisted Living

 

701 East Puetz Road

 

Oak Creek

 

WI

 

53154

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-WI, LLC

 

Greentree Health & Rehabilitation Center

 

70 Greentree Road

 

Clintonville

 

WI

 

54929-1099

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-WI, LLC

 

Pine Manor Health Care Center

 

Village of Embarrass,1625 East Main Street,

 

Clintonville

 

WI

 

54929-9236

SPTMNR Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-WI, LLC

 

The Virginia Health & Rehabilitation Center

 

1451 Cleveland Avenue

 

Waukesha

 

WI

 

53186-3903

CCC of Kentucky Trust (Ground Lease)

 

FS Tenant Holding Company Trust

 

FS Lafayette Tenant Trust

 

Lafayette at Country Place

 

690 Mason Headley Road

 

Lexington

 

KY

 

40504

Leisure Park Venture Limited Partnership

 

FS Tenant Holding Company Trust

 

FS Leisure Park Tenant Trust

 

Leisure Park

 

1400 Route 70

 

Lakewood

 

NJ

 

08701

CCC of Kentucky Trust (Ground Lease)

 

FS Tenant Holding Company Trust

 

FS Lexington Tenant Trust

 

Lexington at Country Place

 

700 Mason Headley Road

 

Lexington

 

KY

 

40504

CCDE Senior Living LLC

 

FS Tenant Holding Company Trust

 

FS Tenant Pool I Trust

 

Millcroft

 

255 Possum Park Road

 

Newark

 

DE

 

19711

CCDE Senior Living LLC

 

FS Tenant Holding Company Trust

 

FS Tenant Pool I Trust

 

Shipley Manor

 

2723 Shipley Road

 

Wilmington

 

DE

 

19810

CCOP Senior Living LLC

 

FS Tenant Holding Company Trust

 

FS Tenant Pool I Trust

 

Myrtle Beach Manor

 

9547 Highway 17 North

 

Myrtle Beach

 

SC

 

29572

CCC Pueblo Norte Trust

 

FS Tenant Holding Company Trust

 

FS Tenant Pool II Trust

 

The Forum at Pueblo Norte

 

7090 East Mescal Street

 

Scottsdale

 

AZ

 

85254

CCC Retirement Communities II, L.P.

 

FS Tenant Holding Company Trust

 

FS Tenant Pool II Trust

 

Forwood Manor

 

1912 Marsh Road

 

Wilmington

 

DE

 

19810

CCC Investments I, L.L.C.

 

FS Tenant Holding Company Trust

 

FS Tenant Pool II Trust

 

Fountainview

 

111 Executive Center Drive

 

West Palm Beach

 

FL

 

33401

CCC Financing I Trust

 

FS Tenant Holding Company Trust

 

FS Tenant Pool III Trust

 

Forum at Deer Creek

 

3001 Deer Creek Boulevard

 

Deerfield Beach

 

FL

 

33442

CCC Financing I Trust

 

FS Tenant Holding Company Trust

 

FS Tenant Pool III Trust

 

Forum at Park Lane

 

7831 Park Lane

 

Dallas

 

TX

 

75225

CCC Financing Limited, L.P.

 

FS Tenant Holding Company Trust

 

FS Tenant Pool IV Trust

 

Foulk Manor South

 

407 Foulk Road

 

Wilmington

 

DE

 

19803

CCC Investments I, L.L.C.

 

FS Tenant Holding Company Trust

 

FS Tenant Pool IV Trust

 

Springwood Court

 

12780 Kenwood Lane

 

Fort Myers

 

FL

 

33907

SNH Somerford Properties Trust

 

Five Star Quality Care Trust

 

FSQC-AL, LLC

 

Ashton Gables in Riverchase

 

2184 Parkway Lake Drive

 

Birmingham

 

AL

 

35244

SNH Somerford Properties Trust

 

Five Star Quality Care Trust

 

FSQC-AL, LLC

 

Lakeview Estates

 

2634 Valleydale Road

 

Birmingham

 

AL

 

35244

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Morningside of Anderson, L.P.

 

Morningside of Anderson

 

1304 McLees Road

 

Anderson

 

SC

 

29621

 

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

 

Schedule 4.01(q) to Credit Agreement

Part II: Leased Assets

 

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Morningside of Athens, Limited Partnership

 

Morningside of Athens

 

1291 Cedar Shoals Drive

 

Athens

 

GA

 

30605

HRES1 Properties Trust

 

FS Commonwealth LLC

 

N/A

 

New England Rehabilitation Hospital

 

2 Rehabilitation Way

 

Woburn

 

MA

 

01801

HRES1 Properties Trust

 

FS Patriot LLC

 

N/A

 

Braintree Rehabilitation Hospital

 

250 Pond Street

 

Braintree

 

MA

 

02184

 

Amended and Restated Master Lease Agreement, dated as of August, 4, 2009, by and
among SNH FM Financing LLC, SNH FM Financing Trust and Ellicott C ity Land I,
LLC, as Landlord, and FVE FM Financing, Inc., as Tenant, as amended from time to
time.

 

Lease Expiration Date:

12/31/2028

Annual Rent:

$62,968,279

 

Real Estate Owner/Lessor

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Desert Harbor LLC

 

Forum at Desert Harbor

 

13840 North Desert Harbor Drive

 

Peoria

 

AZ

 

85381

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Rio Las Palmas LLC

 

Rio Las Palmas

 

877 East March Lane

 

Stockton

 

CA

 

95207

SNH FM Financing Trust

 

FVE FM Financing, Inc.

 

Five Star Aspenwood LLC

 

Aspenwood

 

14400 Homecrest Road

 

Silver Spring

 

MD

 

20906-1871

SNH FM Financing Trust

 

FVE FM Financing, Inc.

 

Five Star Easton Heartfields LLC

 

HeartFields at Easton

 

700 Port Street

 

Easton

 

MD

 

21601-8184

SNH FM Financing Trust

 

FVE FM Financing, Inc.

 

Five Star Severna Park LLC

 

Heartlands at Severna Park

 

715 Benfield Road

 

Severna Park

 

MD

 

21146-2210

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Cary Heartfields LLC

 

HeartFields at Cary

 

1050 Crescent Green Drive

 

Cary

 

NC

 

27511-8100

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Savannah Square LLC

 

Savannah Square

 

One Savannah Square Drive

 

Savannah

 

GA

 

31406

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Frederick Heartfields LLC

 

HeartFields at Fredericksburg

 

20 HeartFields Lane

 

Fredericksburg

 

VA

 

22405-2368

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Northshore LLC

 

Meadowmere-Northshore Assisted Living

 

10803 North Port Washington Road

 

Mequon

 

WI

 

53902

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Tucson Forum LLC

 

Forum at Tucson

 

2500 North Rosemont Boulevard

 

Tucson

 

AZ

 

85712

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Foulk Manor North LLC

 

Foulk Manor North

 

1212 Foulk Road

 

Wilmington

 

DE

 

19803

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Coral Springs LLC

 

Park Summit at Coral Springs

 

8500 Royal Palm Boulevard

 

Coral Springs

 

FL

 

33065

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Montebello LLC

 

Montebello on Academy

 

10500 Academy Road, N.E.

 

Albuquerque

 

NM

 

87111

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Lincoln Heights LLC

 

Forum at Lincoln Heights

 

311 Nottingham West

 

San Antonio

 

TX

 

78209

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Remington Club LLC

 

Remington Club I & II

 

16925 and 16916 Hiebra Drive

 

San Diego

 

CA

 

92128

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Coral Oaks LLC

 

Coral Oaks

 

900 West Lake Road

 

Palm Harbor

 

FL

 

34684

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Crossing LLC

 

Forum at the Crossing

 

8505 Woodfield Crossing Boulevard

 

Indianapolis

 

IN

 

46240

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Gables LLC

 

Gables at Winchester

 

299 Cambridge Street

 

Winchester

 

MA

 

01890

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Woodlands LLC

 

Forum at Woodlands

 

5055 W. Panther Creek Drive

 

Woodlands

 

TX

 

77381

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Overland Park LLC

 

Forum at Overland Park

 

3501 West 95th Street

 

Overland Park

 

KS

 

66206

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Brookside LLC

 

Forum at Brookside

 

200 Brookside Drive

 

Louisville

 

KY

 

40243

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Knightsbridge LLC

 

Forum at Knightsbridge

 

4590 and 4625 Knightsbridge Boulevard

 

Columbus

 

OH

 

43214

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Memorial Woods LLC

 

Forum at Memorial Woods

 

777 North Post Oak Road

 

Houston

 

TX

 

77024

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Morningside Bellgrade LLC

 

Morningside of Bellgrade (Midlothian)

 

2800 Polo Parkway

 

Midlothian

 

VA

 

23113

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Morningside Charlottesville LLC

 

Morningside of Charlottesville

 

491 Crestwood Drive

 

Charlottesville

 

VA

 

22903

SNH FM Financing LLC

 

FVE FM Financing, Inc.

 

Five Star Newport News LLC

 

Morningside of Newport News

 

655 Denbigh Boulevard

 

Newport News

 

VA

 

23608

Ellicott City Land I, LLC

 

FVE FM Financing, Inc.

 

Five Star Ellicott City LLC

 

Heartlands at Ellicott City

 

3004 North Ridge Road

 

Ellicott City

 

MD

 

21043-3381

 

Amended and Restated Master Lease Agreement (Lease No. 4), dated as of August 4,
2009, by and among certain affiliates of Senior Housing Properties Trust, as
Landlord, and Five Star Quality Care Trust, Five Star Quality Care — NS Tenant,
LLC, and FS Tenant Holding Company Trust, as Tenants, as amended from time to
time.

 

Lease Expiration Date:

4/30/2017

Annual Rent:

$22,455,208

 

Real Estate Owner/Lessor

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-Colorado, LLC

 

La Villa Grande Care Center

 

2501 Little Bookcliff Drive

 

Grand Junction

 

CO

 

81501-8842

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-FL, LLC

 

Court at Palm Aire

 

2701 North Course Drive

 

Pompano Beach

 

FL

 

33069

SNH/LTA Properties GA LLC

 

Five Star Quality Care Trust

 

Five Star Quality Care-GA, LLC

 

Northlake Gardens

 

1300 Montreal Road

 

Tucker

 

GA

 

30084

SNH NS Properties Trust

 

Five Star Quality Care - NS Tenant, LLC

 

Five Star Quality Care-GHV, LLC

 

Clarks Summit Senior Living

 

950 Morgan Highway

 

Clarks Summit

 

PA

 

18411

 

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

 

Schedule 4.01(q) to Credit Agreement

Part II: Leased Assets

 

SNH NS Properties Trust

 

Five Star Quality Care - NS Tenant, LLC

 

Five Star Quality Care-GHV, LLC

 

Glen Mills Senior Living (Concordville)

 

242 Baltimore Pike

 

Glen Mills

 

PA

 

19342

SNH NS Properties Trust

 

Five Star Quality Care - NS Tenant, LLC

 

Five Star Quality Care-GHV, LLC

 

Exton Senior Living

 

600 North Pottstown Pike

 

Exton

 

PA

 

19341

SNH NS Properties Trust

 

Five Star Quality Care - NS Tenant, LLC

 

Five Star Quality Care-GHV, LLC

 

Tiffany Court Senior Living

 

700 Northampton Street

 

Kingston

 

PA

 

18704

SNH NS Properties Trust

 

Five Star Quality Care - NS Tenant, LLC

 

Five Star Quality Care-GHV, LLC

 

New Britain Senior Living

 

800 Manor Drive

 

Chalfont

 

PA

 

18914

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-IA, LLC

 

WestRidge Quality Care & Rehabilitation

 

600 Manor Drive

 

Clarinda

 

IA

 

51632-0475

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-IL, LLC

 

Brenden Gardens

 

900 Southwind Road

 

Springfield

 

IL

 

62703

SNH CHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-KS, LLC

 

Overland Park Place

 

6555 West 75th Street

 

Overland Park

 

KS

 

66204

SNH CHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-KS, LLC

 

Brandon Woods at Alvamar

 

1501 Inverness Drive

 

Lawrence

 

KS

 

66047

SNH CHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-NE, LLC

 

Westgate Assisted Living

 

3030 South 80th Street

 

Omaha

 

NE

 

68124

SNH CHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-NE, LLC

 

Centennial Park Retirement Village

 

510 Centennial Circle

 

North Platte

 

NE

 

69101

SNH NS Properties Trust

 

Five Star Quality Care - NS Tenant, LLC

 

Five Star Quality Care-NJ, LLC

 

Cherry Hill Senior Living

 

490 Cooper Landing Road

 

Cherry Hill

 

NJ

 

08002

SNH NS Properties Trust

 

Five Star Quality Care - NS Tenant, LLC

 

Five Star Quality Care-NJ, LLC

 

Mount Arlington Senior Living

 

2 Hillside Drive

 

Mt. Arlington

 

NJ

 

07856

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-North Carolina, LLC

 

McCarthy Court II

 

1325 McCarthy Boulevard

 

New Bern

 

NC

 

28562-2054

SNH CHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-VA, LLC

 

Dominion Village of Poquoson

 

531 Wythe Creek Road

 

Poquoson

 

VA

 

23662

SPTIHS Properties Trust

 

Five Star Quality Care Trust

 

Five Star Quality Care-WY, LLC

 

Worland Healthcare & Rehabilitation Center

 

1901 Howell Avenue

 

Worland

 

WY

 

82401-3799

CCOP Senior Living LLC

 

FS Tenant Holding Company Trust

 

FS Tenant Pool I Trust

 

Montevista at Coronado

 

1575 Belvidere

 

El Paso

 

TX

 

79912

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Morningside of Greenwood, L.P.

 

Morningside of Greenwood

 

116 Enterprise Court

 

Greenwood

 

SC

 

29649

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Morningside of Kentucky, Limited Partnership

 

Morningside of Mayfield

 

1517 West Broadway

 

Mayfield

 

KY

 

42066

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Morningside of Kentucky, Limited Partnership

 

The Neighborhood of Somerset

 

100 Neighborly Drive

 

Somerset

 

KY

 

42501

SNH/LTA Properties Trust

 

Five Star Quality Care Trust

 

Morningside of Skipwith-Richmond, LLC

 

Morningside in the West End

 

3000 Skipwith Road

 

Richmond

 

VA

 

23294

SNH Somerford Properties Trust

 

Five Star Quality Care Trust

 

Stockton Heritage Partners, LLC

 

Somerford Place - Stockton

 

3530 Deer Park Drive

 

Stockton

 

CA

 

95219

 

Lease Agreement, dated November 19, 2004, by and among certain affiliates of
Senior Housing Properties Trust, as Landlord, and certain affiliates of Five
Star Quality Care, Inc., as Tenant.

 

Lease Expiration Date:

12/31/2020

Annual Rent:

$6,614,442

 

Real Estate Owner/Lessor

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

MSD - Beaufort, LLC

 

Morningside of Beaufort, LLC

 

N/A

 

Morningside of Beaufort

 

109 Old Salem Road

 

Beaufort

 

SC

 

29901

MSD - Bowling Green, LLC

 

Morningside of Bowling Green, LLC

 

N/A

 

Morningside of Bowling Green

 

981 Campbell Lane

 

Bowling Green

 

KY

 

42104

MSD - Camden, LLC

 

Morningside of Camden, LLC

 

N/A

 

Morningside of Camden

 

719 Kershaw Highway

 

Camden

 

SC

 

29020

MSD - Cleveland, LLC

 

Morningside of Cleveland, LLC

 

N/A

 

Morningside of Cleveland

 

2900 Westside Drive, N.W.

 

Cleveland

 

TN

 

37312

MSD - Conyers, LLC

 

Morningside of Conyers, LLC

 

N/A

 

Morningside of Conyers

 

1352 Wellbrook Circle

 

Conyers

 

GA

 

30012

MSD - Cookeville, LLC

 

Morningside of Cookeville, LLC

 

N/A

 

Morningside of Cookeville

 

1010 East Spring Street

 

Cookeville

 

TN

 

38501

MSD - Cullman, LLC

 

Morningside of Cullman, LLC

 

N/A

 

Morningside of Cullman

 

2021 Dahlke Dr. N.E.

 

Cullman

 

AL

 

35058

MSD - Gainesville, LLC

 

Morningside of Gainesville, LLC

 

N/A

 

Morningside of Gainesville

 

2435 Limestone Parkway

 

Gainesville

 

GA

 

30501

MSD - Hartsville, LLC

 

Morningside of Hartsville, LLC

 

N/A

 

Morningside of Hartsville

 

1901 West Carolina Avenue

 

Hartsville

 

SC

 

29550

MSD - Lexington, LLC

 

Morningside of Lexington, LLC

 

N/A

 

Morningside of Lexington

 

218 Old Chapin Road

 

Lexington

 

SC

 

29072

MSD - Macon, LLC

 

Morningside of Macon, LLC

 

N/A

 

Morningside of Macon

 

6191 Peake Road

 

Macon

 

GA

 

31220

MSD - Madison, LLC

 

Morningside of Madison, LLC

 

N/A

 

Morningside of Madison

 

49 Hughes Road

 

Madison

 

AL

 

35758

MSD - Orangeburg, LLC

 

Morningside of Orangeburg, LLC

 

N/A

 

Morningside of Orangeburg

 

2306 Riverbank Drive

 

Orangeburg

 

SC

 

29118

MSD - Paducah, LLC

 

Morningside of Paducah, LLC

 

N/A

 

Morningside of Paducah

 

1700 Elmdale Road

 

Paducah

 

KY

 

42003

MSD - Seneca, LLC

 

Morningside of Seneca, L.P.

 

N/A

 

Morningside of Seneca

 

15855 Wells Highway

 

Seneca

 

SC

 

29678

MSD - Sheffield, LLC

 

Morningside of Sheffield, LLC

 

N/A

 

Morningside of Sheffield

 

413 Cox Boulevard

 

Sheffield

 

AL

 

35660

 

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

 

Schedule 4.01(q) to Credit Agreement

Part II: Leased Assets

 

Lease Agreement, dated November 19, 2004, by and among certain affiliates of
Senior Housing Properties Trust, as Landlord, and certain affiliates of Five
Star Quality Care, Inc., as Tenant.

 

Lease Expiration Date:

12/31/2020

 

 

 

 

 

 

 

 

 

 

 

 

Annual Rent:

$1,625,587

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Owner/Lessor

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

MSD - Franklin, LLC

 

Morningside of Franklin, LLC

 

N/A

 

Morningside of Franklin

 

105 Sunrise Circle

 

Franklin

 

TN

 

37067

MSD - Hopkinsville, LLC

 

Morningside of Hopkinsville, Limited Partnership

 

N/A

 

Morningside of Hopkinsville

 

4190 Lafayette Road

 

Hopkinsville

 

KY

 

42240

MSD - Jackson, LLC

 

Morningside of Jackson, LLC

 

N/A

 

Morningside of Jackson

 

1200 North Parkway

 

Jackson

 

TN

 

38305

MSD - Knoxville, LLC

 

Morningside of Knoxville, LLC

 

N/A

 

Williamsburg Villas (Knoxville)

 

3020 Heatherton Way

 

Knoxville

 

TN

 

37920

 

Master Lease Agreement, dated as of September 1, 2008, by and among each of the
parties identified on the signature page thereof, as Landlord, and Five Star
Quality Care - RMI, LLC, as Tenant.

 

Lease Expiration Date:

12/31/2024

 

 

 

 

 

 

 

 

 

 

 

 

Annual Rent:

$5,068,171

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Owner/Lessor

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

SNH RMI Fox Ridge Manor Properties LLC

 

Five Star Quality Care-RMI, LLC

 

N/A

 

Fox Ridge Manor

 

150 Fox Ridge Drive

 

Vincennes

 

IN

 

47591

SNH RMI Jefferson Manor Properties LLC

 

Five Star Quality Care-RMI, LLC

 

N/A

 

Jefferson Manor

 

601 Saint Joseph Drive

 

Kokomo

 

IN

 

46901

SNH RMI McKay Manor Properties LLC

 

Five Star Quality Care-RMI, LLC

 

N/A

 

McKay Manor

 

1473 East McKay Road

 

Shelbyville

 

IN

 

46176

SNH RMI Northwood Manor Properties LLC

 

Five Star Quality Care-RMI, LLC

 

N/A

 

Northwood Manor

 

1590 West Timberview Drive

 

Marion

 

IN

 

46952

SNH RMI Oak Woods Manor Properties LLC

 

Five Star Quality Care-RMI, LLC

 

N/A

 

Oak Woods Manor

 

1211 Longwood Drive

 

LaPorte

 

IN

 

46350

SNH RMI Park Square Manor Properties LLC

 

Five Star Quality Care-RMI, LLC

 

N/A

 

Park Square Manor

 

6990 East County Road 100 North

 

Avon

 

IN

 

46123

SNH RMI Smith Farms Manor Properties LLC

 

Five Star Quality Care-RMI, LLC

 

N/A

 

Smith Farm Manor

 

406 Smith Drive

 

Auburn

 

IN

 

46706

SNH RMI Sycamore Manor Properties LLC

 

Five Star Quality Care-RMI, LLC

 

N/A

 

Sycamore Manor

 

222 South 25th Street

 

Terre Haute

 

IN

 

47803

 

Lease Agreement, dated as of June 20, 2011, by and between SNH/LTA SE Home Place
New Bern LLC, as Landlord, and FVE SE Home Place New Bern LLC, as Tenant.

 

Lease Expiration Date:

4/30/2017

 

 

 

 

 

 

 

 

 

 

 

 

Annual Rent:

$558,711

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Owner/Lessor

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

SNH/LTA SE Home Place New Bern LLC

 

FVE SE Home Place New Bern LLC

 

N/A

 

Home Place of New Bern

 

1309 McCarthy Boulevard

 

New Bern

 

NC

 

28562-2035

 

Lease Agreement, dated as of June 20, 2011, by and between SNH/LTA SE McCarthy
New Bern LLC, as Landlord, and FVE SE McCarthy New Bern LLC, as Tenant.

 

Lease Expiration Date:

4/30/2017

 

 

 

 

 

 

 

 

 

 

 

 

Annual Rent:

$707,438

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Owner/Lessor

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

SNH/LTA SE McCarthy New Bern LLC

 

FVE SE McCarthy New Bern LLC

 

N/A

 

McCarthy Court I

 

1321 McCarthy Boulevard

 

New Bern

 

NC

 

28562-2052

 

Lease Agreement, dated as of June 23, 2011, by and between SNH/LTA SE Wilson
LLC, as Landlord, and FVE SE Wilson LLC, as Tenant.

 

Lease Expiration Date:

12/31/2024

 

 

 

 

 

 

 

 

 

 

 

 

Annual Rent:

$604,570

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Owner/Lessor

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

SNH/LTA SE Wilson LLC

 

FVE SE Wilson LLC

 

N/A

 

Parkwood Village

 

1730 Parkwood Boulevard

 

Wilson

 

NC

 

27893-3564

 

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

 

Schedule 4.01(q) to Credit Agreement

Part II: Leased Assets

 

PROPERTIES OWNED BY FIVE STAR

 

Lease Agreement, dated as of May 17, 2005, by and between Five Star Quality Care
- Farmington, LLC, as Landlord, and Five Star Quality Care - MI, LLC, as Tenant.

 

Lease Expiration Date:

12/31/2018

 

 

 

 

 

 

 

 

 

 

 

 

Annual Rent:

$705,609

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Owner/Lessor

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

Five Star Quality Care-Farmington, LLC

 

Five Star Quality Care-MI, LLC

 

N/A

 

Farmington Health Care Center

 

34225 Grand River Avenue

 

Farmington

 

MI

 

48335-3440

 

Lease Agreement, dated as of April 19, 2004, by and between Five Star Quality
Care - Howell, LLC, as Landlord, and Five Star Quality Care - MI, LLC, as
Tenant.

 

 

Lease Expiration Date:

12/31/2018

 

 

 

 

 

 

 

 

 

 

 

 

Annual Rent:

$811,857

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Owner/Lessor

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

Five Star Quality Care-Howell, LLC

 

Five Star Quality Care-MI, LLC

 

N/A

 

Howell Care Center

 

3003 West Grand River Avenue

 

Howell

 

MI

 

48843-8539

 

Master Lease Agreement, dated as of July 1, 2008, by and between Five Star
Quality Care - NS Owner, LLC, as Landlord, and Five Star Quality Care - NS
Operator, LLC, as Tenant.

 

Lease Expiration Date:

4/30/2017

 

 

 

 

 

 

 

 

 

 

 

 

Annual Rent:

$372,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Owner/Lessor

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

Five Star Quality Care - NS Owner, LLC

 

Five Star Quality Care - NS Operator, LLC

 

N/A

 

The Devon Senior Living

 

445 North Valley Forge Road

 

Devon

 

PA

 

19333

 

Master Lease Agreement, dated as of December 3, 2008, by and between Five Star
Quality Care - OBX Owner, LLC, as Landlord, and Five Star Quality Care - OBX
Operator, LLC, as Tenant.

 

Lease Expiration Date:

4/30/2017

 

 

 

 

 

 

 

 

 

 

 

 

Annual Rent:

$2,724,410

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Owner/Lessor

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

Five Star Quality Care - OBX Owner, LLC

 

Five Star Quality Care - OBX Operator, LLC

 

N/A

 

Legacy Heights

 

11230 Ballantyne Trace Court

 

Charlotte

 

NC

 

28277

Five Star Quality Care - OBX Owner, LLC

 

Five Star Quality Care - OBX Operator, LLC

 

N/A

 

Carriage House

 

3896 North Elm Street

 

Greensboro

 

NC

 

27455

Five Star Quality Care - OBX Owner, LLC

 

Five Star Quality Care - OBX Operator, LLC

 

N/A

 

Forest Heights

 

2500 Polo Ridge Court

 

Winston-Salem

 

NC

 

27106

Five Star Quality Care - OBX Owner, LLC

 

Five Star Quality Care - OBX Operator, LLC

 

N/A

 

Legacy of Anderson

 

3501 North Highway 81

 

Anderson

 

SC

 

29621

Five Star Quality Care - OBX Owner, LLC

 

Five Star Quality Care - OBX Operator, LLC

 

N/A

 

Sweetgrass Court

 

1010 Anna Knapp Boulevard

 

Mt. Pleasant

 

SC

 

29464

Five Star Quality Care - OBX Owner, LLC

 

Five Star Quality Care - OBX Operator, LLC

 

N/A

 

Sweetgrass Village

 

601 Mathis Ferry Road

 

Mt. Pleasant

 

SC

 

29464

 

PROPERTIES LEASED FROM HCPI TRUST TO FIVE STAR

 

Master Lease, dated as of November 19, 2004, between HCPI Trust, as Landlord,
and Morningside of South Carolina, L.P., as Tenant.

 

Lease Expiration Date:

6/30/2014

 

 

 

 

 

 

 

 

 

 

 

 

Annual Rent:

$1,183,092

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Owner/Lessor

 

Tenant/Lessee

 

Subtenant/Licensee

 

d/b/a Name

 

Address

 

City

 

ST

 

Zip

HCPI Trust

 

Morningside of South Carolina, L.P.

 

N/A

 

Morningside of Georgetown

 

2628 N. Fraser Street

 

Georgetown

 

SC

 

29440

HCPI Trust

 

Morningside of South Carolina, L.P.

 

N/A

 

Morningside of Lancaster

 

1004 Hardin Street

 

Lancaster

 

SC

 

29720

HCPI Trust

 

Morningside of South Carolina, L.P.

 

N/A

 

Morningside of Rock Hill

 

1830 West Main Street

 

Rock Hill

 

SC

 

29732

HCPI Trust

 

Morningside of South Carolina, L.P.

 

N/A

 

Morningside of Sumter

 

2500 Lin-Do Court

 

Sumter

 

SC

 

29150

 

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

 

Schedule 4.01(r)

Environmental Concerns

 

None.

 

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

 

Schedule 4.01(x)

Plans and Welfare Plans

 

Five Star Quality Care, Inc. Benefits Plan, Amended and Restated as of August 1,
2007, as further amended by the First Amendment dated June 30, 2009, the Second
Amendment dated December 10, 2009 and the Third Amendment dated December 14,
2010, including without limitation:

 

(a)          Five Star Quality Care, Inc. Cafeteria Plan for HMO Participants,
effective July 1, 2009;

 

(b)         Five Star Quality Care, Inc. Cafeteria Plan, Amended and Restated
October 1, 2009; and

 

(c)          Five Star Quality Care, Inc. Health Care Flexible Spending Account,
Amended and Restated as of October 1, 2009, as further amended by the First
Amendment dated December 14, 2010.

 

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

 

Schedule 4.01(y)

Healthcare Matters

 

Section 4.01(y)(iv):  FSQ The Palms at Ft Myers Business Trust has received a
“comfort letter” from the Florida Agency for Health Care Administration with
respect to Palms at Ft Myers, indicating that (i) the change of ownership (CHOW)
application for a license is complete with the exception of proof of ownership,
(ii) upon receipt of such proof of ownership and proof of liability insurance a
six-month provisional license will be issued, and  (iii) upon receipt of a
deficiency-free survey, recommendation will be made to issue a standard
license.  Pending receipt of the standard license, Palms at Ft Myers will be
operated subject to the comfort letter and the provisional license.

 

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

 

Schedule 5.01(b)

Insurance Requirements

 

All capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to such terms in the respective Mortgages

 

1.1 Insurance.

 

1.1.1                        Insurance Policies.  (a)  [Mortgagor/Grantor] shall
obtain and maintain, or cause to be maintained, insurance for
[Mortgagor/Grantor] and the [Mortgaged Property/Trust Property] providing at
least the following coverages:

 

(i)                                     all risk insurance on the Improvements
and the personal property at the [Mortgaged Property/Trust Property], in each
case (A) in an amount equal to one hundred percent (100%) of the “Full
Replacement Cost,” which for purposes of this [Mortgage/Deed of Trust] shall
mean actual replacement value (containing no exclusion for foundations,
underground utilities and footings); (B) containing an agreed amount endorsement
(or its equivalent) with respect to the Improvements and personal property at
the [Mortgaged Property/Trust Property] waiving all or containing no
co-insurance provisions; (C) providing for no deductible in excess of Five
Hundred Thousand and No/100 Dollars ($500,000) for all such insurance coverage,
except for (1) windstorm coverage in which the deductible may not exceed the
greater of (a) Five Hundred Thousand and No/100 Dollars ($500,000), and (b) five
percent (5%) of the insured value of the [Mortgaged Property/Trust Property]
(provided, however, that if windstorm coverage is not available at commercially
reasonable rates with such a deductible, [Mortgagor/Grantor] shall procure the
same with a commercially reasonable deductible), (2) earthquake coverage in
which the deductible may not exceed the greater of (a) Five Hundred Thousand and
No/100 Dollars ($500,000), and (b) five percent (5%) of the insured value of the
[Mortgaged Property/Trust Property], and (3) flood coverage in which the
deductible may not exceed Five Hundred Thousand and No/100 Dollars ($500,000)
per building; and (D) containing an “Ordinance or Law Coverage” or “Enforcement”
endorsement, including coverage for the value of the undamaged portion of the
building, demolition costs and increased cost of construction,  if any of the
Improvements or the use of the [Mortgaged Property/Trust Property] shall at any
time constitute legal non-conforming structures or uses.

 

(ii)                                  commercial general liability and
professional liability insurance against claims for personal injury, bodily
injury, death or property damage occurring upon, in or about the [Mortgaged
Property/Trust Property], such insurance (A) to be on the so-called “claims
made” form with general liability and professional liability limits, excluding
umbrella coverage, of not less than $500,000 per occurrence, with no deductible
or self insured retention over and above what is covered by
[Mortgagor/Grantor]’s wholly-owned captive insurance company (Senior Living
Insurance Company, Ltd.); (b) to continue at not less than the aforesaid limit
until required to be changed by Agent in writing by reason of changed economic
conditions making such protection inadequate; and (C) to cover at least the
following hazards:  (1) premises and operations; (2) products and completed
operations on an “if any” basis; (3) independent contractors; and (4) blanket
contractual liability for all insured contracts; and (5) acts of terrorism;

 

1

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

 

(iii)                               business income insurance (A) with loss
payable to Agent; (B) covering all risks required to be covered by the insurance
provided for in subsection (i) above; (C) containing an extended period of
indemnity endorsement which provides that after the physical loss to the
Improvements and personal property has been repaired, the continued loss of
income will be insured until such income either returns to the same level it was
at prior to the loss, or the expiration of six (6) months from the date that the
[Mortgaged Property/Trust Property] is repaired or replaced and operations are
resumed, whichever first occurs, and notwithstanding that the policy may expire
prior to the end of such period; and (D) in an amount equal to one hundred
percent (100%) of the gross income from the [Mortgaged Property/Trust Property]
for a period of eighteen (18) months from the date of loss.  The amount of such
business income insurance shall be determined prior to the date hereof and at
least once each year thereafter based on [Mortgagor/Grantor]’s reasonable
estimate of the gross income from the [Mortgaged Property/Trust Property] for
the succeeding eighteen (18) month, or greater, as applicable, period;

 

(iv)                              at all times during which structural
construction, repairs or alterations are being made with respect to the
Improvements, (A) owner’s contingent or protective liability insurance covering
claims not covered by or under the terms or provisions of the above mentioned
commercial general liability insurance policy; and (B) the insurance provided
for in subsection (i) above written in a so-called builder’s risk completed
value form (1) on a non-reporting basis, (2) against all risks insured against
pursuant to subsection (i) above, (3) including permission to occupy the
[Mortgaged Property/Trust Property], and (4) with an agreed amount endorsement
waiving co-insurance provisions;

 

(v)                                 workers’ compensation, subject to the
statutory limits of the state in which the [Mortgaged Property/Trust Property]
is located, and employer’s liability insurance with a limit of at least
$1,000,000 per accident and per disease per employee, and $1,000,000 for disease
aggregate in respect of any direct employees of [Mortgagor/Grantor];

 

(vi)                              comprehensive boiler and machinery insurance
covering all mechanical and electrical equipment and pressure vessels and
boilers in an amount not less than their replacement cost or in such other
amount as shall be reasonably required by Agent;

 

(vii)                           intentionally omitted

 

(viii)                        if any portion of the Improvements is at any time
located in an area identified by the Secretary of Housing and Urban Development
or any successor thereto as an area having special flood hazards pursuant to the
National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973
or the National Flood Insurance Reform Act of 1994, as each may be amended, or
any successor law (the “Flood Insurance Acts”), flood hazard insurance in an
amount equal to the maximum limit of coverage available for the [Mortgaged
Property/Trust Property] under the Flood Insurance Acts (or such higher amount
as reasonably required by Agent);

 

(ix)                                earthquake (if the [Mortgaged Property/Trust
Property] is in an Earthquake Zone 3 or 4 with a probable maximum loss of
greater than 20%), sinkhole and mine subsidence insurance, if required, in
amounts equal to the probable maximum

 

2

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

 

loss (net of applicable deductibles) of the [Mortgaged Property/Trust Property]
as determined by Agent in its reasonable discretion and in form and substance
satisfactory to Agent, provided that the insurance pursuant to this subsection
(ix) shall be on terms consistent with the all risk insurance policy required
under subsection 1.1.1(a)(i);

 

(x)                                   umbrella liability insurance, in addition
to primary coverage, in a total amount of not less than $20,000,000 per
occurrence for professional liability and $25,000,000 per occurrence for general
liability on terms consistent with the commercial general liability insurance
policy required under subsections (ii) above and (viii) below;

 

(xi)                                intentionally omitted;

 

(xii)                             motor vehicle liability coverage for all owned
and non-owned vehicles, including rented and leased vehicles containing minimum
limits per occurrence, excluding umbrella coverage, of One Million and No/100
Dollars ($1,000,000);

 

(xiii)                          so-called “host liquor liability” insurance or
other liability insurance required in connection with distributing and serving,
but not selling, alcoholic beverages;

 

(xiv)                         if [Mortgagor/Grantor] has employees, insurance
against employee dishonesty in an amount not less than $1 million per loss and
with a deductible not greater than Fifteen Thousand and No/100 Dollars
($15,000); and

 

(xv)                            such other insurance and in such amounts as
Agent from time to time may reasonably request against such other insurable
hazards which at the time are commonly insured against for property similar to
the [Mortgaged Property/Trust Property] located in or around the region in which
the [Mortgaged Property/Trust Property] is located.

 

The comprehensive all risk insurance, business income insurance, general
liability and umbrella liability policies required under subsections (i), (ii),
(iii), and (x) above shall be required to cover perils of terrorism and acts of
terrorism for the maximum amount obtainable up to the amounts set forth in
subsections (i) (ii), (iii), and (x) above and with deductibles no greater than
the deductibles set forth in subsections (i), (ii), (iii), and (x) above. 
Notwithstanding the foregoing, if acts of terrorism or perils of terrorism or
other similar acts or events are hereafter excluded from the policies required
under subsections (i) (ii), (iii), and (x) above, [Mortgagor/Grantor] shall
obtain an endorsement to such policy (or a separate policy from an insurance
provider reasonably approved by Agent), if available at commercially reasonable
rates as determined by Agent, insuring against all acts of terrorism and perils
of terrorism and “fire following” (or, in the case of any period of time during
which the Terrorism Risk Insurance Act of 2002 (“TRIA”) or its successors, is in
effect, insuring against all “certified acts of terrorism” as defined in TRIA
and “fire following”), each in an amount and on terms consistent with the
requirements of subsections (i) (ii), (iii), and (x) above. The endorsement or
policy shall be in form and substance reasonably satisfactory to Agent.

 

(b)                                 All insurance provided for in
Section 1.1.1(a) above shall be obtained under valid and enforceable policies
(collectively, the “Policies” or in the singular, the “Policy”) and, to the
extent not specified above, shall be subject to the reasonable approval of Agent
as to deductibles, loss payees and insureds.  Prior to the expiration dates of
the Policies theretofore furnished to Agent, certificates of insurance
evidencing the renewal or successor Policies accompanied by evidence
satisfactory to Agent of payment of the premiums then due thereunder (the
“Insurance Premiums”), shall be delivered by

 

3

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

 

[Mortgagor/Grantor] to Agent. Within ten (10) days of request by Agent,
[Mortgagor/Grantor] shall deliver to Agent carrier-certified copies of the
Policies, provided that the Policies are available.

 

(c)                                  Any blanket insurance Policy shall
specifically allocate to the [Mortgaged Property/Trust Property] the amount of
coverage from time to time required hereunder and shall otherwise provide the
same protection as would a separate Policy insuring only the [Mortgaged
Property/Trust Property] in compliance with the provisions of
Section 1.1.1(a) above.

 

(d)                                 All Policies of insurance provided for or
contemplated by Section 1.1.1(a) above, except for the Policy referenced in
Section 1.1.1(a)(v), shall name [Mortgagor/Grantor] as the insured and Agent and
its successors and/or assigns as the additional insured, as their interests may
appear, and the Policies referenced in Section 1.1.1(a)(ii) above shall also
name each other Secured Party and its successors and/or assigns as additional
insureds, and in the case of property damage, boiler and machinery, flood and
earthquake insurance, shall contain a so-called New York standard mortgagee
endorsement and loss payable clause in favor of and acceptable to Agent.

 

(e)                                  All Policies of insurance provided for in
Section 1.1.1(a) above, except for the Policies referenced in
Section 1.1.1(a)(v), shall contain clauses or endorsements to the effect that:

 

(i)                                     no act or negligence of
[Mortgagor/Grantor], or anyone acting for [Mortgagor/Grantor], or of any tenant
or other occupant, or failure to comply with the provisions of any Policy, which
might otherwise result in a forfeiture of the insurance or any part thereof,
shall in any way affect the validity or enforceability of the insurance insofar
as Agent or any Secured Party is concerned;

 

(ii)                                  the Policy shall not be cancelled without
at least thirty (30) days’ written notice to Agent, with ten (10) days’ written
notice permissible for nonpayment of premium, and notwithstanding the fact that
liability policies may only provide notice of cancellation to the named insured;
and

 

(iii)                               Neither Agent nor any Secured Party shall be
a co-insurer and they shall not be liable for any contribution or Insurance
Premiums thereon or subject to any assessments thereunder.

 

(f)                                    If at any time Agent is not in receipt of
written evidence that all insurance required hereunder is in full force and
effect, and such failure continues after written request therefor, Agent shall
have the right, without notice to [Mortgagor/Grantor], to take such action as
Agent deems necessary to protect its interest in the [Mortgaged Property/Trust
Property], including, without limitation, the obtaining of such insurance
coverage as Agent in its sole discretion deems appropriate and all expenses
incurred by Agent in connection with such action or in obtaining such insurance
and keeping it in effect shall be paid by [Mortgagor/Grantor] to Agent upon
demand and until paid shall be secured by this [Mortgage/Deed of Trust] and
shall bear interest at the default interest rate specified in the Credit
Agreement.

 

(g)                                 In the event of foreclosure of this
[Mortgage/Deed of Trust] or other transfer of title to the [Mortgaged
Property/Trust Property] in extinguishment in whole or in part of the Facility,
all right, title and interest of [Mortgagor/Grantor] in and to the Policies then
in force concerning the [Mortgaged Property/Trust Property] and all proceeds
payable thereunder shall thereupon vest in the purchaser at such foreclosure or
Agent or other transferee in the event of such other transfer of title.

 

4

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

 

1.1.2                        Insurance Company.  The Policies shall be issued by
financially sound and responsible insurance companies authorized to do business
in the state in which the [Mortgaged Property/Trust Property] is located and
shall be otherwise reasonably satisfactory to Agent, and carry an S&P rating of
at least “A-”.  If four or fewer insurance companies issue the policies, then at
least 75% of the insurance coverage represented by the policies must be provided
by insurance companies with a claims paying ability rating of “A-” or better by
S&P, with no carrier below “BBB” by S&P.  If five (5) or more insurance
companies issue the policies, then at least sixty percent (60%) of the insurance
coverage represented by the policies must be provided by insurance companies
with a claims paying ability rating of “A-” or better by S&P, with no carrier
below “BBB” by S&P. Notwithstanding the foregoing, [Mortgagor/Grantor] shall be
permitted to maintain the Policies with insurance companies which do not meet
the foregoing requirements (an “Otherwise Rated Insurer”), provided
[Mortgagor/Grantor] obtains a “cut-through” endorsement (that is, an endorsement
which permits recovery against the provider of such endorsement) with respect to
any Otherwise Rated Insurer from an insurance company which meets the claims
paying ability ratings required above. Also notwithstanding the foregoing, Agent
has approved Landmark American Insurance Company, Torus Specialty Insurance
Company and Aspen Specialty Insurance Company for this loan so long as they
maintain an AM Best rating of at least A- XI by AM Best. Also Approved for this
loan is Senior Living Insurance Company Limited, a [Mortgagor/Grantor]-funded
captive insurance company that provides coverage to reimburse
[Mortgagor/Grantor] for any general liability and professional liability
deductibles/retentions.

 

5

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

 

EXHIBIT A to the

CREDIT AGREEMENT

 

FORM OF NOTE

 

PROMISSORY NOTE

 

$                      

 

Dated:                        ,     

 

FOR VALUE RECEIVED, the undersigned, FIVE STAR QUALITY CARE, INC., a Maryland
corporation (the “Borrower”), HEREBY PROMISES TO PAY
                                                   (the “Lender”) for the
account of its Applicable Lending Office (as defined in the Credit Agreement
referred to below) the aggregate principal amount of the Revolving Credit
Advances, the Letter of Credit Advances and the Swing Line Advances (each as
defined below) owing to the Lender by the Borrower pursuant to the Credit
Agreement dated as of April 13, 2012 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”;
capitalized terms not otherwise defined herein shall have their respective
meanings set forth in the Credit Agreement) among the Borrower, the Lender,
certain other Lender parties party thereto, the Guarantors party thereto,
Citibank, N.A., as Collateral Agent and as Administrative Agent for the Lender
and such other Lender Parties, and the Arrangers party thereto, on the
Termination Date.

 

The Borrower promises to pay to the Lender interest on the unpaid principal
amount of each Revolving Credit Advance, Letter of Credit Advance and Swing Line
Advance from the date of such Revolving Credit Advance, Letter of Credit Advance
or Swing Line Advance, as the case may be, until such principal amount is paid
in full, at such interest rates, and payable at such times, as are specified in
the Credit Agreement.

 

Both principal and interest are payable in lawful money of the United States of
America to Citibank, N.A., as Administrative Agent, at 1615 Brett Road OPS III,
New Castle, DE 19720, Attention:  Bank Loan Syndications Department, in same day
funds.  Each Revolving Credit Advance, Letter of Credit Advance and Swing Line
Advance owing to the Lender by the Borrower and the maturity thereof, and all
payments made on account of principal thereof, shall be recorded by the Lender
and, prior to any transfer hereof, endorsed on the grid attached hereto, which
is part of this Promissory Note; provided, however, that the failure of the
Lender to make any such recordation or endorsement shall not affect the
Obligations of the Borrower under this Promissory Note.

 

This Promissory Note is one of the Notes referred to in, and is entitled to the
benefits of, the Credit Agreement.  The Credit Agreement, among other things,
(a) provides for the making of advances (variously, the “Revolving Credit
Advances”, “Letter of Credit Advances” or the “Swing Line Advances”) by the
Lender to or for the benefit of the Borrower from time to time in an aggregate
amount not to exceed at any time outstanding the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from each such Revolving
Credit Advance, Letter of Credit Advance and Swing Line Advance being evidenced
by this Promissory Note, and (b) contains provisions for acceleration of the
maturity hereof upon the happening of an Event of Default and also for
prepayments on account of principal hereof prior to the Termination Date upon
the terms and conditions therein specified.

 

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

 

The obligations of the Borrower under this Promissory Note and the other Loan
Documents, and the obligations of the other Loan Parties under the Loan
Documents, are secured by the Collateral as provided in the Loan Documents.

 

This Promissory Note shall be governed by, and construed in accordance with, the
laws of the State of New York.

 

 

FIVE STAR QUALITY CARE, INC.

 

a Maryland corporation

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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

 

ADVANCES AND
PAYMENTS OF PRINCIPAL

 

Date

 

Amount of
Advance

 

Amount of
Principal Paid
or Prepaid

 

Unpaid
Principal
Balance

 

Notation
Made By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

EXHIBIT B to the

CREDIT AGREEMENT

 

FORM OF NOTICE

OF BORROWING

 

NOTICE OF [SWING LINE] BORROWING

 

                               ,       

 

Citibank, N.A.

as Administrative Agent

under the Credit Agreement

referred to below

1615 Brett Road OPS III

New Castle, DE 19720

Attention:  Bank Loan Syndications Department

 

Ladies and Gentlemen:

 

The undersigned, FIVE STAR QUALITY CARE, INC., a Maryland corporation, refers to
the Credit Agreement dated as of April 13, 2012  (as amended, amended and
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”; capitalized terms not otherwise defined herein shall have their
respective meanings set forth in the Credit Agreement), among the undersigned,
Five Star Quality Care, Inc.,  the Guarantors party thereto, the Lender Parties
party thereto, Citibank, N.A., as Collateral Agent and as Administrative Agent
for the Lender Parties and the Arrangers party thereto, and hereby gives you
notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the
undersigned hereby requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to such Borrowing (the
“Proposed Borrowing”) as required by Section [2.02(a)][2.02(b)] of the Credit
Agreement:

 

(i)                                     The Business Day of the Proposed
Borrowing is                        ,         .

 

(ii)                                  The Facility under which the Proposed
Borrowing is requested is the [Revolving Credit][Swing Line] Facility.

 

(iii)                               The Type of Advances comprising the Proposed
Borrowing is [Base Rate Advances] [Eurodollar Rate Advances].

 

(iv)                              The aggregate amount of the Proposed Borrowing
is [$                    ].

 

(v)                                 [The initial Interest Period for each
Eurodollar Rate Advance made as part of the Proposed Borrowing is
                     month[s].]  [The maturity of such Borrowing is
              .]

 

The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Borrowing:

 

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

 

(A)           The representations and warranties contained in each Loan Document
are true and correct on and as of the date of the Proposed Borrowing, before and
after giving effect to (1) such Proposed Borrowing and (2) the application of
the proceeds therefrom, as though made on and as of the date of the Proposed
Borrowing;

 

(B)             No Default or Event of Default has occurred and is continuing,
or would result from (1) such Proposed Borrowing or (2) from the application of
the proceeds therefrom; and

 

(C)             (1) the Facility Available Amount equals or exceeds the Facility
Exposure that will be outstanding after giving effect to such Advance, issuance
or renewal, respectively, and (2) before and after giving effect to such
Advance, issuance or renewal, the Borrower shall be in compliance with the
covenants contained in Section 5.04 of the Credit Agreement.

 

Attached hereto is a Borrowing Base Certificate for the Proposed Borrowing dated
the date of such Proposed Borrowing demonstrating that the Facility Available
Amount as of such date (calculated on a pro forma basis after giving effect to
such proposed borrowing) will be greater than or equal to the Facility Exposure.

 

Delivery of an executed counterpart of this Notice of Borrowing by telecopier or
e-mail (which e-mail shall include an attachment in PDF format or similar format
containing the legible signature of the undersigned) shall be effective as
delivery of an original executed counterpart of this Notice of Borrowing.

 

 

FIVE STAR QUALITY CARE, INC.

 

a Maryland corporation

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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

 

EXHIBIT C to the

CREDIT AGREEMENT

 

FORM OF

GUARANTY SUPPLEMENT

 

GUARANTY SUPPLEMENT

 

                       ,       

 

Citibank, N.A.

as Administrative Agent

under the Credit Agreement

referred to below

1615 Brett Road OPS III

New Castle, DE 19720

Attention:  Bank Loan Syndications Department

 

Credit Agreement dated as of April 13, 2012 (as in effect on the date hereof and
as it may hereafter be amended, amended and restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”), among Five Star Quality
Care, Inc., as Borrower the Guarantors party thereto, the Lender Parties party
thereto, Citibank, N.A., as Collateral Agent and as Administrative Agent for the
Lender Parties and the Arrangers party thereto.

 

Ladies and Gentlemen:

 

Reference is made to the above-captioned Credit Agreement and to the Guaranty
set forth in Article VII thereof (such Guaranty, as in effect on the date hereof
and as it may hereafter be amended, supplemented or otherwise modified from time
to time, together with this Guaranty Supplement, being the “Guaranty”). 
Capitalized terms not otherwise defined herein shall have their respective
meanings set forth in the Credit Agreement.

 

Section 1.                                            Guaranty; Limitation of
Liability.  (a)  The undersigned hereby absolutely, unconditionally and
irrevocably guarantees the punctual payment when due, whether at scheduled
maturity or on any date of a required prepayment or by acceleration, demand or
otherwise, of all Obligations of the Borrower and each other Loan Party now or
hereafter existing under or in respect of the Loan Documents (including, without
limitation, any extensions, modifications, substitutions, amendments or renewals
of any or all of the foregoing Obligations), whether direct or indirect,
absolute or contingent, and whether for principal, interest, premiums, fees,
indemnities, contract causes of action, costs, expenses or otherwise (such
Obligations being the “Guaranteed Obligations”), and agrees to pay any and all
expenses (including, without limitation, fees and expenses of counsel) incurred
by the Administrative Agent or any other Secured Party in enforcing any rights
under this Guaranty Supplement, the Guaranty, the Credit Agreement or any other
Loan Document.  Without limiting the generality of the foregoing, the
undersigned’s liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by any other Loan Party to any Secured
Party under or in respect of the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such other Loan Party.

 

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

 

(b)                                 The undersigned, and by its acceptance of
the benefits of this Guaranty Supplement, the Administrative Agent and each
other Secured Party, hereby confirms that it is the intention of all such
Persons that this Guaranty Supplement, the Guaranty and the Obligations of the
undersigned hereunder and thereunder not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or
state law to the extent applicable to this Guaranty Supplement, the Guaranty and
the Obligations of the undersigned hereunder and thereunder.  To effectuate the
foregoing intention, the Administrative Agent, the other Secured Parties and the
undersigned hereby irrevocably agree that the Obligations of the undersigned
under this Guaranty Supplement and the Guaranty at any time shall be limited to
the maximum amount as will result in the Obligations of the undersigned under
this Guaranty Supplement and the Guaranty not constituting a fraudulent transfer
or conveyance.

 

(c)                                  The undersigned hereby unconditionally and
irrevocably agrees that in the event any payment shall be required to be made to
any Secured Party under this Guaranty Supplement, the Guaranty or any other
guaranty, the undersigned will contribute, to the maximum extent permitted by
law, such amounts to each other Guarantor and each other guarantor so as to
maximize the aggregate amount paid to the Secured Parties under or in respect of
the Loan Documents.

 

Section 2.                                            Obligations Under the
Guaranty.  The undersigned hereby agrees, as of the date first above written, to
be bound as a Guarantor by all of the terms and conditions of the Credit
Agreement and the Guaranty to the same extent as each of the other Guarantors
thereunder.  The undersigned further agrees, as of the date first above written,
that each reference in the Credit Agreement to an “Additional Guarantor”, a
“Loan Party” or a “Guarantor” shall also mean and be a reference to the
undersigned, and each reference in any other Loan Document to a “Guarantor” or a
“Loan Party” shall also mean and be a reference to the undersigned.

 

Section 3.                                            Representations and
Warranties.  The undersigned hereby makes each representation and warranty set
forth in Section 4.01 of the Credit Agreement to the same extent as each other
Guarantor; provided, however, that, to the extent there have been any changes in
factual matters related to the addition of the undersigned as a Guarantor or the
addition of any Asset owned by the undersigned as a Borrowing Base Asset
warranting updated Schedules to the Credit Agreement (so long as such changes in
factual matters shall in no event comprise a Default or an Event of Default
under the Credit Agreement), such updated Schedules are attached as Exhibit A
hereto, and references in such representations and warranties to Schedules to
the Credit Agreement shall be deemed to refer to such Schedules as so updated.

 

Section 4.                                            Delivery by Telecopier. 
Delivery of an executed counterpart of a signature page to this Guaranty
Supplement by telecopier or e-mail (which e-mail shall include an attachment in
PDF format or similar format containing the legible signature of the
undersigned) shall be effective as delivery of an original executed counterpart
of this Guaranty Supplement.

 

Section 5.                                            Governing Law;
Jurisdiction; Waiver of Jury Trial, Etc.  (a)  This Guaranty Supplement shall be
governed by, and construed in accordance with, the laws of the State of
New York.

 

(b)                                 The undersigned hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or any federal court of the United
States of America sitting in New York City, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this Guaranty
Supplement, the Guaranty, the Credit Agreement or any of the other Loan
Documents to which it is or is to be a party, or for recognition or enforcement
of any judgment, and the undersigned hereby irrevocably and unconditionally
agrees that all

 

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

 

claims in respect of any such action or proceeding may be heard and determined
in any such New York State court or, to the extent permitted by law, in such
federal court.  The undersigned agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.  Nothing in this
Guaranty Supplement or the Guaranty or the Credit Agreement or any other Loan
Document shall affect any right that any party may otherwise have to bring any
action or proceeding relating to this Guaranty Supplement, the Credit Agreement,
the Guaranty thereunder or any of the other Loan Documents to which it is or is
to be a party in the courts of any other jurisdiction.

 

(c)                                  The undersigned irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Guaranty
Supplement, the Credit Agreement, the Guaranty or any of the other Loan
Documents to which it is or is to be a party in any New York State or federal
court.  The undersigned hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such suit, action or proceeding in any such court.

 

(d)                                 THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE
LOAN DOCUMENTS, THE ADVANCES OR THE ACTIONS OF ANY SECURED PARTY IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

 

 

Very truly yours,

 

 

 

[NAME OF ADDITIONAL GUARANTOR]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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

 

EXHIBIT D to the

CREDIT AGREEMENT

 

FORM OF

ASSIGNMENT AND ACCEPTANCE

 

ASSIGNMENT AND ACCEPTANCE

 

Reference is made to the Credit Agreement dated as of April 13, 2012 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”; capitalized terms not otherwise defined herein
shall have their respective meanings set forth in the Credit Agreement), among
Five Star Quality Care, Inc., a Maryland Corporation, as Borrower, the
Guarantors party thereto, the Lender Parties party thereto, Citibank, N.A., as
Collateral Agent and as Administrative Agent for the Lender Parties and the
Arrangers party thereto.

 

Each “Assignor” referred to on Schedule 1 hereto (each, an “Assignor”) and each
“Assignee” referred to on Schedule 1 hereto (each, an “Assignee”) agrees
severally with respect to all information relating to it and its assignment
hereunder and on Schedule 1 hereto as follows:

 

1.                                       Such Assignor hereby sells and assigns,
without recourse except as to the representations and warranties made by it
herein, to such Assignee, and such Assignee hereby purchases and assumes from
such Assignor, an interest in and to such Assignor’s rights and obligations
under the Credit Agreement as of the date hereof equal to the percentage
interest specified on Schedule 1 hereto of all outstanding rights and
obligations under the Credit Agreement Facilities specified on Schedule 1
hereto.  After giving effect to such sale and assignment, such Assignee’s
Commitments and the amount of the Advances owing to such Assignee will be as set
forth on Schedule 1 hereto.

 

2.                                       Such Assignor (a) represents and
warrants that its name set forth on Schedule 1 hereto is its legal name, that it
is the legal and beneficial owner of the interest or interests being assigned by
it hereunder and that such interest or interests are free and clear of any
adverse claim; (b) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with any Loan Document or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of, or the
perfection or priority of any lien or security interest created or purported to
be created under or in connection with, any Loan Document or any other
instrument or document furnished pursuant thereto; (c) makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of any Loan Party or the performance or observance by any Loan Party
of any of its obligations under any Loan Document or any other instrument or
document furnished pursuant thereto; and (d) attaches the Note or Notes (if any)
held by such Assignor and requests that the Administrative Agent exchange such
Note or Notes for a new Note or Notes payable to the order of such Assignee in
an amount equal to the Commitments assumed by such Assignee pursuant hereto or
new Notes payable to the order of such Assignee in an amount equal to the
Commitments assumed by such Assignee pursuant hereto and such Assignor in an
amount equal to the Commitments retained by such Assignor under the Credit
Agreement, respectively, as specified on Schedule 1 hereto.

 

3.                                       Such Assignee (a) represents and
warrants that it is legally authorized to enter into this Assignment and
Acceptance; (b) confirms that it has received a copy of the Credit Agreement,
together with copies of the financial statements referred to in Section 4.01
thereof and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to

 

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

 

enter into this Assignment and Acceptance; (c) agrees that it will,
independently and without reliance upon any Agent, any Assignor or any other
Lender Party and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (d) represents and warrants that
its name set forth on Schedule 1 hereto is its legal name; (e) confirms that it
is an Eligible Assignee; (f) appoints and authorizes each Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
the Loan Documents as are delegated to such Agent by the terms thereof, together
with such powers and discretion as are reasonably incidental thereto; (g) agrees
that it will perform in accordance with their terms all of the obligations that
by the terms of the Credit Agreement are required to be performed by it as a
Lender Party; and (h) attaches any U.S. Internal Revenue Service forms required
under Section 2.12 of the Credit Agreement.

 

4.                                       Following the execution of this
Assignment and Acceptance, it will be delivered to the Administrative Agent for
acceptance and recording by the Administrative Agent.  The effective date for
this Assignment and Acceptance (the “Effective Date”) shall be the date of
acceptance hereof by the Administrative Agent, unless otherwise specified on
Schedule 1 hereto.

 

5.                                       Upon such acceptance by the
Administrative Agent and, if applicable, the Borrower and recording by the
Administrative Agent, as of the Effective Date, (a) such Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender Party thereunder and
(b) such Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Credit Agreement (other than its rights and obligations under the Loan Documents
that are specified under the terms of such Loan Documents to survive the payment
in full of the Obligations of the Loan Parties under the Loan Documents to the
extent any claim thereunder relates to an event arising prior to the Effective
Date of this Assignment and Acceptance) and, if this Assignment and Acceptance
covers all of the remaining portion of the rights and obligations of such
Assignor under the Credit Agreement, such Assignor shall cease to be a party
thereto.

 

6.                                       Upon such acceptance by the
Administrative Agent and, if applicable, the Borrower and recording by the
Administrative Agent, from and after the Effective Date, the Administrative
Agent shall make all payments under the Credit Agreement and the Notes in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest and commitment fees with respect thereto) to
such Assignee.  Such Assignor and such Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Notes for periods
prior to the Effective Date directly between themselves.

 

7.                                       This Assignment and Acceptance shall be
governed by, and construed in accordance with, the laws of the State of
New York.

 

8.                                       This Assignment and Acceptance may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.  Delivery of an executed counterpart of Schedule 1 to this Assignment
and Acceptance by telecopier or e-mail (which e-mail shall include an attachment
in PDF format or similar format containing the legible signature of the person
executing this Assignment and Acceptance) shall be effective as delivery of an
original executed counterpart of this Assignment and Acceptance.

 

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

 

IN WITNESS WHEREOF, each Assignor and each Assignee have caused Schedule 1 to
this Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.

 

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

 

SCHEDULE 1

to

ASSIGNMENT AND ACCEPTANCE

 

ASSIGNORS:

 

 

 

 

 

 

 

 

 

 

 

Revolving Credit Facility

 

 

 

 

 

 

 

 

 

 

 

Percentage interest assigned

 

 

%

 

%

 

%

 

%

 

%

Revolving Credit Commitment assigned

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

Aggregate outstanding principal amount of Revolving Credit Advances assigned

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

Principal amount of Note payable to Assignor

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

Letter of Credit Facility

 

 

 

 

 

 

 

 

 

 

 

Letter of Credit Commitment assigned

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

Letter of Credit Commitment retained

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

ASSIGNEES:

 

 

 

 

 

 

 

 

 

 

 

Revolving Credit Facility

 

 

 

 

 

 

 

 

 

 

 

Percentage interest assumed

 

 

%

 

%

 

%

 

%

 

%

Revolving Credit Commitment assumed

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

Aggregate outstanding principal amount of Revolving Credit Advances assumed

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

Principal amount of Note payable to Assignee

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

Letter of Credit Facility

 

 

 

 

 

 

 

 

 

 

 

Letter of Credit Commitment assumed

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

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

 

Effective Date (if other than date of acceptance by Administrative Agent):

 

(1)                       ,

 

Assignors

 

 

                                                                 , as Assignor

 

[Type or print legal name of Assignor]

 

 

 

By

 

 

 

Title:

 

 

 

Dated:                        ,    

 

 

 

 

 

                                                                 , as Assignor

 

[Type or print legal name of Assignor]

 

 

 

By

 

 

 

Title:

 

 

 

Dated:                        ,    

 

 

 

 

 

                                                                 , as Assignor

 

[Type or print legal name of Assignor]

 

 

 

By

 

 

 

Title:

 

 

 

Dated:                        ,    

 

 

 

 

 

                                                                 , as Assignor

 

[Type or print legal name of Assignor]

 

 

 

By

 

 

 

Title:

 

 

 

Dated:                        ,    

 

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

(1)                                  This date should be no earlier than five
Business Days after the delivery of this Assignment and Acceptance to the
Administrative Agent and, if applicable, the Borrower.

 

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

 

Assignees

 

 

                                                                 , as Assignee

 

[Type or print legal name of Assignee]

 

 

 

By

 

 

 

Title:

 

 

E-mail address for notices:

 

 

 

Dated:                        ,     

 

 

 

Domestic Lending Office:

 

 

 

 

 

Eurodollar Lending Office:

 

 

 

 

 

                                                                 , as Assignee

 

[Type or print legal name of Assignee]

 

 

 

By

 

 

 

Title:

 

 

E-mail address for notices:

 

 

 

Dated:                        ,     

 

 

 

Domestic Lending Office:

 

 

 

 

 

Eurodollar Lending Office:

 

 

 

 

 

                                                                 , as Assignee

 

[Type or print legal name of Assignee]

 

 

 

By

 

 

 

Title:

 

 

E-mail address for notices:

 

 

 

Dated:                        ,     

 

 

 

Domestic Lending Office:

 

 

 

 

 

Eurodollar Lending Office:

 

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

 

 

                                                                 , as Assignee

 

[Type or print legal name of Assignee]

 

 

 

By

 

 

 

Title:

 

 

E-mail address for notices:

 

 

 

Dated:                        ,    

 

 

 

Domestic Lending Office:

 

 

 

 

 

Eurodollar Lending Office:

 

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

 

Accepted [and Approved] this    

 

day of                       ,     

 

 

 

CITIBANK, N.A.,

 

as Administrative Agent

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

[Approved this          day

 

of                           ,     

 

 

 

FIVE STAR QUALITY CARE, INC.,

 

a Maryland corporation

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:]

 

 

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

 

EXHIBIT E-1

 

FORM OF OPINION OF SULLIVAN & WORCESTER LLP

 

[to be attached]

 

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

 

EXHIBIT E-2

 

FORM OF OPINION OF LOCAL COUNSEL FOR THE LOAN PARTIES

 

Exh. E-2-1

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

 

 

Form of Opinion of Local Counsel
with Respect to Real Estate Matters

 

[FORM OF OPINION OF LOCAL COUNSEL
WITH RESPECT TO REAL ESTATE MATTERS]

 

                    , 2012

 

To:                              The Secured Parties under the Credit Agreement
referred to below and to Citibank, N.A.,

as Administrative and Collateral Agent under the

Credit Agreement referred to below

 

Re:  Five Star Quality Care, Inc.

 

Ladies and Gentlemen:

 

We have acted as special [name of State] (the “State”) counsel to Five Star
Quality Care, Inc., a Maryland corporation (“Borrower”), and [applicable
Guarantor] a [              ] [                  ] (“Grantor”) in connection
with the execution and delivery of the [Mortgage/Deed of Trust/Deed to Secure
Debt] referenced below pursuant to that certain Credit Agreement dated as of
[                    ], 2012 (the “Credit Agreement”) by and among Borrower, the
Guarantors identified therein, the Secured Parties (as defined therein), and
Citibank, N.A., as collateral agent (in such capacity, “Collateral Agent”) and
as administrative agent (in such capacity, “Administrative Agent”) for the
Secured Parties.  This opinion is rendered at the request of Borrower pursuant
to Section 3.01(a) of the Credit Agreement.  Capitalized terms used herein and
not otherwise defined shall have the respective meanings ascribed to such terms
in the [Mortgage/Deed of Trust/Deed to Secure Debt], or if not defined therein,
in the Credit Agreement.

 

In our capacity as such counsel, we have examined originals, or copies
identified to our satisfaction as being true copies, of such records, documents
or other instruments as in our judgment are necessary or appropriate to enable
us to render the opinions expressed below, including such corporate records and
documents of Grantor and such certificates of public officials and officers of
Grantor as we have deemed necessary or appropriate for purposes of this
opinion.  These records, documents and instruments also included execution
copies or counterparts of the following documents (collectively, the “Subject
Documents”):

 

1.             The Credit Agreement; [and]

 

2.             The [Mortgage/Deed of Trust/Deed to Secure Debt], Assignment of
Rents and Leases, Security Agreement and Fixture Filing dated as of
              , 2012 from Grantor, as [mortgagor/grantor], to
[                                , as trustee (“Trustee”), for the benefit of]
Collateral Agent, as [mortgagee/beneficiary] (the “[Mortgage/Deed of Trust/Deed
to Secure Debt]”), encumbering the “Mortgaged Property” described therein[.][;
and]

 

3.             [** FOR MICHIGAN, GEORGIA, SOUTH CAROLINA, NORTH DAKOTA OR
LOUISIANA:  The Uniform Commercial Code Fixture Filing naming Grantor as debtor
and Collateral Agent as secured party, relating to the Mortgaged Property (the
“Fixture Filing”).**]

 

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

 

Assumptions

 

In rendering this opinion we have assumed, without having made any independent
investigation of the facts, except with respect to matters of State and federal
law on which we have opined below, the following:

 

(i)            the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity with originals of all
documents submitted to us as copies;

 

(ii)           to the extent that the obligations of Grantor may be dependent
upon such matters, other than with respect to Grantor, that each party to the
agreements and contracts referred to herein is duly formed, validly existing and
in good standing under the laws of its jurisdiction of formation; that each such
other party has the requisite corporate or other organizational power and
authority to perform its obligations under such agreements and contracts, as
applicable; and that such agreements and contracts have been duly authorized,
executed and delivered by, and each of them constitutes the legally valid and
binding obligations of, such other parties, as applicable, enforceable against
such other parties in accordance with their respective terms;

 

(iii)          that Grantor is duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation;

 

(iv)          that Grantor has the requisite corporate power and authority to
enter into and perform its obligations under the Subject Documents to which it
is a party;

 

(v)           the due authorization, execution and delivery by Grantor of the
Subject Documents to which Grantor is a party;

 

(vi)          that a part or all of the loan proceeds to be advanced pursuant to
the Credit Agreement will have been advanced on or before the date hereof;

 

(vii)         that all material factual matters, including without limitation,
representations and warranties, contained in the Subject Documents, are true and
correct as set forth therein;

 

(viii)        that Grantor, at the time of recordation of the [Mortgage/Deed of
Trust/Deed to Secure Debt][**FOR MICHIGAN, GEORGIA, SOUTH CAROLINA, NORTH DAKOTA
OR LOUISIANA:  and filing of the Fixture Filing**], held an interest of record
in the real property portions of the Mortgaged Property owned by Grantor; [and]

 

(ix)           [**FOR MICHIGAN, GEORGIA, SOUTH CAROLINA, NORTH DAKOTA OR
LOUISIANA:  that the portions of the Fixtures (as defined below) that are or are
to become fixtures with respect to the Mortgaged Property are and will be
located on the Mortgaged Property; and**]

 

(x)            that the Subject Documents will be governed by and construed in
accordance with the internal laws of the State, notwithstanding the provisions
of the Subject Documents to the contrary.

 

2

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Opinions

 

On the basis of such examination, our reliance upon the assumptions contained
herein and our consideration of those questions of law we considered relevant,
and subject to the limitations and qualifications in this opinion, we are of the
opinion that:

 

1.     The [Mortgage/Deed of Trust/Deed to Secure Debt] constitutes the legal,
valid and binding obligation of Grantor, enforceable against Grantor in
accordance with its terms.

 

2.     The execution and delivery of the Subject Documents, the performance by
Grantor of its obligations thereunder and the compliance with the terms and
conditions thereof by Grantor are not in contravention of or in conflict with
any law, rule or regulation of the State applicable to Grantor.

 

3.     The execution and delivery by [name of Guarantor] of each Loan Document
to which it is a party do not, and the performance by [name of Guarantor] of its
obligations thereunder and the transactions contemplated by such Loan Documents
do not violate any [State] law, rule or regulation applicable to guarantors or
grantors generally or applicable to [name of Guarantor].

 

4.     No authorization or approval or other action by, and no notice to or
filing with, any [State] governmental authority or regulatory body is required
for (a) the due execution, delivery or performance by [name of Guarantor] of any
Loan Document to which it is a party or the consummation of the transactions
contemplated by any such Loan Document, (b) the grant by [name of Guarantor] of
the Liens granted by it pursuant to the Collateral Documents to which it is a
party, or (c) the perfection or maintenance of the Liens created under such
Collateral Documents (including the first priority nature thereof), or
(d) except for (i) the exercise of any remedies requiring prior court approval,
(ii) the filings or other actions referred to in paragraph[s]      herein or
(iii) the approval of [State] licensing agencies or permitting boards, the
exercise by the Administrative Agent, the Collateral Agent or any Secured Party
of its rights under any Loan Document to which [name of Guarantor] is a party or
the remedies in respect of the Collateral pursuant to any such Collateral
Document.

 

5.     The [Mortgage/Deed of Trust/Deed to Secure Debt] (including the
acknowledgement, attestation, seal and witness requirements) is in appropriate
form for recordation in the State.

 

6.     The [Mortgage/Deed of Trust/Deed to Secure Debt] is in proper form
sufficient to create a valid [mortgage lien/deed of trust lien/security title]
in favor of Collateral Agent on, and to vest [Trustee and] Collateral Agent with
power of sale in, such of the Mortgaged Property described therein that
constitutes real property (including fixtures, to the extent the same constitute
real property).  The recordation of the [Mortgage/Deed of Trust/Deed to Secure
Debt] in the [** NAME APPROPRIATE COUNTY RECORDING OFFICE**] is the only
recordation, filing or registration necessary to perfect the [lien on/security
title in] the Mortgaged Property created by the [Mortgage/Deed of Trust/Deed to
Secure Debt] [** FOR MICHIGAN, GEORGIA, SOUTH CAROLINA, NORTH DAKOTA OR
LOUISIANA:  , except for the filing with the ** NAME APPROPRIATE COUNTY
RECORDING OFFICE** of the Fixture Filing regarding that portion of the Mortgaged
Property constituting fixtures**].  Upon recordation of the [Mortgage/Deed of
Trust/Deed to Secure Debt] in the [** NAME APPROPRIATE COUNTY RECORDING
OFFICE**], [Trustee/Collateral Agent] will have a valid and perfected [mortgage
lien on/deed of trust lien on/security title to] the Mortgaged Property
described therein.  No other

 

3

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

 

recordation, filing, re-recordation or re-filing is necessary in order to
perfect or to maintain the priority of the [lien/security title] created by the
[Mortgage/Deed of Trust/Deed to Secure Debt].

 

7.     The real property descriptions attached to the [Mortgage/Deed of Trust]
[FOR MICHIGAN, GEORGIA, SOUTH CAROLINA, NORTH DAKOTA OR LOUISIANA: and the
Fixture Filing] are in form legally sufficient for the purpose of subjecting
that portion of the Mortgaged Property that constitutes real property to the
lien evidenced by the [Mortgage/Deed of Trust/Deed to Secure Debt][** FOR
MICHIGAN, GEORGIA, SOUTH CAROLINA, NORTH DAKOTA OR LOUISIANA:  and the Fixture
Filing**].

 

8.     [**EXCLUDING MICHIGAN, GEORGIA, SOUTH CAROLINA, NORTH DAKOTA AND
LOUISIANA** The [Mortgage/Deed of Trust] is in proper form sufficient to
constitute a valid and effective fixture filing with respect to the Premises
under Article 9 of the Uniform Commercial Code as in effect in the State naming
Grantor as debtor and Collateral Agent as secured party.

 

9.     Collateral Agent is not required to qualify to transact business in the
State nor will Collateral Agent incur any tax imposed by the State (including,
without limitation, any tax imposed by the State on interest or on revenue paid
in respect of the Credit Agreement), solely as the result of the ownership or
recordation of the [Mortgage/Deed of Trust/Deed to Secure Debt].

 

10.   [**FOR MICHIGAN, GEORGIA, SOUTH CAROLINA, NORTH DAKOTA OR LOUISIANA:  The
Fixture Filing is in appropriate form for recordation in the State.**]

 

11.   [**FOR MICHIGAN, GEORGIA, SOUTH CAROLINA, NORTH DAKOTA OR LOUISIANA:  With
respect to that portion of the Mortgaged Property in which a security interest
may be perfected by the recordation of a fixture filing in the State (the
“Fixtures”), the proper place to file the Fixture Filing is in the [LIST
APPROPRIATE COUNTY RECORDING OFFICE] (the “Filing Office”), and no filing or
recordation in any other place is necessary under the UCC to perfect a security
interest in the Fixtures.  Upon the recordation of the Fixture Filing with the
Filing Office, Collateral Agent will have a perfected security interest in the
Fixtures.  Subsequent to the recordation of the Fixture Filing in accordance
with the procedures set forth above, no other, further or subsequent filing,
recordation, registration, re-filing, re-recordation or re-registration of the
Fixture Filing or any additional financing statements or any other instrument
and no other actions will be necessary or advisable to perfect or continue the
perfection of the lien created thereby, except that Article 9 of the UCC
requires the recordation of continuation statements within the period of six
(6) months prior to the expiration of five (5) years from the date of the
original recordation or the recordation of any continuation statement in order
to maintain the effectiveness of the Fixture Filing.**]

 

12.   [Except as specifically set forth on Schedule 1 hereto, no] [No] taxes or
other charges, including, without limitation, intangible, documentary, stamp,
mortgage, transfer or recording taxes or similar charges are payable to the
State or to any governmental authority or regulatory body located therein on
account of the execution or delivery of the [Mortgage/Deed of Trust/Deed to
Secure Debt], or the creation of the liens and security interests thereunder, or
the filing, recordation or registration of the [Mortgage/Deed of Trust/Deed to
Secure Debt], except for nominal filing or recording fees.

 

13.   Grantor possesses all Healthcare Licenses necessary to operate the
Facility as an [independent living/assisted living/Alzheimer’s/memory care —
conform as applicable] facility with the respective number of units or beds
described on Schedule II of the Credit Agreement.  

 

4

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“Healthcare Licenses” means all certificates of need (or similar),
certifications, licenses, permits, or other material approvals or authorizations
required by any federal agency and/or [State] as a condition precedent to the
operation of the Facility as an [independent living/assisted
living/Alzheimer’s/memory care — conform as applicable] facility with the
respective number of units or beds described on Schedule II of the Credit
Agreement.

 

Qualifications

 

The foregoing opinions are subject to the following qualifications, limitations
and exceptions:

 

1.     Qualifying paragraph 1 above, the enforceability of the [Mortgage/Deed of
Trust/Deed to Secure Debt] and the liens created thereby may be limited or
affected by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally (including, without limitation, fraudulent
conveyance laws) and by general principles of equity including, without
limitation, concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding in equity or at law.  The
aforesaid opinion as to enforceability of the [Mortgage/Deed of Trust/Deed to
Secure Debt] is also subject to the qualification that certain provisions
contained therein may not be enforceable, but (subject to the limitations set
forth in the foregoing sentence) such unenforceability will not render the
[Mortgage/Deed of Trust/Deed to Secure Debt] invalid as a whole or substantially
interfere with realization of the principal benefits and/or security provided
thereby.

 

2.     In rendering the opinions expressed in this opinion letter, we have made
no examination of and express no opinion with respect to:  (i) title to or,
except as to adequacy of form, descriptions of the Mortgaged Property described
in the [Mortgage/Deed of Trust/Deed to Secure Debt]; (ii) the nature or extent
of Grantor’s rights in, or title to, the Mortgaged Property; (iii) the existence
or non-existence of liens, security interests, charges or encumbrances thereon
or therein actually of record; or (iv) the priority of any liens on any part of
the Mortgaged Property.  We have not independently certified the existence,
condition, location or ownership of any of the Mortgaged Property.

 

This opinion is given as of the date hereof, and we disclaim any obligation to
update this opinion letter for events occurring after the date of this opinion
letter.  The foregoing opinion applies only with respect to the laws of the
State and the federal laws of the United States of America and we express no
opinion with respect to the laws of any other jurisdiction.

 

This opinion is rendered only to Administrative Agent, Collateral Agent and the
other Secured Parties and their respective successors and assigns (including any
participant in any Secured Party’s interest) and is solely for their benefit in
connection with the transactions contemplated by the Subject Documents and may
not be relied upon by Administrative Agent, Collateral Agent or any other
Secured Party or any of their respective successors or assigns for any other
purpose without our prior written consent.

 

 

Very truly yours,

 

 

 

5

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SCHEDULE 1

 

Mortgage Recording Taxes, Documentary Stamp Taxes
and other similar Taxes and Fees

 

[**INSERT DESCRIPTION OF AND METHOD OF CALCULATING ALL MORTGAGE RECORDING TAXES,
DOCUMENTARY STAMP TAXES AND SIMILAR TAXES AND FEES**]

 

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EXHIBIT E-3

 

FORM OF OPINION OF VENABLE LLP

 

[to be attached]

 

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

EXHIBIT F to the

CREDIT AGREEMENT

 

FORM OF SECURITY AGREEMENT

 

 

 

SECURITY AGREEMENT

 

Dated April 13, 2012

 

from

 

THE GRANTORS REFERRED TO HEREIN

 

to

 

CITIBANK, N.A.,

 

as Collateral Agent

 

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

 

T A B L E O F C O N T E N T S

 

Section

 

 

Page

 

 

 

 

Section 1.

 

Grant of Security

2

 

 

 

 

Section 2.

 

Security for Obligations

5

 

 

 

 

Section 3.

 

Grantors Remain Liable

5

 

 

 

 

Section 4.

 

Maintaining the Account Collateral

5

 

 

 

 

Section 5.

 

Investing of Amounts in the L/C Cash Collateral Account

5

 

 

 

 

Section 6.

 

Release of Amounts

6

 

 

 

 

Section 7.

 

Maintaining Electronic Chattel Paper and Transferable Records

6

 

 

 

 

Section 8.

 

Representations and Warranties

6

 

 

 

 

Section 9.

 

Further Assurances

7

 

 

 

 

Section 10.

 

As to Equipment and Inventory

9

 

 

 

 

Section 11.

 

Insurance

9

 

 

 

 

Section 12.

 

Post-Closing Changes; Bailees; Collections on Assigned Agreements, Receivables
and Related Contracts

10

 

 

 

 

Section 13.

 

As to the Assigned Agreements

11

 

 

 

 

Section 14.

 

Payments Under the Assigned Agreements

12

 

 

 

 

Section 15.

 

Transfers and Other Liens; Additional Equity Interests

12

 

 

 

 

Section 16.

 

Collateral Agent Appointed Attorney-in-Fact

13

 

 

 

 

Section 17.

 

Collateral Agent May Perform

13

 

 

 

 

Section 18.

 

The Collateral Agent’s Duties

13

 

 

 

 

Section 19.

 

Remedies

14

 

 

 

 

Section 20.

 

Indemnity and Expenses

15

 

 

 

 

Section 21.

 

Amendments; Waivers; Additional Grantors, Etc.

16

 

 

 

 

Section 22.

 

Notices, Etc.

16

 

 

 

 

Section 23.

 

Continuing Security Interest; Assignments under the Credit Agreement

16

 

 

 

 

Section 24.

 

Release; Termination

16

 

 

 

 

Section 25.

 

Security Interest Absolute

17

 

 

 

 

Section 26.

 

Third Party Waivers

18

 

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

 

Section 27.

 

Execution in Counterparts

20

 

 

 

 

Section 28.

 

The Credit Agreement and the Mortgages

20

 

 

 

 

Section 29.

 

Governing Law

20

 

 

 

 

Schedules

 

 

 

 

 

 

 

 

 

Schedule I

 

—

Location, Chief Executive Office, Type of Organization, Jurisdiction of
Organization and Organizational Identification Number

 

Schedule II

 

—

Borrowing Base Assets and Locations of Equipment and Inventory

 

Schedule III

 

—

Changes in Name, Location, Etc.

 

 

 

 

 

 

Exhibits

 

 

 

 

 

 

 

 

 

Exhibit A

 

—

Form of Security Agreement Supplement

 

Exhibit B

 

—

Form of Consent and Agreement

 

 

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

 

SECURITY AGREEMENT

 

SECURITY AGREEMENT dated April 13, 2012 (this “Agreement”) among FIVE STAR
QUALITY CARE, INC., a Maryland corporation (the “Borrower”), [insert names of
Guarantors under the Credit Agreement] and the ADDITIONAL GRANTORS (as defined
in Section 21)(each such Guarantor or Additional Grantor referred to herein as a
“Guarantor Grantor”, collectively, the “Guarantor Grantors”, and collectively
together with the Borrower, the “Grantors”), and CITIBANK, N.A., as collateral
agent (in such capacity, together with any successor collateral agent appointed
pursuant to Article VIII of the Credit Agreement (as hereinafter defined), the
“Collateral Agent”) for the Secured Parties (as defined in the Credit
Agreement).

 

PRELIMINARY STATEMENTS

 

(1)   The Grantors and certain other Loan Parties have entered into a Credit
Agreement dated as of April 13, 2012 (such Agreement, as it may hereafter be
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”) with the Lender Parties, the Agents, and the
Arrangers (each as defined therein).

 

(2)   Pursuant to the Credit Agreement, the Grantors are entering into this
Agreement in order to grant to the Collateral Agent for the ratable benefit of
the Secured Parties a security interest in the Collateral (as hereinafter
defined).

 

(3)   Upon the request of the Collateral Agent, the Borrower shall open a letter
of credit cash collateral deposit account, (the “L/C Cash Collateral Account”),
with Citibank, N.A. in New York, New York, in the name of the Collateral Agent
and under the sole control and dominion of the Collateral Agent and subject to
the terms of this Agreement.

 

(4)   It is a condition precedent to the making of Advances and the issuance of
Letters of Credit by the Lender Parties under the Credit Agreement from time to
time that the Grantors shall have executed and delivered this Agreement to the
Administrative Agent.

 

(5)   Each Grantor will derive substantial direct and indirect benefit from the
transactions contemplated by the Loan Documents.

 

(6)   Capitalized terms used but not otherwise defined in this Agreement shall
have their respective meanings set forth in the Credit Agreement.  Further,
unless otherwise defined in this Agreement or in the Credit Agreement, terms
defined in Article 8 or 9 of the UCC (as defined below) are used in this
Agreement as such terms are defined in such Article 8 or 9.  “UCC” means the
Uniform Commercial Code as in effect, from time to time, in the State of New
York; provided, however, that, if perfection or the effect of perfection or
non-perfection or the priority of any security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, “UCC” means the Uniform Commercial Code as in effect
from time to time in such other jurisdiction for purposes of the provisions
hereof relating to such perfection, effect of perfection or non-perfection or
priority.

 

NOW, THEREFORE, in consideration of the premises, in order to induce the Lender
Parties to make Advances and issue Letters of Credit under the Credit Agreement
from time to time, and for good and valuable other consideration, the receipt
and sufficiency of which is hereby conclusively acknowledged, each Grantor
hereby agrees with the Collateral Agent for the ratable benefit of the Secured
Parties as follows:

 

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

 

Section 1.       Grant of Security

 

Section 1.1     Guarantor Grantor Collateral.  Each Guarantor Grantor hereby
grants to the Collateral Agent, for the ratable benefit of the Secured Parties,
a security interest in such Guarantor Grantor’s right, title and interest in and
to the following, in each case, as to each type of property described below,
whether now owned or hereafter acquired by such Guarantor Grantor, wherever
located, and whether now or hereafter existing or arising (collectively, the
“Guarantor Grantor Collateral”):

 

(a)   all equipment in all of its forms, including, without limitation, all
machinery, tools, motor vehicles, furniture and fixtures, medical and diagnostic
equipment and supplies, and all parts thereof and all accessions thereto,
including, without limitation, computer programs and supporting information that
constitute equipment within the meaning of the UCC but excluding any equipment
subject to a Lien permitted by Section 5.02(a)(iv) of the Credit Agreement
solely to the extent the documents governing such Lien prohibit the grant of a
junior security interest in such equipment (any and all such property being the
“Equipment”);

 

(b)   all inventory in all of its forms, including, without limitation, (i) all
raw materials, work in process, finished goods and materials used or consumed in
the manufacture, production, preparation or shipping thereof, (ii) goods in
which such Guarantor Grantor has an interest in mass or a joint or other
interest or right of any kind (including, without limitation, goods in which
such Guarantor Grantor has an interest or right as consignee) and (iii) goods
that are returned to or repossessed or stopped in transit by such Guarantor
Grantor), and all accessions thereto and products thereof and documents
therefor, including, without limitation, computer programs and supporting
information that constitute inventory within the meaning of the UCC (any and all
such property being the “Inventory”);

 

(c)   all accounts and payment intangibles (including, without limitation,
health-care-insurance receivables), chattel paper (including, without
limitation, tangible chattel paper and electronic chattel paper), instruments
(including, without limitation, promissory notes), deposit accounts,
letter-of-credit rights and other obligations of any kind, whether or not
arising out of or in connection with the sale or lease of goods or the rendering
of services and whether or not earned by performance, and all rights now or
hereafter existing in and to all supporting obligations and in and to all
security agreements, mortgages, Liens, leases, letters of credit and other
contracts securing or otherwise relating to the foregoing property, but
excluding all disbursement accounts, security deposit accounts and cash
collateral accounts established for the benefit of third parties in the ordinary
course of business and not to secure Debt (any and all of such accounts, chattel
paper, instruments, deposit accounts, letter-of-credit rights, general
intangibles and other obligations, to the extent not referred to in clause (d),
(e) or (f) below, being the “Receivables,” and any and all such supporting
obligations, security agreements, mortgages, Liens, leases, letters of credit
and other contracts being the “Related Contracts”);

 

(d)   all “general intangibles,” as such term is defined in the UCC, of such
Guarantor Grantor and, which, shall include, without limitation, (i) all of such
Guarantor Grantor’s rights, title and interest in, to and under all contracts
and insurance policies (including all rights and remedies relating to monetary
damages, including indemnification rights and remedies, and claims for damages
or other relief pursuant to or in respect of any contract), (ii) all know-how
and warranties relating to any of the Collateral or any Borrowing Base Asset,
(iii) any and all other rights, claims, choses-in-action and causes of action of
such Guarantor Grantor against any other person and the benefits of any and all
collateral or other security given by any other person in connection therewith,
(iv) all guarantees, endorsements and indemnifications on, or of, any of the
Collateral or any of the Borrowing Base Assets, (v) all lists, books, records,
(including but not limited to billing and related records) correspondence,
ledgers, printouts, files (whether in printed

 

2

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

 

form or stored electronically), tapes and other papers or materials containing
information relating to any of the Collateral or any of the Borrowing Base
Assets, including all customer, patient, client, resident or tenant lists,
identification of suppliers, data, plans, blueprints, specifications, designs,
drawings, appraisals, credit files, recorded knowledge, surveys, studies,
engineering reports, test reports, manuals, standards, processing standards,
performance standards, catalogs, research data, computer and automatic machinery
software and programs and the like, field repair data, accounting information
pertaining to such Guarantor Grantor’s operations or any of the Collateral or
any of the Borrowing Base Assets and all media in which or on which any of the
information or knowledge or data or records may be recorded or stored and all
computer programs used for the compilation or printout of such information,
knowledge, records or data, (vi) all licenses (including, but not limited to,
the Healthcare Licenses), consents, permits, variances, certifications,
authorizations and approvals, however characterized, now or hereafter acquired
or held by such Guarantor Grantor, including building permits, certificates of
occupancy, environmental certificates, industrial permits or licenses and
certificates of operation, (vii) all rights to reserves, deferred payments,
deposits, refunds, indemnification of claims and claims for tax or other refunds
against any Governmental Authority and (viii) with respect to each Guarantor
Grantor, the goodwill connected with such Guarantor Grantor’s business (any and
all such property being the “General Intangibles”);

 

(e)   any agreements beneficial in connection with the operation of such
Guarantor Grantor’s business, in each case as such agreements may be amended,
amended and restated, supplemented or otherwise modified from time to time
(collectively, the “Assigned Agreements”), including, without limitation,
(i) all rights of such Guarantor Grantor to receive moneys due and to become due
under or pursuant to the Assigned Agreements, (ii) all rights of such Guarantor
Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty
with respect to the Assigned Agreements, (iii) claims of such Guarantor Grantor
for damages arising out of or for breach of or default under the Assigned
Agreements and (iv) the right of such Guarantor Grantor to terminate the
Assigned Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder (all such Collateral being the
“Agreement Collateral”);

 

(f)    the following (collectively, the “Guarantor Grantor Account Collateral”):

 

(i)            all promissory notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time delivered to or otherwise
possessed by the Collateral Agent for or on behalf of such Guarantor Grantor,
including, without limitation, those delivered or possessed in substitution for
or in addition to any or all of the then existing Guarantor Grantor Account
Collateral; and

 

(ii)           all interest, dividends, distributions, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the then existing collateral
described in subsections 1.1(f)(i);

 

(g)   all agreements, permits, consents, orders and franchises relating to the
construction, use or operation of any of the Borrowing Base Assets to which such
Guarantor Grantor, now or hereafter, is a party or a beneficiary; and

 

(h)   all proceeds of, collateral for, income, royalties and other payments now
or hereafter due and payable with respect to, and supporting obligations
relating to, any and all of the Guarantor Collateral (including, without
limitation, proceeds, collateral and supporting obligations that constitute
property of the types described in clauses (a) through (g) of this

 

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Section 1.1 and this clause (h)) and, to the extent not otherwise included, all
(A) payments under insurance (whether or not the Collateral Agent is the loss
payee thereof), or any indemnity, warranty or guaranty, payable by reason of
loss or damage to or otherwise with respect to any of the foregoing Guarantor
Collateral, (B) tort claims, including, without limitation, all commercial tort
claims and (C) cash.

 

Section 1.2             Borrower Account Collateral.  In addition, the Borrower
hereby grants to the Collateral Agent, for the ratable benefit of the Secured
Parties, a security interest in the Borrower’s right, title and interest in and
to:

 

(a)   the following (collectively, the “Borrower Account Collateral”):

 

(i)            the L/C Cash Collateral Account and all funds and financial
assets from time to time credited thereto (including, without limitation, all
Cash Equivalents), all interest, dividends, distributions, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of such funds and financial assets,
and all certificates and instruments, if any, from time to time representing or
evidencing the L/C Cash Collateral Account;

 

(ii)           all promissory notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time delivered to or otherwise
possessed by the Collateral Agent for or on behalf of such Grantor, including,
without limitation, those delivered or possessed in substitution for or in
addition to any or all of the then existing Borrower Account Collateral; and

 

(iii)          all interest, dividends, distributions, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the then existing collateral
described in subsections 1.2(a)(i) and (ii) above;

 

(b)   all proceeds of, collateral for, income, royalties and other payments now
or hereafter due and payable with respect to, and supporting obligations
relating to, any and all of the Borrower Account Collateral (including, without
limitation, proceeds, collateral and supporting obligations that constitute
property of the types described in clause (a) of this Section 1.2 and this
clause (b)) and, to the extent not otherwise included, all cash;

 

in each case, whether now owned or hereafter acquired by the Borrower, wherever
located, and whether now or hereafter existing or arising (the Borrower Account
Collateral together with the Guarantor Grantor Account Collateral, the “Account
Collateral”) (the Borrower Account Collateral together with the Guarantor
Grantor Collateral, the “Collateral”).

 

Section 1.3             Scope of Grant.  Notwithstanding anything herein to the
contrary, in no event shall the Collateral include or the security interest
granted under Section 1.1 and Section 1.2 attach to any agreement, permit,
consent, order or franchise covering real or personal property of any Grantor,
and any of its rights or interest thereunder, if and to the extent that the
grant of a security interest or lien is prohibited by or in violation of (y) any
law, rule, regulation or order, or (z) a term, provision or condition of any
such agreement, permit, consent, order or franchise (unless such law, rule,
regulation, term, provision or condition would be rendered ineffective with
respect to the creation of the security interest hereunder pursuant to Sections
9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or
provisions) of any relevant jurisdiction or any other applicable law (including
any Bankruptcy Law) or principles of equity) and such provision or condition has
not been waived or the consent of the other party

 

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to such agreement, permit, consent, order or franchise has not been obtained;
provided, however, that the Collateral shall include (and such security interest
shall attach) immediately at such time as the contractual or legal prohibition
shall no longer be applicable and to the extent severable, shall attach
immediately to any portion of such agreement, permit, consent, order or
franchise not subject to the prohibitions specified in (y) or (z) above;
provided further that the exclusions referred to in this paragraph shall not
include any proceeds of any such agreement, permit, consent, order or franchise.

 

Section 2.       Security for Obligations.  This Agreement secures the payment
of all Obligations of such Grantor now or hereafter existing under the Loan
Documents, whether direct or indirect, absolute or contingent, and whether for
principal, reimbursement obligations, interest, fees, premiums, penalties,
indemnifications, contract causes of action, costs, expenses or otherwise (all
such Obligations being the “Secured Obligations”).  Without limiting the
generality of the foregoing, this Agreement secures, as to each Grantor, the
payment of all amounts that constitute part of the Secured Obligations and would
be owed by such Grantor to any Secured Party under the Loan Documents but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving a Loan Party.

 

Section 3.       Grantors Remain Liable.  Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor’s Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Collateral Agent
of any of the rights hereunder shall not release any Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral and (c) no Secured Party shall have any obligation or liability under
the contracts and agreements included in the Collateral solely by reason of this
Agreement or any other Loan Document, nor shall any Secured Party be obligated
to perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.

 

Section 4.       Maintaining the Account Collateral.  So long as any Advance or
any other Obligation of any Loan Party under any Loan Document shall remain
unpaid, any Letter of Credit shall be outstanding, or any Lender Party shall
have any Commitment:

 

(a)   The Borrower will maintain the L/C Cash Collateral Account only with the
Collateral Agent.

 

(b)   The Collateral Agent may, at any time and without notice to, or consent
from, the Borrower or any Grantor, transfer, or direct the transfer of, funds
from the Account Collateral to satisfy the Borrower’s or such Grantor’s
obligations under the Loan Documents if an Event of Default shall have occurred
and be continuing.

 

Section 5.       Investing of Amounts in the L/C Cash Collateral Account.  The
Collateral Agent will, subject to the provisions of Sections 4, 6 and 19, from
time to time (a) (i) invest amounts received with respect to the L/C Cash
Collateral Account in such Cash Equivalents credited to the L/C Cash Collateral
Account as the Borrower may select and the Collateral Agent may approve in its
reasonable discretion, and (ii) invest interest paid on the Cash Equivalents
referred to in clause (a)(i) above, in accordance with such clause (a)(i) and
(b) reinvest other proceeds of any such Cash Equivalents that may mature or be
sold, in each case in such Cash Equivalents credited to the L/C Cash Collateral
Account in the same manner.  Interest and proceeds that are not invested or
reinvested in Cash Equivalents as provided above shall be deposited and held in
the L/C Cash Collateral Account.  In addition, the Collateral Agent shall have
the right at any time to exchange such Cash Equivalents for similar Cash
Equivalents of smaller or larger determinations, or for other Cash Equivalents,
credited to

 

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the L/C Cash Collateral Account; provided that no Event of Default has occurred
and is continuing, the Borrower may select such Cash Equivalents with the
Collateral Agent’s approval in its reasonable discretion.

 

Section 6.       Release of Amounts.  So long as no Event of Default shall have
occurred and be continuing, the Collateral Agent will pay and release to the
Borrower or the relevant Grantor or at the Borrower’s order or, at the request
of the Borrower, to the Collateral Agent to be applied to the Obligations of the
Borrower under the Loan Documents, such amount, if any, as is then on deposit in
the L/C Cash Collateral Account, in each case to the extent permitted to be
released under the terms of the Credit Agreement.

 

Section 7.       Maintaining Electronic Chattel Paper and Transferable Records. 
So long as any Advance or any other Obligation of any Loan Party under any Loan
Document shall remain unpaid, any Letter of Credit shall be outstanding, or any
Lender Party shall have any Commitment:

 

(a)           Each Guarantor Grantor will maintain all (i) electronic chattel
paper so that the Collateral Agent has control of the electronic chattel paper
in the manner specified in Section 9-105 of the UCC and (ii) all transferable
records so that the Collateral Agent has control of the transferable records in
the manner specified in Section 16 of the Uniform Electronic Transactions Act,
as in effect in the jurisdiction governing such transferable record (“UETA”);
and

 

(b)                                                         Each Guarantor
Grantor will as soon as reasonably practicable give notice to the Collateral
Agent of any material commercial tort claim (as defined in Section 9-102(13) of
the UCC) of any Guarantor Grantor and will immediately execute or otherwise
authenticate a supplement to this Agreement, and otherwise take all necessary
action, to subject such commercial tort claim to the first priority security
interest created under this Agreement.

 

Section 8.       Representations and Warranties.  Each Grantor represents and
warrants as follows:

 

(a)   Such Grantor’s exact legal name is correctly set forth in Schedule I
hereto.  Such Grantor is located (within the meaning of Section 9-307 of the
UCC) and has its chief executive office, all original copies of each Assigned
Agreement and Related Contract to which such Grantor (if a Guarantor Grantor) is
a party, and all originals of all chattel paper that evidence Receivables of
such Grantor, in the state or jurisdiction set forth in Schedule I hereto.  The
information set forth in Schedule I hereto with respect to such Grantor is true
and accurate in all respects.  Such Grantor has not previously changed its name,
location, chief executive office, type of organization, jurisdiction of
organization or organizational identification number from those set forth in
Schedule I hereto except as disclosed in Schedule III hereto.

 

(b)   All of the Equipment and Inventory of such Grantor (if a Guarantor
Grantor) are located at the places specified therefor in Schedule II hereto, as
such Schedule II may be amended from time to time pursuant to Section 10(a). 
All Collateral consisting of certificated securities and instruments (other than
instruments representing a Receivable or Agreement Collateral) have been
delivered to the Collateral Agent.  As of the date of this Agreement, none of
the Receivables or Agreement Collateral is evidenced by a promissory note or
other instrument that has not been delivered to the Collateral Agent if so
required to be delivered pursuant to Section 9(c).

 

(c)   Such Grantor is the legal and beneficial owner of the Collateral of such
Grantor free and clear of any Lien, claim, option or right of others, except for
Liens permitted pursuant to Section 5.02(a) of the Credit Agreement.  As of the
date hereof, no effective financing statement

 

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or other instrument similar in effect covering all or any part of such
Collateral or listing Grantor or any trade name of Grantor as debtor is on file
in any recording office, except (i) such as may have been filed in favor of the
Collateral Agent relating to the Loan Documents and (ii) to the extent that such
financing statement or other instrument similar in effect does not relate to
such Grantor’s interest in the Collateral.

 

(d)   Such Grantor (if a Guarantor Grantor) has exclusive possession and control
of its Equipment and Inventory.

 

(e)   Each Assigned Agreement to which such Grantor (if a Guarantor Grantor) is
a party have been duly authorized, executed and delivered by such Grantor, is in
full force and effect and is binding upon and enforceable against all parties
thereto in accordance with their terms (subject to Bankruptcy Law and principles
of equity, and subject to the terms of the Credit Agreement and this Agreement).
 There exists no material default under any Assigned Agreement to which such
Grantor is a party by such Grantor, or to such Grantor’s knowledge and to the
extent such default, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect, by any party thereto.

 

(f)    As of the date of this Agreement, such Grantor (if a Guarantor Grantor)
is not a beneficiary or assignee under any letter of credit.

 

(g)   All filings necessary to perfect the security interest in the Collateral
of such Grantor created under this Agreement have been duly made or taken and
are in full force and effect, and this Agreement creates in favor of the
Collateral Agent for the benefit of the Secured Parties a valid and, together
with such filings, perfected first priority security interest in all Collateral
of such Grantor that may be perfected by the filing of UCC-1 financing
statements, securing the payment of the Secured Obligations.

 

(h)   No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or any other third
party is required for (i) the grant by such Grantor of the security interest
granted hereunder or for the execution, delivery or performance of this
Agreement by such Grantor, (ii) the perfection or maintenance of the security
interest created hereunder (including the first priority nature of such security
interest), except for the filing of financing and continuation statements under
the UCC, the filing of which have been duly authorized, (iii) the exercise by
the Collateral Agent of its rights provided for in this Agreement or the
remedies in respect of the Collateral pursuant to this Agreement, except as may
be required in connection with the disposition of any portion of the Collateral
consisting of securities, security entitlements or pledged financial assets by
laws affecting the offering and sale of securities generally, compliance with
any applicable healthcare licensing requirements, and notices and other actions
contemplated by this Agreement.

 

(i)    The Inventory that has been produced or distributed by such Grantor (if a
Guarantor Grantor) has been produced in compliance with all requirements of
applicable law, including, without limitation, the Fair Labor Standards Act.

 

(j)    Such Grantor has no commercial tort claims (as defined in
Section 9-102(13) of the UCC).

 

Section 9.       Further Assurances(a).  Each Grantor agrees that from time to
time, at its own expense, such Grantor will promptly execute and deliver, or
otherwise authenticate, all further instruments and documents, and take all
further action that may be necessary or that the Collateral

 

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Agent may reasonably request, in order to perfect and protect any pledge or
security interest granted or purported to be granted by such Grantor hereunder
or to enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral of such Grantor.  Without
limiting the generality of the foregoing, each Grantor will, upon the reasonable
request of the Collateral Agent, promptly with respect to Collateral of such
Grantor:  (i) mark conspicuously each document included in Inventory, each
chattel paper included in Receivables, each Related Contract, each Assigned
Agreement and each of its records pertaining to such Collateral with a legend,
in form and substance satisfactory to the Collateral Agent, indicating that such
document, chattel paper, Related Contract, Assigned Agreement or Collateral is
subject to the security interest granted hereby; (ii) except as contemplated by
Section 9(c), if any such Collateral shall be evidenced by a promissory note or
other instrument, deliver and pledge to the Collateral Agent hereunder such note
or instrument duly indorsed in blank and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
the Collateral Agent; (iii) execute or authenticate and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or as the Collateral Agent may reasonably request,
in order to perfect and preserve the security interest granted or purported to
be granted by Grantor hereunder; (iv) deliver and pledge to the Collateral Agent
for benefit of the Secured Parties certificates representing any Collateral
consisting of certificated securities, accompanied by undated stock or bond
powers executed in blank; (v) take all action necessary to ensure that the
Collateral Agent has control of the Account Collateral, electronic chattel
paper, investment property (upon the occurrence and during the continuance of
any Event of Default), transferable records as provided in Sections 9-104, 9-105
and 9-106 of the UCC and Section 16 of UETA; (vi) at the request of the
Collateral Agent, take all action to ensure that the Collateral Agent’s security
interest is noted on any certificate of ownership related to any Collateral
evidenced by a certificate of ownership; and (vii) deliver to the Collateral
Agent evidence that all other action that the Collateral Agent may reasonably
deem necessary or desirable in order to perfect and protect the security
interest created by Grantor under this Agreement has been taken.

 

(b)   Each Guarantor Grantor hereby authorizes the Collateral Agent to file one
or more financing or continuation statements, and amendments thereto, including,
without limitation, one or more financing statements indicating that such
financing statements cover all assets or all personal property (or words of
similar effect) of such Guarantor Grantor (exclusive of agreements that by their
terms prohibit the creation of a Lien thereon, but only to the extent, and for
so long as, such prohibition is not terminated or rendered unenforceable or
otherwise deemed ineffective by the UCC or any other applicable law), in each
case without the signature of such Grantor, and regardless of whether any
particular asset described in such financing statements falls within the scope
of the UCC or the granting clause of this Agreement.  A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law. Each Grantor ratifies its authorization for the
Collateral Agent to have filed such financing statements, continuation
statements or amendments filed prior to the date hereof.

 

(c)   Each Grantor will furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral of
such Grantor and such other reports in connection with such Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.

 

(d)   If at any time any amount then payable under or in connection with any of
the Receivables or Agreement Collateral shall be evidenced by any promissory
note or other instrument, and such amount, together with all amounts payable
evidenced by any promissory

 

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note or other instrument not previously delivered to the Collateral Agent
exceeds $1,000,000 in the aggregate for all Grantors, the Grantor acquiring such
promissory note or other instrument shall promptly (but in any event within
thirty (30) days after receipt thereof) endorse, assign and deliver the same to
the Collateral Agent, accompanied by such instruments of transfer or assignment
duly executed in blank as the Collateral Agent may from time to time specify.

 

(e)   If after the date hereof any Grantor becomes a beneficiary under a letter
of credit now or hereafter issued, such Grantor shall promptly notify the
Collateral Agent thereof and such Grantor shall, upon the occurrence and during
the continuation of an Event of Default, at the request of the Collateral Agent,
pursuant to an agreement in form and substance reasonably satisfactory to the
Collateral Agent, either (i) arrange for the issuer and any confirmer of such
letter of credit to consent to an assignment to the Collateral Agent of the
proceeds of any drawing under the letter of credit or (ii) arrange for the
Collateral Agent to become the transferee beneficiary of such Letter of Credit,
with the Collateral Agent agreeing, in each case, that the proceeds of any
drawing under the letter of credit are to be applied as provided in the Credit
Agreement. The actions in the preceding sentence shall not be required to the
extent that the amount of any such Letter of Credit, together with the aggregate
amount of all other letters of credit for which the actions described above in
clauses (i) and (ii) have not been taken, does not exceed $1,000,000 in the
aggregate for all Grantors.

 

Section 10.     As to Equipment and Inventory.(a)  Each Guarantor Grantor will
keep the Equipment and Inventory of such Grantor (other than any Equipment or
Inventory transferred in accordance with Section 5.02(e)(ii) or
Section 5.02(e)(iii) of the Credit Agreement) at the places therefor specified
in Section 8(b).

 

(b)   Each Guarantor Grantor will cause the Equipment of such Grantor to be
maintained and preserved in the same condition, repair and working order as when
new, ordinary wear and tear excepted, and will forthwith, or in the case of any
loss or damage to any of such Equipment as soon as practicable after the
occurrence thereof, make or cause to be made all repairs, replacements and other
improvements in connection therewith that are necessary or desirable to such
end.  Each Guarantor Grantor will promptly furnish to the Collateral Agent a
statement respecting any loss or damage exceeding $1,000,000 to any of the
Equipment or Inventory of such Grantor.

 

(c)   Each Guarantor Grantor will pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including, without limitation, claims for labor, materials and supplies)
against, the Equipment and Inventory of such Grantor, except to the extent
payment thereof is not required by Section 5.01(b) of the Credit Agreement.  In
producing its Inventory, each Guarantor Grantor will comply with all
requirements of applicable law, including, without limitation, the Fair Labor
Standards Act.

 

Section 11.     Insurance.(a)  Each Guarantor Grantor will, at its own expense,
maintain insurance with respect to the Equipment and Inventory of such Guarantor
Grantor in such amounts, against such risks, in such form and with such
insurers, as shall be reasonably satisfactory to the Collateral Agent from time
to time.  Each policy of each Guarantor Grantor for liability insurance shall
provide for all losses to be paid on behalf of the Collateral Agent and such
Guarantor Grantor as their interests may appear, and each policy for property
damage insurance shall provide for all losses (except for losses of less than
$1,000,000 per occurrence) to be paid directly to the Collateral Agent.  Each
such policy shall in addition (i) name such Guarantor Grantor and the Collateral
Agent as insured parties thereunder (without any representation or warranty by
or obligation upon the Collateral Agent) as their interests may

 

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appear, (ii) contain the agreement by the insurer that any loss thereunder shall
be payable to the Collateral Agent notwithstanding any action, inaction or
breach of representation or warranty by such Guarantor Grantor, (iii) provide
that there shall be no recourse against the Collateral Agent for payment of
premiums or other amounts with respect thereto and (iv) provide that at least 10
days’ prior written notice of cancellation or of lapse shall be given to the
Collateral Agent by the insurer.  Each Guarantor Grantor will, if so requested
by the Collateral Agent, deliver to the Collateral Agent original or duplicate
policies of such insurance and, as often as the Collateral Agent may reasonably
request, a report of a reputable insurance broker with respect to such
insurance.  Further, each Guarantor Grantor will, at the request of the
Collateral Agent, duly execute and deliver instruments of assignment of such
insurance policies to comply with the requirements of Section 9 and cause the
insurers to acknowledge notice of such assignment.

 

(b)   Reimbursement under any liability insurance maintained by any Grantor
pursuant to this Section 11 may be paid directly to the Person who shall have
incurred liability covered by such insurance.  In case of any loss involving
damage to Equipment or Inventory when subsection (c) of this Section 11 is not
applicable, the applicable Grantor will make or cause to be made the necessary
repairs to or replacements of such Equipment or Inventory, and any proceeds of
insurance properly received by or released to such Grantor shall be used by such
Grantor, except as otherwise required hereunder or by the Credit Agreement, to
pay or as reimbursement for the costs of such repairs or replacements.

 

(c)   So long as no Event of Default shall have occurred and be continuing, all
insurance payments received by the Collateral Agent in connection with any loss,
damage or destruction of any Inventory or Equipment will be released by the
Collateral Agent for the benefit of the applicable Grantor within a reasonably
prompt period of time from a request therefor for the repair, replacement or
restoration thereof, subject to such terms and conditions with respect to the
release thereof as the Collateral Agent may reasonably require, including,
without limitation, that such payments be made directly by the Collateral Agent
to the applicable contractors performing the repair, replacement and restoration
work.  Upon the occurrence and during the continuance of any Event of Default,
all insurance payments in respect of such Equipment or Inventory shall be paid
to the Collateral Agent and shall be, in the Collateral Agent’s sole discretion,
(i) released to the applicable Grantor to be applied as set forth in the first
sentence of this subsection (c) or (ii) applied as specified in Section 19(b).

 

Section 12.     Post-Closing Changes; Bailees; Collections on Assigned
Agreements, Receivables and Related Contracts.(a)  No Grantor will change its
name, type of organization, jurisdiction of organization, organizational
identification number or location from those set forth in Section 8(a) of this
Agreement without first giving at least 30 days’ prior written notice to the
Collateral Agent and taking all action required by the Collateral Agent for the
purpose of perfecting or protecting the security interest granted by this
Agreement.  No Guarantor Grantor will change the location of its Equipment and
Inventory (other than Inventory sold in the ordinary course of business) or the
place where it keeps the originals of the Assigned Agreements and Related
Contracts to which such Grantor is a party and the originals of all chattel
paper that evidence Receivables of such Grantor from the locations therefor
specified in Sections 8(a) and 8(b) without first giving the Collateral Agent 30
days’ prior written notice of such change.  Except as not otherwise prohibited
by the Credit Agreement, no Grantor will become bound by a security agreement
authenticated by another Person (determined as provided in Section 9-203(d) of
the UCC) without giving the Collateral Agent 30 days’ prior written notice
thereof and taking all action required by the Collateral Agent to ensure that
the perfection and first priority nature of the Collateral Agent’s security
interest in the Collateral will be maintained.  Each Grantor will hold and
preserve its records relating to the Collateral, including, without limitation,
the Assigned Agreements and

 

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Related Contracts, and will, upon reasonable notice, permit representatives of
the Collateral Agent at any time during normal business hours to inspect and
make abstracts from such records and other documents.  If the Grantor does not
have an organizational identification number and later obtains one, it will
forthwith notify the Collateral Agent of such organizational identification
number.

 

(b)   If any Collateral of any Guarantor Grantor is at any time in the
possession or control of a warehouseman, bailee or agent, such Grantor will,
upon the request of the Collateral Agent (i) notify such warehouseman, bailee or
agent of the security interest created hereunder, (ii) instruct such
warehouseman, bailee or agent to hold all such Collateral solely for the
Collateral Agent’s account subject only to the Collateral Agent’s instructions
(which shall permit such Collateral to be removed by such Grantor in the
ordinary course of business until the Collateral Agent notifies such
warehouseman, bailee or agent that an Event of Default has occurred and is
continuing), (iii) use commercially reasonable efforts, to cause such
warehouseman, bailee or agent to authenticate a record acknowledging that it
holds possession of such Collateral for the Collateral Agent’s benefit and shall
act solely on the instructions of the Collateral Agent without the further
consent of the Grantor or any other Person, and (iv) make such authenticated
record available to the Collateral Agent.

 

(c)   Except as otherwise provided in this subsection (c), each Guarantor
Grantor will continue to collect, at its own expense, all amounts due or to
become due such Grantor under the Assigned Agreements, Receivables and Related
Contracts.  In connection with such collections, such Grantor may take (and at
the Collateral Agent’s reasonable direction will take) such action as such
Grantor or Collateral Agent may deem necessary or advisable to enforce
collection of the Assigned Agreements, Receivables and Related Contracts;
provided, however, that the Collateral Agent shall have the right at any time
upon the occurrence and during the continuance of an Event of Default under the
Credit Agreement, and upon written notice to such Grantor of its intention to do
so, to notify the Obligors under any Assigned Agreements, Receivables and
Related Contracts of the assignment of such Assigned Agreements, Receivables and
Related Contracts to the Collateral Agent and to direct such Obligors to make
payment of all amounts due or to become due to such Grantor thereunder directly
to the Collateral Agent and, upon such notification and at the expense of such
Grantor, to enforce collection of any such Assigned Agreements, Receivables and
Related Contracts, to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done, and to otherwise exercise all rights with respect to such Assigned
Agreements, Receivables and Related Contracts, including, without limitation,
those set forth set forth in Section 9-607 of the UCC.  After receipt by any
Grantor of the notice from the Collateral Agent referred to in the proviso to
the preceding sentence, (i) all amounts and proceeds (including, without
limitation, instruments) received by such Grantor in respect of the Assigned
Agreements, Receivables and Related Contracts of such Grantor shall be received
in trust for the benefit of the Collateral Agent hereunder, shall be segregated
from other funds of such Grantor and shall be forthwith paid over to the
Collateral Agent in the same form as so received (with any necessary
indorsement) and applied as provided in Section 19(b) and (ii) such Grantor will
not adjust, settle or compromise the amount or payment of any Receivable or
amount due on any Assigned Agreement or Related Contract, release wholly or
partly any Obligor thereof, or allow any credit or discount thereon.  No Grantor
will permit or consent to the subordination of its right to payment under any of
the Assigned Agreements, Receivables and Related Contracts to any other
indebtedness or obligations of the Obligor thereof.

 

Section 13.     As to the Assigned Agreements.(a)  Each Guarantor Grantor will
at its expense (i) perform and observe all terms and provisions of the Assigned
Agreements to be performed or

 

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observed by it, and, except as otherwise permitted by Section 13(b) hereof,
maintain the Assigned Agreements to which it is party in full force and effect,
enforce the Assigned Agreements to which it is a party in the best interests of
the applicable Borrowing Base Asset, all in accordance with the terms thereof
and in accordance with sound business judgment and take all such action to such
end as may be requested from time to time by the Collateral Agent, and
(ii) furnish to the Collateral Agent promptly upon receipt thereof copies of all
notices, requests and other documents received by such Grantor under or pursuant
to the Assigned Agreements to which it is a party, and from time to time
(A) furnish to the Collateral Agent such information and reports regarding the
Assigned Agreements and such other Collateral of such Grantor as the Collateral
Agent may reasonably request and (B) upon request of the Collateral Agent make
to each other party to any Assigned Agreement to which it is a party such
demands and requests for information and reports or for action as such Grantor
is entitled to make thereunder.

 

(b)   Each Guarantor Grantor agrees that it will not, except to the extent
otherwise not prohibited by the Credit Agreement:

 

(i)            cancel or terminate any Assigned Agreement to which it is a party
or consent to or accept any cancellation or termination thereof;

 

(ii)           amend, amend and restate, supplement or otherwise modify any such
Assigned Agreement or give any consent, waiver or approval thereunder (unless
otherwise required to do so pursuant to the terms thereof) that would impair the
value of the interests or rights of Grantor thereunder or that would impair the
interests or rights of any Secured Party, in either case, in any material
respect;

 

(iii)          waive any default under or breach of any such Assigned Agreement;
or

 

(iv)          take any other action in connection with any such Assigned
Agreement that would impair the value of the interests or rights of such Grantor
thereunder or that would impair the interests or rights of any Secured Party, in
either case, in any material respect.

 

(c)   Each Grantor hereby consents on its behalf and on behalf of its
Subsidiaries to the assignment and pledge to the Collateral Agent for benefit of
the Secured Parties of each Assigned Agreement to which it is a party by any
other Grantor hereunder.

 

Section 14.     Payments Under the Assigned Agreements.(a)  Each Grantor agrees
that, upon the occurrence and during the continuance of any Event of Default,
all payments due or to become due to such Grantor under or in connection with
such Assigned Agreement will be made in accordance with the instructions of the
Collateral Agent.

 

(b)   All moneys received or collected pursuant to subsection (a) above shall be
applied as provided in Section 19(b).

 

Section 15.     Transfers and Other Liens; Additional Equity Interests.(a)  Each
Grantor agrees that it will not (i) sell, assign or otherwise dispose of, or
grant any option with respect to, any of the Collateral, other than sales,
assignments and other dispositions of Collateral, and options relating to
Collateral, permitted under the terms of the Credit Agreement, or (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral except
for the pledge, assignment and security interest created under this Agreement
and Liens permitted under Section 5.02(a) of the Credit Agreement.

 

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(b)   No Grantor shall permit to become effective in any document creating,
governing or providing for any permit, license or agreement benefitting such
Grantor or any of its Affiliates, a provision that would prohibit the creation
of a Lien on such permit, license or agreement in favor of the Collateral Agent
unless such provision is customary and reasonably necessary in the ordinary
course of business of such Grantor.

 

Section 16.     Collateral Agent Appointed Attorney-in-Fact.  To the extent
permitted by applicable law, each Grantor hereby irrevocably appoints the
Collateral Agent such Grantor’s attorney-in-fact, with full authority in the
place and stead of such Grantor and in the name of such Grantor or otherwise,
from time to time upon the occurrence and during the continuance of an Event of
Default in the Collateral Agent’s discretion, to take any action and to execute
any instrument that the Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:

 

(a)   to obtain and adjust insurance required to be paid to the Collateral Agent
pursuant to Section 11,

 

(b)   to ask for, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral,

 

(c)   to receive, indorse and collect any drafts or other instruments, documents
and chattel paper, in connection with clause (a) or (b) above, and

 

(d)   to file any claims or take any action or institute any proceedings that
the Collateral Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce compliance with the terms and
conditions of any Assigned Agreement or the rights of the Collateral Agent with
respect to any of the Collateral.

 

Section 17.     Collateral Agent May Perform.  If any Grantor fails to perform
any agreement contained herein, the Collateral Agent may, upon the occurrence
and during the continuance of an Event of Default, but without any obligation to
do so and without notice, itself perform, or cause performance of, such
agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by such Grantor under Section 20.

 

Section 18.     The Collateral Agent’s Duties.(a)  The powers conferred on the
Collateral Agent hereunder are solely to protect the Secured Parties’ interest
in the Collateral and shall not impose any duty upon it to exercise any such
powers.  Except for (i) the exercise of reasonable care with respect to, and the
safe custody of, any Collateral in its possession and the accounting for moneys
actually received by it hereunder, and (ii) liability for the gross negligence
or willful misconduct of any of the Collateral Agent’s officers, directors,
agents or employees, the Collateral Agent shall have no duty or liability as to
any Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not any Secured Party has or is deemed to have knowledge
of such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Collateral.  The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which it accords its own
property.

 

(b)   Anything contained herein to the contrary notwithstanding, the Collateral
Agent may from time to time, when the Collateral Agent deems it to be necessary,
appoint one or more

 

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subagents (each, a “Subagent”) for the Collateral Agent hereunder with respect
to all or any part of the Collateral.  In the event that the Collateral Agent so
appoints any Subagent with respect to any Collateral, (i) the assignment and
pledge of such Collateral and the security interest granted in such Collateral
by each Grantor hereunder shall be deemed for purposes of this Security
Agreement to have been made to such Subagent, in addition to the Collateral
Agent, for the ratable benefit of the Secured Parties, as security for the
Secured Obligations of such Grantor, (ii) such Subagent shall automatically be
vested, in addition to the Collateral Agent, with all rights, powers,
privileges, interests and remedies of the Collateral Agent hereunder with
respect to such Collateral, and (iii) the term “Collateral Agent,” when used
herein in relation to any rights, powers, privileges, interests and remedies of
the Collateral Agent with respect to such Collateral, shall include such
Subagent; provided, however, that no such Subagent shall be authorized to take
any action with respect to any such Collateral unless and except to the extent
expressly authorized in writing by the Collateral Agent.

 

Section 19.     Remedies.  If any Event of Default shall have occurred and be
continuing:

 

(a)   The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party upon default under the UCC
(whether or not the UCC applies to the affected Collateral) and also may: 
(i) require each Grantor to, and each Grantor hereby agrees that it will at its
expense and upon request of the Collateral Agent forthwith, assemble all or part
of the Collateral, to the extent such Collateral is susceptible of assembly, as
directed in writing by the Collateral Agent and make it available to the
Collateral Agent at a place and time to be designated by the Collateral Agent
that is reasonably convenient to both parties; (ii) without notice except as
specified below, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any of the Collateral Agent’s offices or
elsewhere, for cash, on credit or for future delivery, and upon such other terms
as the Collateral Agent may deem commercially reasonable; (iii) peaceably occupy
any premises owned or leased by any of the Guarantor Grantors where the
Collateral or any part thereof is assembled or located for a reasonable period
in order to effectuate its rights and remedies hereunder or under law, without
obligation to such Grantor in respect of such occupation; and (iv) exercise any
and all rights and remedies of any of the Grantors under or in connection with
the Collateral, or otherwise in respect of the Collateral, including, without
limitation, (A) any and all rights of such Grantor to demand or otherwise
require payment of any amount under, or performance of any provision of, the
Assigned Agreements, the Receivables, the Related Contracts and the other
Collateral, (B) withdraw, or cause or direct the withdrawal, of all funds with
respect to the Account Collateral, (C) without notice to the Borrower or any
other Loan Party, except as required by law and at any time or from time to
time, charge, set-off and otherwise apply all or any part of the Secured
Obligations against any funds held with respect to the Collateral in any deposit
account and (D) exercise all other rights and remedies with respect to the
Assigned Agreements, the Receivables, the Related Contracts and the other
Collateral, including, without limitation, those set forth in Section 9-607 of
the UCC.  Each Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten days’ notice to such Grantor of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification.  The Collateral Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given. 
The Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.

 

(b)   Any cash held by or on behalf of the Collateral Agent and all cash
proceeds received by or on behalf of the Collateral Agent in respect of any sale
of, collection from, or other

 

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realization upon all or any part of the Collateral will be applied (after
payment of any amounts payable to the Collateral Agent pursuant to Section 20)
by the Collateral Agent for the ratable benefit of the Secured Parties against
the Secured Obligations, in the following manner:

 

(i)            first, paid to the Agents for any amounts then owing to the
Agents pursuant to Section 9.04 of the Credit Agreement or otherwise under the
Loan Documents, ratably in accordance with such respective amounts then owing to
the Agents; and

 

(ii)           second, ratably (A) paid to the Lender Parties for any amounts
then owing to them under the Loan Documents ratably in accordance with such
respective amounts then owing to such Lender Parties and (B) deposited as
Collateral in the L/C Cash Collateral Account up to an amount equal to 100% of
the aggregate Available Amount of all outstanding Letters of Credit, provided
that in the event that any such Letter of Credit is drawn, the Collateral Agent
shall pay to the Issuing Bank that issued such Letter of Credit the amount held
in the L/C Cash Collateral Account in respect of such Letter of Credit, provided
further that, to the extent that any such Letter of Credit shall expire or
terminate undrawn and as a result thereof the amount of the Collateral in the
L/C Cash Collateral Account shall exceed 100% of the aggregate Available Amount
of all then outstanding Letters of Credit, such excess amount of such Collateral
shall be applied in accordance with the remaining order of priority set out in
this Section 19(b).

 

Any surplus of such cash or cash proceeds held by or on the behalf of the
Collateral Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the applicable Grantor or to whomsoever may be
lawfully entitled to receive such surplus.

 

(c)   All payments received by any Grantor under or in connection with any
Assigned Agreement or otherwise in respect of the Collateral shall be received
in trust for the benefit of the Collateral Agent, shall be segregated from other
funds of such Grantor and shall be forthwith paid over to the Collateral Agent
in the same form as so received (with any necessary indorsement).

 

(d)   The Collateral Agent may, without notice to any Grantor except as required
by law and at any time or from time to time, charge, set-off and otherwise apply
all or any part of the Secured Obligations against any funds held by it or
another Secured Party with respect to the Account Collateral or in any other
deposit account.

 

Section 20.     Indemnity and Expenses.(a)  Each Grantor agrees to indemnify,
defend and save and hold harmless each Secured Party and each of their
Affiliates and their respective officers, directors, employees, agents and
advisors (each, an “Indemnified Party”) from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except to the
extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party’s gross negligence or willful misconduct.

 

(b)   Each Grantor will upon demand pay to the Collateral Agent the amount of
any and all reasonable expenses, including, without limitation, the reasonable
fees and expenses of its counsel and of any experts and agents, that the
Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the

 

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sale of, collection from or other realization upon, any of the Collateral of
such Grantor, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent or the other Secured Parties hereunder or (iv) the failure by
such Grantor to perform or observe any of the provisions hereof.

 

Section 21.     Amendments; Waivers; Additional Grantors, Etc.  (a)  No
amendment shall in any event be effective unless the same shall be in writing
and signed by the parties hereto.  No waiver of any provision of this Agreement,
and no consent to any departure by any Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Collateral
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.  No failure on the part
of the Collateral Agent or any other Secured Party to exercise, and no delay in
exercising any right hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.

 

(b)  Upon the execution and delivery, or authentication, by any Person of a
security agreement supplement in substantially the form of Exhibit A hereto
(each, a “Security Agreement Supplement”), (i) such Person shall be referred to
as an “Additional Grantor” and shall be and become a Grantor hereunder, and each
reference in this Agreement and the other Loan Documents to “Grantor” or
“Guarantor Grantor” shall also mean and be a reference to such Additional
Grantor,  and each reference in this Agreement and the other Loan Documents to
“Collateral” shall also mean and be a reference to the Collateral of such
Additional Grantor, and (ii) the supplemental schedules I-III attached to each
Security Agreement Supplement (the “Supplemental Schedules”) shall be
incorporated into and become a part of and supplement Schedules I-III,
respectively, hereto (the “Schedules”), and the Collateral Agent may attach such
Supplemental Schedules to such Schedules; and each reference to such Schedules
shall mean and be a reference to such Schedules as supplemented pursuant to each
Security Agreement Supplement.

 

Section 22.     Notices, Etc.  All notices and other communications provided for
hereunder shall be given in accordance with Section 9.02 of the Credit
Agreement.  Delivery by telecopier or email (in .pdf or similar electronic
format) of an executed counterpart of any amendment or waiver of any provision
of this Agreement or of any Security Agreement Supplement or the Schedules
hereto shall be effective as delivery of an original executed counterpart
thereof.

 

Section 23.     Continuing Security Interest; Assignments under the Credit
Agreement.  This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the latest of
(i) the payment in full in cash of the Secured Obligations, (ii) the Termination
Date and (iii) the termination or expiration or cash collateralization on terms
satisfactory to the Collateral Agent of all Letters of Credit, (b) be binding
upon each Grantor, its successors and assigns and (c) inure, together with the
rights and remedies of the Collateral Agent hereunder, to the benefit of the
Secured Parties and their respective successors, transferees and assigns. 
Without limiting the generality of the foregoing clause (c), any Lender Party
may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement in accordance with the terms thereof
(including, without limitation, all or any portion of its Commitments, the
Advances owing to it and the Note or Notes, if any, held by it) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender Party herein or otherwise, in
each case as provided in Section 9.07 of the Credit Agreement.

 

Section 24.     Release; Termination.(a)  Upon any sale, lease, transfer or
other disposition of any item of Collateral of any Grantor not in violation of
any of the terms of the Loan Documents (other than sales of Inventory in the
ordinary course of business as to which any security interest therein shall be
automatically released), the Collateral Agent will, at such Grantor’s expense,
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence the release of such item of Collateral from the
assignment and security interest granted

 

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hereby; provided, however, that (i) at the time of such request and such release
no Event of Default shall have occurred and be continuing and (ii) such Grantor
shall have delivered to the Collateral Agent, at least five Business Days prior
to the date of the proposed release, a written request for release describing
the item of Collateral and the terms of the sale, lease, transfer or other
disposition in reasonable detail, including a form of release for execution by
the Collateral Agent and a certificate of Grantor to the effect that the
transaction is in compliance with the Loan Documents and as to such other
matters as the Collateral Agent may request.

 

(b)   Upon any Transfer of a Borrowing Base Asset or designation of a Borrowing
Base Asset as a non-Borrowing Base Asset in accordance with
Section 5.02(e)(iii) of the Credit Agreement, the Collateral Agent will, at such
Grantor’s expense, execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence the release of any item of
Collateral related to such Borrowing Base Asset from the assignment and security
interest granted hereby; provided, however, that (i) at the time of such request
and such release no Event of Default shall have occurred and be continuing or
shall result from such Transfer and (ii) such Grantor shall have delivered to
the Collateral Agent, at least five Business Days prior to the date of the
proposed release, a written request for release describing the item of
Collateral, including a form of release for execution by the Collateral Agent.

 

(c)   Upon the latest of (i) the payment in full in cash of the Secured
Obligations, (ii) the Termination Date and (iii) the termination or expiration
or cash collateralization on terms satisfactory to the Collateral Agent of all
Letters of Credit, the pledge and security interest granted hereby shall
terminate and all rights to the Collateral shall revert to the applicable
Grantor.  Upon any such termination, the Collateral Agent will, at the
applicable Grantor’s expense, execute and deliver to such Grantor such documents
as such Grantor shall reasonably request to evidence such termination.

 

Upon the effectiveness of any release of the security interest granted herein in
any Collateral, Collateral Agent shall promptly authorize Borrower or the
applicable Guarantor Grantor to file any UCC amendments terminating any
financing statements filed by the Collateral Agent to perfect its security
interest in such Collateral granted under any of the Security Documents.

 

Section 25.     Security Interest Absolute.  The obligations of each Grantor
under this Agreement are independent of the Secured Obligations or any other
Obligations of any other Loan Party under or in respect of the Loan Documents,
and a separate action or actions may be brought and prosecuted against each
Grantor to enforce this Agreement, irrespective of whether any action is brought
against such Grantor or any other Loan Party or whether such Grantor or any
other Loan Party is joined in any such action or actions.  All rights of the
Collateral Agent and the other Secured Parties and the pledge, assignment and
security interest hereunder, and all obligations of each Grantor hereunder,
shall be irrevocable, absolute and unconditional irrespective of, and each
Grantor hereby irrevocably waives (to the maximum extent permitted by applicable
law) any defenses it may now have or may hereafter acquire in any way relating
to, any or all of the following:

 

(a)   any lack of validity or enforceability of any Loan Document or any other
agreement or instrument relating thereto;

 

(b)   any change in the time, manner or place of payment of, or in any other
term of, all or any of the Secured Obligations or any other Obligations of any
other Loan Party under or in respect of the Loan Documents or any other
amendment or waiver of or any consent to any departure from any Loan Document,
including, without limitation, any increase in the Secured

 

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Obligations resulting from the extension of additional credit to any Loan Party
or any of its Subsidiaries or otherwise;

 

(c)   any taking, exchange, release or non-perfection of any Collateral or any
other collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;

 

(d)   any manner of application of any Collateral or any other collateral, or
proceeds thereof, to all or any of the Secured Obligations, or any manner of
sale or other disposition of any Collateral or any other collateral for all or
any of the Secured Obligations or any other Obligations of any other Loan Party
under or in respect of the Loan Documents or any other assets of any Loan Party
or any of its Subsidiaries;

 

(e)   any change, restructuring or termination of the corporate structure or
existence of any Loan Party or any of its Subsidiaries;

 

(f)    any failure of any Secured Party to disclose to any Loan Party any
information relating to the business, condition (financial or otherwise),
operations, performance, assets, nature of assets, liabilities or prospects of
any other Loan Party now or hereafter known to such Secured Party (each Grantor
waiving any duty on the part of the Secured Parties to disclose such
information);

 

(g)   the failure of any other Person to execute this Agreement or any other
Collateral Document, guaranty or agreement or the release or reduction of
liability of any Grantor or other grantor or surety with respect to the Secured
Obligations; or

 

(h)   any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by any
Secured Party that might otherwise constitute a defense available to, or a
discharge of, such Grantor or any other Grantor or a third party grantor of a
security interest.

 

This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Secured Party or by any other Person upon the
insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as
though such payment had not been made.

 

Section 26.     Third Party Waivers (a).  Each Grantor authorizes the Collateral
Agent to perform any or all of the following acts at any time in its sole
discretion, all without notice to any Grantor, without affecting such Grantor’s
obligations under this Agreement or any other Loan Documents and without
affecting the liens and encumbrances against the Collateral in favor of the
Collateral Agent:

 

(i)            Subject to Section 9.01 of the Credit Agreement, the Collateral
Agent may alter any terms of the Obligations or any part thereof, including
renewing, compromising, extending or accelerating, or otherwise changing the
time for payment of, or increasing or decreasing the rate of interest on, the
Obligations or any part thereof.

 

(ii)           The Collateral Agent may take and hold security for the
Obligations, accept additional or substituted security, and subordinate,
exchange, enforce, waive, release, compromise, fail to perfect and sell or
otherwise dispose of any such security.

 

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(iii)          The Collateral Agent may direct the order and manner of any sale
of all or any part of any security now or later to be held for the Obligations,
and the Collateral Agent (or its nominees or designees) may also bid at any such
sale.

 

(iv)          The Collateral Agent may apply any payments or recoveries from any
Borrower, any Grantor or any other source, and any proceeds of any security, to
the obligations under the Loan Documents in such manner, order and priority as
the Collateral Agent may elect.

 

(v)           The Collateral Agent may release any Borrower or any other person
or entity of its liability for the Obligations or any part thereof.

 

(vi)          The Collateral Agent may substitute, add or release any one or
more guarantors or endorsers.

 

(vii)         In addition to the Obligations, the Collateral Agent may extend
other credit to any Borrower, and may take and hold security for the credit so
extended.

 

(b)   Each Grantor waives:

 

(i)            Any right it may have to require the Collateral Agent to proceed
against any Borrower, any Grantor or any other person or entity, proceed against
or exhaust any security held from any Borrower, any Grantor or any person or
entity, or pursue any other remedy in the Collateral Agent’s power to pursue;

 

(ii)           Any defense based on any claim that any Grantor’s obligations
exceed or are more burdensome than those of any Borrower, any Grantor or any
other Person;

 

(iii)          Any defense:  (A) based on any legal disability of any other
Person, (B) based on any release, discharge, modification, impairment or
limitation of the liability of any other person or entity to the Collateral
Agent from any cause, whether consented to by the Collateral Agent or arising by
operation of law, (C) arising out of or able to be asserted as a result of any
case, action or proceeding before any court or other governmental authority
relating to bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of any other person or entity or any of their
respective affiliates, or any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors or other, similar arrangement in
respect of its creditors generally or any substantial portion of its creditors;
in each case as undertaken under any U.S. Federal or State law (each of the
foregoing described in this clause (C) being referred to herein as an
“Insolvency Proceeding”); or (D) arising from any rejection or disaffirmance of
the Obligations, or any part thereof, or any security held therefor, in any such
Insolvency Proceeding;

 

(iv)          Any defense based on any action taken or omitted by the Collateral
Agent in any Insolvency Proceeding involving any other Person, including any
election to have the Collateral Agent’s claim allowed as being secured,
partially secured or unsecured, any extension of credit by the Collateral Agent
to any other Person in any Insolvency Proceeding, and the taking and holding by
the Collateral Agent of any security for any such extension of credit;

 

(v)           All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices of
intention to accelerate, notices of acceleration, notices of acceptance of this
Agreement or any other Loan Document and of the existence,

 

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creation, or incurring of new or additional indebtedness, and demands and
notices of every kind (except or expressly required by the Loan Documents); and

 

(vi)          Except for such notices as required by the Loan Documents, any
defense based on or arising out of any defense that the Borrower or any of its
affiliates may have to the payment or performance of the Obligations (other than
the defense that the Obligations have been paid in full).

 

(c)   (i) After the occurrence and during the continuance of any Event of
Default, in its sole discretion, without prior notice (except as required by
applicable law) to or consent of any Grantor or any Borrower, the Collateral
Agent may elect to:  (A) foreclose against any Collateral for the Secured
Obligations, (B) accept any offer to transfer any such Collateral for the
Secured Obligations in lieu of foreclosure, (C) compromise or adjust the Secured
Obligations or any part thereof or make any other accommodation with any
Borrower or any Person, or (D) exercise any other remedy against any Borrower or
any person or entity or any collateral for the Secured Obligations.  No such
action by the Collateral Agent shall release or limit the Collateral Agent’s
rights hereunder or under the other Loan Documents, even if the effect of the
action is to deprive Grantor of any subrogation rights, rights of indemnity, or
other rights to collect reimbursement from any Borrower or any other Person for
any sums paid to the Collateral Agent, whether contractual or arising by
operation of law or otherwise.  Each Grantor expressly agrees that under no
circumstances shall such Grantor be deemed to have any right, title, interest or
claim in or to any real or personal property to be held by the Collateral Agent
or any third party after any foreclosure or transfer in lieu of foreclosure of
any security for the Secured Obligations in accordance with this Agreement and
applicable law.

 

(ii)           Subject to the full, final and indefeasible payment of all
Secured Obligations to the Collateral Agent, each Grantor shall retain its
rights to seek contribution and reimbursement from, and rights of subrogation
with respect to, any other Grantor to the extent the Secured Obligations
hereunder render such Grantor insolvent.  Such rights of subrogation,
contribution and reimbursement shall be subordinate to the Secured Obligations,
and no Grantor shall enforce any such rights until the Secured Obligations shall
have been finally paid in full.

 

Section 27.     Execution in Counterparts.  This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.  Delivery of an executed counterpart of a signature page to this
Agreement by telecopier or email (in .pdf or similar electronic format) shall be
effective as delivery of an original executed counterpart of this Agreement.

 

Section 28.     The Credit Agreement and the Mortgages.  If any conflict or
inconsistency exists between this Agreement and the Credit Agreement, the Credit
Agreement shall control and govern to the extent of such inconsistency.  In the
event that any of the Collateral hereunder is also subject to a valid and
enforceable Lien under the terms of any Mortgage and the terms of such Mortgage
are inconsistent with the terms of this Agreement, then with respect to such
Collateral, the terms of such Mortgage shall be controlling in the case of
fixtures and real estate leases, letting and licenses of, and contracts and
agreements relating to the lease of, real property, and the terms of this
Agreement shall be controlling in the case of all other Collateral.

 

Section 29.     Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

 

[Signatures on following pages]

 

20

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

 

IN WITNESS WHEREOF, each Grantor and the Collateral Agent has caused this
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.

 

 

CITIBANK, N.A.,

 

as Collateral Agent

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[Signatures continue on following pages]

 

SIGNATURE PAGE TO SECURITY AGREEMENT

 

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

 

 

GRANTORS:

 

 

 

FIVE STAR QUALITY CARE, INC.,

 

a Maryland corporation

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

FSQ THE PALMS AT FORT MYERS BUSINESS TRUST, a Maryland statutory trust

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

FVE MW LLC,

 

a Maryland limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

FSQ VILLA AT RIVERWOOD BUSINESS TRUST, a Maryland statutory trust

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

MORNINGSIDE OF CONCORD, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

SIGNATURE PAGE TO SECURITY AGREEMENT

 

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

 

 

MORNINGSIDE OF GASTONIA, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

MORNINGSIDE OF GREENSBORO, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

MORNINGSIDE OF RALEIGH, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

FVE EC LLC,

 

a Maryland limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

MORNINGSIDE OF PARIS, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

MORNINGSIDE OF WILLIAMSBURG, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

SIGNATURE PAGE TO SECURITY AGREEMENT

 

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

 

Schedule I to the
Security Agreement

 

LOCATION, CHIEF EXECUTIVE OFFICE, TYPE OF ORGANIZATION, JURISDICTION OF
ORGANIZATION AND ORGANIZATIONAL IDENTIFICATION NUMBER

 

Grantor

 

Location

 

Chief
Executive
Office

 

Type of
Organization

 

Jurisdiction
of
Organization

 

Organizational
I.D. No.

Five Star Quality Care, Inc.

 

400 Centre Street,
Newton, MA
02458

 

400 Centre Street,
Newton, MA
02458

 

Corporation

 

Maryland

 

D06461743

 

 

 

 

 

 

 

 

 

 

 

FSQ The Palms at Fort Myers Business Trust

 

2674 Winkler Avenue,
Fort Myers, FL
33901

 

400 Centre Street,
Newton, MA 02458

 

Statutory Trust

 

Maryland

 

B06646145

 

 

 

 

 

 

 

 

 

 

 

FVE MW LLC

 

4519 E. 82nd Street, Indianapolis, IN
46250

 

400 Centre Street, Newton, MA 02458

 

Limited Liability Company

 

Maryland

 

W14490544

 

 

 

 

 

 

 

 

 

 

 

FVE MW LLC

 

250 Shenandoah Drive,
Lafayette, IN
46062

 

400 Centre Street, Newton, MA 02458

 

Limited Liability Company

 

Maryland

 

W14490544

 

 

 

 

 

 

 

 

 

 

 

FVE MW LLC

 

7235 Riverwalk Way North,
Noblesville, IN
46062

 

400 Centre Street, Newton, MA 02458

 

Limited Liability Company

 

Maryland

 

W14490544

 

 

 

 

 

 

 

 

 

 

 

FSQ Villa at Riverwood Business Trust

 

No. One Pratt Place, Florissant, MO
63031

 

400 Centre Street, Newton, MA 02458

 

Statutory Trust

 

Maryland

 

B06646194

 

 

 

 

 

 

 

 

 

 

 

Morningside of Concord, LLC

 

500 Penny Lane, N.E., Concord, NC
28025

 

400 Centre Street, Newton, MA 02458

 

Limited Liability Company

 

Delaware

 

3503097

 

Schedule I

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

 

Grantor

 

Location

 

Chief
Executive
Office

 

Type of
Organization

 

Jurisdiction
of
Organization

 

Organizational
I.D. No.

Morningside of Gastonia, LLC

 

2755 Union Road, Gastonia, NC
28054

 

400 Centre Street, Newton, MA 02458

 

Limited Liability Company

 

Delaware

 

3503114

 

 

 

 

 

 

 

 

 

 

 

Morningside of Greensboro, LLC

 

3200 North Elm Street,
Greensboro, NC
27408

 

400 Centre Street, Newton, MA 02458

 

Limited Liability Company

 

Delaware

 

3503100

 

 

 

 

 

 

 

 

 

 

 

Morningside of Concord, LLC

 

190 Fox Hollow Road,
Pinehurst, NC
28374

 

400 Centre Street, Newton, MA 02458

 

Limited Liability Company

 

Delaware

 

3503097

 

 

 

 

 

 

 

 

 

 

 

Morningside of Raleigh, LLC

 

801 Dixie Trail, Raleigh, NC
27607

 

400 Centre Street, Newton, MA 02458

 

Limited Liability Company

 

Delaware

 

3503099

 

 

 

 

 

 

 

 

 

 

 

FVE EC LLC

 

600 Medical Center Drive, Sewell, NJ
08080

 

400 Centre Street, Newton, MA 02458

 

Limited Liability Company

 

Maryland

 

W14490502

 

 

 

 

 

 

 

 

 

 

 

FVE EC LLC

 

501 Laurel Oak Road,
Voorhees, NJ
08043

 

400 Centre Street,
Newton, MA 02458

 

Limited Liability Company

 

Maryland

 

W14490502

 

 

 

 

 

 

 

 

 

 

 

Morningside of Paris, LLC

 

350 Volunteer Drive, Paris, TN
38242

 

400 Centre Street, Newton, MA 02458

 

Limited Liability Company

 

Delaware

 

2643609

 

 

 

 

 

 

 

 

 

 

 

Morningside of Williamsburg, LLC

 

440 McLaws Circle, Williamsburg, VA
23185

 

400 Centre Street, Newton, MA 02458

 

Limited Liability Company

 

Delaware

 

3503108

 

 

 

 

 

 

 

 

 

 

 

FVE MW LLC

 

3801 North Wright Road,

 

400 Centre Street,

 

Limited Liability

 

Maryland

 

W14490544

 

Schedule II

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

 

Grantor

 

Location

 

Chief
Executive
Office

 

Type of
Organization

 

Jurisdiction
of
Organization

 

Organizational
I.D. No.

 

 

Janesville, WI
53546

 

Newton, MA 02458

 

Company

 

 

 

 

 

Schedule II

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

 

Schedule II to the
Security Agreement

 

BORROWING BASE ASSETS AND LOCATION OF EQUIPMENT AND INVENTORY

 

Grantor

 

Borrowing Base
Asset

 

Locations of
Equipment

 

Locations of
Inventory

FSQ The Palms at Fort Myers Business Trust

 

2674 Winkler Avenue,
Fort Myers, FL
33901

 

2674 Winkler Avenue,
Fort Myers, FL
33901

 

2674 Winkler Avenue,
Fort Myers, FL
33901

 

 

 

 

 

 

 

FVE MW LLC

 

4519 E. 82nd Street, Indianapolis, IN
46250

 

4519 E 82nd Street, Indianapolis, IN
46250

 

4519 E. 82nd Street, Indianapolis, IN
46250

 

 

 

 

 

 

 

FVE MW LLC

 

250 Shenandoah Drive,
Lafayette, IN
46062

 

250 Shenandoah Drive,
Lafayette, IN
46062

 

250 Shenandoah Drive,
Lafayette, IN
46062

 

 

 

 

 

 

 

FVE MW LLC

 

7235 Riverwalk Way North, Noblesville, IN
46062

 

7235 Riverwalk Way North, Noblesville, IN
46062

 

7235 Riverwalk Way North, Noblesville, IN
46062

 

 

 

 

 

 

 

FSQ Villa at Riverwood Business Trust

 

No. One Pratt Place, Florissant, MO
63031

 

No. One Pratt Place, Florissant, MO
63031

 

No. One Pratt Place, Florissant, MO
63031

 

 

 

 

 

 

 

Morningside of Concord, LLC

 

500 Penny Lane, N.E., Concord, NC
28025

 

500 Penny Lane, N.E., Concord, NC
28025

 

500 Penny Lane, N.E.,
Concord, NC
28025

 

 

 

 

 

 

 

Morningside of Gastonia, LLC

 

2755 Union Road, Gastonia, NC
28054

 

2755 Union Road, Gastonia, NC
28054

 

2755 Union Road,
Gastonia, NC
28054

 

 

 

 

 

 

 

Morningside of Greensboro, LLC

 

3200 North Elm Street, Greensboro, NC
27408

 

3200 North Elm Street, Greensboro, NC
27408

 

3200 North Elm Street, Greensboro, NC
27408

 

 

 

 

 

 

 

Morningside of Concord, LLC

 

190 Fox Hollow Road, Pinehurst, NC
28374

 

190 Fox Hollow Road, Pinehurst, NC
28374

 

190 Fox Hollow Road, Pinehurst, NC
28374

 

 

 

 

 

 

 

Morningside of Raleigh, LLC

 

801 Dixie Trail,
Raleigh, NC
27607

 

801 Dixie Trail,
Raleigh, NC
27607

 

801 Dixie Trail,
Raleigh, NC
27607

 

Schedule II

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

 

Grantor

 

Borrowing Base
Asset

 

Locations of
Equipment

 

Locations of
Inventory

 

 

 

 

 

 

 

FVE EC LLC

 

600 Medical Center Drive, Sewell, NJ
08080

 

600 Medical Center Drive, Sewell, NJ
08080

 

600 Medical Center Drive, Sewell, NJ
08080

 

 

 

 

 

 

 

FVE EC LLC

 

501 Laurel Oak Road, Voorhees, NJ
08043

 

501 Laurel Oak Road, Voorhees, NJ
08043

 

501 Laurel Oak Road, Voorhees, NJ
08043

 

 

 

 

 

 

 

Morningside of Paris, LLC

 

350 Volunteer Drive, Paris, TN
38242

 

350 Volunteer Drive, Paris, TN
38242

 

350 Volunteer Drive,
Paris, TN
38242

 

 

 

 

 

 

 

Morningside of Williamsburg, LLC

 

440 McLaws Circle, Williamsburg, VA
23185

 

440 McLaws Circle, Williamsburg, VA
23185

 

440 McLaws Circle, Williamsburg, VA
23185

 

 

 

 

 

 

 

FVE MW LLC

 

3801 North Wright Road, Janesville, WI
53546

 

3801 North Wright Road, Janesville, WI
53546

 

3801 North Wright Road, Janesville, WI
53546

 

Schedule II

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

 

Schedule III to the

Security Agreement

 

CHANGES IN NAME, LOCATION, ETC.

 

1.               Morningside of Concord, LLC

 

Merged with Morningside Holdings of Concord, LLC effective April 13, 2012, with
Morningside of Concord, LLC as the Surviving Entity.

 

2.               Morningside of Gastonia,

 

Merged with Morningside Holdings of Gastonia, LLC effective April 13, 2012, with
Morningside of Gastonia, LLC as the Surviving Entity.

 

3.               Morningside of Greensboro, LLC

 

Merged with Morningside Holdings of Greensboro, LLC effective April 13, 2012,
with Morningside of Greensboro, LLC as the Surviving Entity.

 

4.               Morningside of Paris, LLC

 

Converted from a Delaware limited partnership to a Delaware limited liability
company effective March 30, 2012, and in connection therewith changed its name
from Morningside of Paris, L.P. to Morningside of Paris, LLC.

 

5.               Morningside of Raleigh, LLC

 

Merged with Morningside Holdings of Raleigh, LLC effective April 13, 2012, with
Morningside of Raleigh, LLC as the Surviving Entity.

 

6.               Morningside of Williamsburg, LLC

 

Merged with Morningside Holdings of Williamsburg, LLC effective April 13, 2012,
with Morningside of Williamsburg, LLC as the Surviving Entity.

 

Schedule III

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

 

Exhibit A to the
Security Agreement

 

FORM OF SECURITY AGREEMENT SUPPLEMENT

 

[Date of Security Agreement Supplement]

 

To:

Citibank, N.A., as Collateral Agent

 

1615 Brett Road OPS III

 

New Castle, DE 19720

 

Attention: Bank Loan Syndications Department

 

[Name of Borrower]

 

Ladies and Gentlemen:

 

Reference is made to (i) the Credit Agreement dated as of April 13, 2012 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Five Star Quality Care, Inc., a Maryland
corporation, as the Borrower, the Lender Parties party thereto, Citibank, N.A.,
as collateral agent (together with any successor collateral agent appointed
pursuant to Article VIII of the Credit Agreement, the “Collateral Agent”), and
Citibank, N. A., as administrative agent for the Lender Parties, and (ii) the
Security Agreement dated 13, 2012 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Security Agreement”)
made by the Grantors from time to time party thereto in favor of the Collateral
Agent for the Secured Parties.  Terms defined in the Credit Agreement or the
Security Agreement and not otherwise defined herein are used herein as defined
in the Credit Agreement or the Security Agreement.

 

SECTION 1.  Grant of Security.  The undersigned hereby grants to the Collateral
Agent, for the ratable benefit of the Secured Parties, a security interest in
all of its right, title and interest in and to all of the Collateral of the
undersigned, whether now owned or hereafter acquired by the undersigned,
wherever located and whether now or hereafter existing or arising, including,
without limitation, the property and assets of the undersigned set forth on the
attached Supplemental Schedules to the Schedules to the Security Agreement.

 

SECTION 2.  Security for Obligations.  The grant of a security interest in, the
Collateral by the undersigned under this Security Agreement Supplement and the
Security Agreement secures the payment of all Obligations of the undersigned now
or hereafter existing under or in respect of the Loan Documents, whether direct
or indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, premiums, penalties, fees, indemnifications, contract
causes of action, costs, expenses or otherwise.  Without limiting the generality
of the foregoing, this Security Agreement Supplement and the Security Agreement
secure the payment of all amounts that constitute part of the Secured
Obligations and that would be owed by the undersigned to any Secured Party under
the Loan Documents but for the fact that such Secured Obligations are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving a Loan Party.

 

SECTION 3.  Supplements to Security Agreement Schedules.  The undersigned has
attached hereto Supplemental Schedules I through III to Schedules I through III
respectively, to the Security Agreement, and the undersigned hereby certifies,
as of the date first above written, that such

 

Exhibit A-1

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

 

Supplemental Schedules have been prepared by the undersigned in substantially
the form of the equivalent Schedules to the Security Agreement and are complete
and correct.

 

SECTION 4.  Representations and Warranties.  The undersigned hereby makes each
representation and warranty set forth in Section 8 of the Security Agreement (as
supplemented by the attached Supplemental Schedules) to the same extent as each
other Grantor.

 

SECTION 5.  Obligations Under the Security Agreement.  The undersigned hereby
agrees, as of the date first above written, to be bound as a Grantor by all of
the terms and provisions of the Security Agreement to the same extent as each of
the other Grantors.  The undersigned further agrees, as of the date first above
written, that each reference in the Security Agreement to an “Additional
Grantor” or a “Grantor” shall also mean and be a reference to the undersigned.

 

SECTION 6.  Governing Law.  This Security Agreement Supplement shall be governed
by, and construed in accordance with, the laws of the State of New York.

 

 

Very truly yours,

 

 

 

 

 

[NAME OF ADDITIONAL GRANTOR]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

Address for notices:

 

 

 

Exhibit A-2

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

 

Exhibit G to the

CREDIT AGREEMENT
Form of Mortgage

 

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND LEASES AND FIXTURE FILING [(                        )]

 

by and from

 

[                                    ], “Mortgagor”

 

to

 

CITIBANK, N.A., in its capacity as Agent, “Mortgagee”

 

Dated as of [                    , 2012]

 

[insert only if mortgage is capped:  THE MAXIMUM PRINCIPAL INDEBTEDNESS WHICH IS
SECURED BY OR WHICH BY ANY CONTINGENCY MAY BE SECURED BY THIS MORTGAGE IS
$                              .]

 

 

 

Location:

[                                ]

 

Municipality:

[                                ]

 

County:

[                                ]

 

State:

[                                ]

 

THE SECURED PARTY (MORTGAGEE) DESIRES THIS FIXTURE FILING
TO BE INDEXED AGAINST THE RECORD OWNER OF THE REAL ESTATE
DESCRIBED HEREIN.

 

PREPARED BY, RECORDING REQUESTED BY,
AND WHEN RECORDED MAIL TO:

 

Shearman & Sterling LLP
599 Lexington Avenue
New York, New York  10022-6069
Attention: Malcolm K. Montgomery, Esq.
File #            

 

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

 

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND LEASES AND FIXTURE FILING ([                        ])

 

THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND FIXTURE
FILING ([                       ]) (this “Mortgage”) is dated as of
[                    ], 2012 by and from
[                                      ] (“Mortgagor”), whose address is c/o
Five Star Quality Care, Inc., 400 Centre Street, Newton, Massachusetts 02458 to
Citibank, N.A., a national association, as collateral agent (in such capacity,
“Agent”) for the Secured Parties as defined in the Credit Agreement (defined
below), having an address at 1615 Brett Road OPS III, New Castle, DE 19720,
Attention: Bank Loan Syndications Department (Agent, together with its
successors and assigns, “Mortgagee”).

 

[insert only if mortgage is capped:  ANY PROVISION HEREIN TO THE CONTRARY
NOTWITHSTANDING, THE MAXIMUM PRINCIPAL INDEBTEDNESS WHICH IS SECURED BY OR WHICH
BY ANY CONTINGENCY MAY BE SECURED BY THIS MORTGAGE IS $[                      ]
(THE “SECURED AMOUNT”).]

 

ARTICLE 1
Definitions

 

Section 1.1            Definitions.  All capitalized terms used herein without
definition shall have the respective meanings ascribed to them in that certain
Credit Agreement dated as of April 13, 2012, as the same may be amended, amended
and restated, supplemented or otherwise modified from time to time (the “Credit
Agreement”), among Five Star Quality Care, Inc. (“Borrower”), the Guarantors
party thereto, the Lender Parties party thereto, Citibank, N.A., as Collateral
Agent and as Administrative Agent, the other Secured Parties identified therein
and the Arrangers party thereto.  As used herein, the following terms shall have
the following meanings:

 

(a)   “Event of Default”:  An Event of Default under and as defined in the
Credit Agreement .

 

(b)   “Guaranty”:  That certain guaranty provided pursuant to Article VII of the
Credit Agreement and any Guaranty Supplement by and from Mortgagor and the other
Guarantors referred to therein for the benefit of the Secured Parties dated as
of even date herewith, as the same may hereafter be amended, amended and
restated, supplemented or otherwise modified from time to time.

 

(c)   “Indebtedness”:  (1) All indebtedness of Mortgagor to Mortgagee or any of
the other Secured Parties under the Credit Agreement or any other Loan Document
to which Mortgagor is a party, including, without limitation (except as
otherwise set forth in 7.01(b) of the Credit Agreement), the sum of all
(a) principal, interest and other amounts owing under or evidenced or secured by
the Loan Documents, (b) principal, interest and other amounts which may
hereafter be lent by Mortgagee or any of the other Secured Parties under or in
connection with the Credit Agreement or any of the other Loan Documents, whether
evidenced by a promissory note or other instrument which, by its terms, is
secured hereby, and (c) obligations and liabilities of any nature now or
hereafter existing under or arising in connection with Letters of Credit and
other extensions of credit under the Credit Agreement or any of the other Loan
Documents and reimbursement obligations in respect thereof, together with
interest and other amounts payable with respect thereto, and (2) all other
indebtedness, obligations and liabilities now or hereafter existing of any kind
of Mortgagor to Mortgagee or any of the other Secured Parties under documents
which recite that they are intended to be secured by this Mortgage.  The
Indebtedness secured hereby includes, without limitation, all interest and
expenses accruing after the commencement by or against Mortgagor or any of its
affiliates of a proceeding under the Bankruptcy Code (defined below) or any
similar law for the relief of debtors.  The Credit Agreement contains a
revolving credit facility which

 

2

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

 

permits Borrower to borrow certain principal amounts, repay all or a portion of
such principal amounts, and reborrow the amounts previously paid to the Secured
Parties, all upon satisfaction of certain conditions stated in the Credit
Agreement.  [use only if mortgage is capped:  Subject to the provisions of
Section 2.2, this]  [This] Mortgage secures all advances and re-advances under
the Credit Agreement, including, without limitation, those under the revolving
credit facility contained therein.

 

(d)   “Mortgaged Property”:  The fee interest in the real property described in
Exhibit A attached hereto and incorporated herein by this reference, together
with any greater estate therein as hereafter may be acquired by Mortgagor (the
“Land”), and all of Mortgagor’s right, title and interest now or hereafter
acquired in and to (1) all improvements now owned or hereafter acquired by
Mortgagor, now or at any time situated, placed or constructed upon the Land (the
“Improvements”; the Land and Improvements are collectively referred to as the
“Premises”), (2) all materials, supplies, equipment, apparatus and other items
of personal property now owned or hereafter acquired by Mortgagor and now or
hereafter attached to, installed in or used in connection with any of the
Improvements or the Land, and water, gas, electrical, telephone, storm and
sanitary sewer facilities and all other utilities whether or not situated in
easements, and all equipment, inventory and other goods in which Mortgagor now
has or hereafter acquires any rights or any power to transfer rights and that
are or are to become fixtures (as defined in the UCC, defined below) related to
the Land  (the “Fixtures”), (3) all goods, accounts, inventory, general
intangibles, instruments, documents, contract rights and chattel paper,
including all such items as defined in the UCC, now owned or hereafter acquired
by Mortgagor and now or hereafter affixed to, placed upon, used in connection
with, arising from or otherwise related to the Premises (the “Personalty”),
(4) all reserves, escrows or impounds required under the Credit Agreement or any
of the other Loan Documents and all deposit accounts maintained by Mortgagor
with respect to the Mortgaged Property (the “Deposit Accounts”), (5) all leases,
licenses, concessions, occupancy agreements or other agreements (written or
oral, now or at any time in effect) which grant to any Person a possessory
interest in, or the right to use, all or any part of the Mortgaged Property,
together with all related security and other deposits (the “Leases”), (6) all of
the rents, revenues, royalties, income, proceeds, profits, accounts receivable,
security and other types of deposits, and other benefits paid or payable by
parties to the Leases for using, leasing, licensing possessing, operating from,
residing in, selling or otherwise enjoying the Mortgaged Property (the “Rents”),
(7) all other agreements, such as construction contracts, architects’
agreements, engineers’ contracts, utility contracts, maintenance agreements,
management agreements, service contracts, listing agreements, guaranties,
warranties, permits, licenses, certificates and entitlements in any way relating
to the construction, use, occupancy, operation, maintenance, enjoyment or
ownership of the Mortgaged Property (the “Property Agreements”), (8) all rights,
privileges, tenements, hereditaments, rights-of-way, easements, appendages and
appurtenances appertaining to the foregoing, (9) all property tax refunds
payable with respect to the Mortgaged Property (the “Tax Refunds”), (10) all
accessions, replacements and substitutions for any of the foregoing and all
proceeds thereof (the “Proceeds”), (11) all insurance policies, unearned
premiums therefor and proceeds from such policies covering any of the above
property now or hereafter acquired by Mortgagor (the “Insurance”), and (12) all
awards, damages, remunerations, reimbursements, settlements or compensation
heretofore made or hereafter to be made by any governmental authority pertaining
to any condemnation or other taking (or any purchase in lieu thereof) of all or
any portion of the Land, Improvements, Fixtures or Personalty (the “Condemnation
Awards”).  As used in this Mortgage, the term “Mortgaged Property” shall mean
all or, where the context permits or requires, any portion of the above or any
interest therein.

 

(e)   “Obligations”:  All of the agreements, covenants, conditions, warranties,
representations and other obligations of Mortgagor under the Credit Agreement
and the other Loan Documents to which it is a party.

 

(f)    “Permitted Liens”: Permitted Liens under and as defined in the Credit
Agreement .

 

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(g)   “Security Agreement”:  That certain Security Agreement by and from
Mortgagor and the other grantors referred to therein to Agent and the other
Secured Parties dated as of April 13, 2012, as the same may hereafter be
amended, amended and restated, supplemented or otherwise modified from time to
time.

 

(h)   “UCC”:  The Uniform Commercial Code of the State of
[                        ] or, if the creation, perfection and enforcement of
any security interest herein granted is governed by the laws of a state other
than the State of [                          ], then, as to the matter in
question, the Uniform Commercial Code in effect in that state.

 

ARTICLE 2
GRANT[INSERT ONLY IF MORTGAGE IS CAPPED:  ; REVOLVING LOAN]

 

Section 2.1            Grant.  To secure the full and timely payment of the
Indebtedness and the full and timely performance of the Obligations, Mortgagor
MORTGAGES, GRANTS, BARGAINS, ASSIGNS, SELLS, CONVEYS and CONFIRMS, to Mortgagee
the Mortgaged Property, subject, however, only to the matters that are set forth
on Exhibit B attached hereto (the “Permitted Encumbrances”) and to Permitted
Liens, TO HAVE AND TO HOLD the Mortgaged Property to Mortgagee, and Mortgagor
does hereby bind itself, its successors and assigns to WARRANT AND FOREVER
DEFEND the title to the Mortgaged Property unto Mortgagee.

 

Section 2.2            Treatment of Borrowings and Repayments.  [insert only if
mortgage is capped:  Pursuant to the Credit Agreement, the amount of the
Indebtedness may increase and decrease from time to time as the Secured Parties
advance, Borrower repays, and the Secured Parties re-advance sums pursuant to
the Credit Agreement.  For purposes of this Mortgage, so long as the balance of
the Indebtedness equals or exceeds the Secured Amount, the amount of the
Indebtedness secured by this Mortgage shall at all times equal only the Secured
Amount.  Such Secured Amount represents only a portion of the first sums
advanced by the Secured Parties in respect of the Indebtedness.

 

Section 2.3            Reduction of Secured Amount.  [insert only if mortgage is
capped:  The Secured Amount shall be reduced only by the last and final sums
that Borrower repays with respect to the Indebtedness and shall not be reduced
by any intervening repayments of the Indebtedness.  So long as the balance of
the Indebtedness exceeds the Secured Amount, any payments and repayments of the
Indebtedness shall not be deemed to be applied against, or to reduce, the
portion of the Indebtedness secured by this Mortgage.  Such payments shall
instead be deemed to reduce only such portions of the Indebtedness as are
secured by other collateral located outside of the State of
[                            ].

 

ARTICLE 3
WARRANTIES, REPRESENTATIONS AND COVENANTS

 

Mortgagor warrants, represents and covenants to Mortgagee as follows:

 

Section 3.1            Title to Mortgaged Property and Lien of this Instrument. 
Mortgagor owns the Mortgaged Property free and clear of any liens, claims or
interests, except the Permitted Encumbrances and the Permitted Liens.  This
Mortgage creates valid, enforceable first priority liens and security interests
against the Mortgaged Property.

 

Section 3.2            First Lien Status.  Mortgagor shall preserve and protect
the first lien and security interest status of this Mortgage and the other Loan
Documents.  If any lien or security interest other than a Permitted Encumbrance
or a Permitted Lien is asserted against the Mortgaged Property, Mortgagor shall
promptly, and at its expense, (a) give Mortgagee a detailed written notice of

 

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such lien or security interest (including origin, amount and other terms), and
(b) pay the underlying claim in full or take such other action so as to cause it
to be released or contest the same in compliance with the requirements of the
Credit Agreement (including the requirement of providing a bond or other
security satisfactory to Mortgagee).

 

Section 3.3            Payment and Performance.  Mortgagor shall pay the
Indebtedness when due under the Credit Agreement and the other Loan Documents
and shall perform the Obligations in full when they are required to be
performed.

 

Section 3.4            Replacement of Fixtures and Personalty.  Mortgagor shall
not, without the prior written consent of Mortgagee, permit any of the Fixtures
or Personalty owned or leased by Mortgagor to be removed at any time from the
Land or Improvements, unless the removed item is removed temporarily for
maintenance and repair, is replaced by an item of equal or better quality or is
permitted to be removed (or otherwise disposed of) under the Credit Agreement.

 

Section 3.5            Inspection.  Mortgagor shall permit Mortgagee and the
other Secured Parties, and their respective agents, representatives and
employees, upon reasonable prior notice to Mortgagor, to inspect the Mortgaged
Property and all books and records of Mortgagor located thereon, and to conduct
such environmental and engineering studies as Mortgagee or the other Secured
Parties may require, provided that such inspections and studies shall not
materially interfere with the use and operation of the Mortgaged Property;
provided, however, that Mortgagee or the other Secured Parties shall only
request additional environmental studies (i) upon a reasonable determination
that prohibited environmental activities or conditions exist in connection with
the Mortgaged Property, or (ii) following the occurrence and during the
continuance of any Event of Default.

 

Section 3.6            Other Covenants.  All of the covenants in the Credit
Agreement are incorporated herein by reference and, together with covenants in
this Article 3, shall be covenants running with the Land.

 

Section 3.7            Insurance; Condemnation Awards and Insurance Proceeds.

 

(a)   Insurance.  Mortgagor shall maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to the
Mortgaged Property in compliance with the requirements set forth on Schedule I
attached hereto.

 

(b)   Condemnation Awards.  Mortgagor assigns all Condemnation Awards to
Mortgagee and authorizes Mortgagee to collect and receive such Condemnation
Awards and to give proper receipts and acquittances therefor, subject to the
terms of the Credit Agreement and the applicable provisions of Schedule I
attached hereto.

 

(c)   Insurance Proceeds.  Mortgagor assigns to Mortgagee all proceeds of any
insurance policies insuring against loss or damage to the Mortgaged Property. 
Subject to the terms of the Credit Agreement and the applicable provisions of
Schedule I attached hereto, Mortgagor authorizes Mortgagee to collect and
receive such proceeds and authorizes and directs the issuer of each of such
insurance policies to make payment for all such losses directly to Mortgagee,
instead of to Mortgagor and Mortgagee jointly.

 

ARTICLE 4
[INTENTIONALLY OMITTED]

 

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ARTICLE 5
DEFAULT AND FORECLOSURE

 

Section 5.1            Remedies.  Upon the occurrence and during the continuance
of an Event of Default, Mortgagee may, at Mortgagee’s election, exercise any or
all of the following rights, remedies and recourses:

 

(a)   Acceleration.  Subject to any provisions of the Loan Documents providing
for the automatic acceleration of the Indebtedness upon the occurrence of
certain Events of Default, declare the Indebtedness to be immediately due and
payable, without further notice, presentment, protest, notice of intent to
accelerate, notice of acceleration, demand or action of any nature whatsoever
(each of which hereby is expressly waived by Mortgagor), whereupon the same
shall become immediately due and payable.

 

(b)   Entry on Mortgaged Property.  Enter the Mortgaged Property and take
exclusive possession thereof and of all books, records and accounts relating
thereto or located thereon.  If Mortgagor remains in possession of the Mortgaged
Property following the occurrence and during the continuance of an Event of
Default and without Mortgagee’s prior written consent, Mortgagee may invoke any
legal remedies to dispossess Mortgagor.

 

(c)   Operation of Mortgaged Property.  Hold, lease, develop, manage, operate or
otherwise use the Mortgaged Property upon such terms and conditions as Mortgagee
may deem reasonable under the circumstances (making such repairs, alterations,
additions and improvements and taking other actions, from time to time, as
Mortgagee deems necessary or desirable), and apply all Rents and other amounts
collected by Mortgagee in connection therewith in accordance with the provisions
of Section 5.7.

 

(d)   Foreclosure and Sale.  Institute proceedings for the complete foreclosure
of this Mortgage by judicial action or by power of sale, in which case the
Mortgaged Property may be sold for cash or credit in one or more parcels.  With
respect to any notices required or permitted under the UCC, Mortgagor agrees
that ten (10) days’ prior written notice shall be deemed commercially
reasonable.  At any such sale by virtue of any judicial proceedings, power of
sale, or any other legal right, remedy or recourse, the title to and right of
possession of any such property shall pass to the purchaser thereof, and to the
fullest extent permitted by law, Mortgagor shall be completely and irrevocably
divested of all of its right, title, interest, claim, equity, equity of
redemption, and demand whatsoever, either at law or in equity, in and to the
property sold and such sale shall be a perpetual bar both at law and in equity
against Mortgagor, and against all other Persons claiming or to claim the
property sold or any part thereof, by, through or under Mortgagor.  Mortgagee or
any of the other Secured Parties may be a purchaser at such sale.  If Mortgagee
or such other Secured Party is the highest bidder, Mortgagee or such other
Secured Party may credit the portion of the purchase price that would be
distributed to Mortgagee or such other Secured Party against the Indebtedness in
lieu of paying cash.  In the event this Mortgage is foreclosed by judicial
action, appraisement of the Mortgaged Property is waived.

 

(e)   Receiver.  Make application to a court of competent jurisdiction for, and
obtain from such court as a matter of strict right and without notice to
Mortgagor or regard to the adequacy of the Mortgaged Property for the repayment
of the Indebtedness, the appointment of a receiver of the Mortgaged Property,
and Mortgagor irrevocably consents to such appointment.  Any such receiver shall
have all the usual powers and duties of receivers in similar cases, including
the full power to rent, maintain and otherwise operate the Mortgaged Property
upon such terms as may be approved by the court, and shall apply such Rents in
accordance with the provisions of Section 5.7.

 

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(f)    Other.  Exercise all other rights, remedies and recourses granted under
the Loan Documents or otherwise available at law or in equity.

 

Section 5.2            Separate Sales.  The Mortgaged Property may be sold in
one or more parcels and in such manner and order as Mortgagee in its sole
discretion may elect.  The right of sale arising out of any Event of Default
shall not be exhausted by any one or more sales.

 

Section 5.3            Remedies Cumulative, Concurrent and Nonexclusive. 
Mortgagee and the other Secured Parties shall have all rights, remedies and
recourses granted in the Loan Documents and available at law or equity
(including the UCC), which rights (a) shall be cumulative and concurrent,
(b) may be pursued separately, successively or concurrently against Mortgagor or
others obligated under the Loan Documents, or against the Mortgaged Property, or
against any one or more of them, at the sole discretion of Mortgagee or such
other Secured Party, as the case may be, (c) may be exercised as often as
occasion therefor shall arise, and the exercise or failure to exercise any of
them shall not be construed as a waiver or release thereof or of any other
right, remedy or recourse, and (d) are intended to be, and shall be,
nonexclusive.  No action by Mortgagee or any other Secured Party in the
enforcement of any rights, remedies or recourses under the Loan Documents or
otherwise at law or equity shall be deemed to cure any Event of Default.

 

Section 5.4            Release of and Resort to Collateral.  Mortgagee may
release, regardless of consideration and without the necessity for any notice to
or consent by the holder of any subordinate lien on the Mortgaged Property, any
part of the Mortgaged Property without, as to the remainder, in any way
impairing, affecting, subordinating or releasing the lien or security interest
created in or evidenced by the Loan Documents or their status as a first and
prior lien and security interest in and to the Mortgaged Property.  For payment
of the Indebtedness, Mortgagee may resort to any other security in such order
and manner as Mortgagee may elect.

 

Section 5.5            Waiver of Redemption, Notice and Marshalling of Assets. 
To the fullest extent permitted by law, Mortgagor hereby irrevocably and
unconditionally waives and releases (a) all benefit that might accrue to
Mortgagor by virtue of any present or future statute of limitations or law or
judicial decision exempting the Mortgaged Property from attachment, levy or sale
on execution or providing for any stay of execution, exemption from civil
process, redemption or extension of time for payment, (b) all notices of any
Event of Default or of Mortgagee’s election to exercise or the actual exercise
of any right, remedy or recourse provided for under the Loan Documents, and
(c) any right to a marshalling of assets or a sale in inverse order of
alienation.

 

Section 5.6            Discontinuance of Proceedings.  If Mortgagee or any other
Secured Party shall have proceeded to invoke any right, remedy or recourse
permitted under the Loan Documents and shall thereafter elect to discontinue or
abandon it for any reason, Mortgagee or such other Secured Party, as the case
may be, shall have the unqualified right to do so and, in such an event,
Mortgagor, Mortgagee and the other Secured Parties shall be restored to their
former positions with respect to the Indebtedness, the Obligations, the Loan
Documents, the Mortgaged Property and otherwise, and the rights, remedies,
recourses and powers of Mortgagee and the other Secured Parties shall continue
as if the right, remedy or recourse had never been invoked, but no such
discontinuance or abandonment shall waive any Event of Default which may then
exist or the right of Mortgagee or any other Secured Party thereafter to
exercise any right, remedy or recourse under the Loan Documents for such Event
of Default.

 

Section 5.7            Application of Proceeds.  The proceeds of any sale of,
and the Rents and other amounts generated by the holding, leasing, management,
operation or other use of the Mortgaged Property, shall be applied by Mortgagee
(or the receiver, if one is appointed) in the following order unless otherwise
required by applicable law:

 

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(a)   to the payment of the costs and expenses of taking possession of the
Mortgaged Property and of holding, using, leasing, repairing, improving and
selling the same, including, without limitation (1) receiver’s fees and
expenses, including the repayment of the amounts evidenced by any receiver’s
certificates, (2) court costs, (3) attorneys’ and accountants’ fees and
expenses, and (4) costs of advertisement;

 

(b)   to the payment of the Indebtedness and performance of the Obligations in
such manner and order of preference as Mortgagee in its sole discretion may
determine; and

 

(c)   the balance, if any, to the Persons legally entitled thereto.

 

Section 5.8            Occupancy After Foreclosure.  Any sale of the Mortgaged
Property or any part thereof in accordance with Section 5.1(d) will divest all
right, title and interest of Mortgagor in and to the property sold.  Subject to
applicable law, any purchaser at a foreclosure sale will receive immediate
possession of the property purchased.  If Mortgagor retains possession of such
property or any part thereof subsequent to such sale, Mortgagor will be
considered a tenant at sufferance of the purchaser, and will, if Mortgagor
remains in possession after demand to remove, be subject to eviction and
removal, forcible or otherwise, with or without process of law.

 

Section 5.9            Additional Advances and Disbursements; Costs of
Enforcement.

 

(a)   Upon the occurrence and during the continuance of any Event of Default,
Mortgagee and each of the other Secured Parties shall have the right, but not
the obligation, to cure such Event of Default in the name and on behalf of
Mortgagor.  All sums advanced and expenses incurred at any time by Mortgagee or
any other Secured Party under this Section 5.9, or otherwise under this Mortgage
or any of the other Loan Documents or applicable law, shall bear interest from
the date that such sum is advanced or expense incurred, to and including the
date of reimbursement, computed at the highest rate at which interest is then
computed on any portion of the Indebtedness, and all such sums, together with
interest thereon, shall be secured by this Mortgage.

 

(b)   Mortgagor shall pay all expenses (including reasonable attorneys’ fees and
expenses) of or incidental to the perfection and enforcement of this Mortgage
and the other Loan Documents, or the enforcement, compromise or settlement of
the Indebtedness or any claim under this Mortgage and the other Loan Documents,
and for the curing thereof, or for defending or asserting the rights and claims
of Mortgagee in respect thereof, by litigation or otherwise.

 

Section 5.10         No Mortgagee in Possession.  Neither the enforcement of any
of the remedies under this Article 5, the assignment of the Rents and Leases
under Article 6, the security interests under Article 7, nor any other remedies
afforded to Mortgagee under the Loan Documents, at law or in equity shall cause
Mortgagee or any other Secured Party to be deemed or construed to be a mortgagee
in possession of the Mortgaged Property, to obligate Mortgagee or any other
Secured Party to lease the Mortgaged Property or attempt to do so, or to take
any action, incur any expense, or perform or discharge any obligation, duty or
liability whatsoever under any of the Leases or otherwise.

 

ARTICLE 6
ASSIGNMENT OF RENTS AND LEASES

 

Section 6.1            Assignment.  In furtherance of and in addition to the
assignment made by Mortgagor in Section 2.1 of this Mortgage, Mortgagor hereby
absolutely and unconditionally assigns, sells, transfers and conveys to
Mortgagee all of its right, title and interest in and to all Leases, whether

 

8

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now existing or hereafter entered into, and all of its right, title and interest
in and to all Rents.  This assignment is an absolute assignment and not an
assignment for additional security only.  So long as no Event of Default shall
have occurred and be continuing, Mortgagor shall have a revocable license from
Mortgagee to exercise all rights extended to the landlord under the Leases,
including the right to receive and collect all Rents and to hold the Rents in
trust for use in the payment and performance of the Obligations and to otherwise
use the same.  The foregoing license is granted subject to the conditional
limitation that no Event of Default shall have occurred and be continuing.  Upon
the occurrence and during the continuance of an Event of Default, whether or not
legal proceedings have commenced, and without regard to waste, adequacy of
security for the Obligations or solvency of Mortgagor, the license herein
granted shall automatically expire and terminate, without notice to Mortgagor by
Mortgagee (any such notice being hereby expressly waived by Mortgagor to the
extent permitted by applicable law).

 

Section 6.2            Perfection Upon Recordation.  Mortgagor acknowledges that
Mortgagee has taken all actions necessary to obtain, and that upon recordation
of this Mortgage Mortgagee shall have, to the extent permitted under applicable
law, a valid and fully perfected, first priority, present assignment of the
Rents arising out of the Leases and all security for such Leases.  Mortgagor
acknowledges and agrees that upon recordation of this Mortgage Mortgagee’s
interest in the Rents shall be deemed to be fully perfected, “choate” and
enforced as to Mortgagor and  to the extent permitted under applicable law, all
third parties, including, without limitation, any subsequently appointed trustee
in any case under Title 11 of the United States Code (the “Bankruptcy Code”),
without the necessity of commencing a foreclosure action with respect to this
Mortgage, making formal demand for the Rents, obtaining the appointment of a
receiver or taking any other affirmative action.

 

Section 6.3            Bankruptcy Provisions.  Without limitation of the
absolute nature of the assignment of the Rents hereunder, Mortgagor and
Mortgagee agree that (a) this Mortgage shall constitute a “security agreement”
for purposes of Section 552(b) of the Bankruptcy Code, (b) the security interest
created by this Mortgage extends to property of Mortgagor acquired before the
commencement of a case in bankruptcy and to all amounts paid as Rents and
(c) such security interest shall extend to all Rents acquired by the estate
after the commencement of any case in bankruptcy.

 

Section 6.4            No Merger of Estates.  So long as part of the
Indebtedness and the Obligations secured hereby remain unpaid and undischarged,
the fee and leasehold estates to the Mortgaged Property shall not merge, but
shall remain separate and distinct, notwithstanding the union of such estates
either in Mortgagor, Mortgagee, any tenant or any third party by purchase or
otherwise.

 

ARTICLE 7
SECURITY AGREEMENT

 

Section 7.1            Security Interest.  This Mortgage constitutes a “security
agreement” on personal property within the meaning of the UCC and other
applicable law and with respect to the Personalty, Fixtures, Leases, Rents,
Deposit Accounts, Property Agreements, Tax Refunds, Proceeds, Insurance and
Condemnation Awards.  To this end, Mortgagor grants to Mortgagee a first and
prior security interest in the Personalty, Fixtures, Leases, Rents, Deposit
Accounts, Property Agreements, Tax Refunds, Proceeds, Insurance, Condemnation
Awards and all other Mortgaged Property which is personal property to secure the
payment of the Indebtedness and performance of the Obligations, and agrees that
Mortgagee shall have all the rights and remedies of a secured party under the
UCC with respect to such property.  Any notice of sale, disposition or other
intended action by Mortgagee with respect to the Personalty, Fixtures, Leases,
Rents, Deposit Accounts, Property Agreements, Tax Refunds, Proceeds, Insurance
and Condemnation Awards sent to Mortgagor at least ten (10) days prior to any
action under the UCC shall constitute reasonable notice to Mortgagor.  In the
event of any conflict or inconsistency between the terms of this Mortgage and
the terms of the Security Agreement with respect to the collateral

 

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covered both therein and herein, the Security Agreement shall control and govern
to the extent of any such conflict or inconsistency.

 

Section 7.2            Financing Statements.  Mortgagor shall prepare and
deliver to Mortgagee such financing statements, and shall execute and deliver to
Mortgagee such documents, instruments and further assurances, in each case in
form and substance satisfactory to Mortgagee, as Mortgagee may, from time to
time, reasonably consider necessary to create, perfect and preserve Mortgagee’s
security interest hereunder.  Mortgagor hereby irrevocably authorizes Mortgagee
to cause financing statements (and amendments thereto and continuations thereof)
and any such documents, instruments and assurances to be recorded and filed, at
such times and places as may be required or permitted by law to so create,
perfect and preserve such security interest.  Mortgagor represents and warrants
to Mortgagee that Mortgagor’s jurisdiction of organization is the State of
[                  ].  After the date of this Mortgage, Mortgagor shall not
change its name, type of organization, organizational identification number (if
any), jurisdiction of organization or location (within the meaning of the UCC)
without giving at least thirty (30) days’ prior written notice to Mortgagee.

 

Section 7.3            Fixture Filing.  This Mortgage shall also constitute a
“fixture filing” for the purposes of the UCC against all of the Mortgaged
Property which is or is to become fixtures.  The information provided in this
Section 7.3 is provided so that this Mortgage shall comply with the requirements
of the UCC for a mortgage instrument to be filed as a financing statement. 
Mortgagor is the “Debtor” and its name and mailing address are set forth in the
preamble of this Mortgage immediately preceding Article 1.  Mortgagee is the
“Secured Party” and its name and mailing address from which information
concerning the security interest granted herein may be obtained are also set
forth in the preamble of this Mortgage immediately preceding Article 1.  A
statement describing the portion of the Mortgaged Property comprising the
fixtures hereby secured is set forth in Section 1.1(d) of this Mortgage. 
Mortgagor represents and warrants to Mortgagee that Mortgagor is the record
owner of the Mortgaged Property, the employer identification number of Mortgagor
is [                    ] and the organizational identification number of
Mortgagor is [                      ].

 

ARTICLE 8
[INTENTIONALLY OMITTED]

 

ARTICLE 9
MISCELLANEOUS

 

Section 9.1            Notices.  Any notice required or permitted to be given
under this Mortgage shall be given in accordance with Section 9.02 of the Credit
Agreement.

 

Section 9.2            Covenants Running with the Land.  All Obligations
contained in this Mortgage are intended by Mortgagor and Mortgagee to be, and
shall be construed as, covenants running with the Land.  As used herein,
“Mortgagor” shall refer to the party named in the first paragraph of this
Mortgage and to any subsequent owner of all or any portion of the Mortgaged
Property.  All Persons who may have or acquire an interest in the Mortgaged
Property shall be deemed to have notice of, and be bound by, the terms of the
Credit Agreement and the other Loan Documents; provided, however, that no such
party shall be entitled to any rights thereunder without the prior written
consent of Mortgagee.

 

Section 9.3            Attorney-in-Fact.  Mortgagor hereby irrevocably appoints
Mortgagee as its attorney-in-fact, which agency is coupled with an interest and
with full power of substitution, with full authority in the place and stead of
Mortgagor and in the name of Mortgagor or otherwise (a) to execute and/or record
any notices of completion, cessation of labor or any other notices that
Mortgagee deems appropriate to protect Mortgagee’s interest, if Mortgagor shall
fail to do so within ten (10) days after

 

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written request by Mortgagee, (b) upon the issuance of a deed pursuant to the
foreclosure of this Mortgage or the delivery of a deed in lieu of foreclosure,
to execute all instruments of assignment, conveyance or further assurance with
respect to the Leases, Rents, Deposit Accounts, Property Agreements, Tax
Refunds, Proceeds, Insurance and Condemnation Awards in favor of the grantee of
any such deed and as may be necessary or desirable for such purpose, (c) to
prepare and file or record financing statements and continuation statements, and
to prepare, execute and file or record applications for registration and like
papers necessary to create, perfect or preserve Mortgagee’s security interests
and rights in or to any of the Mortgaged Property, and (d) after the occurrence
and during the continuance of any Event of Default, to perform any obligation of
Mortgagor hereunder; provided, however, that (1) Mortgagee shall not under any
circumstances be obligated to perform any obligation of Mortgagor; (2) any sums
advanced by Mortgagee in such performance shall be added to and included in the
Indebtedness and shall bear interest at the highest rate at which interest is
then computed on any portion of the Indebtedness; (3) Mortgagee as such
attorney-in-fact shall only be accountable for such funds as are actually
received by Mortgagee; and (4) Mortgagee shall not be liable to Mortgagor or any
other person or entity for any failure to take any action which it is empowered
to take under this Section 9.3.

 

Section 9.4            Successors and Assigns.  This Mortgage shall be binding
upon and inure to the benefit of Mortgagee, the other Secured Parties, and
Mortgagor and their respective successors and assigns.  Except as permitted by
the Credit Agreement, Mortgagor shall not, without the prior written consent of
Mortgagee, assign any rights, duties or obligations hereunder.

 

Section 9.5            No Waiver.  Any failure by Mortgagee or the other Secured
Parties to insist upon strict performance of any of the terms, provisions or
conditions of the Loan Documents shall not be deemed to be a waiver of same, and
Mortgagee and the other Secured Parties shall have the right at any time to
insist upon strict performance of all of such terms, provisions and conditions.

 

Section 9.6            Credit Agreement.  If any conflict or inconsistency
exists between this Mortgage and the Credit Agreement, the Credit Agreement
shall control and govern to the extent of any such conflict or inconsistency.

 

Section 9.7            Release or Reconveyance.  Upon payment in full of the
Indebtedness and performance in full of the Obligations, upon a sale or other
disposition of the Mortgaged Property permitted by the Credit Agreement, or
otherwise as provided in the Credit Agreement, Mortgagee, at Mortgagor’s request
and expense, shall release the liens and security interests created by this
Mortgage or reconvey the Mortgaged Property to Mortgagor.

 

Section 9.8            Waiver of Stay, Moratorium and Similar Rights.  Mortgagor
agrees, to the full extent that it may lawfully do so, that it will not at any
time insist upon or plead or in any way take advantage of any stay, marshalling
of assets, extension, redemption or moratorium law now or hereafter in force and
effect so as to prevent or hinder the enforcement of the provisions of this
Mortgage or the Indebtedness or Obligations secured hereby, or any agreement
between Mortgagor and Mortgagee or any rights or remedies of Mortgagee or any
other Secured Party.

 

Section 9.9            Applicable Law.  The provisions of this Mortgage
regarding the creation, perfection and enforcement of the liens and security
interests herein granted shall be governed by and construed under the laws of
the state in which the Mortgaged Property is located.  All other provisions of
this Mortgage shall be governed by the laws of the State of New York (including,
without limitation, Section 5-1401 of the General Obligations Law of the State
of New York).

 

11

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

 

Section 9.10         Headings.  The Article, Section and Subsection titles
hereof are inserted for convenience of reference only and shall in no way alter,
modify or define, or be used in construing, the text of such Articles, Sections
or Subsections.

 

Section 9.11         Severability.  If any provision of this Mortgage shall be
held by any court of competent jurisdiction to be unlawful, void or
unenforceable for any reason, such provision shall be deemed severable from and
shall in no way affect the enforceability and validity of the remaining
provisions of this Mortgage.

 

Section 9.12         Entire Agreement.  This Mortgage and the other Loan
Documents embody the entire agreement and understanding between Mortgagee and
Mortgagor relating to the subject matter hereof and thereof and supersede all
prior agreements and understandings between such parties relating to the subject
matter hereof and thereof.  Accordingly, the Loan Documents may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties.  There are no unwritten oral agreements between the parties.

 

Section 9.13         Mortgagee as Agent; Successor Agents.

 

(a)   Agent has been appointed to act as Agent hereunder by the other Secured
Parties.  Agent shall have the right hereunder to make demands, to give notices,
to exercise or refrain from exercising any rights, and to take or refrain from
taking any action (including, without limitation, the release or substitution of
the Mortgaged Property) in accordance with the terms of the Credit Agreement,
any related agency agreement among Agent and the other Secured Parties
(collectively, as amended, amended and restated, supplemented or otherwise
modified or replaced from time to time, the “Agency Documents”) and this
Mortgage.  Mortgagor and all other Persons shall be entitled to rely on
releases, waivers, consents, approvals, notifications and other acts of Agent,
without inquiry into the existence of required consents or approvals of the
Secured Parties therefor.

 

(b)   Mortgagee shall at all times be the same Person that is Agent under the
Agency Documents.  Written notice of resignation by Agent pursuant to the Agency
Documents shall also constitute notice of resignation as Agent under this
Mortgage.  Removal of Agent pursuant to any provision of the Agency Documents
shall also constitute removal as Agent under this Mortgage.  Appointment of a
successor Agent pursuant to the Agency Documents shall also constitute
appointment of a successor Agent under this Mortgage.  Upon the acceptance of
any appointment as Agent by a successor Agent under the Agency Documents, that
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Agent as the
Mortgagee under this Mortgage, and the retiring or removed Agent shall promptly
(i) assign and transfer to such successor Agent all of its right, title and
interest in and to this Mortgage and the Mortgaged Property, and (ii) execute
and deliver to such successor Agent such assignments and amendments and take
such other actions, as may be necessary or appropriate in connection with the
assignment to such successor Agent of the liens and security interests created
hereunder, whereupon such retiring or removed Agent shall be discharged from its
duties and obligations under this Mortgage.  After any retiring or removed
Agent’s resignation or removal hereunder as Agent, the provisions of this
Mortgage and the Agency Documents shall inure to its benefit as to any actions
taken or omitted to be taken by it under this Mortgage while it was Agent
hereunder.

 

Section 9.14         Subrogation.  If any or all of the proceeds of the
Indebtedness are used to extinguish, extend or renew any indebtedness heretofore
existing against the Mortgaged Property, then, to the extent of the funds so
used, Mortgagee and the other Secured Parties shall be subrogated to all of the
rights, claims, liens, titles, and interests existing against the Mortgaged
Property heretofore held by, or in favor of, the holder of such indebtedness and
such former rights, claims, liens, titles, and interests, if

 

12

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

 

any, are not waived but rather are continued in full force and effect in favor
of Mortgagee and the other Secured Parties and are merged with the lien and
security interest created herein as cumulative security for the repayment of the
Indebtedness and the performance of the Obligations.

 

ARTICLE 10
LOCAL LAW PROVISIONS

 

[To Come]

 

[The remainder of this page has been intentionally left blank]

 

13

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

 

IN WITNESS WHEREOF, Mortgagor has on the date set forth in the acknowledgement
hereto, effective as of the date first above written, caused this instrument to
be duly EXECUTED AND DELIVERED by authority duly given.

 

MORTGAGOR:

[                                          ],

 

a [                                              ]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

S-1

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

 

[Insert State specific notary block]

 

N-1

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

 

SCHEDULE I

 

INSURANCE, CASUALTY AND CONDEMNATION REQUIREMENTS

 

1.1 Insurance.

 

1.1.1        Insurance Policies.  (a)  [Mortgagor/Grantor] shall obtain and
maintain, or cause to be maintained, insurance for [Mortgagor/Grantor] and the
[Mortgaged Property/Trust Property] providing at least the following coverages:

 

(i)            all risk insurance on the Improvements and the personal property
at the [Mortgaged Property/Trust Property], in each case (A) in an amount equal
to one hundred percent (100%) of the “Full Replacement Cost,” which for purposes
of this [Mortgage/Deed of Trust] shall mean actual replacement value (containing
no exclusion for foundations, underground utilities and footings);
(B) containing an agreed amount endorsement (or its equivalent) with respect to
the Improvements and personal property at the [Mortgaged Property/Trust
Property] waiving all or containing no co-insurance provisions; (C) providing
for no deductible in excess of Five Hundred Thousand and No/100 Dollars
($500,000) for all such insurance coverage, except for (1) windstorm coverage in
which the deductible may not exceed the greater of (a) Five Hundred Thousand and
No/100 Dollars ($500,000), and (b) five percent (5%) of the insured value of the
[Mortgaged Property/Trust Property] (provided, however, that if windstorm
coverage is not available at commercially reasonable rates with such a
deductible, [Mortgagor/Grantor] shall procure the same with a commercially
reasonable deductible), (2) earthquake coverage in which the deductible may not
exceed the greater of (a) Five Hundred Thousand and No/100 Dollars ($500,000),
and (b) five percent (5%) of the insured value of the [Mortgaged Property/Trust
Property], and (3) flood coverage in which the deductible may not exceed Five
Hundred Thousand and No/100 Dollars ($500,000) per building; and (D) containing
an “Ordinance or Law Coverage” or “Enforcement” endorsement, including coverage
for the value of the undamaged portion of the building, demolition costs and
increased cost of construction,  if any of the Improvements or the use of the
[Mortgaged Property/Trust Property] shall at any time constitute legal
non-conforming structures or uses.

 

(ii)           commercial general liability and professional liability insurance
against claims for personal injury, bodily injury, death or property damage
occurring upon, in or about the [Mortgaged Property/Trust Property], such
insurance (A) to be on the so-called “claims made” form with general liability
and professional liability limits, excluding umbrella coverage, of not less than
$500,000 per occurrence, with no deductible or self insured retention over and
above what is covered by [Mortgagor/Grantor]’s wholly-owned captive insurance
company (Senior Living Insurance Company, Ltd.); (b) to continue at not less
than the aforesaid limit until required to be changed by Agent in writing by
reason of changed economic conditions making such protection inadequate; and
(C) to cover at least the following hazards:  (1) premises and operations;
(2) products and completed operations on an “if any” basis; (3) independent
contractors; and (4) blanket contractual liability for all insured contracts;
and (5) acts of terrorism;

 

Sched I-1

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

 

(iii)          business income insurance (A) with loss payable to Agent;
(B) covering all risks required to be covered by the insurance provided for in
subsection (i) above; (C) containing an extended period of indemnity endorsement
which provides that after the physical loss to the Improvements and personal
property has been repaired, the continued loss of income will be insured until
such income either returns to the same level it was at prior to the loss, or the
expiration of six (6) months from the date that the [Mortgaged Property/Trust
Property] is repaired or replaced and operations are resumed, whichever first
occurs, and notwithstanding that the policy may expire prior to the end of such
period; and (D) in an amount equal to one hundred percent (100%) of the gross
income from the [Mortgaged Property/Trust Property] for a period of eighteen
(18) months from the date of loss.  The amount of such business income insurance
shall be determined prior to the date hereof and at least once each year
thereafter based on [Mortgagor/Grantor]’s reasonable estimate of the gross
income from the [Mortgaged Property/Trust Property] for the succeeding eighteen
(18) month, or greater, as applicable, period;

 

(iv)          at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements, (A) owner’s
contingent or protective liability insurance covering claims not covered by or
under the terms or provisions of the above mentioned commercial general
liability insurance policy; and (B) the insurance provided for in subsection
(i) above written in a so-called builder’s risk completed value form (1) on a
non-reporting basis, (2) against all risks insured against pursuant to
subsection (i) above, (3) including permission to occupy the [Mortgaged
Property/Trust Property], and (4) with an agreed amount endorsement waiving
co-insurance provisions;

 

(v)           workers’ compensation, subject to the statutory limits of the
state in which the [Mortgaged Property/Trust Property] is located, and
employer’s liability insurance with a limit of at least $1,000,000 per accident
and per disease per employee, and $1,000,000 for disease aggregate in respect of
any direct employees of [Mortgagor/Grantor];

 

(vi)          comprehensive boiler and machinery insurance covering all
mechanical and electrical equipment and pressure vessels and boilers in an
amount not less than their replacement cost or in such other amount as shall be
reasonably required by Agent;

 

(vii)         intentionally omitted

 

(viii)        if any portion of the Improvements is at any time located in an
area identified by the Secretary of Housing and Urban Development or any
successor thereto as an area having special flood hazards pursuant to the
National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973
or the National Flood Insurance Reform Act of 1994, as each may be amended, or
any successor law (the “Flood Insurance Acts”), flood hazard insurance in an
amount equal to the maximum limit of coverage available for the [Mortgaged
Property/Trust Property] under the Flood Insurance Acts (or such higher amount
as reasonably required by Agent);

 

(ix)           earthquake (if the [Mortgaged Property/Trust Property] is in an
Earthquake Zone 3 or 4 with a probable maximum loss of greater than 20%),
sinkhole and mine subsidence insurance, if required, in amounts equal to the
probable maximum

 

Sched I-2

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

 

loss (net of applicable deductibles) of the [Mortgaged Property/Trust Property]
as determined by Agent in its reasonable discretion and in form and substance
satisfactory to Agent, provided that the insurance pursuant to this subsection
(ix) shall be on terms consistent with the all risk insurance policy required
under subsection 1.1.1(a)(i);

 

(x)            umbrella liability insurance, in addition to primary coverage, in
a total amount of not less than $20,000,000 per occurrence for professional
liability and $25,000,000 per occurrence for general liability on terms
consistent with the commercial general liability insurance policy required under
subsections (ii) above and (viii) below;

 

(xi)           intentionally omitted;

 

(xii)          motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles containing minimum limits per
occurrence, excluding umbrella coverage, of One Million and No/100 Dollars
($1,000,000);

 

(xiii)         so-called “host liquor liability” insurance or other liability
insurance required in connection with distributing and serving, but not selling,
alcoholic beverages;

 

(xiv)        if [Mortgagor/Grantor] has employees, insurance against employee
dishonesty in an amount not less than $1 million per loss and with a deductible
not greater than Fifteen Thousand and No/100 Dollars ($15,000); and

 

(xv)         such other insurance and in such amounts as Agent from time to time
may reasonably request against such other insurable hazards which at the time
are commonly insured against for property similar to the [Mortgaged
Property/Trust Property] located in or around the region in which the [Mortgaged
Property/Trust Property] is located.

 

The comprehensive all risk insurance, business income insurance, general
liability and umbrella liability policies required under subsections (i), (ii),
(iii), and (x) above shall be required to cover perils of terrorism and acts of
terrorism for the maximum amount obtainable up to the amounts set forth in
subsections (i) (ii), (iii), and (x) above and with deductibles no greater than
the deductibles set forth in subsections (i), (ii), (iii), and (x) above. 
Notwithstanding the foregoing, if acts of terrorism or perils of terrorism or
other similar acts or events are hereafter excluded from the policies required
under subsections (i) (ii), (iii), and (x) above, [Mortgagor/Grantor] shall
obtain an endorsement to such policy (or a separate policy from an insurance
provider reasonably approved by Agent), if available at commercially reasonable
rates as determined by Agent, insuring against all acts of terrorism and perils
of terrorism and “fire following” (or, in the case of any period of time during
which the Terrorism Risk Insurance Act of 2002 (“TRIA”) or its successors, is in
effect, insuring against all “certified acts of terrorism” as defined in TRIA
and “fire following”), each in an amount and on terms consistent with the
requirements of subsections (i) (ii), (iii), and (x) above. The endorsement or
policy shall be in form and substance reasonably satisfactory to Agent.

 

(b)           All insurance provided for in Section 1.1.1(a) above shall be
obtained under valid and enforceable policies (collectively, the “Policies” or
in the singular, the “Policy”) and, to the extent not specified above, shall be
subject to the reasonable approval of Agent as to deductibles, loss payees and
insureds.  Prior to the expiration dates of the Policies theretofore furnished
to Agent, certificates of insurance evidencing the renewal or successor Policies
accompanied by evidence satisfactory to Agent of payment of the premiums then
due thereunder (the “Insurance Premiums”), shall be delivered by

 

Sched I-3

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

 

[Mortgagor/Grantor] to Agent. Within ten (10) days of request by Agent,
[Mortgagor/Grantor] shall deliver to Agent carrier-certified copies of the
Policies, provided that the Policies are available.

 

(c)           Any blanket insurance Policy shall specifically allocate to the
[Mortgaged Property/Trust Property] the amount of coverage from time to time
required hereunder and shall otherwise provide the same protection as would a
separate Policy insuring only the [Mortgaged Property/Trust Property] in
compliance with the provisions of Section 1.1.1(a) above.

 

(d)           All Policies of insurance provided for or contemplated by
Section 1.1.1(a) above, except for the Policy referenced in Section 1.1.1(a)(v),
shall name [Mortgagor/Grantor] as the insured and Agent and its successors
and/or assigns as the additional insured, as their interests may appear, and the
Policies referenced in Section 1.1.1(a)(ii) above shall also name each other
Secured Party and its successors and/or assigns as additional insureds, and in
the case of property damage, boiler and machinery, flood and earthquake
insurance, shall contain a so-called New York standard mortgagee endorsement and
loss payable clause in favor of and acceptable to Agent.

 

(e)           All Policies of insurance provided for in Section 1.1.1(a) above,
except for the Policies referenced in Section 1.1.1(a)(v), shall contain clauses
or endorsements to the effect that:

 

(i)            no act or negligence of [Mortgagor/Grantor], or anyone acting for
[Mortgagor/Grantor], or of any tenant or other occupant, or failure to comply
with the provisions of any Policy, which might otherwise result in a forfeiture
of the insurance or any part thereof, shall in any way affect the validity or
enforceability of the insurance insofar as Agent or any Secured Party is
concerned;

 

(ii)           the Policy shall not be cancelled without at least thirty (30)
days’ written notice to Agent, with ten (10) days’ written notice permissible
for nonpayment of premium, and notwithstanding the fact that liability policies
may only provide notice of cancellation to the named insured; and

 

(iii)          Neither Agent nor any Secured Party shall be a co-insurer and
they shall not be liable for any contribution or Insurance Premiums thereon or
subject to any assessments thereunder.

 

(f)            If at any time Agent is not in receipt of written evidence that
all insurance required hereunder is in full force and effect, and such failure
continues after written request therefor, Agent shall have the right, without
notice to [Mortgagor/Grantor], to take such action as Agent deems necessary to
protect its interest in the [Mortgaged Property/Trust Property], including,
without limitation, the obtaining of such insurance coverage as Agent in its
sole discretion deems appropriate and all expenses incurred by Agent in
connection with such action or in obtaining such insurance and keeping it in
effect shall be paid by [Mortgagor/Grantor] to Agent upon demand and until paid
shall be secured by this [Mortgage/Deed of Trust] and shall bear interest at the
default interest rate specified in the Credit Agreement.

 

(g)           In the event of foreclosure of this [Mortgage/Deed of Trust] or
other transfer of title to the [Mortgaged Property/Trust Property] in
extinguishment in whole or in part of the Facility, all right, title and
interest of [Mortgagor/Grantor] in and to the Policies then in force concerning
the [Mortgaged Property/Trust Property] and all proceeds payable thereunder
shall thereupon vest in the purchaser at such foreclosure or Agent or other
transferee in the event of such other transfer of title.

 

Sched I-4

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

 

1.1.2        Insurance Company.  The Policies shall be issued by financially
sound and responsible insurance companies authorized to do business in the state
in which the [Mortgaged Property/Trust Property] is located and shall be
otherwise reasonably satisfactory to Agent, and carry an S&P rating of at least
“A-”.  If four or fewer insurance companies issue the policies, then at least
75% of the insurance coverage represented by the policies must be provided by
insurance companies with a claims paying ability rating of “A-” or better by
S&P, with no carrier below “BBB” by S&P.  If five (5) or more insurance
companies issue the policies, then at least sixty percent (60%) of the insurance
coverage represented by the policies must be provided by insurance companies
with a claims paying ability rating of “A-” or better by S&P, with no carrier
below “BBB” by S&P. Notwithstanding the foregoing, [Mortgagor/Grantor] shall be
permitted to maintain the Policies with insurance companies which do not meet
the foregoing requirements (an “Otherwise Rated Insurer”), provided
[Mortgagor/Grantor] obtains a “cut-through” endorsement (that is, an endorsement
which permits recovery against the provider of such endorsement) with respect to
any Otherwise Rated Insurer from an insurance company which meets the claims
paying ability ratings required above. Also notwithstanding the foregoing, Agent
has approved Landmark American Insurance Company, Torus Specialty Insurance
Company and Aspen Specialty Insurance Company for this loan so long as they
maintain an AM Best rating of at least A- XI by AM Best. Also Approved for this
loan is Senior Living Insurance Company Limited, a [Mortgagor/Grantor]-funded
captive insurance company that provides coverage to reimburse
[Mortgagor/Grantor] for any general liability and professional liability
deductibles/retentions.

 

Sched I-5

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

 

EXHIBIT A

 

LEGAL DESCRIPTION

 

Legal Description of premises located at [                          ]:

 

[See Attached Page(s) For Legal Description]

 

Exh. A-1

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

 

[EXHIBIT B

 

PERMITTED ENCUMBRANCES]

 

Those exceptions set forth in Schedule B of that certain policy of title
insurance issued to Mortgagee by [                            ] on or about the
date hereof pursuant to commitment number [                  ].

 

Exh. B-1

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

 

EXHIBIT H to the

CREDIT AGREEMENT

 

FORM OF BORROWING

BASE CERTIFICATE

 

BORROWING BASE CERTIFICATE

 

Five Star Quality Care, Inc.,

Borrowing Base Certificate

Period ending     /    /

 

Citibank, N.A.

as Administrative Agent

under the Credit Agreement

referred to below

1615 Brett Road OPS III

New Castle, DE 19720

Attention:  Bank Loan Syndications Department

 

Pursuant to provisions of that certain Credit Agreement, dated as of April 13,
2012, among Five Star Quality Care, Inc., a Maryland corporation, as borrower
(“Borrower”), the Guarantors party thereto, Citibank, N.A., as Administrative
Agent and Collateral Agent for the Secured Parties, the Secured Parties
identified therein, and the Arrangers party thereto (as amended, amended and
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”; capitalized terms not otherwise defined herein shall have their
respective meanings set forth in the Credit Agreement), the undersigned, a
Responsible Officer of the Borrower, hereby certifies and represents and
warrants on behalf of the Borrower as follows:

 

1.             The information contained in Schedule I of this certificate and
the attached information supporting the calculation of the Facility Available
Amount, Total Borrowing Base Value, and Borrowing Base Debt Service Coverage
Ratio is true, complete and correct as of the close of business on
                        , 20     (the “Calculation Date”) and has been prepared
in accordance with the provisions of the Credit Agreement.

 

2              The Facility Exposure of $                                   
does not exceed the Facility Available Amount of $
                                         as required by Section 5.04(b)(i) of
the Credit Agreement.

 

3.             This certificate is furnished to the Administrative Agent
pursuant to Section [3.02][5.01(k)][5.02(d)][5.02(e)(iii)(D)][5.03(d)] of the
Credit Agreement.

 

4.             The Borrowing Base Assets comply with all Borrowing Base
Conditions and the other conditions, terms, warranties, representations and
covenants set forth in the Credit Agreement other than those previously waived
in writing by the Administrative Agent and the Required Lenders.

 

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

 

In each case, with supporting information showing the computations used in
determining compliance with such covenants set forth on Schedule I attached
hereto.

 

 

FIVE STAR QUALITY CARE, INC.,

 

a Maryland corporation

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

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

 

Schedule I – Financial Covenant Computations

 

(See Attached Pages)

 

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

 

Date Updated

 

3/20/2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year

 

 

 

As Is

 

Units

 

Facility

 

State

 

City

 

Street Address

 

Year
Built

 

Acquired
By FVE

 

Building
Area (SF)

 

Appraised
Value

 

# of IL
Units

 

# of AL
Units

 

# of ALZ
Units

 

Total
Units

 

 1

The Palms of Fort Myers

 

FL

 

Fort Meyers

 

2674 Winkler Avenue

 

1998

 

2002

 

207,042

 

$

18,500,000

 

140

 

56

 

20

 

216

 

 2

Clearwater Commons Assisted Living

 

IN

 

Indianapolis

 

4519 E. 82nd Street

 

1994

 

2011

 

47,457

 

10,800,000

 

7

 

81

 

0

 

88

 

 3

Rosewalk Commons Retirement Community

 

IN

 

Lafayette

 

250 Shenandoah Drive

 

1997

 

2011

 

50,121

 

18,200,000

 

22

 

87

 

0

 

109

 

 4

Riverwalk Commons

 

IN

 

Noblesville

 

7235 Riverwalk Way North

 

2005

 

2011

 

70,489

 

33,600,000

 

54

 

75

 

17

 

146

 

 5

Villa at Riverwood

 

MO

 

Florissant

 

No. One Pratt Place

 

1986

 

2002

 

110,000

 

10,400,000

 

111

 

0

 

0

 

111

 

 6

Morningside of Concord

 

NC

 

Concord

 

500 Penny Lane, N.E.

 

1997

 

2004

 

53,330

 

16,900,000

 

0

 

56

 

30

 

86

 

 7

Morningside of Gastonia

 

NC

 

Gastonia

 

2755 Union Road

 

1999

 

2004

 

53,334

 

16,700,000

 

0

 

69

 

20

 

89

 

 8

Morningview of Greensboro

 

NC

 

Greensboro

 

3200 North Elm Street

 

1998

 

2004

 

53,334

 

12,300,000

 

0

 

61

 

30

 

91

 

 9

Fox Hollow Senior Living

 

NC

 

Pinehurst

 

190 Fox Hollow Road

 

1999

 

2008

 

49,174

 

8,500,000

 

0

 

59

 

13

 

72

 

10

Morningside of Raleigh

 

NC

 

Raleigh

 

801 Dixie Trail

 

1992

 

2004

 

55,530

 

21,300,000

 

0

 

46

 

42

 

88

 

11

Washington Township Senior Living

 

NJ

 

Sewell

 

600 Medical Center Drive

 

1998

 

2008

 

61,220

 

9,900,000

 

0

 

93

 

0

 

93

 

12

Voorhees Senior Living

 

NJ

 

Voorhees

 

501 Laurel Oak Road

 

1998

 

2008

 

58,717

 

12,900,000

 

0

 

93

 

0

 

93

 

13

Morningside of Paris

 

TN

 

Paris

 

350 Volunteer Drive

 

1997

 

2004

 

46,947

 

13,300,000

 

0

 

70

 

0

 

70

 

14

Morningside of Williamsburg

 

VA

 

Williamsburg

 

440 McLaws Circle

 

2001

 

2004

 

53,334

 

13,200,000

 

0

 

57

 

30

 

87

 

15

Huntington Place Retirement

 

WI

 

Janesville

 

3801 North Wright Road

 

1999

 

2010

 

130,762

 

13,300,000

 

35

 

48

 

27

 

110

 

 

Total / Avg

 

 

 

 

 

 

 

1997

 

2006

 

1,100,791

 

$

229,800,000

 

369

 

951

 

229

 

1,549

 

 

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

 

 

 

INPUT

 

INPUT

 

INPUT

 

INPUT

 

INPUT

 

INPUT

 

 

 

 

 

 

 

Facility

 

Occupancy

 

ADR

 

Private Pay
Rental
Revenue

 

Rental
Revenues

 

Total
Revenues

 

EBITDAM

 

Capex

 

5% Mmgt
Fees

 

Adjusted NOI

 

 1

The Palms of Fort Myers

 

100

%

$

81

 

 

 

 

 

$

6,375,793

 

$

1,853,579

 

$

75,600

 

$

318,790

 

$

1,459,189

 

 2

Clearwater Commons Assisted Living

 

99

%

94

 

 

 

 

 

2,991,551

 

1,009,169

 

30,800

 

149,578

 

828,791

 

 3

Rosewalk Commons Retirement Community

 

85

%

98

 

 

 

 

 

3,319,228

 

1,529,697

 

38,150

 

165,961

 

1,325,586

 

 4

Riverwalk Commons

 

97

%

114

 

 

 

 

 

6,118,733

 

3,130,269

 

51,100

 

305,937

 

2,773,232

 

 5

Villa at Riverwood

 

95

%

71

 

 

 

 

 

2,733,381

 

1,001,547

 

38,850

 

136,669

 

826,028

 

 6

Morningside of Concord

 

94

%

141

 

 

 

 

 

4,434,958

 

1,667,823

 

30,100

 

221,748

 

1,415,975

 

 7

Morningside of Gastonia

 

97

%

136

 

 

 

 

 

4,475,833

 

1,701,251

 

31,150

 

223,792

 

1,446,309

 

 8

Morningview of Greensboro

 

88

%

136

 

 

 

 

 

3,955,577

 

1,163,183

 

31,850

 

197,779

 

933,554

 

 9

Fox Hollow Senior Living

 

82

%

124

 

 

 

 

 

2,918,186

 

858,552

 

25,200

 

145,909

 

687,443

 

10

Morningside of Raleigh

 

93

%

174

 

 

 

 

 

5,186,456

 

2,073,997

 

30,800

 

259,323

 

1,783,874

 

11

Washington Township Senior Living

 

79

%

130

 

 

 

 

 

3,853,818

 

802,025

 

32,550

 

192,691

 

576,784

 

12

Voorhees Senior Living

 

83

%

139

 

 

 

 

 

4,395,930

 

1,208,390

 

32,550

 

219,797

 

956,044

 

13

Morningside of Paris

 

100

%

108

 

 

 

 

 

2,968,959

 

1,590,768

 

24,500

 

148,448

 

1,417,820

 

14

Morningside of Williamsburg

 

78

%

141

 

 

 

 

 

3,496,300

 

970,065

 

30,450

 

174,815

 

764,800

 

15

Huntington Place Retirement

 

98

%

97

 

 

 

 

 

3,816,513

 

1,270,027

 

38,500

 

190,826

 

1,040,701

 

 

Total / Avg

 

92

%

 

 

$

0.00

 

$

0.00

 

$

61,041,216

 

$

21,830,342

 

$

542,150

 

$

3,052,061

 

$

18,236,131

 

 

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

 

 

EXHIBIT I

 

FORM OF

 

SECTION 2.12(e) U.S. TAX COMPLIANCE CERTIFICATE

 

Reference is hereby made to the Credit Agreement dated as of April 13, 2012 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Five Star Quality Care, Inc., as borrower, and Citicorp North
America, Inc., as administrative agent and collateral agent, and the other
parties party thereto.

 

Pursuant to the provisions of Section 2.12 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of
which it is providing this certificate, (ii) it is not a bank within the meaning
of Section 881(c)(3)(A) of the Internal Revenue Code, (iii) it is not a ten
percent shareholder of the Borrower within the meaning of
Section 871(h)(3)(B) of the Internal Revenue Code, and (iv) it is not a
controlled foreign corporation related to the Borrower as described in
Section 881(c)(3)(C) of the Internal Revenue Code.

 

The undersigned has furnished the Administrative Agent and the Borrower with a
certificate of its non-U.S. Person status on IRS Form W-8BEN.  By executing this
certificate, the undersigned agrees that if the information provided on this
certificate changes, the undersigned shall promptly so inform the Borrower and
the Administrative Agent.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF LENDER PARTY]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

Date:                                     , 20[    ]

 

 

Exh. I-1

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

 

EXHIBIT J to the

CREDIT AGREEMENT

 

FORM OF COMPLIANCE CERTIFICATE

 

COMPLIANCE CERTIFICATE

 

Five Star Quality Care, Inc.

Dated [                  ] [    ], 20[    ]

 

Citibank, N.A.

as Administrative Agent

under the Credit Agreement

referred to below

1615 Brett Road OPS III

New Castle, DE 19720

Attention:  Bank Loan Syndications Department

 

Pursuant to Section [5.03(b)] [5.03(c)] of that certain Credit Agreement dated
as of April 13, 2012  , among Five Star Quality Care, Inc., a Maryland
corporation (“Borrower”), the Guarantors party thereto, the Lender Parties party
thereto, Citibank, N.A., as Collateral Agent and as Administrative Agent for the
Lender Parties and the Arrangers party thereto (as amended, amended and
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”; capitalized terms not otherwise defined herein shall have their
respective meanings set forth in the Credit Agreement), the undersigned, the
[Chief Financial Officer] of the Borrower, hereby certifies and represents and
warrants on behalf of the Borrower as follows:

 

1.             The information contained in this certificate and the attached
information supporting the calculation of (i) the Leverage Ratio, (ii) the
tangible net worth of the Borrower and its Subsidiaries, as determined in
accordance with GAAP (but exclusive of depreciation and amortization), (iii) the
Fixed Charge Coverage Ratio, (iv) the Facility Exposure, and (v) the Borrowing
Base Debt Service Coverage Ratio is true, complete and correct as of the close
of business on [March 31] [June 30] [September 30] [December 31], 20[    ] (the
“Calculation Date”) and has been prepared in accordance with the provisions of
the Credit Agreement.

 

2.             As of the Calculation Date:

 

(a)           Borrower Financial Covenants:

 

(i)            Maximum Leverage Ratio.  The Leverage Ratio
was              :1.00, which was not greater than 5.00:1.00 as required by
Section 5.04(a)(i) of the Credit Agreement.

 

(ii)           Minimum Tangible Net Worth.  The tangible net worth of the
Borrower and its Subsidiaries, as determined in accordance with GAAP (but
exclusive of depreciation and amortization) was $                    which was
not less than the applicable minimum tangible net worth required by
Section 5.04(a)(ii) of the Credit Agreement.

 

1

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

 

(iii)          Minimum Fixed Charge Coverage Ratio.  The Fixed Charge Coverage
Ratio was         :1.00 which was not less than 1.50:1.00 as required by
Section 5.04(a)(iii) of the Credit Agreement.

 

(b)           Borrowing Base Covenants

 

(i)            Maximum Facility Exposure.  The Facility Exposure of
$                           did not exceed the Facility Available Amount of
$               , as required by Section 5.04(b)(i) of the Credit Agreement.

 

(ii)           Minimum Borrowing Base Debt Service Coverage Ratio.  The
Borrowing Base Debt Service Coverate Ratio was           :1.00 which was not
less than 1.50:1.00.

 

In each case, supporting information showing the computations used in
determining compliance with such covenants is attached hereto as Exhibit A.

 

3.             The undersigned hereby certifies that (i) no Default has occurred
and is continuing and (ii) Borrower has not taken any action nor proposes to
take any action with respect to any Default or the continuance thereof, other
than as set forth in Exhibit B attached hereto.

 

[Balance of page intentionally left blank.]

 

2

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

 

IN WITNESS WHEREOF, I have executed this Compliance Certificate this           
day of                             , 20      .

 

 

 

By:

 

 

 

Name:

 

 

Title:    Chief Financial Officer

 

I,                                 , the duly qualified
                                           of Five Star Quality Care, Inc., a
Maryland corporation, do hereby certify that                                 is
the duly appointed and qualified Chief Financial Officer of such corporation and
that his signature set forth immediately above is his genuine signature.

 

IN WITNESS WHEREOF, I have set my hand as of this            day of
                            , 20      .

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

s-1

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

 

EXHIBIT A

 

SCHEDULE OF COMPUTATIONS

 

[to be attached]

 

Exh A-1

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

 

EXHIBIT B

 

DEFAULTS AND DESCRIPTION OF
PROPOSED ACTIONS TO BE TAKEN

 

[Insert “none” if no Default has occurred and is continuing]

 

Exh B-1

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