Exhibit 10.5

Deal CUSIP: 70805FAA4

Revolver CUSIP: 70805FAB2

CREDIT AGREEMENT

dated as of October 1, 2019

among

THE PENNANT GROUP, INC.

as Borrower

THE LENDERS FROM TIME TO TIME PARTY HERETO

and

SUNTRUST BANK

as Administrative Agent

 

 

 

SUNTRUST ROBINSON HUMPHREY, INC.,

BOFA SECURITIES, INC.

and

REGIONS SECURITIES LLC

as Joint Lead Arrangers and Joint Book Managers

BANK OF AMERICA, N.A.

and

REGIONS BANK

as Co-Syndication Agents

and

BBVA USA,

CITIZENS BANK, N.A.,

FIFTH THIRD BANK

and

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Co-Documentation Agents

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TABLE OF CONTENTS

 

        Page  

ARTICLE I

     

DEFINITIONS; CONSTRUCTION

     1  

Section 1.1.

   Definitions      1  

Section 1.2.

   Classifications of Loans and Borrowings      41  

Section 1.3.

   Accounting Terms and Determination      41  

Section 1.4.

   Terms Generally      42  

Section 1.5.

   Limited Condition Acquisitions      42  

ARTICLE II

     

AMOUNT AND TERMS OF THE COMMITMENTS

     43  

Section 2.1.

   General Description of Facilities      43  

Section 2.2.

   Revolving Loans      43  

Section 2.3.

   Procedure for Revolving Borrowings      44  

Section 2.4.

   Swingline Commitment      44  

Section 2.5.

   [Reserved]      45  

Section 2.6.

   Funding of Borrowings      46  

Section 2.7.

   Interest Elections      46  

Section 2.8.

   Optional Reduction and Termination of Commitments      47  

Section 2.9.

   Repayment of Loans      48  

Section 2.10.

   Evidence of Indebtedness      48  

Section 2.11.

   Optional Prepayments      48  

Section 2.12.

   Mandatory Prepayments      49  

Section 2.13.

   Interest on Loans      50  

Section 2.14.

   Fees      51  

Section 2.15.

   Computation of Interest and Fees      52  

Section 2.16.

   Inability to Determine Interest Rates      52  

Section 2.17.

   Illegality      53  

Section 2.18.

   Increased Costs      54  

Section 2.19.

   Funding Indemnity      55  

Section 2.20.

   Taxes      55  

Section 2.21.

   Payments Generally; Pro Rata Treatment; Sharing of Set-offs      58  

Section 2.22.

   Letters of Credit      59  

Section 2.23.

   Increase of Commitments; Additional Lenders      63  

Section 2.24.

   Mitigation of Obligations      67  

Section 2.25.

   Replacement of Lenders      67  

Section 2.26.

   Defaulting Lenders      67  

Section 2.27.

   Request for Extended Facilities      70  

Section 2.28.

   Refinancing Amendment      72  

ARTICLE III

     

CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT

     73  

Section 3.1.

   Conditions to Effectiveness      73  

Section 3.2.

   Conditions to Each Credit Event      76  

Section 3.3.

   Delivery of Documents      77  

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ARTICLE IV

     

REPRESENTATIONS AND WARRANTIES

     77  

Section 4.1.

   Existence; Power      77  

Section 4.2.

   Organizational Power; Authorization      77  

Section 4.3.

   Governmental Approvals; No Conflicts      77  

Section 4.4.

   Financial Statements      78  

Section 4.5.

   Litigation and Environmental Matters      78  

Section 4.6.

   Compliance with Laws and Agreements      78  

Section 4.7.

   Investment Company Act.      78  

Section 4.8.

   Taxes      78  

Section 4.9.

   Use of Proceeds; Margin Regulations      79  

Section 4.10.

   ERISA      79  

Section 4.11.

   Ownership of Property; Insurance      80  

Section 4.12.

   Disclosure      80  

Section 4.13.

   Labor Relations      80  

Section 4.14.

   Subsidiaries      81  

Section 4.15.

   Solvency      81  

Section 4.16.

   [Reserved]      81  

Section 4.17.

   Collateral Documents      81  

Section 4.18.

   [Reserved]      82  

Section 4.19.

   Healthcare Matters      82  

Section 4.20.

   Sanctions      84  

Section 4.21.

   Anti-Corruption Laws      84  

Section 4.22.

   Patriot Act      85  

Section 4.23.

   EEA Financial Institutions      85  

ARTICLE V

     

AFFIRMATIVE COVENANTS

     85  

Section 5.1.

   Financial Statements and Other Information      85  

Section 5.2.

   Notices of Material Events      87  

Section 5.3.

   Existence; Conduct of Business      89  

Section 5.4.

   Compliance with Laws.      89  

Section 5.5.

   Payment of Obligations      89  

Section 5.6.

   Books and Records      89  

Section 5.7.

   Visitation and Inspection.      89  

Section 5.8.

   Maintenance of Properties; Insurance      90  

Section 5.9.

   Use of Proceeds; Margin Regulations      90  

Section 5.10.

   [Reserved]      90  

Section 5.11.

   Cash Management      90  

Section 5.12.

   Additional Subsidiaries and Collateral      91  

Section 5.13.

   Mortgages; Collateral Access Agreements      93  

Section 5.14.

   Further Assurances      93  

Section 5.15.

   Health Care Matters      94  

Section 5.16.

   Post-Closing Matters      94  

Section 5.17.

   [Reserved]      94  

Section 5.18.

   Limitations on Designation of Excluded Subsidiaries      95  

Section 5.19.

   Anti-Corruption Laws; Sanctions      96  

 

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ARTICLE VI

     

FINANCIAL COVENANTS

     97  

Section 6.1.

   Leverage Ratio      97  

Section 6.2.

   Interest/Rent Coverage Ratio      97  

ARTICLE VII

     

NEGATIVE COVENANTS

     98  

Section 7.1.

   Indebtedness and Preferred Equity      98  

Section 7.2.

   Liens      100  

Section 7.3.

   Fundamental Changes      101  

Section 7.4.

   Investments, Loans      102  

Section 7.5.

   Restricted Payments      104  

Section 7.6.

   Sale of Assets      106  

Section 7.7.

   Transactions with Affiliates      107  

Section 7.8.

   Restrictive Agreements      107  

Section 7.9.

   Sale and Leaseback Transactions      108  

Section 7.10.

   Hedging Transactions      108  

Section 7.11.

   Amendment to Material Documents      108  

Section 7.12.

   PropCo Master Leases and Ensign Master Leases      108  

Section 7.13.

   Accounting Changes      109  

Section 7.14.

   Government Regulation      109  

Section 7.15.

   Sanctions      109  

Section 7.16.

   Anti-Corruption Laws      109  

ARTICLE VIII

        110  

EVENTS OF DEFAULT

  

Section 8.1.

   Events of Default      110  

Section 8.2.

   Application of Proceeds from Collateral      113  

ARTICLE IX

     

THE ADMINISTRATIVE AGENT

     114  

Section 9.1.

   Appointment of the Administrative Agent      114  

Section 9.2.

   Nature of Duties of the Administrative Agent and the Other Agents      114  

Section 9.3.

   Lack of Reliance on the Agents, the Issuing Banks and the Lenders      115  

Section 9.4.

   Certain Rights of the Administrative Agent      116  

Section 9.5.

   Reliance by the Administrative Agent      116  

Section 9.6.

   The Administrative Agent in its Individual Capacity      116  

Section 9.7.

   Successor Administrative Agent      116  

Section 9.8.

   Withholding Tax      117  

Section 9.9.

   The Administrative Agent May File Proofs of Claim      118  

Section 9.10.

   Authorization to Execute Other Loan Documents      118  

Section 9.11.

   Collateral and Guaranty Matters      118  

Section 9.12.

   Co-Documentation Agents; Co-Syndication Agents; Lead Arrangers      118  

Section 9.13.

   Right to Realize on Collateral and Enforce Guarantee      119  

 

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Section 9.14.

   Secured Bank Product Obligations and Hedging Obligations      119  

ARTICLE X

     

MISCELLANEOUS

     120  

Section 10.1.

   Notices      120  

Section 10.2.

   Waiver; Amendments      123  

Section 10.3.

   Expenses; Indemnification      126  

Section 10.4.

   Successors and Assigns      127  

Section 10.5.

   Governing Law; Jurisdiction; Consent to Service of Process      131  

Section 10.6.

   WAIVER OF JURY TRIAL      132  

Section 10.7.

   Right of Set-off      132  

Section 10.8.

   Counterparts; Integration      132  

Section 10.9.

   Survival      132  

Section 10.10.

   Severability      133  

Section 10.11.

   Confidentiality      133  

Section 10.12.

   Interest Rate Limitation      134  

Section 10.13.

   Waiver of Effect of Corporate Seal      134  

Section 10.14.

   Patriot Act and Beneficial Ownership Regulation      134  

Section 10.15.

   No Advisory or Fiduciary Responsibility      134  

Section 10.16.

   Location of Closing      135  

Section 10.17.

   Releases of Collateral      135  

Section 10.18.

   Acknowledgement and Consent to Bail-In of EEA Financial Institutions      136
 

Section 10.19.

   Acknowledgement Regarding Any Supported QFCs      136  

Section 10.20.

   MIRE Events      137  

 

Schedules      

Schedule I

      Commitment Amounts

Schedule 1.2

   -    Subsidiary Agreements

Schedule 4.11

   -    Real Estate

Schedule 4.14

   -    Subsidiaries

Schedule 4.19

   -    Healthcare Matters

Schedule 5.16

   -    Post-Closing Matters

Schedule 7.1

   -    Existing Indebtedness

Schedule 7.2

   -    Existing Liens

Schedule 7.4

   -    Existing Investments

Schedule 7.8

   -    Existing Leases with Restrictive Agreements

 

Exhibits

     

Exhibit A

   -    Form of Assignment and Acceptance

Exhibit B

   -    Form of Guaranty and Security Agreement

Exhibit 2.3

   -    Form of Notice of Borrowing

Exhibit 2.4

   -    Form of Notice of Swingline Borrowing

Exhibit 2.7

   -    Form of Notice of Continuation/Conversion

Exhibit 3.1(b)(ii)

   -    Form of Secretary’s Certificate

Exhibit 3.1(b)(iv)

   -    Form of Officer’s Certificate

Exhibit 5.1(c)

   -    Form of Compliance Certificate

 

iv

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT (as amended, restated, amended and restated, supplemented,
or otherwise modified from time to time, this “Agreement”) is made and entered
into as of October 1, 2019, by and among THE PENNANT GROUP, INC., a Delaware
corporation (the “Borrower”), the several banks and other financial institutions
and lenders from time to time party hereto (the “Lenders”) and SUNTRUST BANK, in
its capacity as administrative agent for the Lenders (in such capacity, the
“Administrative Agent”), as issuing bank (in such capacity, an “Issuing Bank”)
and as swingline lender (in such capacity, the “Swingline Lender”).

W I T N E S S E T H:

WHEREAS, the Borrower has requested that the Lenders establish a $75,000,000
revolving credit facility in favor of the Borrower; and

WHEREAS, subject to the terms and conditions of this Agreement, the Lenders, the
Issuing Banks and the Swingline Lender are willing to establish the requested
revolving credit facility in favor of the Borrower on the terms and conditions
set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the Borrower, the Lenders, the Administrative Agent, the Issuing
Banks and the Swingline Lender agree as follows:

ARTICLE I

DEFINITIONS; CONSTRUCTION

Section 1.1. Definitions. In addition to the other terms defined herein, the
following terms used herein shall have the meanings herein specified (to be
equally applicable to both the singular and plural forms of the terms defined):

“Accounts Collateral” shall have the meaning set forth in Section 7.2(i).

“Acquisition” shall mean (a) any Investment by the Borrower or any of its
Subsidiaries in any other Person organized in the United States (with all or
substantially all of the assets of such Person and its Subsidiaries located in
the United States), pursuant to which such Person shall become a Subsidiary of
the Borrower or any of its Subsidiaries or shall be merged or otherwise
consolidated or combined with the Borrower or any of its Subsidiaries or (b) any
acquisition by the Borrower or any of its Subsidiaries of the assets of any
Person (other than a wholly owned Subsidiary of the Borrower) that constitute
all or substantially all of the assets of such Person or a division or business
unit of such Person, whether through purchase, capital lease, exercise of an
option to purchase, merger or other business combination or transaction (and all
or substantially all of such assets, division or business unit are located in
the United States). With respect to a determination of the amount of an
Acquisition, such amount shall include all consideration (including any deferred
payments) set forth in the applicable agreements governing such Acquisition as
well as the assumption of any Indebtedness in connection therewith.

“Acquisition Consideration” shall mean purchase consideration for a Permitted
Acquisition of an Excluded Subsidiary and all other payments (but excluding any
related acquisition fees, costs and expenses incurred in connection with any
Permitted Acquisition of an Excluded Subsidiary), directly or indirectly, by the
Borrower or any of its Subsidiaries in exchange for, or as part of, or in
connection with, a Permitted Acquisition of an Excluded Subsidiary, whether paid
in cash or cash equivalents or by exchange of equity interests or of any
property or by the assumption of debt of the

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Person or business unit or asset group of any Person acquired or proposed to be
acquired in any such Acquisition or otherwise and whether payable at or prior to
the consummation of a Permitted Acquisition of an Excluded Subsidiary or
deferred for payment at any future time (including earn-outs); provided, that
any such future payment that is subject to a contingency shall be considered
Acquisition Consideration only to the extent of the reserve, if any, required
under GAAP at the time of such sale to be established in respect thereof by the
Borrower or any of its Subsidiaries; provided, further, that Acquisition
Consideration shall not include (a) any consideration or payment paid by the
Borrower or any of its Subsidiaries (i) with the net cash proceeds of Capital
Stock of the Borrower to its shareholders and/or (ii) in the form of Capital
Stock of the Borrower and (b) cash and cash equivalents acquired by the Borrower
or any of its Subsidiaries as part of the applicable Permitted Acquisition of an
Excluded Subsidiary.

“Additional Lender” shall have the meaning set forth in Section 2.23.

“Adjusted LIBOR” shall mean, with respect to each Interest Period for a
Eurodollar Loan, (i) the rate per annum equal to the London interbank offered
rate for deposits in U.S. Dollars appearing on Reuters screen page LIBOR 01 (or
on any successor or substitute page of such service or any successor to such
service, or such other commercially available source providing such quotations
as may be designated by the Administrative Agent from time to time) at
approximately 11:00 A.M. (London time) two (2) Business Days prior to the first
day of such Interest Period, with a maturity comparable to such Interest Period,
divided by (ii) a percentage equal to 1.00% minus the then stated maximum rate
of all reserve requirements (including any marginal, emergency, supplemental,
special or other reserves and without benefit of credits for proration,
exceptions or offsets that may be available from time to time) expressed as a
decimal (rounded upward to the next 1/100th of 1%) applicable to any member bank
of the Federal Reserve System in respect of Eurocurrency liabilities as defined
in Regulation D (or any successor category of liabilities under Regulation D);
provided, that if the rate referred to in clause (i) above is not available at
any such time for any reason, then the rate referred to in clause (i) shall
instead be the interest rate per annum, as determined by the Administrative
Agent, to be the arithmetic average of the rates per annum at which deposits in
U. S. Dollars in an amount equal to the amount of such Eurodollar Loan are
offered by major banks in the London interbank market to the Administrative
Agent at approximately 11:00 A.M. (London time), two (2) Business Days prior to
the first day of such Interest Period. For the avoidance of doubt, if Adjusted
LIBOR shall be less than zero, such rate shall be deemed to be zero for purposes
of this Agreement.

“Administrative Agent” shall have the meaning set forth in the introductory
paragraph hereof.

“Administrative Questionnaire” shall mean, with respect to each Lender, an
administrative questionnaire in the form provided by the Administrative Agent
and submitted to the Administrative Agent duly completed by such Lender.

“Affiliate” shall mean, as to any Person, any other Person that directly, or
indirectly through one or more intermediaries, Controls, is Controlled by, or is
under common Control with, such Person; provided that none of the Borrower and
its Subsidiaries shall constitute an Affiliate of Ensign or any of its
Subsidiaries. For the purposes of this definition, “Control” shall mean the
power, directly or indirectly, either to (i) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of a Person or (ii) direct or cause the direction
of the management and policies of a Person, whether through the ability to
exercise voting power, by control or otherwise. The terms “Controlled by” and
“under common Control with” have the meanings correlative thereto.

“Agents” shall mean, collectively, the Administrative Agent, the Lead Arrangers,
the Co-Documentation Agents and the Co-Syndication Agents.

 

2

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“Aggregate Revolving Commitment Amount” shall mean the aggregate principal
amount of the Aggregate Revolving Commitments from time to time. On the Closing
Date, the Aggregate Revolving Commitment Amount is $75,000,000.

“Aggregate Revolving Commitments” shall mean, collectively, all Revolving
Commitments of all Lenders at any time outstanding.

“Anti-Corruption Laws” shall have the meaning set forth in Section 4.21.

“Anti-Terrorism Order” shall mean Executive Order 13224, signed by President
George W. Bush on September 23, 2001.

“Applicable Lending Office” shall mean, for each Lender and for each Type of
Loan, the “Lending Office” of such Lender (or an Affiliate of such Lender)
designated for such Type of Loan in the Administrative Questionnaire submitted
by such Lender or such other office of such Lender (or such Affiliate of such
Lender) as such Lender may from time to time specify to the Administrative Agent
and the Borrower as the office by which its Loans of such Type are to be made
and maintained.

“Applicable Margin” shall mean, as of any date, with respect to all Loans
outstanding on such date or the letter of credit fee, as the case may be, the
percentage per annum determined by reference to the applicable Leverage Ratio in
effect on such date as set forth in the pricing grid below (the “Pricing Grid”);
provided that a change in the Applicable Margin resulting from a change in the
Leverage Ratio shall be effective on the second Business Day after the Borrower
delivers each of the financial statements required by Section 5.1(a) and (b) and
the Compliance Certificate required by Section 5.1(c); provided, further, that
if at any time the Borrower shall have failed to deliver such financial
statements and such Compliance Certificate when so required, the Applicable
Margin shall be at Level I as set forth in the Pricing Grid until such time as
such financial statements and Compliance Certificate are delivered, at which
time the Applicable Margin shall be determined as provided above.
Notwithstanding the foregoing, the Applicable Margin from the Closing Date until
the date by which the financial statements and Compliance Certificate for the
Fiscal Year ending December 31, 2019 are required to be delivered shall be at
Level IV as set forth in the Pricing Grid. In the event that any financial
statement or Compliance Certificate delivered hereunder is shown to be
inaccurate (regardless of whether this Agreement or the Commitments are in
effect or any Loans are outstanding when such inaccuracy is discovered), and
such inaccuracy, if corrected, would have led to the application of a higher
Applicable Margin based upon the Pricing Grid (the “Accurate Applicable Margin”)
for any period that such financial statement or Compliance Certificate covered,
then (i) the Borrower shall promptly deliver to the Administrative Agent a
correct financial statement or Compliance Certificate, as the case may be, for
such period, (ii) the Applicable Margin shall be adjusted such that after giving
effect to the corrected financial statement or Compliance Certificate, as the
case may be, the Applicable Margin shall be reset to the Accurate Applicable
Margin based upon the Pricing Grid for such period and (iii) the Borrower shall
promptly pay to the Administrative Agent, for the account of the Lenders, the
accrued additional interest owing as a result of such Accurate Applicable Margin
for such period. The provisions of this definition shall not limit the rights of
the Administrative Agent and the Lenders with respect to Section 2.13(c) or
Article VIII.

 

3

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Pricing Grid

 

Pricing Level

  

Leverage Ratio

  

Applicable

Margin for

Eurodollar

Loans

  

Applicable

Margin for

Base Rate

Loans

  

Applicable

Margin for

Letter of

Credit Fees

  

Applicable
Percentage for
Commitment Fees

I    Greater than or equal to 2.50:1.00   

3.50%

per annum

  

2.50%

per annum

  

3.50%

per annum

  

0.625%

per annum

II    Less than 2.50:1.00 but greater than or equal to 2.00:1.00   

3.25%

per annum

  

2.25%

per annum

  

3.25%

per annum

  

0.625%

per annum

III    Less than 2.00:1.00 but greater than or equal to 1.50:1.00   

3.00%

per annum

  

2.00%

per annum

  

3.00%

per annum

  

0.625%

per annum

IV    Less than 1.50:1.00 but greater than or equal to 1.00:1.00   

2.75%

per annum

  

1.75%

per annum

  

2.75%

per annum

  

0.625%

per annum

V    Less than 1.00:1.00   

2.50%

per annum

  

1.50%

per annum

  

2.50%

per annum

  

0.625%

per annum

“Applicable Percentage” shall mean, as of any date, with respect to the
commitment fee as of such date, the percentage per annum determined by reference
to the Leverage Ratio in effect on such date as set forth in the Pricing Grid;
provided that a change in the Applicable Percentage resulting from a change in
the Leverage Ratio shall be effective on the second Business Day after which the
Borrower delivers each of the financial statements required by Section 5.1(a)
and (b) and the Compliance Certificate required by Section 5.1(c); provided,
further, that if at any time the Borrower shall have failed to deliver such
financial statements and such Compliance Certificate when so required, the
Applicable Percentage shall be at Level I as set forth in the Pricing Grid until
such time as such financial statements and Compliance Certificate are delivered,
at which time the Applicable Percentage shall be determined as provided above.
Notwithstanding the foregoing, the Applicable Percentage for the commitment fee
from the Closing Date until the date by which the financial statements and
Compliance Certificate for the Fiscal Year ending December 31, 2019 are required
to be delivered shall be at Level IV as set forth in the Pricing Grid. In the
event that any financial statement or Compliance Certificate delivered hereunder
is shown to be inaccurate (regardless of whether this Agreement or the
Commitments are in effect or any Loans are outstanding when such inaccuracy is
discovered), and such inaccuracy, if corrected, would have led to the
application of a higher Applicable Percentage based upon the Pricing Grid (the
“Accurate Applicable Percentage”) for any period that such financial statement
or Compliance Certificate covered, then (i) the Borrower shall promptly deliver
to the Administrative Agent a correct financial statement or Compliance
Certificate, as the case may be, for such period, (ii) the Applicable Percentage
shall be adjusted such that after giving effect to the corrected financial
statement or Compliance Certificate, as the case may be, the Applicable
Percentage shall be reset to the Accurate Applicable Percentage based upon the
Pricing Grid for such period and (iii) the Borrower shall promptly pay to the
Administrative Agent, for the account of the Lenders, the accrued additional
commitment fee owing as a result of such Accurate Applicable Percentage for such
period. The provisions of this definition shall not limit the rights of the
Administrative Agent and the Lenders with respect to Section 2.13(c) or Article
VIII.

“Approved Fund” shall mean any Person (other than a natural Person) that is (or
will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
business and that is administered or managed by (i) a Lender, (ii) an Affiliate
of a Lender or (iii) an entity or an Affiliate of an entity that administers or
manages a Lender.

 

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“Assignment and Acceptance” shall mean an assignment and acceptance entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.4(b)) and accepted by the Administrative Agent, in the
form of Exhibit A attached hereto or any other form approved by the
Administrative Agent.

“Available Amount” shall mean, on any date, an amount not less than zero, equal
to:

 

  (i)

50% of the aggregate amount of Equity Issuance Proceeds received by Borrower
from or in exchange for the issuance of Capital Stock (other than Disqualified
Capital Stock and any issuance or distribution of Capital Stock in connection
with the Pennant Transaction) after the Closing Date and on or prior to such
date; minus

 

  (ii)

the aggregate amount of any Acquisition Consideration for all Permitted
Acquisitions of Excluded Subsidiaries and other Investments in Excluded
Subsidiaries, in each case, utilizing the Available Amount on or after the
Closing Date and on or prior to such date.

“Availability Period” shall mean the period from the Closing Date to but
excluding the applicable Revolving Commitment Termination Date.

“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers
by the applicable EEA Resolution Authority in respect of any liability of an EEA
Financial Institution.

“Bail-In Legislation” shall mean, with respect to any EEA Member Country
implementing Article 55 of Directive 2014/59/EU of the European Parliament and
of the Council of the European Union, the implementing law for such EEA Member
Country from time to time which is described in the EU Bail-In Legislation
Schedule.

“Bank Product Obligations” shall mean, collectively, all obligations and other
liabilities of any Loan Party to any Bank Product Provider arising with respect
to any Bank Products.

“Bank Product Provider” shall mean any Person that (i) is a Lender or an
Affiliate of a Lender that provides a Bank Product to a Loan Party and
(ii) except when the Bank Product Provider is either (A) Wells Fargo Bank,
National Association and its Affiliates with respect to Bank Products in
existence on the Closing Date or (B) SunTrust Bank and its Affiliates, has
provided prior written notice to the Administrative Agent which has been
acknowledged by the Borrower of (x) the existence of such Bank Product, (y) the
maximum dollar amount of obligations arising thereunder (the “Bank Product
Amount”) and (z) the methodology to be used by such parties in determining the
obligations under such Bank Product from time to time; provided, the term “Bank
Product Provider” shall include any Person that is the Administrative Agent, an
Affiliate of the Administrative Agent, a Lender or an Affiliate of a Lender as
of the Closing Date or as of the date that such Person provides any Bank Product
to any Loan Party, but subsequently ceases to be the Administrative Agent, an
Affiliate of the Administrative Agent, a Lender or an Affiliate of a Lender, as
the case may be. In no event shall any Bank Product Provider acting in such
capacity be deemed a Lender for purposes hereof to the extent of and as to Bank
Products except that each reference to the term “Lender” in Article IX and
Section 10.3(b) shall be deemed to include such Bank Product Provider and in no
event shall the approval of any such person in its capacity as Bank Product
Provider be required in connection with the release or termination of any
security interest or Lien of the Administrative Agent. The Bank Product Amount
may be changed from time to time upon written notice to the Administrative Agent
by the applicable Bank Product Provider. No Bank Product Amount may be
established at any time that a Default or Event of Default exists.

 

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“Bank Products” shall mean any of the following services provided to any Loan
Party by any Bank Product Provider: (a) any treasury or other cash management
services, including deposit accounts, automated clearing house (ACH) origination
and other funds transfer, depository (including cash vault and check deposit),
zero balance accounts and sweeps, return items processing, controlled
disbursement accounts, positive pay, lockboxes and lockbox accounts, account
reconciliation and information reporting, payables outsourcing, payroll
processing, trade finance services, investment accounts and securities accounts,
and (b) card services, including credit cards (including purchasing cards and
commercial cards), prepaid cards, including payroll, stored value and gift
cards, merchant services processing, and debit card services.

“Base Rate” shall mean the highest of (i) the rate which the Wall Street Journal
reports from time to time as the prime lending rate, as in effect from time to
time, (ii) the Federal Funds Rate, as in effect from time to time, plus one-half
of one percent (0.50%) per annum, (iii) Adjusted LIBOR determined on a daily
basis for an Interest Period of one (1) month, plus one percent (1.00%) per
annum and (iv) zero percent (0.00%). Any change in the Base Rate due to a change
in the prime lending rate, the Federal Funds Rate or Adjusted LIBOR shall be
effective as of the opening of business on the day of such change in the prime
lending rate, the Federal Funds Rate or Adjusted LIBOR, respectively.

“Beneficial Ownership Certification” shall mean a certification regarding
beneficial ownership as required by the Beneficial Ownership Regulation.

“Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230.

“Benefit Plan” shall mean any of (a) an “employee benefit plan” (as defined in
ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and
subject to Section 4975 of the Code or (c) any Person whose assets include (for
purposes of Section 3(42) of ERISA or otherwise for purposes of Title I of ERISA
or Section 4975 of the Code) the assets of any such “employee benefit plan” or
“plan”.

“BHC Act Affiliate” of a party shall mean an “affiliate” (as such term is
defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such
party.

“Borrower” shall have the meaning set forth in the introductory paragraph
hereof.

“Borrowing” shall mean a borrowing consisting of (i) Loans of the same Class and
Type, made, converted or continued on the same date and, in the case of
Eurodollar Loans, as to which a single Interest Period is in effect, or (ii) a
Swingline Loan.

“Business Day” shall mean any day other than (i) a Saturday, Sunday or other day
on which commercial banks in Atlanta, Georgia are authorized or required by law
to close and (ii) if such day relates to a Borrowing of, a payment or prepayment
of principal or interest on, a conversion of or into, or an Interest Period for,
a Eurodollar Loan or a notice with respect to any of the foregoing, any day on
which banks are not open for dealings in Dollar deposits in the London interbank
market.

“Capital Lease Obligations” of any Person shall mean all obligations of such
Person to pay rent or other amounts under any lease (or other arrangement
conveying the right to use) of real or personal property, or a combination
thereof, which obligations are required to be classified and accounted for as
capital leases on a balance sheet of such Person under GAAP, and the amount of
such obligations shall be the capitalized amount thereof determined in
accordance with GAAP; provided that, (i) for the avoidance of doubt, any lease
of a property operated as a healthcare facility shall be accounted for as an
operating lease and not as a Capital Lease Obligation, and (ii) any lease that
is accounted for by any Person as an operating lease as of December 31, 2018 and
any lease entered into in the future that would have been accounted for as an
operating lease if such lease had been in effect on December 31, 2018 shall be
accounted for as an operating lease and not as a Capital Lease Obligation.

 

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“Capital Stock” shall mean all shares, options, warrants, general or limited
partnership interests, membership interests or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability company
or equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other “equity security” (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Exchange Act).

“Cash Collateralize” shall mean, in respect of any obligations, to provide and
pledge (as a first priority perfected security interest) cash collateral for
such obligations in Dollars with the Administrative Agent pursuant to
documentation in form and substance reasonably satisfactory to the
Administrative Agent (and “Cash Collateralized” and “Cash Collateralization”
have the corresponding meanings).

“CFC” shall mean any Subsidiary that is a “controlled foreign corporation”
within the meaning of Section 957 of the Code.

“CHAMPVA” shall mean, collectively, the Civilian Health and Medical Program of
the Department of Veterans Affairs, a program of medical benefits covering
retirees and dependents of former members of the armed services administered by
the United States Department of Veterans Affairs, and all laws, rules,
regulations, manuals, orders or requirements pertaining to such program.

“Change in Control” shall mean the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in a single transaction
or a series of related transactions) of all or substantially all of the assets
of the Borrower to any Person or “group” (within the meaning of the Exchange Act
and the rules of the Securities and Exchange Commission thereunder in effect on
the date hereof), (ii) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or “group” (within the meaning of the
Exchange Act and the rules of the Securities and Exchange Commission thereunder
as in effect on the date hereof) of 35% or more of the outstanding shares of the
voting equity interests of the Borrower, or (iii) during any period (after the
Closing Date) of 24 consecutive months, a majority of the members of the board
of directors or other equivalent governing body of the Borrower cease to be
composed of individuals who are Continuing Directors. It being understood and
agreed that (x) the Pennant Transaction shall not constitute a Change in Control
and (y) a Person shall not be deemed to have beneficial ownership of Capital
Stock subject to a stock purchase agreement, merger agreement or similar
agreement until the consummation of the transactions contemplated by such
agreement so long as Payment in Full of the Obligations is a condition to the
effectiveness of the acquisition contemplated by such stock purchase agreement,
merger agreement or similar agreement.

“Change in Law” shall mean (i) the adoption of any applicable law, rule or
regulation after the date of this Agreement, (ii) any change in any applicable
law, rule or regulation, or any change in the interpretation, implementation or
application thereof, by any Governmental Authority after the date of this
Agreement, or (iii) compliance by any Lender (or its Applicable Lending Office)
or any Issuing Bank (or, for purposes of Section 2.18(b), by the Parent Company
of such Lender or such Issuing Bank, if applicable) with any request, guideline
or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement; provided that for
purposes of this Agreement, (x) the Dodd-Frank Wall Street Reform and Consumer
Protection Act and all requests, rules, guidelines or directives in connection
therewith and (y) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States or
foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “Change in Law”, regardless of the date enacted,
adopted, implemented or issued.

 

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“Class”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or each of the Loans comprising such Borrowing, is a Revolving Loan, a
Swingline Loan, an Incremental Term Loan, an Extended Term Loan or an Other
Refinancing Term Loan and, when used in reference to any Commitment, refers to
whether such Commitment is a Revolving Commitment, a Swingline Commitment, an
Incremental Term Loan Commitment, an Extended Term Loan Commitment or an Other
Refinancing Term Loan Commitment.

“Closing Date” shall mean the date on which the conditions precedent set forth
in Section 3.1 and Section 3.2 have been satisfied or waived in accordance with
Section 10.2.

“Closing Date Release” shall have the meaning set forth in Section 3.1(b)(xv).

“Co-Documentation Agents” shall have the meaning set forth in Section 9.12.

“Co-Syndication Agents” shall have the meaning set forth in Section 9.12.

“Code” shall mean the Internal Revenue Code of 1986, as amended and in effect
from time to time.

“Collateral” shall mean all tangible and intangible property, real and personal,
of any Loan Party that is or purports to be the subject of a Lien to the
Administrative Agent to secure the whole or any part of the Obligations or any
Guarantee thereof, and shall include, without limitation, all casualty insurance
proceeds and condemnation awards with respect to any of the foregoing.

“Collateral Access Agreement” shall mean each landlord waiver or bailee
agreement granted to, and in form and substance reasonably acceptable to, the
Administrative Agent.

“Collateral Documents” shall mean, collectively, the Guaranty and Security
Agreement, the Control Account Agreements, the Sweep Agreements, all Copyright
Security Agreements, all Patent Security Agreements, all Trademark Security
Agreements, all Collateral Access Agreements, all Real Estate Documents, all
loss payee endorsements required by Section 5.8, and all other instruments and
agreements now or hereafter securing or perfecting the Liens securing the whole
or any part of the Obligations or any Guarantee thereof, all UCC financing
statements, fixture filings and stock powers, and all other documents,
instruments, agreements and certificates executed and delivered by any Loan
Party to the Administrative Agent and the Lenders in connection with the
foregoing.

“Commitment” shall mean a Revolving Commitment, a Swingline Commitment or a Term
Loan Commitment or any combination thereof (as the context shall permit or
require).

“Compliance Certificate” shall mean a certificate from the principal executive
officer or the principal financial officer of the Borrower in the form of, and
containing the certifications set forth in, the certificate attached hereto as
Exhibit 5.1(c).

“Consolidated EBITDA” shall mean, for the Borrower and its Subsidiaries for any
period, an amount equal to the sum of (i) Consolidated Net Income for such
period plus (ii) to the extent deducted in determining Consolidated Net Income
for such period, and without duplication, (A) Consolidated Interest Expense,
amortization or write-off of debt discount and debt issuance costs and
commissions and discounts, premiums and other fees, expenses and charges
associated with Indebtedness

 

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including underwriting, arrangement and commitment fees, letter of credit fees,
and Bank Product fees and prepayment or related premiums, (B) income tax expense
determined on a consolidated basis in accordance with GAAP, (C) depreciation and
amortization determined on a consolidated basis in accordance with GAAP,
(D) unusual, extraordinary or non-recurring charges or losses determined on a
consolidated basis in accordance with GAAP, (E) severance, business integration,
restructuring or optimization costs determined on a consolidated basis in
accordance with GAAP, (F) costs and expenses in connection with equity or stock
option plans or other employee benefit plans or stock subscriptions to the
extent funded directly or indirectly with proceeds of an equity issuance by, or
capital contribution to, the Borrower or constituting non-cash charges
determined on a consolidated basis in accordance with GAAP, (G) any non-cash
charges or expenses determined on a consolidated basis in accordance with GAAP;
provided that to the extent any such non-cash charge or expense represents an
accrual or reserve for a potential cash item in any future period, the Borrower
may elect to either not add such item pursuant to this clause (G) (or to add
such item in part), or to have the cash payment in respect thereof in such
future period (to the extent previously added pursuant to this clause (G))
subtracted from Consolidated EBITDA to such extent in such future period in
which such cash payment occurs, and excluding amortization of a prepaid cash
item that was paid in a prior period, (H) expenses related to Permitted
Acquisitions and other Acquisitions permitted hereunder or approved in writing
by the Required Lenders (or attempted Permitted Acquisitions and attempted
Acquisitions permitted hereunder or approved in writing by the Required
Lenders), equity issuances (whether or not consummated) and the Related
Transactions, in each case for such period, (I) costs, fees, expenses or charges
related to this Agreement and the transactions related hereto, and (J) charges,
costs, losses and expenses relating to any Development Facility solely during
the first twelve (12) months following the opening of such Development Facility;
provided that the amount added back in the determination of Consolidated EBITDA
for such Test Period pursuant to this clause (J) shall not exceed 10.0% of
Consolidated EBITDA (after giving effect to such addbacks) of the Borrower and
its Subsidiaries for such period, minus (iii)(A) unusual, extraordinary or
non-recurring gains determined on a consolidated basis in accordance with GAAP
and (B) non-cash gains (excluding any non-cash gain to the extent it
(x) represents the reversal of an accrual or reserve for a potential cash item
that reduced Consolidated Net Income or Consolidated EBITDA in any prior period,
(y) is in respect of cash received in a prior period and not included in
Consolidated Net Income or Consolidated EBITDA in a prior period or
(z) represents an accrual in the ordinary course); provided that if any non-cash
gain represents an accrual or asset outside the ordinary course for potential
cash items in any future period, the cash payment in respect thereof shall in
such future period be added to Consolidated EBITDA for such period to the extent
such non-cash gain was excluded from Consolidated EBITDA in any prior period;
plus (iv) to the extent not included in the calculation of Consolidated Net
Income or not added back to Consolidated Net Income pursuant to clause
(ii) above, proceeds of business interruption insurance (to the extent actually
received in cash); provided that for purposes of calculating compliance with the
financial covenants set forth in Article VI, to the extent that during such
period any Loan Party shall have consummated a Permitted Acquisition or other
Acquisition permitted hereunder or approved in writing by the Required Lenders,
or any sale, transfer or other disposition of any Person, business, property or
assets (other than the Pennant Transaction), Consolidated EBITDA shall be
calculated on a Pro Forma Basis with respect to such Person, business, property
or assets so acquired or disposed of. Notwithstanding the foregoing, the total
amount of Consolidated EBITDA that is attributable to Excluded Subsidiaries (and
their respective Subsidiaries) shall not exceed 50% of Consolidated EBITDA
(prior to inclusion of Consolidated EBITDA of any Excluded Subsidiary and its
Subsidiaries) of the Borrower and its Subsidiaries in any Test Period
(determined on a consolidated basis, inclusive of intercompany transactions).
Notwithstanding the foregoing or anything to the contrary contained herein,
(i) Consolidated EBITDA for each of the Fiscal Quarters ended September 30,
2018, December 31, 2018, March 31, 2019 and June 30, 2019 shall be deemed to be
$7,128,000, $6,712,000, $6,376,000 and $6,827,000, respectively, in each case as
may be subject to addbacks and adjustments (without duplication) pursuant to the
second paragraph of Section 1.3 for the applicable Test Period and
(ii) Consolidated EBITDA for the Fiscal Quarter ending September 30, 2019 shall
be determined in accordance with the foregoing definition as if the Pennant
Transaction had been consummated as of the first day of such Fiscal Quarter.

 

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“Consolidated EBITDAR” shall mean, for the Borrower and its Subsidiaries for any
Test Period, an amount equal to the sum of (i) Consolidated EBITDA for such Test
Period plus the aggregate amount of Consolidated EBITDA attributable to Excluded
Subsidiaries (and their respective Subsidiaries) for such Test Period, if any,
that was excluded from the calculation of Consolidated EBITDA for such Test
Period as a result of the provision in the definition of Consolidated EBITDA
limiting Consolidated EBITDA attributable to Excluded Subsidiaries (and their
respective Subsidiaries) for such Test Period to 50% of Consolidated EBITDA
(prior to inclusion of Consolidated EBITDA of any Excluded Subsidiary and its
Subsidiaries) of the Borrower and its Subsidiaries in such Test Period and
(ii) Consolidated Lease Expense for such Test Period. Notwithstanding the
foregoing or anything to the contrary contained herein, (i) Consolidated EBITDAR
for each of the Fiscal Quarters ended September 30, 2018, December 31,
2018, March 31, 2019 and June 30, 2019 shall be deemed to be $14,949,000,
$14,837,000, $14,667,000 and $15,357,000, respectively, and (ii) Consolidated
EBITDAR for the Fiscal Quarter ending September 30, 2019 shall be determined in
accordance with the foregoing definition as if the Pennant Transaction had been
consummated as of the first day of such Fiscal Quarter.

“Consolidated Interest Expense” shall mean, for the Borrower and its
Subsidiaries for any period, determined on a consolidated basis in accordance
with GAAP, the sum of (i) total interest expense, including, without limitation,
the interest component of any payments in respect of Capital Lease Obligations,
expensed during such period (whether or not actually paid during such period)
plus (ii) the net amount payable or expensed or deducted in calculating
Consolidated Net Income (or minus the net amount receivable) with respect to
Hedging Transactions during such period (whether or not actually paid or
received during such period). Notwithstanding the foregoing or anything to the
contrary contained herein, (i) Consolidated Interest Expense for each of the
Fiscal Quarters ended September 30, 2018, December 31, 2018, March 31, 2019 and
June 30, 2019 shall be deemed to be $0, $0, $0 and $0, respectively, and
(ii) Consolidated Interest Expense for the Fiscal Quarter ending September 30,
2019 shall be determined in accordance with the foregoing definition as if the
Pennant Transaction had been consummated as of the first day of such Fiscal
Quarter.

“Consolidated Lease Expense” shall mean, for the Borrower and its Subsidiaries
for any period, the aggregate amount of fixed and contingent rentals expensed
with respect to leases of real and personal property (excluding Capital Lease
Obligations) for such period (whether or not actually paid during such period)
determined on a consolidated basis in accordance with GAAP. Notwithstanding the
foregoing or anything to the contrary contained herein, (i) Consolidated Lease
Expense for each of the Fiscal Quarters ended September 30, 2018, December 31,
2018, March 31, 2019 and June 30, 2019 shall be deemed to be $7,776,000,
$8,134,000, $8,297,000 and $8,532,000, respectively, and (ii) Consolidated Lease
Expense for the Fiscal Quarter ending September 30, 2019 shall be determined in
accordance with the foregoing definition as if the Pennant Transaction had been
consummated as of the first day of such Fiscal Quarter.

“Consolidated Net Income” shall mean, for the Borrower and its Subsidiaries for
any period, the net income (or loss) of the Borrower and its Subsidiaries for
such period determined on a consolidated basis in accordance with GAAP; provided
that there shall be excluded from Consolidated Net Income (to the extent
otherwise included therein) (i) any extraordinary gains or losses, (ii) any
gains attributable to write-ups of assets or the sale of assets (other than the
sale of inventory in the ordinary course of business), (iii) any equity interest
of the Borrower or any Subsidiary of the Borrower in the unremitted earnings of
any Person that is not a Subsidiary, and (iv) any income (or loss) of any Person
accrued prior to the date it becomes a Subsidiary or is merged into or
consolidated with the Borrower or any Subsidiary or the date that such Person’s
assets are acquired by the Borrower or any Subsidiary.

 

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Notwithstanding the foregoing or anything to the contrary contained herein,
(i) Consolidated Net Income for each of the Fiscal Quarters ended September 30,
2018, December 31, 2018, March 31, 2019 and June 30, 2019 shall be deemed to be
$4,416,000, $3,951,000, $1,484,000 and $3,687,000, respectively, and
(ii) Consolidated Net Income for the Fiscal Quarter ending September 30, 2019
shall be determined in accordance with the foregoing definition as if the
Pennant Transaction had been consummated as of the first day of such Fiscal
Quarter.

“Consolidated Total Debt” shall mean, as of any date, all Indebtedness of the
Borrower and its Subsidiaries measured on a consolidated basis as of such date,
but excluding Hedging Obligations.

“Consolidated Total Net Debt” shall mean, as of any date, (i) Consolidated Total
Debt minus (ii) all cash and Permitted Investments held on such date by the
Borrower and its Subsidiaries in (x) Controlled Accounts and/or (y) Lender
Accounts; provided that the aggregate amount of cash and Permitted Investments
deducted from Consolidated Total Debt at any time pursuant to this clause
(ii) shall not exceed $20,000,000.

“Continuing Director” shall mean, with respect to any period, any individuals
(A) who were members of the board of directors or other equivalent governing
body of the Borrower on the first day of such period, (B) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (A) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body, or (C) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (A) and
(B) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body.

“Contractual Obligation” of any Person shall mean any provision of any security
issued by such Person or of any agreement, instrument or undertaking under which
such Person is obligated or by which it or any of the property in which it has
an interest is bound.

“Control Account Agreement” shall mean any tri-party agreement by and among a
Loan Party, the Administrative Agent and a depositary bank or securities
intermediary at which such Loan Party maintains a Controlled Account, in each
case in form and substance satisfactory to the Administrative Agent.

“Controlled Account” shall have the meaning set forth in Section 5.11.

“Copyright” shall have the meaning assigned to such term in the Guaranty and
Security Agreement.

“Copyright Security Agreement” shall mean any Copyright Security Agreement
executed by a Loan Party owning registered Copyrights or applications for
Copyrights in favor of the Administrative Agent for the benefit of the Secured
Parties, both on the Closing Date and thereafter.

“Covered Entity” shall mean any of the following:

 

  (i)

a “covered entity” as that term is defined in, and interpreted in accordance
with, 12 C.F.R. § 252.82(b);

 

  (ii)

a “covered bank” as that term is defined in, and interpreted in accordance with,
12 C.F.R. § 47.3(b); or

 

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  (iii)

a “covered FSI” as that term is defined in, and interpreted in accordance with,
12 C.F.R. § 382.2(b).

“Covered Party” shall have the meaning set forth in Section 10.19.

“Credit Agreement Refinancing Indebtedness” shall mean any Indebtedness incurred
pursuant to a Refinancing Amendment, in each case, issued, incurred or otherwise
obtained (including by means of the extension or renewal of existing
Indebtedness) in exchange for, or to extend, renew, replace or refinance, in
whole or part, existing Loans or Commitments (including any successive Credit
Agreement Refinancing Indebtedness) (“Refinanced Debt”); provided that (a) such
exchanging, extending, renewing, replacing or refinancing Indebtedness
(including, if such Indebtedness includes any Other Refinancing Revolving
Commitments, the unused portion of such Other Refinancing Revolving Commitments)
is in an original aggregate principal amount not greater than the aggregate
principal amount of the Refinanced Debt (and, in the case of Refinanced Debt
consisting, in whole or in part, of unused Revolving Commitments, Extended
Revolving Commitments or Other Refinancing Revolving Commitments, the amount
thereof) except by an amount equal to unpaid accrued interest and premium
thereon plus reasonable upfront fees and original issue discount on such
exchanging, extending, renewing, replacing or refinancing Indebtedness, plus
other reasonable and customary fees and expenses in connection with such
exchange, modification, refinancing, refunding, renewal, replacement or
extension, (b) such Indebtedness has a maturity equal to or later than, and,
except in the case of Other Refinancing Revolving Commitments, a Weighted
Average Life to Maturity equal to or greater than, the Refinanced Debt, (c) the
terms and conditions of such Indebtedness (except as otherwise provided in
clause (b) above and with respect to pricing, premiums and optional prepayment
or redemption terms) are substantially identical to, or (taken as a whole) are
no more favorable to the lenders or holders providing such Indebtedness, than
those applicable to the Loans or Commitments being refinanced (except for
covenants or other provisions applicable only to periods after the latest
Maturity Date at the time of incurrence of such Indebtedness) (provided that
satisfaction of this clause (c) shall be evidenced by a certificate of a
Responsible Officer of the Borrower delivered to the Administrative Agent at
least three (3) Business Days prior to the incurrence of such Indebtedness,
providing a reasonably detailed description of the material terms and conditions
of such Indebtedness or drafts of the documentation relating thereto, and a
certificate of a Responsible Officer of the Borrower stating that the Borrower
has determined in good faith that such terms and conditions satisfy the
requirement of this clause (c) which shall be conclusive evidence that such
terms and conditions satisfy such requirement unless the Administrative Agent
notifies the Borrower within such three (3) Business Day period that it
disagrees with such determination (including a description of the basis upon
which it disagrees)) and (d) such Refinanced Debt shall be repaid, or satisfied
and discharged, and all accrued interest, fees and premiums (if any) in
connection therewith shall be paid, on the date such Credit Agreement
Refinancing Indebtedness is issued, incurred or obtained.

“CTRI” shall mean CareTrust REIT, Inc., a Maryland corporation.

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

“Default” shall mean any condition or event that, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.

“Default Interest” shall have the meaning set forth in Section 2.13(c).

 

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“Default Right” shall have the meaning assigned to that term in, and shall be
interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as
applicable.

“Defaulting Lender” shall mean, subject to Section 2.26(c), any Lender that
(a) has failed to (i) fund all or any portion of its Loans within two
(2) Business Days of the date such Loans were required to be funded hereunder
unless such Lender notifies the Administrative Agent and the Borrower in writing
that such failure is the result of such Lender’s good-faith determination that
one or more conditions precedent to funding (each of which conditions precedent,
together with any applicable default, shall be specifically identified in such
writing) has not been satisfied, or (ii) pay to the Administrative Agent, any
Issuing Bank, any Swingline Lender or any other Lender any other amount required
to be paid by it hereunder (including in respect of its participation in Letters
of Credit or Swingline Loans) within two (2) Business Days of the date when due,
(b) has notified the Borrower, the Administrative Agent or any Issuing Bank or
Swingline Lender in writing that it does not intend to comply with its funding
obligations hereunder, or has made a public statement to that effect (unless
such writing or public statement relates to such Lender’s obligation to fund a
Loan hereunder and states that such position is based on such Lender’s
good-faith determination that a condition precedent to funding (which condition
precedent, together with any applicable default, shall be specifically
identified in such writing or public statement) cannot be satisfied), (c) has
failed, within three (3) Business Days after written request by the
Administrative Agent or the Borrower, 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 shall cease to be a
Defaulting Lender pursuant to this clause (c) upon receipt of such written
confirmation by the Administrative Agent and the Borrower), or (d) has, or has a
direct or indirect parent company that has, (i) become the subject of a
proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver,
custodian, conservator, trustee, administrator, assignee for the benefit of
creditors or similar Person charged with reorganization or liquidation of its
business or assets, including the Federal Deposit Insurance Corporation or any
other state or federal or foreign regulatory authority acting in such a
capacity; provided that a Lender shall not be a Defaulting Lender solely by
virtue of the ownership or acquisition of any equity interest in that Lender or
any direct or indirect parent company thereof by a Governmental Authority so
long as such ownership interest does not result in or provide such Lender with
immunity from the jurisdiction of courts within the United States or from the
enforcement of judgments or writs of attachment on its assets or permit such
Lender (or such Governmental Authority) to reject, repudiate, disavow or
disaffirm any contracts or agreements made with such Lender. Any determination
by the Administrative Agent that a Lender is a Defaulting Lender under clauses
(a) through (d) above shall be conclusive and binding absent manifest error, and
such Lender shall be deemed to be a Defaulting Lender (subject to
Section 2.26(b)) upon delivery of written notice of such determination to the
Borrower, each Issuing Bank, each Swingline Lender and each Lender.

“Designated Non-Cash Consideration” shall mean the fair market value of non-cash
consideration received by Borrower or any of its Subsidiaries in connection with
a sale or other disposition of assets that is so designated as “Designated
Non-Cash Consideration” pursuant to a certificate from a Responsible Officer of
the Borrower setting forth the basis of such valuation, minus the amount of cash
or Permitted Investments received in connection with a subsequent sale of or
collection on such Designated Non-Cash Consideration.

“Development Facility” means any newly constructed, rehabilitated or developed
healthcare facility of the Borrower or any Subsidiary.

“Disqualified Capital Stock” shall mean, with respect to any Person, any Capital
Stock of such Person that, by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable), or upon the happening
of any event, matures (excluding any maturity as the result of an optional
redemption by the issuer thereof) or is mandatorily redeemable or redeemable at
the sole option

 

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of the holder thereof (other than solely (x) for Qualified Capital Stock or upon
a sale of assets, casualty event or a change of control, in each case, subject
to the prior payment in full of the Obligations or (y) as a result of a
redemption that by the terms of such Capital Stock is contingent upon such
redemption not being prohibited by this Agreement), pursuant to a sinking fund
obligation or otherwise (other than solely for Qualified Capital Stock) or
exchangeable or convertible into debt securities of the issuer thereof at the
sole option of the holder thereof, in whole or in part, on or prior to the date
that is 181 days after the latest Maturity Date then in effect at the time of
issuance thereof.

“Disqualified Institutions” shall mean those Persons who are direct competitors
of the Borrower or any of its Subsidiaries and any Affiliate of such competitors
that are, in each case, identified in writing to the Administrative Agent by the
Borrower from time to time (the writings described herein, collectively, the
“Disqualified Institutions List”); provided that any update or supplement to the
Disqualified Institutions List shall not apply retroactively to disqualify any
parties that have previously acquired an assignment or a participation in any
Commitment or Loan.

“Disqualified Institutions List” shall have the meaning assigned to such term in
the definition of Disqualified Institution.

“Dollar(s)” and the sign “$” shall mean lawful money of the United States.

“Domestic Subsidiary” shall mean each Subsidiary of the Borrower that is
organized under the laws of the United States or any state or district thereof.

“Earlier LC Maturity Date” shall have the meaning set forth in Section 2.22(a).

“Earlier Swingline Maturity Date” shall have the meaning set forth in
Section 2.4(f).

“EEA Financial Institution” shall mean (a) any credit institution or investment
firm established in any EEA Member Country which is subject to the supervision
of an EEA Resolution Authority, (b) any entity established in an EEA Member
Country which is a parent of an institution described in clause (a) of this
definition, or (c) any financial institution established in an EEA Member
Country which is a subsidiary of an institution described in clause (a) or
(b) of this definition and is subject to consolidated supervision with its
parent.

“EEA Member Country” shall mean any of the member states of the European Union,
Iceland, Liechtenstein and Norway.

“EEA Resolution Authority” shall mean any public administrative authority or any
Person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.

“Ensign” shall mean The Ensign Group, Inc., a Delaware corporation.

“Ensign Credit Agreement” shall mean that certain Third Amended and Restated
Credit Agreement, dated as of October 1, 2019, by and among Ensign, the lenders
from time to time party thereto, and SunTrust Bank, as administrative agent for
the lenders, as issuing bank, and as swingline lender, as amended, restated,
amended and restated, supplemented or otherwise modified through the Closing
Date.

“Ensign Landlord” shall mean Ensign and any Subsidiary of Ensign.

 

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“Ensign Master Leases” shall mean the master leases entered into by the Borrower
or any of its Subsidiaries with one or more Ensign Landlords, in each case, in
substantially the form of such master leases delivered to the Administrative
Agent on or prior to the Closing Date and any other master lease entered into by
the Borrower or any of its Subsidiaries with an Ensign Landlord.

“Environmental Laws” shall mean all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by or with any Governmental Authority relating in
any way to the environment, preservation or reclamation of natural resources,
the management, Release or threatened Release of any Hazardous Material or to
health and safety matters.

“Environmental Liability” shall mean any liability, contingent or otherwise
(including any liability for damages, costs of environmental investigation and
remediation, costs of administrative oversight, fines, natural resource damages,
penalties or indemnities), of the Borrower or any of its Subsidiaries directly
or indirectly resulting from or based upon (i) any actual or alleged violation
of any Environmental Law, (ii) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (iii) any actual or
alleged exposure to any Hazardous Materials, (iv) the Release or threatened
Release of any Hazardous Materials or (v) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

“Equity Issuance” shall mean (a) any issuance or sale after the Closing Date by
the Borrower of any Capital Stock, or (b) the receipt by the Borrower after the
Closing Date of any capital contribution (whether or not evidenced by any
Capital Stock issued by the recipient of such contribution).

“Equity Issuance Proceeds” shall mean, with respect to any Equity Issuance, the
aggregate amount of all cash received in respect thereof by the Person
consummating such Equity Issuance net of all investment banking fees, discounts
and commissions, legal fees, consulting fees, accountants’ fees, underwriting
discounts and commissions and other fees and expenses actually incurred in
connection therewith.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended and in effect from time to time, and any successor statute thereto and
the regulations promulgated and rulings issued thereunder.

“ERISA Affiliate” shall mean any person that for purposes of Title I or Title IV
of ERISA or Section 412 of the Code would be deemed at any relevant time to be a
“single employer” or otherwise aggregated with the Borrower or any of its
Subsidiaries under Section 414(b), (c), (m) or (o) of the Code or Section 4001
of ERISA.

“ERISA Event” shall mean (i) any “reportable event” as defined in Section 4043
of ERISA with respect to a Plan (other than an event as to which the PBGC has
waived under subsection .22, .23, .25, .27 or .28 of PBGC Regulation
Section 4043 the requirement of Section 4043(a) of ERISA that it be notified of
such event); (ii) any failure to make a required contribution to any Plan that
would result in the imposition of a lien or other encumbrance or the provision
of security under Section 430 of the Code or Section 303 or 4068 of ERISA, or
the arising of such a lien or encumbrance, there being or arising any “unpaid
minimum required contribution” or “accumulated funding deficiency” (as defined
or otherwise set forth in Section 4971 of the Code or Part 3 of Subtitle B of
Title 1 of ERISA), whether or not waived, or any filing of any request for or
receipt of a minimum funding waiver under Section 412 of the Code or Section 302
of ERISA with respect to any Plan or Multiemployer Plan, or that such filing may
be made, or any determination that any Plan is, or is expected to be, in at-risk
status under Title IV of ERISA; (iii) any incurrence by the Borrower, any of its
Subsidiaries or any of their respective ERISA Affiliates of any liability under
Title IV of ERISA with respect to any Plan or Multiemployer Plan (other

 

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than for premiums due and not delinquent under Section 4007 of ERISA); (iv) any
institution of proceedings, or the occurrence of an event or condition which
would reasonably be expected to constitute grounds for the institution of
proceedings by the PBGC, under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan; (v) any incurrence by the
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates of
any liability with respect to the withdrawal or partial withdrawal from any Plan
or Multiemployer Plan, or the receipt by the Borrower, any of its Subsidiaries
or any of their respective ERISA Affiliates of any notice that a Multiemployer
Plan is in endangered or critical status under Section 305 of ERISA; (vi) any
receipt by the Borrower, any of its Subsidiaries or any of their respective
ERISA Affiliates of any notice, or any receipt by any Multiemployer Plan from
the Borrower, any of its Subsidiaries or any of their respective ERISA
Affiliates of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent,
within the meaning of Title IV of ERISA; (vii) engaging in a non-exempt
prohibited transaction within the meaning of Section 4975 of the Code or
Section 406 of ERISA; or (viii) any filing of a notice of intent to terminate
any Plan if such termination would require material additional contributions in
order to be considered a standard termination within the meaning of
Section 4041(b) of ERISA, any filing under Section 4041(c) of ERISA of a notice
of intent to terminate any Plan, or the termination of any Plan under
Section 4041(c) of ERISA.

“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor Person), as in effect
from time to time.

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, bears interest at a rate
determined by reference to Adjusted LIBOR.

“Event of Default” shall have the meaning set forth in Section 8.1.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended and in
effect from time to time.

“Excluded Subsidiary” shall mean (i) each Subsidiary of the Borrower that is
designated by the Borrower as an “Excluded Subsidiary” on Schedule 4.14 on the
Closing Date, and (ii) each other Subsidiary of the Borrower that is designated
by the Borrower by written notice to the Administrative Agent as an “Excluded
Subsidiary” pursuant to Section 5.18 subsequent to the Closing Date.
Notwithstanding the foregoing, in no event shall (i) any tenant under any Ensign
Master Lease be an Excluded Subsidiary other than to the extent such tenant is
required to grant a Lien on its assets to secure Indebtedness of the applicable
Ensign Landlord or (ii) any tenant under any PropCo Master Lease be an Excluded
Subsidiary.

“Excluded Subsidiary Designation” shall have the meaning set forth in
Section 5.18.

“Excluded Subsidiary Designation Amount” shall have the meaning set forth in
Section 5.18.

“Excluded Subsidiary Revocation” shall have the meaning set forth in
Section 5.18.

“Excluded Taxes” shall mean, with respect to any Recipient of any payment to be
made by or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) the Recipient’s net income by the
jurisdiction under the laws of which such Recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
Applicable Lending Office is located, (b) any branch profits taxes imposed by
the United States or any similar tax imposed by any other jurisdiction in which
such Recipient is located, and (c) any U.S. federal withholding

 

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taxes that (i) are imposed on amounts payable to such Recipient pursuant to a
law in effect at the time such Recipient becomes a Recipient under this
Agreement or designates a new lending office, except in each case to the extent
that amounts with respect to such taxes were payable either (A) to such
Recipient’s assignor immediately before such Recipient became a Recipient under
this Agreement, or (B) to such Recipient immediately before it designated a new
lending office, (ii) are attributable to such Recipient’s failure to comply with
Section 2.20(e), or (iii) are imposed under FATCA.

“Extended Commitments” shall mean the Extended Term Loan Commitments and the
Extended Revolving Commitments.

“Extended Facility” shall mean any additional tranche established pursuant to
Section 2.27 reflecting an extension of the maturity date and, if applicable,
amortization schedule of any existing tranche.

“Extended Facility Agreement” shall mean an Extended Revolving Credit Facility
Agreement or an Extended Term Facility Agreement, as the context may require.

“Extended Facility Closing Date” shall mean, with regard to an Extended
Facility, the first date all the conditions precedent set forth in the
respective Extended Facility Agreement are satisfied or waived in accordance
with Section 10.2.

“Extended Facility Lender” shall mean, at any time, with regard to an Extended
Facility, any Lender that holds Loans or Commitments under such Extended
Facility at such time.

“Extended Revolving Commitments” shall have the meaning set forth in
Section 2.27.

“Extended Revolving Credit Facility” shall mean an Extended Facility designated
as an “Extended Revolving Credit Facility” by the Borrower and established
pursuant to an Extended Revolving Credit Facility Agreement.

“Extended Revolving Credit Facility Agreement” shall mean an agreement setting
forth the terms and conditions relating to an Extended Revolving Credit
Facility.

“Extended Term Facility” shall mean an Extended Facility designated as an
“Extended Term Facility” by the Borrower and established pursuant to an Extended
Term Facility Agreement.

“Extended Term Facility Agreement” shall mean an agreement setting forth the
terms and conditions relating to an Extended Term Facility.

“Extended Term Loan Commitment” shall have the meaning set forth in
Section 2.27.

“Extended Term Loans” shall have the meaning set forth in Section 2.27.

“Extending Revolving Lender” shall have the meaning set forth in Section 2.27.

“Extending Term Loan Lender” shall have the meaning set forth in Section 2.27.

“Extension” shall have the meaning set forth in Section 2.27.

“Extension Offer” shall have the meaning set forth in Section 2.27.

 

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“FATCA” shall mean Sections 1471 through 1474 of the Code as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with) and any current or future
regulations or official interpretations thereof and any agreement entered into
pursuant to Section 1471(b)(1) of the Code or any intergovernmental agreements
entered into in connection with the implementation of such Sections of the Code.

“Federal Funds Rate” shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the next 1/100 of 1%) equal to the weighted average of
the rates on overnight Federal funds transactions with member banks of the
Federal Reserve System, as published by the Federal Reserve Bank of New York on
the next succeeding Business Day or, if such rate is not so published for any
Business Day, the Federal Funds Rate for such day shall be the average rate
(rounded upwards, if necessary, to the next 1/100 of 1%) charged to the
Administrative Agent on such day on such transactions as determined by the
Administrative Agent. For the avoidance of doubt, if the Federal Funds Rate
shall be less than zero, such rate shall be deemed zero for purposes of this
Agreement.

“Fee Letter” shall mean that certain fee letter, dated as of May 3, 2019,
executed by SunTrust Robinson Humphrey, Inc. and SunTrust Bank and accepted by
the Borrower, as amended, restated, amended and restated, supplemented or
otherwise modified from time to time.

“Fiscal Quarter” shall mean any fiscal quarter of the Borrower.

“Fiscal Year” shall mean any fiscal year of the Borrower.

“Flood Insurance Laws” shall mean, collectively, (i) the National Flood
Insurance Reform Act of 1994 (which comprehensively revised the National Flood
Insurance Act of 1968 and the Flood Disaster Protection Act of 1973), as now or
hereafter in effect or any successor statute thereto, (ii) the Flood Insurance
Reform Act of 2004, as now or hereafter in effect or any successor statute
thereto and (iii) the Biggert–Waters Flood Insurance Reform Act of 2012, as now
or hereafter in effect or any successor statute thereto.

“Foreign Person” shall mean any Person that is not a U.S. Person.

“Foreign Subsidiary” shall mean each Subsidiary of the Borrower that is
organized under the laws of a jurisdiction other than one of the fifty states of
the United States or the District of Columbia.

“GAAP” shall mean generally accepted accounting principles in the United States
applied on a consistent basis and subject to the terms of Section 1.3.

“Governmental Authority” shall mean the government of the United States, any
other nation or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government. “Governmental
Authority” shall include any agency, branch or other governmental body charged
with the responsibility, or vested with the authority to administer or enforce,
any Health Care Laws, including any Medicare or Medicaid contractors,
intermediaries or carriers.

“Governmental Deposit Account” shall mean a deposit account of a Loan Party
maintained in accordance with the requirements of Section 5.11, into which
direct proceeds of Medicare and Medicaid payments made by Governmental Payors
are deposited.

“Governmental Payor” shall mean Medicare, Medicaid, TRICARE, CHAMPVA, any state
health plan adopted pursuant to Title XIX of the Social Security Act, any other
state or federal health care program and any other Governmental Authority which
presently or in the future maintains a Third Party Payor Program.

 

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“Guarantee” of or by any Person (the “guarantor”) shall mean any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly and including any
obligation, direct or indirect, of the guarantor (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (ii) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness of the payment
thereof, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or (iv) as an account party
in respect of any letter of credit or letter of guaranty issued in support of
such Indebtedness; provided that the term “Guarantee” shall not include
endorsements for collection or deposit in the ordinary course of business. The
amount of any Guarantee shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
is made or, if not so 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. The term “Guarantee”
used as a verb has a corresponding meaning.

“Guarantor” shall mean each of the Subsidiary Loan Parties.

“Guaranty and Security Agreement” shall mean the Guaranty and Security
Agreement, dated as of the Closing Date and substantially in the form of Exhibit
B, made by the Loan Parties in favor of the Administrative Agent for the benefit
of the Secured Parties, as amended, restated, amended and restated, supplemented
or otherwise modified from time to time.

“Hazardous Materials” shall mean all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.

“Health Care Law” shall mean any Requirement of Law relating to (a) fraud and
abuse (including, without limitation, the following statutes, as amended and in
effect from time to time, and any successor statutes thereto and the regulations
promulgated thereunder: the federal Anti-Kickback Statute (42 U.S.C. §
1320a-7b(b)); the Stark Law (42 U.S.C. § 1395nn and §1395(q)); the civil False
Claims Act (31 U.S.C. § 3729 et seq.); Sections 1320a-7 and 1320a-7a and
1320a-7b of Title 42 of the United States Code; and the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (Pub. L. No. 108-173));
(b) Medicare, Medicaid, CHAMPVA, TRICARE or other Third Party Payor Programs;
(c) the licensure or regulation of healthcare providers, suppliers,
professionals, facilities or payors; (d) the provision of, or payment for,
health care services, items or supplies; (e) patient health care; (f) quality,
safety certification and accreditation standards and requirements; (g) the
billing, coding or submission of claims or collection of accounts receivable or
refund of overpayments; (h) HIPAA; (i) fee-splitting prohibitions; (j) health
planning or rate-setting laws, including laws regarding certificates of need and
certificates of exemption; (k) certificates of operations and authority;
(l) laws regulating the provision of free or discounted care or services; and
(m) any and all other applicable federal, state or local health care laws,
rules, codes, statutes, regulations, manuals, orders, ordinances, statutes,
policies, professional or ethical rules, administrative guidance and
requirements, in each case as amended from time to time.

“Health Care Permits” shall mean, with respect to any Person, any permit,
approval, consent, authorization, license, provisional license, registration,
accreditation, certificate, certification, certificate of need, qualification,
operating authority, concession, grant, franchise, variance or permission from
any Governmental Authority issued or required under applicable Health Care Laws.

 

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“Hedging Obligations” of any Person shall mean any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired under (i) any and all Hedging Transactions,
(ii) any and all cancellations, buy backs, reversals, terminations or
assignments of any Hedging Transactions and (iii) any and all renewals,
extensions and modifications of any Hedging Transactions and any and all
substitutions for any Hedging Transactions.

“Hedging Transaction” of any Person shall mean (a) any transaction (including an
agreement with respect to any such transaction) now existing or hereafter
entered into by such Person that is a rate swap transaction, swap option, basis
swap, forward rate transaction, commodity swap, commodity option, equity or
equity index swap or option, bond option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, collar transaction, currency
swap transaction, cross-currency rate swap transaction, currency option, spot
transaction, credit protection transaction, credit swap, credit default swap,
credit default option, total return swap, credit spread transaction, repurchase
transaction, reverse repurchase transaction, buy/sell-back transaction,
securities lending transaction, or any other similar transaction (including any
option with respect to any of these transactions) or any combination thereof,
whether or not any such transaction is governed by or subject to any master
agreement, and (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed by,
any form of master agreement published by the International Swaps and
Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together
with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.

“HIPAA” shall mean the (a) Health Insurance Portability and Accountability Act
of 1996; (b) the Health Information Technology for Economic and Clinical Health
Act (Title XIII of the American Recovery and Reinvestment Act of 2009); and
(c) any state and local laws regulating the privacy and/or security of
individually identifiable information, including state laws providing for
notification of breach of privacy or security of individually identifiable
information, in each case, with respect to the laws described in clauses (a),
(b) and (c) of this definition, as amended and in effect from time to time, and
any successor statutes thereto and the regulations promulgated thereunder.

“Immaterial Subsidiary” shall mean, as of any date of determination, any direct
or indirect Subsidiary of the Borrower that is formed or acquired after the
Closing Date that has, (a) individually, (i) assets in an amount not in excess
of 2.5% of the total assets of the Borrower and its Subsidiaries (other than
Excluded Subsidiaries) determined on a consolidated basis as of such date and
(ii) revenues in an amount not in excess of 2.5% of the total revenues of the
Borrower and its Subsidiaries (other than Excluded Subsidiaries) on a
consolidated basis for the most recently ended Test Period and (b) when taken
together with all other then-existing Immaterial Subsidiaries, (i) assets in an
amount not in excess of 5.0% of the total assets of the Borrower and its
Subsidiaries (other than Excluded Subsidiaries) determined on a consolidated
basis as of such date and (ii) revenues in an amount not in excess of 5.0% of
the total revenues of the Borrower and its Subsidiaries (other than Excluded
Subsidiaries) on a consolidated basis for the most recently ended Test Period.

“Increasing Lender” shall have the meaning set forth in Section 2.23.

“Incremental Commitment” shall have the meaning set forth in Section 2.23.

“Incremental Commitment Joinder” shall have the meaning set forth in
Section 2.23.

“Incremental Revolving Commitment” shall have the meaning set forth in
Section 2.23.

“Incremental Term Loan” shall have the meaning set forth in Section 2.23.

 

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“Incremental Term Loan Commitment” shall have the meaning set forth in
Section 2.23.

“Indebtedness” of any Person shall mean, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person in respect of the deferred purchase price
of property or services (other than trade payables incurred in the ordinary
course of business and excluding earn-outs except to the extent required under
GAAP to be reflected as a liability on the balance sheet of such Person),
(iv) all obligations of such Person under any conditional sale or other title
retention agreement(s) relating to property acquired by such Person, (v) all
Capital Lease Obligations of such Person, (vi) all obligations, contingent or
otherwise, of such Person in respect of letters of credit, acceptances or
similar extensions of credit, (vii) all Guarantees of such Person of the type of
Indebtedness described in clauses (i) through (vi) above, (viii) all
Indebtedness of a third party secured by any Lien on property owned by such
Person, whether or not such Indebtedness has been assumed by such Person
(provided that if such Person has not assumed or otherwise become liable in
respect of such Indebtedness, such Indebtedness shall be deemed to be in an
amount equal to the lesser of (A) the amount of such Indebtedness and (B) the
fair market value of the property to which such Lien relates), (ix) all
obligations of such Person in respect of Disqualified Capital Stock, (x) all
Off-Balance Sheet Liabilities and (xi) all Hedging Obligations. The Indebtedness
of any Person shall include (1) the Indebtedness of any partnership in which
such Person is a general partner, except to the extent that the terms of such
Indebtedness or the terms of the partnership agreement of such partnership
provide that such Person is not liable therefor and (2) the Indebtedness of any
joint venture (other than to the extent covered by clause (1) above) in which
such Person is joint venturer, solely to the extent that the terms of such
Indebtedness or the terms of the operating agreement of such joint venture
expressly provide that such Person is liable therefor, or such Person is
otherwise liable therefor.

“Indemnified Taxes” shall mean Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of any Loan
Party under any Loan Document.

“Interest/Rent Coverage Ratio” shall mean, as of the end of any Test Period, the
ratio of (i) Consolidated EBITDAR for such Test Period to (ii) the sum of
Consolidated Interest Expense and Consolidated Lease Expense for such Test
Period.

“Interest Period” shall mean with respect to any Eurodollar Borrowing, a period
of one, two, three or six months, or such other period that is twelve months or
less than one month that is agreed to by all relevant Lenders; provided that:

(i) the initial Interest Period for such Borrowing shall commence on the date of
such Borrowing (including the date of any conversion from a Borrowing of another
Type), and each Interest Period occurring thereafter in respect of such
Borrowing shall commence on the day on which the next preceding Interest Period
expires;

(ii) if any Interest Period would otherwise end on a day other than a Business
Day, such Interest Period shall be extended to the next succeeding Business Day,
unless such Business Day falls in another calendar month, in which case such
Interest Period would end on the next preceding Business Day;

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

 

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(iv) each principal installment of the Term Loans shall have an Interest Period
ending on or prior to each installment payment date and the remaining principal
balance (if any) of the Term Loans shall have an Interest Period determined as
set forth above; and

(v) no Interest Period may extend beyond the applicable Revolving Commitment
Termination Date, unless on such Revolving Commitment Termination Date the
aggregate outstanding principal amount of Term Loans is equal to or greater than
the aggregate principal amount of Eurodollar Loans with Interest Periods
expiring after such date, and no Interest Period may extend beyond the final
Maturity Date.

“Investments” shall have the meaning set forth in Section 7.4.

“Issuing Bank” shall mean (a) SunTrust Bank in its capacity as an issuer of
Letters of Credit and (b) each other Lender with a Revolving Commitment selected
by the Borrower and approved by the Administrative Agent that agrees to act as
an issuer of Letters of Credit (it being understood that any other Lender that
becomes an Issuing Bank may condition its agreement to act in such capacity on a
lesser sublimit within the LC Commitment but that the Administrative Agent shall
not have any responsibility for monitoring the usage of such lesser sublimit),
in each case pursuant to Section 2.22.

“Joining Guarantor” shall have the meaning set forth in Section 5.12(a).

“JV Documents” shall have the meaning set forth in Section 7.4(i).

“JV Entities” shall have the meaning set forth in Section 7.4(i).

“LCA Election” shall mean the Borrower’s election to treat a specified
Acquisition as a Limited Condition Acquisition in accordance with Section 1.5,
effective upon delivery by the Borrower of the LCA Election Certificate required
by Section 1.5.

“LCA Election Certificate” shall have the meaning set forth in Section 1.5.

“LCA Test Date” shall have the meaning set forth in Section 1.5.

“LC Commitment” shall mean that portion of the Aggregate Revolving Commitments
that may be used by the Borrower for the issuance of Letters of Credit in an
aggregate face amount not to exceed $15,000,000.

“LC Disbursement” shall mean a payment made by an Issuing Bank pursuant to a
Letter of Credit.

“LC Documents” shall mean all applications, agreements and instruments relating
to the Letters of Credit but excluding the Letters of Credit.

“LC Exposure” shall mean, at any time, the sum of (i) the aggregate undrawn
amount of all outstanding Letters of Credit at such time, plus (ii) the
aggregate amount of all LC Disbursements that have not been reimbursed by or on
behalf of the Borrower at such time. The LC Exposure of any Revolving Lender
shall be its Pro Rata Share (based on such Revolving Lender’s Revolving
Commitment or Revolving Credit Exposure, as applicable) of the total LC Exposure
at such time.

“Lead Arrangers” shall mean SunTrust Robinson Humphrey, Inc., BofA Securities,
Inc. and Regions Securities LLC, each in its capacity as a joint lead arranger
in connection with this Agreement.

 

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“Lease-Adjusted Leverage Ratio” shall mean, as of any date of determination, the
ratio of (i) the sum of (A) Consolidated Total Net Debt as of such date and
(B) an amount equal to six (6) times the Consolidated Lease Expense for the most
recently ended Test Period to (ii) Consolidated EBITDAR for the most recently
ended Test Period.

“Lender Account” shall mean any deposit account or securities account of the
Borrower or any of its Subsidiaries that is established at the Administrative
Agent or any Lender.

“Lender-Related Hedge Provider” shall mean any Person that, at the time it
enters into a Hedging Transaction with any Loan Party, (i) is a Lender or an
Affiliate of a Lender and (ii) except when the Lender-Related Hedge Provider is
SunTrust Bank or any of its Affiliates, has provided prior written notice to the
Administrative Agent which has been acknowledged by the Borrower of (x) the
existence of such Hedging Transaction and (y) the methodology to be used by such
parties in determining the obligations under such Hedging Transaction from time
to time. In no event shall any Lender-Related Hedge Provider acting in such
capacity be deemed a Lender for purposes hereof to the extent of and as to
Hedging Obligations except that each reference to the term “Lender” in Article
IX and Section 10.3(b) shall be deemed to include such Lender-Related Hedge
Provider. In no event shall the approval of any such Person in its capacity as
Lender-Related Hedge Provider be required in connection with the release or
termination of any security interest or Lien of the Administrative Agent.

“Lenders” shall have the meaning set forth in the introductory paragraph hereof
and shall include, where appropriate, the Swingline Lender, each Increasing
Lender, each Additional Lender that joins this Agreement pursuant to
Section 2.23, each Extended Facility Lender and each Refinancing Lender.

“Letter of Credit” shall mean any stand-by letter of credit issued pursuant to
Section 2.22 by an Issuing Bank for the account of the Borrower pursuant to the
LC Commitment.

“Leverage Ratio” shall mean, as of any date of determination, the ratio of
(i) Consolidated Total Net Debt as of such date to (ii) Consolidated EBITDA for
the most recently ended Test Period.

“Licensed Personnel” shall mean any Person (including any physician) involved in
the delivery of health care or medical items, services or supplies, employed or
retained by the Borrower or any of its Subsidiaries.

“Lien” shall mean any mortgage, pledge, security interest, lien (statutory or
otherwise), charge, encumbrance, hypothecation, assignment, or other arrangement
having the practical effect of any of the foregoing or any preference, priority
or other security agreement or preferential arrangement for security of any kind
or nature whatsoever (including any conditional sale or other title retention
agreement and any capital lease having the same economic effect as any of the
foregoing).

“Limited Condition Acquisition” shall mean any Acquisition whose consummation is
not conditioned on the availability of, or on obtaining, third party financing;
provided that in the event the consummation of any such acquisition shall not
have occurred on or prior to the date that is one hundred and fifty (150) days
following the signing of the applicable Limited Condition Acquisition Agreement
(or such longer period as is reasonably necessary to obtain regulatory approvals
from any applicable Governmental Authority), such acquisition shall no longer
constitute a Limited Condition Acquisition for any purpose hereunder.

“Limited Condition Acquisition Agreement” shall have the meaning set forth in
Section 1.5.

 

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“Liquidity” shall mean, as of any date of determination, an amount equal to
(x) the Aggregate Revolving Commitment Amount minus (y) the aggregate Revolving
Credit Exposure of all Lenders.

“Loan Documents” shall mean, collectively, this Agreement, the Collateral
Documents, the LC Documents, the Fee Letter, all Notices of Borrowing, all
Notices of Swingline Borrowing, all Notices of Conversion/Continuation, all
Compliance Certificates, any promissory notes issued hereunder and each other
instrument, agreement, document and writing executed in connection with any of
the foregoing that is identified by its terms as a “Loan Document”.

“Loan Parties” shall mean the Borrower and the Subsidiary Loan Parties.

“Loans” shall mean all Revolving Loans, Swingline Loans and Term Loans in the
aggregate or any of them, as the context shall require, and shall include, where
appropriate, any loan made pursuant to Section 2.23, 2.27 or 2.28.

“Master Leases” shall mean the PropCo Master Leases, the Ensign Master Leases
and each other Material Master Lease.

“Material Adverse Effect” shall mean, with respect to any event, act, condition
or occurrence of whatever nature, whether singularly or in conjunction with any
other event or events, act or acts, condition or conditions, occurrence or
occurrences whether or not related, resulting in a material adverse change in,
or a material adverse effect on, (i) the business, results of operations,
financial condition, assets, liabilities or properties of the Borrower and its
Subsidiaries taken as a whole and after giving effect to the Related
Transactions, (ii) the ability of the Loan Parties, taken as a whole, to perform
their respective obligations under the Loan Documents, (iii) the rights and
remedies of the Administrative Agent, each Issuing Bank, the Swingline Lender or
the Lenders under any of the Loan Documents or (iv) the legality, validity or
enforceability of any of the Loan Documents.

“Material Agreements” shall mean (i) all agreements, indentures or notes
governing the terms of any Material Indebtedness, (ii) each Master Lease and
(iii) all other agreements, documents, contracts, indentures and instruments
pursuant to which a default, breach or termination thereof could reasonably be
expected to result in a Material Adverse Effect.

“Material Indebtedness” shall mean any Indebtedness (other than the Commitments,
the Loans and the Letters of Credit) of the Borrower or any of its Subsidiaries
individually or in an aggregate committed or outstanding principal amount
exceeding $7,500,000. For purposes of determining the amount of attributed
Indebtedness from Hedging Obligations, the “principal amount” of any Hedging
Obligations at any time shall be the Net Mark-to-Market Exposure of such Hedging
Obligations.

“Material Master Lease” shall mean a master lease of multiple properties to the
Borrower or its Subsidiaries concerning properties from which the Borrower and
its Subsidiaries, when taken together, derived in excess of 7.5% of their
consolidated revenues for any Test Period.

“Material Real Estate” shall mean Real Estate with a fair market value in excess
of $3,500,000.

“Material Subsidiary” shall mean, as of any date, any direct or indirect
Subsidiary of the Borrower that is not an Immaterial Subsidiary.

 

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“Maturity Date” shall mean, (a) with respect to any new tranche of Term Loans
(including any Incremental Term Loans, Extended Term Loans or Other Refinancing
Term Loans), the maturity dates specified therefor in the applicable Incremental
Commitment Joinder, Extended Facility Agreement or Refinancing Amendment, as
applicable and (b) with respect to the Revolving Commitments, the Revolving
Commitment Termination Date.

“Medicaid” shall mean, collectively, the health care 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,
orders or requirements pertaining to such program, including (a) all federal
statutes affecting such program; (b) all state statutes 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, orders and administrative,
reimbursement, and requirements of all Government Authorities promulgated in
connection with such program (whether or not having the force of law), in each
case as the same may be amended and in effect from time to time.

“Medicare” shall mean, 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, orders or requirements pertaining to such program
including (a) all federal statutes (whether set forth in Title XVIII of the
Social Security Act (42 U.S.C. 1395 et seq.) or elsewhere) affecting such
program; and (b) all applicable provisions of all rules, regulations, manuals,
orders and administrative and reimbursement 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 and in effect from
time to time.

“Moody’s” shall mean Moody’s Investors Service, Inc.

“Mortgaged Property” shall mean, collectively, the Real Estate subject to the
Mortgages, including, but not limited to, any Real Estate for which a Mortgage
is required to be delivered after the Closing Date pursuant to Section 5.13.

“Mortgage Release Event” shall mean, on any date of determination, as
applicable, that:

(i) if a Mortgage Trigger Event resulted pursuant to clause (A) of the
definition of Mortgage Trigger Event, (x) the Event of Default that resulted in
such Mortgage Trigger Event shall no longer exist as of such date, (y) no other
Default or Event of Default shall exist and be continuing as of such date and
(z) no other Mortgage Trigger Event shall have occurred for which the relevant
Mortgage Release Event pursuant to clauses (ii) and/or (iii) below has not
occurred as of such date;

(ii) if a Mortgage Trigger Event resulted pursuant to clause (B) of the
definition of Mortgage Trigger Event, (x) the Leverage Ratio of the Borrower
shall have been less than a ratio that is 0.25:1.00 less than the
then-applicable maximum Leverage Ratio permitted under Section 6.1 for three
(3) consecutive Fiscal Quarters following the date of such Mortgage Trigger
Event and (y) no other Mortgage Trigger Event shall have occurred for which the
relevant Mortgage Release Event pursuant to clause (i) above and/or clause
(iii) below has not occurred as of such date; and/or

(iii) if a Mortgage Trigger Event resulted pursuant to clause (C) of the
definition of Mortgage Trigger Event, (x) Liquidity shall have been greater than
10% of the Aggregate Revolving Commitment Amount for a period of one hundred
twenty (120) consecutive days and (y) no other Mortgage Trigger Event shall have
occurred for which the relevant Mortgage Release Event pursuant to clauses
(i) and/or (ii) above has not occurred as of such date.

 

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“Mortgage Trigger Event” shall mean, as of any date of determination, that
(A) an Event of Default has occurred and is continuing, (B) the Leverage Ratio
of the Borrower is equal to or greater than a ratio that is 0.25:1.00 less than
the then-applicable maximum Leverage Ratio permitted under Section 6.1 for two
consecutive Fiscal Quarters, or (C) Liquidity is equal to or less than 10% of
the Aggregate Revolving Commitment Amount for a period of ten (10) consecutive
Business Days.

“Mortgages” shall mean, collectively, each mortgage, deed of trust, trust deed,
security deed, deed to secure debt or other real estate security documents
delivered by any Loan Party to the Administrative Agent from time to time, all
in form and substance reasonably satisfactory to the Administrative Agent, as
the same may be amended, restated, amended and restated, supplemented or
otherwise modified from time to time.

“Multiemployer Plan” shall mean any “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA, which is contributed to by (or to which there is or
may be an obligation to contribute of) the Borrower, any of its Subsidiaries or
an ERISA Affiliate, and each such plan for the five-year period immediately
following the latest date on which the Borrower, any of its Subsidiaries or an
ERISA Affiliate contributed to or had an obligation to contribute to such plan.

“Net Mark-to-Market Exposure” of any Person shall mean, as of any date of
determination with respect to any Hedging Obligation, the excess (if any) of all
unrealized losses over all unrealized profits of such Person arising from such
Hedging Obligation. “Unrealized losses” shall mean the fair market value of the
cost to such Person of replacing the Hedging Transaction giving rise to such
Hedging Obligation as of the date of determination (assuming such Hedging
Transaction were to be terminated as of that date), and “unrealized profits”
shall mean the fair market value of the gain to such Person of replacing such
Hedging Transaction as of the date of determination (assuming such Hedging
Transaction were to be terminated as of that date).

“Non-Defaulting Lender” shall mean, at any time, a Lender that is not a
Defaulting Lender.

“Non-Public Information” shall mean any material non-public information (within
the meaning of United States federal and state securities laws) with respect to
the Borrower or any of its Subsidiaries or any of their respective securities.

“Non-U.S. Plan” shall mean any plan, fund (including, without limitation, any
superannuation fund) or other similar program established, contributed to
(regardless of whether through direct contributions or through employee
withholding) or maintained outside the United States by the Borrower or one or
more of its Subsidiaries primarily for the benefit of employees of the Borrower
or such Subsidiaries residing outside the United States, which plan, fund or
other similar program provides, or results in, retirement income, a deferral of
income in contemplation of retirement, or payments to be made upon termination
of employment, and which plan is not subject to ERISA or the Code.

“Notice of Conversion/Continuation” shall have the meaning set forth in
Section 2.7(b).

“Notice of Borrowing” shall have the meaning set forth in Section 2.3.

“Notice of Swingline Borrowing” shall have the meaning set forth in Section 2.4.

“Obligations” shall mean (a) all amounts owing by the Loan Parties to the
Administrative Agent, any Issuing Bank, any Lender (including the Swingline
Lender) or any Lead Arranger pursuant to or in connection with this Agreement or
any other Loan Document or otherwise with respect to any Commitment, Loan or
Letter of Credit, including, without limitation, all principal, interest
(including any

 

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interest accruing after the filing of any petition in bankruptcy or the
commencement of any insolvency, reorganization or like proceeding relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), reimbursement obligations, fees, expenses,
indemnification and reimbursement payments, costs and expenses, whether direct
or indirect, absolute or contingent, liquidated or unliquidated, now existing or
hereafter arising hereunder or thereunder, (b) all Hedging Obligations owed by
any Loan Party to any Lender-Related Hedge Provider, and (c) all Bank Product
Obligations, together with all renewals, extensions, modifications or
refinancings of any of the foregoing.

“OFAC” shall mean the U.S. Department of the Treasury’s Office of Foreign Assets
Control.

“Off-Balance Sheet Liabilities” of any Person shall mean (i) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (ii) any Synthetic Lease Obligation or (iii) any
obligation arising with respect to any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the balance sheet of such Person other than, in the case of this
clause (iii), any operating lease, including, for the avoidance of doubt, any
other lease referred to in the provisos of the definition of “Capital Lease
Obligations”.

“OSHA” shall mean the Occupational Safety and Health Act of 1970, as amended and
in effect from time to time, and any successor statute thereto.

“Other Refinancing Commitments” shall mean the Other Refinancing Revolving
Commitments and the Other Refinancing Term Loan Commitments.

“Other Refinancing Loans” shall mean the Other Refinancing Revolving Loans and
the Other Refinancing Term Loans.

“Other Refinancing Revolving Commitments” shall mean one or more classes of
revolving commitments hereunder or extended Revolving Commitments that result
from a Refinancing Amendment.

“Other Refinancing Revolving Loans” shall mean the Revolving Loans made pursuant
to any Other Refinancing Revolving Commitment.

“Other Refinancing Term Loan Commitments” shall mean one or more classes of term
loan commitments hereunder that result from a Refinancing Amendment.

“Other Refinancing Term Loans” shall mean one or more classes of Term Loans that
result from a Refinancing Amendment.

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

“Parent Company” shall mean, with respect to a Lender, the “bank holding
company” as defined in 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.

 

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“Participant” shall have the meaning set forth in Section 10.4(d).

“Pass-Through Foreign Holdco” shall mean (i) any Domestic Subsidiary that is a
Subsidiary of a Foreign Subsidiary of the Borrower and (ii) any Domestic
Subsidiary for which all or substantially all of its assets consist (directly or
through Subsidiaries) of Capital Stock of one or more CFCs.

“Patent” shall have the meaning assigned to such term in the Guaranty and
Security Agreement.

“Patent Security Agreement” shall mean any Patent Security Agreement executed by
a Loan Party owning Patents or licenses of Patents in favor of the
Administrative Agent for the benefit of the Secured Parties, both on the Closing
Date and thereafter.

“Patriot Act” shall mean the USA PATRIOT Improvement and Reauthorization Act of
2005 (Pub. L. 109-177 (signed into law March 9, 2006)), as amended and in effect
from time to time.

“Payment in Full” and “Paid in Full” shall mean the termination of all Revolving
Commitments and all other commitments of the Lenders to lend funds or extend
financial accommodations to the Borrower under the Loan Documents and the
payment in full, in immediately available funds, of all of the Obligations
(other than (a) contingent indemnification and expense reimbursement
Obligations, in each case, to the extent no claim giving rise thereto has been
asserted, (b) Hedging Obligations and Bank Product Obligations to the extent
arrangements satisfactory to the Lender-Related Hedge Provider or Bank Product
Provider, as applicable, shall have been made and (c) contingent Obligations
with respect to which the deposit of cash collateral (in the case of LC
Exposure, which shall not exceed 103% of the face amount of the relevant Letters
of Credit and in the case of other Obligations, which shall not exceed 100% of
the amount thereof) (or, as an alternative to cash collateral in the case of any
LC Exposure, receipt by the Administrative Agent of a back-up letter of credit
reasonably satisfactory to the Administrative Agent and the applicable Issuing
Bank), in amounts and on terms and conditions and with parties reasonably
satisfactory to the Administrative Agent and each Indemnitee that is, or may be,
owed such Obligations has been provided).

“Payment Office” shall mean the office of the Administrative Agent located at
303 Peachtree Street, N.E., Atlanta, Georgia 30308, or such other location as to
which the Administrative Agent shall have given written notice to the Borrower
and the other Lenders.

“PBGC” shall mean the U.S. Pension Benefit Guaranty Corporation referred to and
defined in ERISA, and any successor entity performing similar functions.

“Pennant Business Assets” shall have the meaning assigned to such term in the
definition of Pennant Transaction.

“Pennant Contribution Agreement” shall mean that certain Distribution and
Contribution Agreement, dated as of October 1, by and among Bridgestone Living,
LLC, a Nevada limited liability company, Ensign, and Pinnacle Senior Living,
LLC, a Delaware limited liability company.

“Pennant Employee Matters Agreement” shall mean that certain Employee Matters
Agreement, dated as of October 1, by and between the Borrower and Ensign.

“Pennant Guaranty” shall mean certain Guarantees of PropCo Master Leases entered
into by the Borrower in favor of the PropCo Landlords, in each case in the form
of such Guarantees in effect on the Closing Date or otherwise reasonably
acceptable to the Administrative Agent.

 

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“Pennant Master Separation Agreement” shall mean that certain Separation and
Distribution Agreement, dated as of October 1, by and between the Borrower and
Ensign.

“Pennant Preferred Provider Agreement” shall mean that certain Preferred
Provider Agreement, dated as of October 1, 2019, by and between the Borrower and
Ensign.

“Pennant Tax Matters Agreement” shall mean that certain Tax Matters Agreement,
dated as of October 1, by and between the Borrower, by and on behalf of itself
and each affiliate of the Borrower, and Ensign, by and behalf of itself and each
affiliate of Ensign.

“Pennant Transaction” shall mean (a) the transfer by Ensign of substantially all
of the existing assets of Ensign and its Subsidiaries (other than the Borrower
and its Subsidiaries) related to their home health, hospice and select senior
living businesses (collectively, the “Pennant Business Assets”) to the Borrower
and its Subsidiaries and (b) the spin-off of the Borrower and its Subsidiaries
(which own the Pennant Business Assets) to Ensign’s shareholders, in each case
in accordance with the Pennant Transaction Documents.

“Pennant Transaction Documents” shall mean the Pennant Master Separation
Agreement, the Pennant Transition Services Agreement, the Pennant Employee
Matters Agreement, the Pennant Tax Matters Agreement, the Pennant Preferred
Provider Agreement, the Pennant Contribution Agreement, the Ensign Master
Leases, and the Pennant Guaranty.

“Pennant Transition Services Agreement” shall mean that certain Transition
Services Agreement, dated as of October 1, by and between the Borrower and
Ensign.

“Perfection Certificate” shall have the meaning assigned to such term in the
Guaranty and Security Agreement.

“Permitted Acquisition” shall mean any Acquisition by the Borrower or any of its
Subsidiaries that occurs when the following conditions have been satisfied:

(i) subject, in the case of a Limited Condition Acquisition, to Section 1.5,
before and after giving effect to such Acquisition, no Default or Event of
Default has occurred and is continuing or would result therefrom; provided that
(A) this clause (i) shall be limited to Events of Default referenced in
Section 2.23(a)(iii) if an Incremental Commitment is being funded in connection
with any such Permitted Acquisition and (B) if the Borrower makes an LCA
Election pursuant to Section 1.5 and such condition is tested as of the
applicable LCA Test Date, it shall also be a condition that no Event of Default
under Section 8.1(a), (b), (g), (h) or (i) shall have occurred and be continuing
or would result from such Acquisition and the transactions consummated in
connection therewith (including the incurrence of any Indebtedness and the use
proceeds thereof) on the date on which such Acquisition is consummated;

(ii) subject, in the case of a Limited Condition Acquisition, to Section 1.5,
before and after giving effect to such Acquisition, on a Pro Forma Basis (giving
effect to such Acquisition and any related debt incurrences), the Borrower is in
compliance with each of the covenants set forth in Article VI, measuring
Consolidated Total Net Debt for purposes of Section 6.1 as of the date of such
Acquisition and otherwise recomputing the covenants set forth in Article VI as
of the end of the most recently ended Test Period as if such Acquisition (and
any other Acquisitions that have been consummated since the end of such Test
Period and on or prior to the date of such Acquisition) had occurred, and any
Indebtedness incurred in connection therewith was incurred, on the first day of
the relevant period for testing compliance;

 

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(iii) (A) at least five (5) days (or such shorter period of time as may be
agreed to by the Administrative Agent) prior to the date of the consummation of
any such Acquisition for which the aggregate consideration to be paid is at
least $10,000,000, the Borrower shall have delivered to the Administrative Agent
notice of such Acquisition and (B) at least five (5) days (or such shorter
period of time as may be agreed to by the Administrative Agent) prior to the
date of the consummation of any such Acquisition for which the aggregate
consideration to be paid is at least $20,000,000, the Borrower shall have
delivered to the Administrative Agent, to the extent available and received by
the Borrower in connection with such Acquisition (including after request by the
Borrower to the applicable seller), historical financial information with
respect to the Person whose stock or assets are being acquired, the acquisition
agreement and such other information in the possession of the Borrower that is
reasonably requested by the Administrative Agent, and which is not subject to
confidentiality agreements restricting the Borrower from providing such
information;

(iv) such Acquisition is not opposed by the board of directors (or the
equivalent thereof) of the Person whose stock or assets are being acquired;

(v) the Person or assets being acquired is in the same type of business
conducted by the Borrower and its Subsidiaries on the date hereof or any
business reasonably related thereto or ancillary or complementary thereto;

(vi) such Acquisition is consummated in compliance in all material respects with
all Requirements of Law, and all material consents and approvals from any
Governmental Authority and all material consents and approvals from any other
Person in each case required in connection with such Acquisition have been
obtained; and

(vii) at least five (5) days (or such shorter period of time as may be agreed to
by the Administrative Agent) prior to the date of the consummation of any such
Acquisition for which the aggregate consideration to be paid is at least
$10,000,000, the Borrower shall have delivered to the Administrative Agent a
certificate executed by a Responsible Officer certifying that each of the
conditions set forth above has been satisfied (or, with respect to the condition
set forth in clause (iv), that such condition will be satisfied by the date of
the consummation of such Acquisition) if such a certificate is requested by the
Administrative Agent after the Administrative Agent receives notice of such
Acquisition; provided that, in the case of a Limited Condition Acquisition, the
conditions set forth above that are tested as of the applicable LCA Test Date
shall be certified in the applicable LCA Election Certificate instead of the
certificate delivered pursuant to this clause (vii).

“Permitted Alternative Investments” shall mean any of the following, but
excluding any Permitted Investment:

(i) direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the United States (or by any agency thereof
to the extent such obligations are backed by the full faith and credit of the
United States);

(ii) commercial paper having the highest rating, at the time of acquisition
thereof, of S&P or Moody’s and in either case maturing within one year from the
date of acquisition thereof;

 

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(iii) certificates of deposit, bankers’ acceptances and time deposits maturing
within one year from the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by, any
domestic office of any commercial bank organized under the laws of the United
States or any state thereof which has a combined capital and surplus and
undivided profits of not less than $500,000,000 (determined at the time of such
investment);

(iv) other securities, including, without limitation, corporate debt, having the
highest rating, at the time of acquisition thereof, of S&P or Moody’s and in
either case maturing within one year from the date of acquisition thereof; and

(v) mutual funds investing primarily in any one or more of the Permitted
Alternative Investments described in clauses (i) through (iv) above (determined
at the time of such investment).

“Permitted Encumbrances” shall mean:

(i) Liens imposed by law for taxes not yet due or which are being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves are being maintained in accordance with GAAP;

(ii) Liens of landlords, carriers, warehousemen, mechanics, materialmen and
other Liens imposed by law which arise in the ordinary course of business for
amounts not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves are being maintained in
accordance with GAAP;

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

(iv) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;

(v) judgment and attachment liens not giving rise to an Event of Default or
Liens created by or existing from any litigation or legal proceeding that are
currently being contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves are being maintained in
accordance with GAAP;

(vi) customary rights of set-off, revocation, refund or chargeback under deposit
agreements or under the Uniform Commercial Code or common law of banks or other
financial institutions where the Borrower or any of its Subsidiaries maintains
deposits (other than deposits intended as cash collateral) in the ordinary
course of business;

(vii) easements, zoning restrictions, rights-of-way and similar encumbrances on
real property imposed by law or arising in the ordinary course of business that
do not secure any monetary obligations and do not materially interfere with the
ordinary conduct of business of the Borrower and its Subsidiaries taken as a
whole;

(viii) (x) Liens solely on any cash earnest money deposits made by the Borrower
or any of its Subsidiaries and (y) restrictions on transfers of assets that are
subject to sale or transfer pursuant to purchase and sale arrangements, in each
case, in connection with any letter of intent or purchase and sale agreement
permitted hereunder;

 

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(ix) in the case of any non-wholly owned Subsidiary or joint venture, any put
and call arrangements or restrictions on disposition related to its Capital
Stock set forth in its organizational documents or any related joint venture or
similar agreement; and

(x) licenses and sublicenses of intellectual property granted by any Loan Party
in the ordinary course of business and not interfering in any material respect
with the ordinary conduct of business of the Loan Parties;

provided that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness.

“Permitted Investments” shall mean:

(i) direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the United States (or by any agency thereof
to the extent such obligations are backed by the full faith and credit of the
United States), in each case maturing within one year from the date of
acquisition thereof;

(ii) commercial paper having the highest rating, at the time of acquisition
thereof, of S&P or Moody’s and in either case maturing within six months from
the date of acquisition thereof;

(iii) certificates of deposit, bankers’ acceptances and time deposits maturing
within 180 days of the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by, any
domestic office of any commercial bank organized under the laws of the United
States or any state thereof which has a combined capital and surplus and
undivided profits of not less than $500,000,000 (determined at the time of such
investment);

(iv) fully collateralized repurchase agreements with a term of not more than 30
days for securities described in clause (i) above and entered into with a
financial institution satisfying the criteria described in clause (iii) above
(determined at the time of such investment); and

(v) mutual funds investing primarily in any one or more of the Permitted
Investments described in clauses (i) through (iv) above (determined at the time
of such investment).

“Person” shall mean any individual, partnership, firm, corporation, association,
joint venture, limited liability company, trust or other entity, or any
Governmental Authority.

“Plan” shall mean any “employee benefit plan” as defined in Section 3 of ERISA
(other than a Multiemployer Plan) maintained or contributed to by the Borrower
or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate has or
may have an obligation to contribute, and each such plan that is subject to
Title IV of ERISA for the five-year period immediately following the latest date
on which the Borrower or any ERISA Affiliate maintained, contributed to or had
an obligation to contribute to (or is deemed under Section 4069 of ERISA to have
maintained or contributed to or to have had an obligation to contribute to, or
otherwise to have liability with respect to) such plan.

“Proceeding” shall mean any investigation, inquiry, litigation, review, hearing,
suit, claim, audit, arbitration, proceeding or action (in each case, whether
civil, criminal, administrative, investigative or informal) commenced, brought,
conducted or heard by or before, or otherwise involving, any Governmental
Authority or arbitrator.

 

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“Pro Forma Basis” shall mean, (i) with respect to any Person, business, property
or asset acquired in a Permitted Acquisition or other Acquisition permitted
hereunder or approved in writing by the Required Lenders, the inclusion as
“Consolidated EBITDA” of the Consolidated EBITDA (determined by reference to
such Person, business, property or asset) for such Person, business, property or
asset as if such Acquisition had been consummated on the first day of the
applicable period, based on historical results accounted for in accordance with
GAAP, adjusted by (A) any credit received for acquisition-related costs and
savings to the extent expressly permitted pursuant to Article 11 of Securities
and Exchange Commission Regulation S-X and (B) other reasonable adjustments
consistent with the operation by the Borrower or any of its Subsidiaries of
comparable businesses, properties or assets that are in the same or reasonably
related line of business in the same or similar geographies for (1) insurance
expense savings, (2) bad debt expense savings, (3) any other non-recurring or
non-cash charges that have been deducted from the EBITDA of or attributable to
such Person, business, property or asset prior to such Acquisition and (4) cost
savings and synergies reasonably expected to be achieved by the Borrower
relating to such Acquisition; provided that in each case (x) the cost savings or
synergies associated with such adjustments are reasonably expected by the
Borrower in good faith to be realized within twelve (12) months of the
consummation of such Acquisition and (y) for any such adjustments included
twelve (12) months after the consummation of such Acquisition, the Borrower and
its Subsidiaries have achieved annualized run-rate savings consistent with such
adjustments; provided further that the aggregate amount added to Consolidated
EBITDA pursuant to this clause (4) shall not exceed 20% of Consolidated EBITDA
in any Test Period (calculated before giving effect to the addition of such
amount); and (ii) with respect to any Person, business, property or asset sold,
transferred or otherwise disposed of, the exclusion from “Consolidated EBITDA”
of the portion of Consolidated EBITDA for such Person, business, property or
asset so disposed of during such period as if such disposition had been
consummated on the first day of the applicable period, in accordance with GAAP.

“Projected Income Statement” shall have the meaning set forth in Section 4.4.

“PropCo Landlord” shall mean CTRI and any Subsidiary of CTRI.

“PropCo Master Leases” shall mean the master leases entered into by the Borrower
or any of its Subsidiaries with one or more PropCo Landlords, in each case, in
substantially the form of such master leases delivered to the Administrative
Agent on or prior to the Closing Date and any other master lease entered into by
the Borrower or any of its Subsidiaries with a PropCo Landlord.

“Pro Rata Share” shall mean (i) with respect to any Class of Commitment or Loan
of any Lender at any time, a percentage, the numerator of which shall be such
Lender’s Commitment of such Class (or, if such Commitment has been terminated or
expired or the Loans have been declared to be due and payable, such Lender’s
Revolving Credit Exposure or Term Loan, as applicable), and the denominator of
which shall be the sum of all Commitments of such Class of all Lenders (or, if
such Commitments have been terminated or expired or the Loans have been declared
to be due and payable, all Revolving Credit Exposure or Term Loans, as
applicable, of all Lenders) and (ii) with respect to all Classes of Commitments
and Loans of any Lender at any time, the numerator of which shall be the sum of
such Lender’s Revolving Commitment (or, if such Revolving Commitment has been
terminated or expired or the Loans have been declared to be due and payable,
such Lender’s Revolving Credit Exposure) and Term Loan and the denominator of
which shall be the sum of all Lenders’ Revolving Commitments (or, if such
Revolving Commitments have been terminated or expired or the Loans have been
declared to be due and payable, all Revolving Credit Exposure of all Lenders
funded under such Commitments) and Term Loans.

“PTE” shall mean a prohibited transaction class exemption issued by the U.S.
Department of Labor, as any such exemption may be amended from time to time.

 

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“Public Lender” shall mean any Lender who does not wish to receive Non-Public
Information and who may be engaged in investment and other market related
activities with respect to the Borrower, its Affiliates or any of their
securities or loans.

“QFC” shall have the meaning assigned to the term “qualified financial contract”
in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

“QFC Credit Support” shall have the meaning set forth in Section 10.19.

“Qualified Capital Stock” shall mean, with respect to any Person, any Capital
Stock of such Person that is not Disqualified Capital Stock.

“Real Estate” shall mean all real property owned or leased by the Borrower and
its Subsidiaries.

“Real Estate Documents” shall mean, collectively, with respect to each parcel of
Material Real Estate owned in fee by one or more of the Loan Parties, a Mortgage
duly executed by the applicable Loan Party, together with (A) (i) an ALTA
extended lender’s policy of title insurance (including all endorsements
reasonably requested by Administrative Agent) issued by a title insurance
company reasonably satisfactory to Administrative Agent, insuring Administrative
Agent as the holder of such Mortgage in the amount specified by Administrative
Agent (the “Title Policy”), and any additional documentation and/or deliveries
required by the title company in order to issue the Title Policy (such as
owner’s affidavits), (ii) a current as-built ALTA/ACSM Land Title survey
certified to the Administrative Agent and the title insurance company issuing
the Title Policy, and (iii) a zoning report for such parcel of Material Real
Estate reasonably satisfactory in form and substance to the Administrative
Agent, (B) (i) a “Life of Loan” Federal Emergency Management Agency Standard
Flood Hazard Determination that accurately identifies such Material Real Estate
(including its address), (ii) a notice, in the form required under the Flood
Insurance Laws, about special flood hazard area status and flood disaster
assistance duly executed by the applicable Loan Party, and (iii) if such
Material Real Estate constitutes improved real property located in a special
flood hazard area, a policy of flood insurance from such providers, in such
form, on such terms and in such amounts as required by the Flood Insurance Laws
or as otherwise required by the Administrative Agent and/or any Lender, (C) an
opinion of counsel in each state in which such Real Estate is located in form
and substance and from counsel reasonably satisfactory to the Administrative
Agent, (D) a duly executed environmental indemnity agreement with respect
thereto, (E) a Phase I Environmental Site Assessment Report, consistent with
American Society of Testing and Materials (ASTM) Standard E 1527-05, and
applicable state requirements, with respect to such Material Real Estate, dated
no more than six (6) months prior to the date of the applicable Mortgage (or
such earlier date as may be agreed to by the Administrative Agent), prepared by
environmental engineers reasonably satisfactory to the Administrative Agent, all
in form and substance reasonably satisfactory to the Administrative Agent, and
such environmental review and audit reports, including Phase II reports, with
respect to such Material Real Estate as the Administrative Agent shall have
reasonably requested, in each case together with letters executed by the
environmental firms preparing such environmental reports, in form and substance
reasonably satisfactory to the Administrative Agent, authorizing the
Administrative Agent and the Lenders to rely on such reports, and (F) such other
reports, documents, instruments and agreements as the Administrative Agent shall
reasonably request, each in form and substance reasonably satisfactory to
Administrative Agent.

“Recipient” shall mean, as applicable, (a) the Administrative Agent, (b) any
Lender and (c) any Issuing Bank.

 

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“Refinancing Amendment” shall mean an amendment to this Agreement in form and
substance reasonably satisfactory to the Administrative Agent and the Borrower
executed by each of (a) the Borrower, (b) the Administrative Agent, (c) each
Issuing Bank (in the case of Other Refinancing Revolving Commitments or Other
Refinancing Revolving Loans) and (d) each Refinancing Lender and Lender that
agrees to provide any portion of the Credit Agreement Refinancing Indebtedness
being incurred pursuant thereto, in accordance with Section 2.28.

“Refinancing Lender” shall mean, at any time, any bank, other financial
institution or institutional investor that agrees to provide any portion of any
Credit Agreement Refinancing Indebtedness pursuant to a Refinancing Amendment in
accordance with Section 2.28; provided that each Refinancing Lender (other than
any Person that is a Lender, an Affiliate of a Lender or an Approved Fund of a
Lender at such time) shall be subject to the approval of the Administrative
Agent and each Issuing Bank (in the case of Other Refinancing Revolving
Commitments or Other Refinancing Revolving Loans) (such approval not to be
unreasonably withheld or delayed), in each case to the extent any such consent
would be required from the Administrative Agent and each Issuing Bank (in the
case of Other Refinancing Revolving Commitments or Other Refinancing Revolving
Loans) under Section 10.4(b) for an assignment of Loans or Commitments to such
Refinancing Lender.

“Regulation D” shall mean Regulation D of the Board of Governors of the Federal
Reserve System, as the same may be in effect from time to time, and any
successor regulations.

“Regulation T” shall mean Regulation T of the Board of Governors of the Federal
Reserve System, as the same may be in effect from time to time, and any
successor regulations.

“Regulation U” shall mean Regulation U of the Board of Governors of the Federal
Reserve System, as the same may be in effect from time to time, and any
successor regulations.

“Regulation X” shall mean Regulation X of the Board of Governors of the Federal
Reserve System, as the same may be in effect from time to time, and any
successor regulations.

“Regulation Y” shall mean Regulation Y of the Board of Governors of the Federal
Reserve System, as the same may be in effect from time to time, and any
successor regulations.

“Related Parties” shall mean, with respect to any specified Person, such
Person’s Affiliates and the respective managers, administrators, trustees,
partners, directors, officers, employees, agents, advisors or other
representatives of such Person and such Person’s Affiliates.

“Related Transaction Documents” shall mean the Loan Documents, the Pennant
Transaction Documents and all other agreements or instruments executed in
connection with the Related Transactions.

“Related Transactions” shall mean, collectively, the Closing Date Release, the
making of the initial Loans on the Closing Date, the consummation of the Pennant
Transaction, the payment of all fees, costs and expenses associated with all of
the foregoing and the execution and delivery of all Related Transaction
Documents.

“Release” shall mean any release, spill, emission, leaking, dumping, injection,
pouring, deposit, disposal, discharge, dispersal, leaching or migration into the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata) or within any building, structure, facility or fixture.

 

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“Required Lenders” shall mean, at any time, Lenders holding more than 50% of the
aggregate outstanding Revolving Commitments and Term Loans at such time or, if
the Lenders have no Commitments outstanding, then Lenders holding more than 50%
of the aggregate outstanding Revolving Credit Exposure and Term Loans of the
Lenders at such time; provided that, (x) if at any time there are at least two
Lenders that are not Affiliates of each other, the Lenders constituting
“Required Lenders” must include at least two Lenders that are not Affiliates of
each other and (y) if at any time there are only two Lenders, “Required Lenders”
shall mean both Lenders; provided further that to the extent that any Lender is
a Defaulting Lender, such Defaulting Lender and all of its Revolving
Commitments, Revolving Credit Exposure and Term Loans shall be excluded for
purposes of determining Required Lenders.

“Required Revolving Lenders” shall mean, at any time, Lenders holding more than
50% of the aggregate outstanding Revolving Commitments at such time or, if the
Lenders have no Revolving Commitments outstanding, then Lenders holding more
than 50% of the aggregate outstanding Revolving Credit Exposure at such time;
provided that, (x) if at any time there are at least two such Lenders that are
not Affiliates of each other, the Lenders constituting “Required Revolving
Lenders” must include at least two such Lenders that are not Affiliates of each
other and (y) if at any time there are only two such Lenders, “Required
Revolving Lenders” shall mean both such Lenders; provided further that to the
extent that any Lender is a Defaulting Lender, such Defaulting Lender and all of
its Revolving Commitments and Revolving Credit Exposure shall be excluded for
purposes of determining Required Revolving Lenders.

“Requirement of Law” for any Person shall mean the articles or certificate of
incorporation, bylaws, partnership certificate and agreement, or limited
liability company certificate of organization and agreement, as the case may be,
and other organizational and governing documents of such Person, and any law,
treaty, rule or regulation, or determination of a Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject, including, without
limitation, all Health Care Laws.

“Responsible Officer” shall mean (x) with respect to certifying compliance with
the financial covenants set forth in Article VI, the chief financial officer or
the treasurer of the Borrower and (y) with respect to all other provisions, any
of the president, the chief executive officer, the chief operating officer, the
chief financial officer, the treasurer or a vice president of the Borrower or
such other representative of the Borrower as may be designated in writing by any
one of the foregoing with the consent of the Administrative Agent.

“Restricted Payment” shall mean, for any Person, any dividend or distribution on
any class of its Capital Stock, or any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase, redemption,
retirement, defeasance or other acquisition of any shares of its Capital Stock,
any Indebtedness subordinated to the Obligations or any Guarantee thereof or any
options, warrants or other rights to purchase such Capital Stock or such
Indebtedness, whether now or hereafter outstanding.

“Revolving Commitment” shall mean, with respect to each Lender, the commitment
of such Lender to make Revolving Loans to the Borrower and to acquire
participations in Letters of Credit and Swingline Loans in an aggregate
principal amount not exceeding the amount set forth with respect to such Lender
on Schedule I, as such schedule may be amended pursuant to Section 2.23,
Section 2.27 or Section 2.28, or, in the case of a Person becoming a Lender
after the Closing Date, the amount of the assigned “Revolving Commitment” as
provided in the Assignment and Acceptance executed by such Person as an
assignee, or the amount provided in the Incremental Commitment Joinder or
Refinancing Amendment executed by such Person, in each case as such commitment
may subsequently be increased or decreased pursuant to the terms hereof. Unless
the context shall otherwise require, the term “Revolving Commitment” shall
include any Extended Revolving Commitment.

 

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“Revolving Commitment Termination Date” shall mean the earliest of (a) (i) with
respect to the Revolving Commitments (including any Incremental Revolving
Commitments) of the Revolving Lenders (other than any portion constituting
Extended Revolving Commitments or Other Refinancing Revolving Commitments),
October 1, 2024, (ii) with respect to any Extended Revolving Commitments, the
maturity date specified therefor in the applicable Extended Facility Agreement
and (iii) with respect to any Other Refinancing Revolving Commitments, the
maturity date specified therefor in the applicable Refinancing Amendment,
(b) the date on which the Revolving Commitments are terminated pursuant to
Section 2.8 and (c) the date on which all amounts outstanding under this
Agreement have been declared or have automatically become due and payable
(whether by acceleration or otherwise).

“Revolving Credit Exposure” shall mean, with respect to any Lender at any time,
the sum of the outstanding principal amount of such Lender’s Revolving Loans, LC
Exposure and Swingline Exposure.

“Revolving Lender” shall mean each Lender with a Revolving Commitment (or if the
Revolving Commitments have terminated, who hold Revolving Credit Exposure).

“Revolving Loan” shall mean a loan made by a Lender (other than the Swingline
Lender) to the Borrower under its Revolving Commitment, which may either be a
Base Rate Loan or a Eurodollar Loan.

“S&P” shall mean Standard & Poor’s, a division of The McGraw-Hill Companies,
Inc.

“Sanctioned Country” shall mean, at any time, a country, region or territory
that is, or whose government or an agency of whose government is, or an
organization directly or indirectly controlled by a country or territory that
is, the subject or target of any Sanctions.

“Sanctioned Person” shall mean, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by OFAC, the U.S.
Department of State, the United Nations Security Council, the European Union,
any EU member state or any other Governmental Authority, (b) any Person located,
organized, operating or resident in a Sanctioned Country, (c) a Person or legal
entity that is a target of Sanctions or (d) any Person directly or indirectly
controlled (individually or in the aggregate) by or acting on behalf of any such
Person described in the foregoing clauses (a) through (c).

“Sanctions” shall mean economic or financial sanctions or trade embargoes
administered, imposed or enforced from time to time by (a) the U.S. government,
including those administered by OFAC or the U.S. Department of State or (b) the
United Nations Security Council, the European Union, any EU member state, Her
Majesty’s Treasury of the United Kingdom or any other applicable Governmental
Authority.

“Screen Rate” shall mean the rate specified in clause (i) of the definition of
Adjusted LIBOR.

“Secured Parties” shall mean the Administrative Agent, the Lenders, the Issuing
Banks, the Lender-Related Hedge Providers and the Bank Product Providers.

 

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“Solvent” shall mean, with respect to any Person on a particular date, that on
such date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including subordinated and contingent liabilities,
of such Person; (b) the present fair saleable value of the assets of such Person
is not less than the amount that will be required to pay the probable liability
of such Person on its debts and liabilities, including subordinated and
contingent liabilities as they become absolute and matured; (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person’s ability to pay as such debts and liabilities mature; and
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Person’s property would
constitute an unreasonably small capital. The amount of contingent liabilities
(such as litigation, guaranties and pension plan liabilities) at any time shall
be computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that would reasonably be expected to
become an actual or matured liability.

“Specified Representations” shall mean the representations and warranties set
forth in Sections 4.1(i) and (ii), 4.2, 4.3(a), 4.3(b), 4.7, 4.9, 4.15, 4.17(a),
4.20, 4.21, and 4.22.

“Specified Subsidiary” shall mean (i) any Pass-Through Foreign Holdco, (ii) any
CFC, (iii) any JV Entity and (iv) any Subsidiary that is prohibited by
applicable law, rule or regulation or by agreement, instrument or other
undertaking to which such Subsidiary is a party or by which it or any of its
property or assets is bound from guaranteeing the Obligations; provided that any
such agreement, instrument or other undertaking (x) is in existence on the
Closing Date and listed on Schedule 1.2 (or, with respect to a Subsidiary
acquired after the Closing Date, as of the date of such acquisition) and (y) in
the case of a Subsidiary acquired after the Closing Date, was not entered into
in connection with or in anticipation of such acquisition. Notwithstanding the
foregoing, in no event shall (i) any tenant under any Ensign Master Lease be a
Specified Subsidiary other than to the extent such tenant is required to grant a
Lien on its assets to secure Indebtedness of the applicable Ensign Landlord or
(ii) any tenant under any PropCo Master Lease be a Specified Subsidiary.

“Specified Target Representations” shall have the meaning set forth in
Section 2.23(a)(iii).

“Subsidiary” shall mean, with respect to any Person (the “parent”) at any date,
any corporation, partnership, joint venture, limited liability company,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent’s consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, partnership, joint venture, limited liability
company, association or other entity (i) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held,
or (ii) that is, as of such date, otherwise controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent. Unless otherwise indicated, all references to “Subsidiary” hereunder
shall mean a Subsidiary of the Borrower.

“Subsidiary Loan Party” shall mean any Subsidiary that executes or becomes a
party to the Guaranty and Security Agreement, unless and until any such
Subsidiary is released pursuant to Section 9.11.

“Supported QFC” shall have the meaning set forth in Section 10.19.

“Sweep Agreement” shall have the meaning set forth in Section 5.11.

“Swingline Commitment” shall mean the commitment of the Swingline Lender to make
Swingline Loans in an aggregate principal amount at any time outstanding not to
exceed $7,500,000.

 

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“Swingline Exposure” shall mean, with respect to each Lender, the principal
amount of the Swingline Loans in which such Lender is legally obligated either
to make a Base Rate Loan or to purchase a participation in accordance with
Section 2.4, which shall equal such Lender’s Pro Rata Share of all outstanding
Swingline Loans.

“Swingline Lender” shall mean SunTrust Bank in its capacity as such, together
with any successor in such capacity.

“Swingline Loan” shall mean a loan made to the Borrower by the Swingline Lender
under the Swingline Commitment.

“Synthetic Lease” shall mean a lease transaction under which the parties intend
that (i) the lease will be treated as an “operating lease” by the lessee
pursuant to Accounting Standards Codification Sections 840-10 and 840-20, as
amended, and (ii) the lessee will be entitled to various tax and other benefits
ordinarily available to owners (as opposed to lessees) of like property.

“Synthetic Lease Obligations” shall mean, with respect to any Person, the sum of
(i) all remaining rental obligations of such Person as lessee under Synthetic
Leases which are attributable to principal and, without duplication, plus
(ii) all rental and purchase price payment obligations of such Person under such
Synthetic Leases assuming such Person exercises the option to purchase the lease
property at the end of the lease term.

“Taxes” shall mean any and all present or future taxes, levies, imposts, duties,
deductions, assessments, fees, charges or withholdings imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.

“Term Loan” shall mean any term loan made hereunder pursuant to Section 2.23,
Section 2.27, or Section 2.28.

“Term Loan Commitment” shall mean, with respect to each Lender, such Lender’s
Incremental Term Loan Commitment, Extended Term Loan Commitment and/or Other
Refinancing Term Loan Commitment, as the context may require.

“Term Lender” shall mean a Lender holding a Term Loan or a Term Loan Commitment.

“Test Period” shall mean, for any date of determination under this Agreement,
the four consecutive Fiscal Quarters most recently ended as of such date of
determination for which financial statements have been or are required to have
been delivered pursuant to Section 5.1(a) or (b), provided, that for Test
Periods prior to the first such required delivery after the Closing Date, “Test
Period” shall refer to the most recently ended period of four consecutive Fiscal
Quarters for which financial statements are available; provided, further, that
for the purposes of determining quarterly compliance with Sections 6.1 and 6.2,
Test Period shall mean the four consecutive Fiscal Quarters ending on the
applicable date of determination.

“Third Party Payor” shall mean any Governmental Payor, private insurers, managed
care plans, and any other person or entity which presently or in the future
maintains Third Party Payor Programs.

“Third Party Payor Authorizations” shall mean all participation agreements,
provider or supplier agreements, enrollments, accreditations and billing numbers
necessary to participate in and receive reimbursement from a Third Party Payor
Program, including all Medicare and Medicaid participation agreements.

 

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“Third Party Payor Programs” shall mean all payment or reimbursement programs,
sponsored or maintained by any Third Party Payor, in which the Borrower or any
of its Subsidiaries participates.

“Trademark” shall have the meaning assigned to such term in the Guaranty and
Security Agreement.

“Trademark Security Agreement” shall mean any Trademark Security Agreement
executed by a Loan Party owning registered Trademarks or applications for
Trademarks in favor of the Administrative Agent for the benefit of the Secured
Parties, both on the Closing Date and thereafter.

“Trading with the Enemy Act” shall mean the Trading with the Enemy Act of the
United States of America (50 U.S.C. App. §§ 1 et seq.), as amended and in effect
from time to time.

“TRICARE” shall mean, collectively, a program of medical benefits covering
former and active members of the uniformed services and certain of their
dependents, financed and administered by the United States Departments of
Defense, Health and Human Services and Transportation, and all laws applicable
to such programs.

“Type”, when used in reference to a Loan or a Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to Adjusted LIBOR or the Base Rate.

“Unfunded Pension Liability” of any Plan shall mean the amount, if any, by which
the value of the accumulated plan benefits under the Plan, determined on a plan
termination basis in accordance with actuarial assumptions at such time
consistent with those prescribed by the PBGC for purposes of Section 4044 of
ERISA, exceeds the fair market value of all Plan assets allocable to such
liabilities under Title IV of ERISA (excluding any accrued but unpaid
contributions).

“Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code as
amended and in effect from time to time in the State of New York.

“United States” or “U.S.” shall mean the United States of America.

“U.S. Person” shall mean any Person that is a “United States person” as defined
in Section 7701(a)(30) of the Code.

“U.S. Special Resolution Regimes” shall have the meaning set forth in
Section 10.19.

“U.S. Tax Compliance Certificate” shall have the meaning set forth in
Section 2.20(e)(ii).

“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment by (ii) the then outstanding principal
amount of such Indebtedness.

“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

 

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“Withholding Agent” shall mean the Borrower, any other Loan Party or the
Administrative Agent, as applicable.

“Write-Down and Conversion Powers” shall mean, with respect to any EEA
Resolution Authority, the write-down and conversion powers of such EEA
Resolution Authority from time to time under the Bail-In Legislation for the
applicable EEA Member Country, which write-down and conversion powers are
described in the EU Bail-In Legislation Schedule.

Section 1.2. Classifications of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g. “Revolving
Loan” or “Term Loan”) or by Type (e.g. “Eurodollar Loan” or “Base Rate Loan”) or
by Class and Type (e.g. “Revolving Eurodollar Loan”). Borrowings also may be
classified and referred to by Class (e.g. “Revolving Borrowing”) or by Type
(e.g. “Eurodollar Borrowing”) or by Class and Type (e.g. “Revolving Eurodollar
Borrowing”).

Section 1.3. Accounting Terms and Determination. Unless otherwise defined or
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with GAAP as
in effect from time to time, applied, except as otherwise indicated therein, on
a basis consistent with the most recent audited consolidated financial statement
of the Borrower delivered pursuant to Section 5.1(a) (or, prior to the first
delivery thereof, the audited financial statements of Ensign for the fiscal year
ended December 31, 2018); provided that if the Borrower notifies the
Administrative Agent that the Borrower wishes to amend any covenant in Article
VI to eliminate the effect of any change in GAAP on the operation of such
covenant (or if the Administrative Agent notifies the Borrower that the Required
Lenders wish to amend Article VI for such purpose), then the Borrower’s
compliance with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either
such notice is withdrawn or such covenant is amended in a manner satisfactory to
the Borrower and the Required Lenders (and each party hereto agrees to negotiate
in good faith with respect to such amendment). Notwithstanding any other
provision contained herein, (i) all terms of an accounting or financial nature
used herein shall be construed, and all computations of amounts and ratios
referred to herein shall be made, without giving effect to any election under
Accounting Standards Codification Section 825-10 (or any other Financial
Accounting Standard having a similar result or effect) to value any Indebtedness
or other liabilities of any Loan Party or any Subsidiary of any Loan Party at
“fair value”, as defined therein; and (ii) for purposes of this Agreement, any
lease that was accounted for by any Person as an operating lease as of
December 31, 2018 and any lease entered into after December 31, 2018 that would
have been accounted for as an operating lease if such lease had been in effect
on December 31, 2018 shall be accounted for as an operating lease consistent
with GAAP as in effect on December 31, 2018.

Notwithstanding anything to the contrary herein, all financial ratios and tests
contained in this Agreement that are calculated with respect to any Test Period
during which any Permitted Acquisition or other Acquisition permitted hereunder
occurs shall be calculated with respect to such Test Period and such Permitted
Acquisition or other Acquisition permitted hereunder on a Pro Forma Basis.
Further, if since the beginning of any such Test Period and on or prior to the
date of any required calculation of any financial ratio or test (other than for
compliance with the definition of “Permitted Acquisition”) any Permitted
Acquisition or other Acquisition permitted hereunder shall have occurred then
any applicable financial ratio or test shall be calculated on a Pro Forma Basis
for such Test Period as if such Permitted Acquisition or other Acquisition
permitted hereunder had occurred at the beginning of the applicable Test Period
(it being understood, for the avoidance of doubt, that solely for purposes of
calculating quarterly compliance with Sections 6.1 and 6.2, the date of the
required calculation shall be the end of the Test Period, and no Permitted
Acquisition or other Acquisition permitted hereunder occurring thereafter shall
be taken into account).

 

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Section 1.4. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”. 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 word “to” means “to but
excluding”. Unless the context requires otherwise (i) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as it was
originally executed or as it may from time to time be amended, restated,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include such Person’s successors and
permitted assigns, (iii) the words “hereof”, “herein” and “hereunder” and words
of similar import shall be construed to refer to this Agreement as a whole and
not to any particular provision hereof, (iv) all references to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles,
Sections, Exhibits and Schedules to this Agreement and (v) all references to a
specific time shall be construed to refer to the time in Atlanta, Georgia,
unless otherwise indicated. Any reference herein or in any other Loan Document
to an assignment, sale, disposition or transfer, or similar term, shall be
deemed to apply to a division of or by a limited liability company, limited
partnership or trust, or an allocation of assets to a series of a limited
liability company, limited partnership or trust, as if it were an assignment,
sale, disposition or transfer, or similar term, as applicable, to, of or with a
separate Person, and any reference herein to a merger, consolidation or
amalgamation, or similar term, shall be deemed to apply to the unwinding of such
a division or allocation, as if it were a merger, consolidation or amalgamation,
or similar term, as applicable, with a separate Person. Any division of a
limited liability company, limited partnership or trust shall constitute a
separate Person hereunder (and each division of any limited liability company,
limited partnership or trust that is a Subsidiary, an Excluded Subsidiary, a
joint venture or any other like term shall also constitute such a Person unless,
in the case of a Subsidiary or an Excluded Subsidiary, it is otherwise
designated in accordance with the terms of this Agreement).

Section 1.5. Limited Condition Acquisitions. Notwithstanding anything to the
contrary herein, for purposes of (i) determining compliance with Sections 6.1
and 6.2 on a pro forma basis and capacity under baskets (including baskets
measured as a percentage of Consolidated EBITDA or based on a ratio test) with
respect to the making of any Permitted Acquisitions or other Acquisitions
permitted hereunder and the incurrence of any Indebtedness permitted hereunder
in connection therewith (other than Indebtedness under or other use of the
Revolving Commitment or the establishment of any Incremental Revolving
Commitment) or (ii) determining compliance with representations and warranties
or any Default or Event of Default test with respect to the making of any
Permitted Acquisitions or other Acquisitions permitted hereunder and the
incurrence of any Indebtedness permitted hereunder in connection therewith
(other than Indebtedness under or other use of the Revolving Commitment or the
establishment of any Incremental Revolving Commitment), in the case of clauses
(i) and (ii), in connection with a Limited Condition Acquisition, if the
Borrower has made an LCA Election with respect to such Limited Condition
Acquisition, the date of determination of whether any such action is permitted
hereunder (including, in the case of calculating Consolidated EBITDA, the
reference date for determining the most recently ended period of four
consecutive fiscal quarters) shall be deemed to be the date the definitive
agreement for such Limited Condition Acquisition (a “Limited Condition
Acquisition Agreement”) is entered into (the “LCA Test Date”), and if, after
giving effect to such Limited Condition Acquisition and the other transactions
to be entered into in connection therewith (including the incurrence of any
Indebtedness and the use of proceeds thereof) on a pro forma basis, the Borrower
could have taken such action on the relevant LCA Test Date in compliance with
such financial covenant, basket, representation and warranty or Default or Event
of Default test, such financial covenant, basket, representation and warranty or
Default or Event of Default test shall be deemed to have been complied

 

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with. Upon making an LCA Election with respect to any Limited Condition
Acquisition, the Borrower shall deliver a certificate of a Responsible Officer
of the Borrower to the Administrative Agent (a) notifying the Administrative
Agent of such LCA Election and (b) certifying that each of the conditions for
such Limited Condition Acquisition and any related transactions that are tested
as of the LCA Test Date have been satisfied (which shall include calculations in
reasonable detail for any conditions requiring compliance on a pro forma basis
with the covenants set forth in Article VI or with any relevant ratio tests)
(such certificate, an “LCA Election Certificate”). For the avoidance of doubt,
if the Borrower has made an LCA Election and any of the financial covenant,
basket, representation and warranty or Default or Event of Default tests for
which compliance was determined or tested as of the LCA Test Date would
thereafter have failed to have been satisfied as a result of fluctuations in any
such financial covenant or basket, including due to fluctuations in Consolidated
EBITDA, or changes in compliance with such representation and warranty or
Default or Event of Default test at or prior to the consummation of the relevant
Limited Condition Acquisition, such financial covenant, basket, representation
and warranty and Default or Event of Default tests will not be deemed to have
failed to have been satisfied as a result of such fluctuations or changes. If
the Borrower has made an LCA Election for any Limited Condition Acquisition,
then in connection with any subsequent calculation of any ratio (other than
testing of actual compliance with the covenants set forth in Article VI and
determination of the Leverage Ratio for purposes of determining the Applicable
Margin) or basket on or following the relevant LCA Test Date and prior to the
earlier of (i) the date on which such Limited Condition Acquisition is
consummated or (ii) the date that the Limited Condition Acquisition Agreement
therefor is terminated or expires without consummation of such Limited Condition
Acquisition, any such ratio or basket shall be calculated (x) on a pro forma
basis assuming such Limited Condition Acquisition and other transactions in
connection therewith (including any incurrence of Indebtedness and the use of
proceeds thereof) have been consummated and (y) with respect to Restricted
Payments only, also on a standalone basis without giving effect to such Limited
Condition Acquisition and the other transactions in connection therewith.

ARTICLE II

AMOUNT AND TERMS OF THE COMMITMENTS

Section 2.1. General Description of Facilities. Subject to and upon the terms
and conditions herein set forth, (i) the Revolving Lenders hereby establish in
favor of the Borrower a revolving credit facility pursuant to which each
Revolving Lender severally agrees (to the extent of such Revolving Lender’s
Revolving Commitment) to make Revolving Loans to the Borrower in accordance with
Section 2.2; (ii) each Issuing Bank may issue Letters of Credit in accordance
with Section 2.22; (iii) the Swingline Lender may make Swingline Loans in
accordance with Section 2.4; and (iv) each Revolving Lender agrees to purchase a
participation interest in the Letters of Credit and the Swingline Loans pursuant
to the terms and conditions hereof; provided that in no event shall the
aggregate principal amount of all outstanding Revolving Loans, Swingline Loans
and outstanding LC Exposure exceed the Aggregate Revolving Commitment Amount in
effect from time to time.

Section 2.2. Revolving Loans. Subject to the terms and conditions set forth
herein, each Revolving Lender severally agrees to make Revolving Loans, ratably
in proportion to its Pro Rata Share of the Aggregate Revolving Commitments, to
the Borrower, from time to time during the Availability Period, in an aggregate
principal amount outstanding at any time that will not result in (a) such
Revolving Lender’s Revolving Credit Exposure exceeding such Revolving Lender’s
Revolving Commitment or (b) the aggregate Revolving Credit Exposures of all
Revolving Lenders exceeding the Aggregate Revolving Commitment Amount. During
the Availability Period, the Borrower shall be entitled to borrow, prepay and
reborrow Revolving Loans in accordance with the terms and conditions of this
Agreement; provided that the Borrower may not borrow or reborrow should there
exist a Default or Event of Default.

 

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Section 2.3. Procedure for Revolving Borrowings. The Borrower shall give the
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) of each Revolving Borrowing, substantially in the form of Exhibit 2.3
attached hereto (a “Notice of Borrowing”), (x) prior to 1:00 p.m. one
(1) Business Day prior to the requested date of each Base Rate Borrowing and
(y) prior to 1:00 p.m. three (3) Business Days prior to the requested date of
each Eurodollar Borrowing; provided that in the case of any Base Rate Borrowings
on the Closing Date, such Notice of Borrowing may be provided on the Closing
Date. Each Notice of Borrowing shall be irrevocable and shall specify (i) the
aggregate principal amount of such Borrowing, (ii) the date of such Borrowing
(which shall be a Business Day), (iii) the Class and Type of Loan comprising
such Borrowing and (iv) in the case of a Eurodollar Borrowing, the duration of
the initial Interest Period applicable thereto (subject to the provisions of the
definition of Interest Period). Each Revolving Borrowing shall consist entirely
of Base Rate Loans or Eurodollar Loans, as the Borrower may request. The
aggregate principal amount of each Eurodollar Borrowing shall not be less than
$5,000,000 or a larger multiple of $250,000, and the aggregate principal amount
of each Base Rate Borrowing shall not be less than $1,000,000 or a larger
multiple of $100,000; provided that Base Rate Loans made pursuant to Section 2.4
or Section 2.22(d) may be made in lesser amounts as provided therein. At no time
shall the total number of Eurodollar Borrowings outstanding at any time exceed
eight (8). Promptly following the receipt of a Notice of Borrowing in accordance
herewith, the Administrative Agent shall advise each applicable Lender of the
details thereof and the amount of such Lender’s Loan to be made as part of the
requested Borrowing.

Section 2.4. Swingline Commitment.

(a) Subject to the terms and conditions set forth herein, the Swingline Lender
may, in its sole discretion, make Swingline Loans to the Borrower, from time to
time during the Availability Period, in an aggregate principal amount
outstanding at any time not to exceed the lesser of (i) the Swingline Commitment
then in effect and (ii) the difference between the Aggregate Revolving
Commitment Amount and the aggregate Revolving Credit Exposures of all Lenders;
provided that the Swingline Lender shall not be required to make a Swingline
Loan to refinance an outstanding Swingline Loan. The Borrower shall be entitled
to borrow, repay and reborrow Swingline Loans in accordance with the terms and
conditions of this Agreement.

(b) The Borrower shall give the Administrative Agent written notice (or
telephonic notice promptly confirmed in writing) of each Swingline Borrowing,
substantially in the form of Exhibit 2.4 attached hereto (a “Notice of Swingline
Borrowing”), prior to 1:00 p.m. on the requested date of each Swingline
Borrowing. Each Notice of Swingline Borrowing shall be irrevocable and shall
specify (i) the principal amount of such Swingline Borrowing, (ii) the date of
such Swingline Borrowing (which shall be a Business Day) and (iii) the account
of the Borrower to which the proceeds of such Swingline Borrowing should be
credited. The Administrative Agent will promptly advise the Swingline Lender of
each Notice of Swingline Borrowing. The aggregate principal amount of each
Swingline Loan shall not be less than $100,000 or a larger multiple of $50,000,
or such other minimum amounts agreed to by the Swingline Lender and the
Borrower. The Swingline Lender will make the proceeds of each Swingline Loan
available to the Borrower in Dollars in immediately available funds at the
account specified by the Borrower in the applicable Notice of Swingline
Borrowing not later than 3:00 p.m. on the requested date of such Swingline
Borrowing.

(c) The Swingline Lender, at any time and from time to time in its sole
discretion, may, but in no event no less frequently than once each calendar week
shall, on behalf of the Borrower (which hereby irrevocably authorizes and
directs the Swingline Lender to act on its behalf), give a Notice of Borrowing
to the Administrative Agent requesting the Revolving Lenders (including the
Swingline Lender) to make Base Rate Loans in an amount equal to the unpaid
principal amount of any Swingline Loan. Each Revolving Lender will make the
proceeds of its Base Rate Loan included in such Borrowing available to the
Administrative Agent for the account of the Swingline Lender in accordance with
Section 2.6, which will be used solely for the repayment of such Swingline Loan.

 

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(d) If for any reason a Base Rate Borrowing may not be (as determined in the
sole discretion of the Administrative Agent), or is not, made in accordance with
the foregoing provisions, then each Revolving Lender (other than the Swingline
Lender) shall purchase an undivided participating interest in such Swingline
Loan in an amount equal to its Pro Rata Share thereof on the date that such Base
Rate Borrowing should have occurred. On the date of such required purchase, each
Revolving Lender shall promptly transfer, in immediately available funds, the
amount of its participating interest to the Administrative Agent for the account
of the Swingline Lender.

(e) Each Revolving Lender’s obligation to make a Base Rate Loan pursuant to
subsection (c) of this Section or to purchase participating interests pursuant
to subsection (d) of this Section shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right that such Revolving
Lender or any other Person may have or claim against the Swingline Lender, the
Borrower or any other Person for any reason whatsoever, (ii) the existence of a
Default or an Event of Default or the termination of any Revolving Lender’s
Revolving Commitment, (iii) the existence (or alleged existence) of any event or
condition which has had or could reasonably be expected to have a Material
Adverse Effect, (iv) any breach of this Agreement or any other Loan Document by
any Loan Party, the Administrative Agent or any Lender or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. If such amount is not in fact made available to the Swingline
Lender by any Revolving Lender, the Swingline Lender shall be entitled to
recover such amount on demand from such Revolving Lender, together with accrued
interest thereon for each day from the date of demand thereof (x) at the Federal
Funds Rate until the second Business Day after such demand and (y) at the Base
Rate at all times thereafter. Until such time as such Revolving Lender makes its
required payment, the Swingline Lender shall be deemed to continue to have
outstanding Swingline Loans in the amount of the unpaid participation for all
purposes of the Loan Documents. In addition, such Revolving Lender shall be
deemed to have assigned any and all payments made of principal and interest on
its Loans and any other amounts due to it hereunder to the Swingline Lender to
fund the amount of such Revolving Lender’s participation interest in such
Swingline Loans that such Revolving Lender failed to fund pursuant to this
Section, until such amount has been purchased in full.

(f) If a Revolving Commitment Termination Date (the “Earlier Swingline Maturity
Date”) shall have occurred at a time when another tranche or tranches of
Revolving Commitments is or are in effect with a longer Maturity Date, then, on
the Earlier Swingline Maturity Date, all then outstanding Swingline Loans shall
be repaid in full (and there shall be no adjustment to the participations in
such Swingline Loans as a result of the occurrence of the Earlier Swingline
Maturity Date); provided, however, that if on the occurrence of the Earlier
Swingline Maturity Date (after giving effect to any repayments of Revolving
Loans and any reallocation of Letter of Credit participations as contemplated in
Section 2.22(a)), there shall exist sufficient unutilized Extended Revolving
Commitments which will remain in effect after the occurrence of the Earlier
Swingline Maturity Date so that the respective outstanding Swingline Loans could
be incurred pursuant to such Extended Revolving Commitments, then (1) there
shall be an automatic adjustment on the Earlier Swingline Maturity Date of the
risk participations of the Revolving Lenders under such Extended Revolving
Commitments pro rata according to such Revolving Lender’s Pro Rata Share of the
existing Extended Revolving Commitments and such outstanding Swingline Loans
shall be deemed to have been incurred solely pursuant to such Extended Revolving
Commitments and (2) such Swingline Loans shall not be required to be repaid in
full on the Earlier Swingline Maturity Date.

Section 2.5. [Reserved].

 

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Section 2.6. Funding of Borrowings.

(a) Each Lender will make available each Loan to be made by it hereunder on the
proposed date thereof by wire transfer in immediately available funds by 11:00
a.m. to the Administrative Agent at the Payment Office; provided that the
Swingline Loans will be made as set forth in Section 2.4. The Administrative
Agent will make such Loans available to the Borrower by promptly crediting the
amounts that it receives, in like funds by the close of business on such
proposed date, to an account maintained by the Borrower with the Administrative
Agent or, at the Borrower’s option, by effecting a wire transfer of such amounts
to an account designated by the Borrower to the Administrative Agent.

(b) Unless the Administrative Agent shall have been notified by any Lender prior
to 5:00 p.m. one (1) Business Day prior to the date of a Borrowing in which such
Lender is to participate that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such amount available to the
Administrative Agent on such date, and the Administrative Agent, in reliance on
such assumption, may make available to the Borrower on such date a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent by such Lender on the date of such Borrowing, the
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest (x) at the Federal Funds Rate
until the second Business Day after such demand and (y) at the Base Rate at all
times thereafter. If such Lender does not pay such corresponding amount
forthwith upon the Administrative Agent’s demand therefor, the Administrative
Agent shall promptly notify the Borrower, and the Borrower shall immediately pay
such corresponding amount to the Administrative Agent together with interest at
the rate specified for such Borrowing. Nothing in this subsection shall be
deemed to relieve any Lender from its obligation to fund its Pro Rata Share of
any Borrowing hereunder or to prejudice any rights which the Borrower may have
against any Lender as a result of any default by such Lender hereunder.

(c) All Revolving Borrowings shall be made by the Revolving Lenders on the basis
of their respective Pro Rata Shares of the Revolving Commitments. No Lender
shall be responsible for any default by any other Lender in its obligations
hereunder, and each Lender shall be obligated to make its Loans provided to be
made by it hereunder, regardless of the failure of any other Lender to make its
Loans hereunder.

Section 2.7. Interest Elections.

(a) Each Borrowing initially shall be of the Type specified in the applicable
Notice of Borrowing. Thereafter, the Borrower may elect to convert such
Borrowing into a different Type or to continue such Borrowing, all as provided
in this Section. The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.

(b) To make an election pursuant to this Section, the Borrower shall give the
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) of each Borrowing that is to be converted or continued, as the case may
be, substantially in the form of Exhibit 2.7 attached hereto (a “Notice of
Conversion/Continuation”) (x) prior to 1:00 p.m. one (1) Business Day prior to
the requested date of a conversion into a Base Rate Borrowing and (y) prior to
1:00 p.m. three (3) Business Days prior to a continuation of or conversion into
a Eurodollar Borrowing. Each such Notice of Conversion/Continuation shall be
irrevocable and shall specify (i) the Borrowing to which such Notice of
Conversion/Continuation applies and, if different options are being elected with
respect to different portions thereof, the portions thereof that are to be
allocated to each resulting Borrowing (in which case the information to be
specified pursuant to clauses (iii) and (iv) shall be specified for each
resulting

 

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Borrowing), (ii) the effective date of the election made pursuant to such Notice
of Conversion/Continuation, which shall be a Business Day, (iii) whether the
resulting Borrowing is to be a Base Rate Borrowing or a Eurodollar Borrowing,
and (iv) if the resulting Borrowing is to be a Eurodollar Borrowing, the
Interest Period applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of “Interest Period”. If any
such Notice of Conversion/ Continuation requests a Eurodollar Borrowing but does
not specify an Interest Period, the Borrower shall be deemed to have selected an
Interest Period of one month. The principal amount of any resulting Borrowing
shall satisfy the minimum borrowing amount for Eurodollar Borrowings and Base
Rate Borrowings set forth in Section 2.3.

(c) If, on the expiration of any Interest Period in respect of any Eurodollar
Borrowing, the Borrower shall have failed to deliver a Notice of
Conversion/Continuation, then, unless such Borrowing is repaid as provided
herein, the Borrower shall be deemed to have elected to convert such Borrowing
to a Base Rate Borrowing. No Borrowing may be converted into, or continued as, a
Eurodollar Borrowing if a Default or an Event of Default exists, unless the
Administrative Agent and each of the Lenders holding Loans comprising such
Borrowing shall have otherwise consented in writing. No conversion of any
Eurodollar Loan shall be permitted except on the last day of the Interest Period
in respect thereof.

(d) Upon receipt of any Notice of Conversion/Continuation, the Administrative
Agent shall promptly notify each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.

Section 2.8. Optional Reduction and Termination of Commitments.

(a) Unless previously terminated, all Revolving Commitments, Swingline
Commitments and LC Commitments shall terminate on the Revolving Commitment
Termination Date.

(b) Upon at least three (3) Business Days’ prior written notice (or telephonic
notice promptly confirmed in writing) to the Administrative Agent (which notice
shall be irrevocable unless the Borrower provides in such notice (in connection
with a termination in whole) that it is conditional on the occurrence of another
financing or transaction, in which case such notice may be revoked if such
financing or transaction does not occur on a timely basis; provided that the
Borrower shall pay all amounts required to be paid pursuant to Section 2.19 as a
result of such revocation), the Borrower may reduce the Aggregate Revolving
Commitments in part or terminate the Aggregate Revolving Commitments in whole;
provided that (i) any partial reduction shall apply to reduce proportionately
and permanently the Revolving Commitment of each Lender, (ii) any partial
reduction pursuant to this Section shall be in an amount of at least $5,000,000
and any larger multiple of $1,000,000, and (iii) no such reduction shall be
permitted which would reduce the Aggregate Revolving Commitment Amount to an
amount less than the aggregate outstanding Revolving Credit Exposure of all
Lenders. Any such reduction in the Aggregate Revolving Commitment Amount below
the principal amount of the Swingline Commitment and the LC Commitment shall
result in a dollar-for-dollar reduction in the Swingline Commitment and the LC
Commitment, as applicable.

(c) With the written approval of the Administrative Agent, the Borrower may
terminate (on a non-ratable basis) the unused amount of the Revolving Commitment
of a Defaulting Lender, and in such event the provisions of Section 2.26 will
apply to all amounts thereafter paid by the Borrower for the account of any 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 that the Borrower, the
Administrative Agent, any Issuing Bank, the Swingline Lender or any other Lender
may have against such Defaulting Lender.

 

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Section 2.9. Repayment of Loans.

(a) The outstanding principal amount of all Revolving Loans and Swingline Loans
shall be due and payable (together with accrued and unpaid interest thereon) on
the Revolving Commitment Termination Date.

(b) The Borrower unconditionally promises to repay any Incremental Term Loan on
the applicable Maturity Date and on the applicable dates scheduled for the
repayment of principal of any Incremental Term Loan and in the amounts set forth
in the applicable Incremental Commitment Joinder. The Borrower unconditionally
promises to repay any Extended Term Loan on the applicable Maturity Date and on
the applicable dates scheduled for the repayment of principal of any Extended
Term Loan and in the amounts set forth in the applicable Extended Facility
Agreement. The Borrower promises to repay any Other Refinancing Term Loans on
the applicable Maturity Date and on the applicable dates scheduled for the
repayment of principal of any Other Refinancing Term Loan and in the amounts set
forth in the applicable Refinancing Amendment.

Section 2.10. Evidence of Indebtedness.

(a) Each Lender shall maintain in accordance with its usual practice appropriate
records evidencing the Indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender from time to time, including the amounts of
principal and interest payable thereon and paid to such Lender from time to time
under this Agreement. The Administrative Agent shall maintain appropriate
records in which shall be recorded (i) the Revolving Commitment and the Term
Loan Commitment of each Lender, (ii) the amount of each Loan made hereunder by
each Lender, the Class and Type thereof and, in the case of each Eurodollar
Loan, the Interest Period applicable thereto, (iii) the date of any continuation
of any Loan pursuant to Section 2.7, (iv) the date of any conversion of all or a
portion of any Loan to another Type pursuant to Section 2.7, (v) the date and
amount of any principal or interest due and payable or to become due and payable
from the Borrower to each Lender hereunder in respect of the Loans and (vi) both
the date and amount of any sum received by the Administrative Agent hereunder
from the Borrower in respect of the Loans and each Lender’s Pro Rata Share
thereof. The entries made in such records shall be prima facie evidence of the
existence and amounts of the obligations of the Borrower therein recorded;
provided that the failure or delay of any Lender or the Administrative Agent in
maintaining or making entries into any such record or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Loans (both
principal and unpaid accrued interest) of such Lender in accordance with the
terms of this Agreement.

(b) This Agreement evidences the obligation of the Borrower to repay the Loans
and is being executed as a “noteless” credit agreement. However, at the request
of any Lender (including the Swingline Lender) at any time, the Borrower agrees
that it will prepare, execute and deliver to such Lender a promissory note
payable to such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and interest thereon
shall at all times (including after assignment permitted hereunder) be
represented by one or more promissory notes in such form payable to the payee
named therein (or, if such promissory note is a registered note, to such payee
and its registered assigns).

Section 2.11. Optional Prepayments. The Borrower shall have the right at any
time and from time to time to prepay any Borrowing, in whole or in part, without
premium or penalty, by giving written notice (or telephonic notice promptly
confirmed in writing) to the Administrative Agent no later than (i) in the case
of any prepayment of any Eurodollar Borrowing, 1:00 p.m. not less than three
(3) Business Days prior to the date of such prepayment, (ii) in the case of any
prepayment of any Base Rate Borrowing, 1:00 p.m. not less than one (1) Business
Day prior to the date of such prepayment, and (iii) in

 

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the case of any prepayment of any Swingline Borrowing, prior to 1:00 p.m. on the
date of such prepayment. Each such notice shall be irrevocable (provided that
(x) any such notice in connection with the repayment of all Loans may be
conditioned on the occurrence of another financing or transaction, in which case
such notice may be revoked if such financing or transaction does not occur on a
timely basis and (y) the Borrower shall pay all amounts required to be paid
pursuant to Section 2.19 as a result of such revocation) and shall specify the
proposed date of such prepayment and the principal amount of each Borrowing or
portion thereof to be prepaid. Upon receipt of any such notice, the
Administrative Agent shall promptly notify each affected Lender of the contents
thereof and of such Lender’s Pro Rata Share of any such prepayment. If such
notice is given, the aggregate amount specified in such notice shall be due and
payable on the date designated in such notice (unless revoked as provided
above), together with accrued interest to such date on the amount so prepaid in
accordance with Section 2.13(d); provided that if a Eurodollar Borrowing is
prepaid on a date other than the last day of an Interest Period applicable
thereto, the Borrower shall also pay all amounts required pursuant to
Section 2.19. Each partial prepayment of (i) each Eurodollar Borrowing shall not
be less than $5,000,000 or a larger multiple of $250,000, (ii) each Base Rate
Borrowing (other than a Base Rate Borrowing of Swingline Loans) shall not be
less than $1,000,000 or a larger multiple of $100,000 and (iii) each Base Rate
Borrowing of Swingline Loans shall not be less than $100,000 or a larger
multiple of $50,000. Each prepayment of a Borrowing shall be applied ratably to
the Loans comprising such Borrowing and, in the case of a prepayment of a Term
Loan Borrowing, to principal installments in the manner directed by the
Borrower.

Section 2.12. Mandatory Prepayments.

(a) Immediately upon receipt by the Borrower or any of its Subsidiaries of any
proceeds of any sale or disposition by the Borrower or any of its Subsidiaries
of any of its assets, or any proceeds from any casualty insurance policies or
eminent domain, condemnation or similar proceedings, the Borrower shall prepay
the Obligations in an amount equal to all such proceeds, net of commissions and
other reasonable and customary transaction costs, fees and expenses properly
attributable to such transaction and payable by the Borrower in connection
therewith (in each case, paid to non-Affiliates); provided that the Borrower
shall not be required to prepay the Obligations with respect to (i) proceeds
from the sales of inventory in the ordinary course of business, (ii) proceeds
from the sales of assets securing Indebtedness permitted under Section 7.1(c) to
the extent such proceeds are used to repay such Indebtedness, (iii) proceeds
from other asset sales permitted under Section 7.6(f) and (iv) proceeds that are
reinvested in assets then used or usable in the business of the Borrower and its
Subsidiaries within 180 days following receipt thereof, so long as such proceeds
are held in deposit accounts and/or securities accounts that are, in each case,
either (x) subject to Control Account Agreements in favor of the Administrative
Agent or (y) Lender Accounts, in each case of clauses (x) and (y), until such
proceeds are reinvested. Any such prepayment shall be applied in accordance with
subsection (c) of this Section.

(b) In the event that the Borrower or any of its Subsidiaries receives proceeds
from the issuance or incurrence of Indebtedness by the Borrower or any of its
Subsidiaries that is not permitted under Section 7.1, the Borrower shall,
substantially simultaneously with (and in any event not later than the fifth
succeeding Business Day) the receipt of such proceeds by the Borrower or its
applicable Subsidiary, apply an amount equal to 100% of such proceeds, net of
all fees, commissions, costs, underwriting discounts and other fees and expenses
incurred in connection therewith, to prepay the Obligations in accordance with
subsection (c) of this Section. In the event that the Borrower or any of its
Subsidiaries receives proceeds from the issuance or incurrence of Indebtedness
that constitutes (i) Incremental Term Loans or Revolving Loans in respect of
Incremental Revolving Commitments, in each case incurred to refinance all or any
portion of the Term Loans, (ii) Extended Term Loans or Revolving Loans in
respect of Extended Revolving Commitments, in each case incurred to refinance
all or any portion of the Term Loans or (iii) Other Refinancing Loans incurred
to refinance all or any portion of the Term Loans, the Borrower shall,
substantially simultaneously with (and in any event not later than the

 

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fifth succeeding Business Day) the receipt of such proceeds by the Borrower or
its applicable Subsidiary, apply an amount equal to 100% of such proceeds, net
of all fees, commissions, costs, underwriting discounts and other fees and
expenses incurred in connection therewith, to prepay the outstanding principal
amount of the relevant Term Loans and, thereafter, to prepay the Obligations in
accordance with subsection (c) of this Section.

(c) Any prepayments made by the Borrower pursuant to subsection (a) or (b) of
this Section shall be applied as follows: first, to the Administrative Agent’s
fees and reimbursable expenses then due and payable pursuant to any of the Loan
Documents; second, to all reimbursable expenses of the Lenders and all fees and
reimbursable expenses of the Issuing Bank then due and payable pursuant to any
of the Loan Documents, pro rata to the Lenders and the Issuing Bank based on
their respective pro rata shares of such fees and expenses; third, to interest
and fees then due and payable hereunder, pro rata to the Lenders based on their
respective pro rata shares of such interest and fees; fourth, unless otherwise
provided in the applicable Incremental Commitment Joinder, Extended Facility
Agreement or Refinancing Amendment, as applicable, to the principal balance of
any then outstanding Term Loans, until the same shall have been paid in full,
pro rata to the Lenders based on their Pro Rata Shares of such Term Loans, and
applied to installments of such Term Loans on a pro rata basis (including,
without limitation, the final payment due on the Maturity Date); fifth, to the
principal balance of the Swingline Loans, until the same shall have been paid in
full, to the Swingline Lender; sixth, to the principal balance of the Revolving
Loans, until the same shall have been paid in full, pro rata to the Lenders
based on their respective Revolving Commitments; and seventh, to Cash
Collateralize the Letters of Credit in an amount in cash equal to the LC
Exposure as of such date plus any accrued and unpaid fees thereon.

(d) If at any time the aggregate Revolving Credit Exposure of all Lenders
exceeds the Aggregate Revolving Commitment Amount, as reduced pursuant to
Section 2.8 or otherwise increased pursuant to Section 2.23, the Borrower shall
immediately repay the Swingline Loans and the Revolving Loans in an amount equal
to such excess, together with all accrued and unpaid interest on such excess
amount and any amounts due under Section 2.19. Each prepayment shall be applied
as follows: first, to the Swingline Loans to the full extent thereof; second, to
the Revolving Loans that are Base Rate Loans to the full extent thereof; and
third, to the Revolving Loans that are Eurodollar Loans to the full extent
thereof. If, after giving effect to prepayment of all Swingline Loans and
Revolving Loans, the aggregate Revolving Credit Exposure of all Lenders exceeds
the Aggregate Revolving Commitment Amount, the Borrower shall Cash Collateralize
its reimbursement obligations with respect to all Letters of Credit in an amount
equal to such excess plus any accrued and unpaid fees thereon.

Section 2.13. Interest on Loans.

(a) The Borrower shall pay interest on (i) each Base Rate Loan at the Base Rate
plus the Applicable Margin in effect from time to time and (ii) each Eurodollar
Loan at Adjusted LIBOR for the applicable Interest Period in effect for such
Loan plus the Applicable Margin in effect from time to time.

(b) The Borrower shall pay interest on each Swingline Loan at the Base Rate plus
the Applicable Margin in effect from time to time.

(c) Notwithstanding subsections (a) and (b) of this Section, automatically upon
the occurrence and during the continuance of an Event of Default, the Borrower
shall pay interest (“Default Interest”) with respect to all overdue principal
and interest and all other Obligations not paid when due at the rate per annum
equal to 200 basis points above the otherwise applicable interest rate with
respect thereto (i.e., for Eurodollar Loans at the rate per annum equal to 200
basis points above the otherwise applicable interest rate for such Eurodollar
Loans for the then-current Interest Period until the last day of

 

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such Interest Period, and thereafter, and with respect to all Base Rate Loans
and all other Obligations hereunder (other than Loans), at the rate per annum
equal to 200 basis points above the otherwise applicable interest rate for Base
Rate Loans). Notwithstanding the foregoing, automatically upon the occurrence
and during the continuance of an Event of Default under Sections 8.1(g), (h) or
(i) with respect to the Borrower, the Borrower shall pay Default Interest in
accordance with the preceding sentence with respect to all Obligations whether
or not overdue.

(d) Interest on the principal amount of all Loans shall accrue from and
including the date such Loans are made to but excluding the date of any
repayment thereof. Interest on all outstanding Base Rate Loans and Swingline
Loans shall be payable quarterly in arrears on the last day of each March, June,
September and December and on the applicable Maturity Date. Interest on all
outstanding Eurodollar Loans shall be payable on the last day of each Interest
Period applicable thereto, and, in the case of any Eurodollar Loans having an
Interest Period in excess of three months, on each day which occurs every three
months after the initial date of such Interest Period, and on the applicable
Maturity Date. Interest on any Loan which is converted into a Loan of another
Type or which is repaid or prepaid shall be payable on the date of such
conversion or on the date of any such repayment or prepayment (on the amount
repaid or prepaid) thereof. All Default Interest shall be payable on demand.

(e) The Administrative Agent shall determine each interest rate applicable to
the Loans hereunder and shall promptly notify the Borrower and the Lenders of
such rate in writing (or by telephone, promptly confirmed in writing). Any such
determination shall be conclusive and binding for all purposes, absent manifest
error.

Section 2.14. Fees.

(a) The Borrower shall pay to the Administrative Agent for its own account fees
in the amounts and at the times previously agreed upon in writing by the
Borrower and the Administrative Agent.

(b) The Borrower agrees to pay to the Administrative Agent for the account of
each Revolving Lender a commitment fee, which shall accrue at the Applicable
Percentage per annum (determined daily in accordance with the Pricing Grid) on
the daily amount of the unused Revolving Commitment of such Revolving Lender
during the Availability Period. For purposes of computing the commitment fee,
the Revolving Commitment of each Revolving Lender shall be deemed used to the
extent of the outstanding Revolving Loans and LC Exposure, but not Swingline
Exposure, of such Revolving Lender.

(c) The Borrower agrees to pay (i) to the Administrative Agent, for the account
of each Revolving Lender, a letter of credit fee with respect to its
participation in each Letter of Credit, which shall accrue at a rate per annum
equal to the Applicable Margin for letter of credit fees then in effect on the
average daily amount of such Revolving Lender’s LC Exposure attributable to such
Letter of Credit during the period from and including the date of issuance of
such Letter of Credit to but excluding the date on which such Letter of Credit
expires or is drawn in full (including, without limitation, any LC Exposure that
remains outstanding after the Revolving Commitment Termination Date) and (ii) to
each Issuing Bank for its own account a facing fee, which shall accrue at the
rate separately agreed to by the Borrower and such Issuing Bank on the average
daily amount of the LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the Availability Period (or until the date
that such Letter of Credit is irrevocably cancelled, whichever is later), as
well as such Issuing Bank’s standard fees with respect to issuance, amendment,
renewal or extension of any Letter of Credit or processing of drawings
thereunder. Notwithstanding the foregoing, if the Borrower, in accordance with
Section 2.13(c), is obligated to pay Default Interest with respect to the
Obligations whether or not overdue, the fee payable pursuant to this subsection
(c) shall increase by two percent (2.00%) per annum.

 

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(d) [Intentionally Omitted].

(e) The Borrower shall pay on the Closing Date to the Administrative Agent and
its Affiliates all fees in the Fee Letter that are due and payable on the
Closing Date. The Borrower shall pay on the Closing Date to the Lenders all
upfront fees previously agreed in writing.

(f) Accrued fees under subsections (b) and (c) of this Section shall be payable
quarterly in arrears on the last day of each March, June, September and
December, commencing on December 31, 2019, and on the Revolving Commitment
Termination Date (and, if later, the date the Revolving Loans and LC Exposure
shall be repaid in their entirety); provided that any such fees accruing after
the Revolving Commitment Termination Date shall be payable on demand.

(g) Anything herein to the contrary notwithstanding, during such period as a
Lender is a Defaulting Lender, such Defaulting Lender will not be entitled to
commitment fees accruing with respect to its Revolving Commitment during such
period pursuant to subsection (b) of this Section or letter of credit fees
accruing during such period pursuant to subsection (c) of this Section (without
prejudice to the rights of the Lenders other than Defaulting Lenders in respect
of such fees), provided that (x) to the extent that a portion of the LC Exposure
of such Defaulting Lender is reallocated to the Non-Defaulting Lenders pursuant
to Section 2.26, 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 Revolving
Commitments, and (y) to the extent any portion of such LC Exposure cannot be so
reallocated, such fees will instead accrue for the benefit of and be payable to
the applicable Issuing Bank (unless such LC exposure has been Cash
Collateralized). The pro rata payment provisions of Section 2.21 shall
automatically be deemed adjusted to reflect the provisions of this subsection.

Section 2.15. Computation of Interest and Fees.

Interest hereunder based on the prime lending rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year) and paid for the actual
number of days elapsed (including the first day but excluding the last day). All
other interest and all fees hereunder shall be computed on the basis of a year
of 360 days and paid for the actual number of days elapsed (including the first
day but excluding the last day). Each determination by the Administrative Agent
of an interest rate or fee hereunder shall be made in good faith and, except for
manifest error, shall be final, conclusive and binding for all purposes.

Section 2.16. Inability to Determine Interest Rates.

(a) If, prior to the commencement of any Interest Period for any Eurodollar
Borrowing:

(i) the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant interbank market, adequate means do not exist for
ascertaining Adjusted LIBOR (including, without limitation, because the Screen
Rate is not available or published on a current basis) for such Interest Period,
or

(ii) the Administrative Agent shall have received notice from the Required
Lenders that Adjusted LIBOR does not adequately and fairly reflect the cost to
such Lenders of making, funding or maintaining their Eurodollar Loans for such
Interest Period,

 

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the Administrative Agent shall give written notice (or telephonic notice,
promptly confirmed in writing) to the Borrower and to the Lenders as soon as
practicable thereafter. Until the Administrative Agent shall notify the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, (i) the obligations of the Lenders to make Eurodollar Loans or to
continue or convert outstanding Loans as or into Eurodollar Loans shall be
suspended and (ii) all such affected Loans shall be converted into Base Rate
Loans on the last day of the then current Interest Period applicable thereto
unless the Borrower prepays such Loans in accordance with this Agreement. Unless
the Borrower notifies the Administrative Agent at least one (1) Business Day
before the date of any Eurodollar Borrowing for which a Notice of Borrowing or a
Notice of Conversion/ Continuation has previously been given that it elects not
to borrow, continue or convert to a Eurodollar Borrowing on such date, then such
Borrowing shall be made as, continued as or converted into a Base Rate
Borrowing.

(b) If at any time the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that (i) the circumstances set forth
in clause (a)(i) above have arisen and such circumstances are unlikely to be
temporary or (ii) the circumstances set forth in clause (a)(i) above have not
arisen but the supervisor for the administrator of the Screen Rate or a
Governmental Authority having jurisdiction over the Administrative Agent has
made a public statement identifying a specific date after which the Screen Rate
shall no longer be used for determining interest rates for loans, then the
Administrative Agent and the Borrower shall endeavor to establish an alternate
rate of interest to the Screen Rate that gives due consideration to the then
prevailing market convention for determining a rate of interest for syndicated
loans in the United States at such time, and shall enter into an amendment to
this Agreement to reflect such alternate rate of interest and such other related
changes to this Agreement as may be applicable (but for the avoidance of doubt,
such related changes shall not include a reduction of the Applicable Margin).
Notwithstanding anything to the contrary in Section 10.2, such amendment shall
become effective without any further action or consent of any other party to
this Agreement so long as the Administrative Agent shall not have received,
within five (5) Business Days of the date notice of such alternate rate of
interest is provided to the Lenders, a written notice from the Required Lenders
stating that such Required Lenders object to such amendment. Until an alternate
rate of interest shall be determined in accordance with this clause (b) (but, in
the case of the circumstances described in clause (ii) of the first sentence of
this Section 2.16(b), only to the extent the Screen Rate for the applicable
currency and/or such Interest Period is not available or published at such time
on a current basis), (x) any Notice of Conversion/Continuation that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a
Eurodollar Borrowing shall be ineffective, and (y) if any Notice of Borrowing
requests a Eurodollar Borrowing, such Borrowing shall be made as a Base Rate
Borrowing; provided, that, if such alternate rate of interest shall be less than
zero, such rate shall be deemed to be zero for the purposes of this Agreement.

Section 2.17. Illegality. If any Change in Law shall make it unlawful or
impossible for any Lender to make, maintain or fund any Eurodollar Loan and such
Lender shall so notify the Administrative Agent, the Administrative Agent shall
promptly give notice thereof to the Borrower and the other Lenders, whereupon
until such Lender notifies the Administrative Agent and the Borrower that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Lender to make Eurodollar Loans, or to continue or convert outstanding
Loans as or into Eurodollar Loans, shall be suspended. In the case of the making
of a Eurodollar Borrowing, such Lender’s Loan shall be made as a Base Rate Loan
as part of the same Borrowing for the same Interest Period and, if the affected
Eurodollar Loan is then outstanding, such Loan shall be converted to a Base Rate
Loan either (i) on the last day of the then current Interest Period applicable
to such Eurodollar Loan if such Lender may lawfully continue to maintain such
Loan to such date or (ii) immediately if such Lender shall determine that it may
not lawfully continue to maintain such Eurodollar Loan to such date.
Notwithstanding the foregoing, the affected Lender shall, prior to giving such
notice to the Administrative Agent, designate a different Applicable Lending
Office if such designation would avoid the need for giving such notice and if
such designation would not otherwise be disadvantageous to such Lender in the
good faith exercise of its discretion.

 

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Section 2.18. Increased Costs.

(a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement that is not otherwise included in the determination of Adjusted
LIBOR hereunder against assets of, deposits with or for the account of, or
credit extended by, any Lender (except any such reserve requirement reflected in
Adjusted LIBOR) or any Issuing Bank;

(ii) impose on any Lender, any Issuing Bank or the eurodollar interbank market
any other condition affecting this Agreement or any Eurodollar Loans made by
such Lender or any Letter of Credit or any participation therein; or

(iii) subject any Recipient to any Taxes (other than Indemnified Taxes and
Excluded Taxes) on its loans, loan principal, letters of credit, commitments or
other obligations, or its deposits, reserves, other liabilities or capital
attributable thereto;

and the result of any of the foregoing is to increase the cost to such Lender of
making, converting into, continuing or maintaining a Eurodollar Loan or to
increase the cost to such Lender or such Issuing Bank of participating in or
issuing any Letter of Credit or to reduce the amount received or receivable by
such Lender or such Issuing Bank hereunder (whether of principal, interest or
any other amount), then, from time to time, such Lender or such Issuing Bank may
provide the Borrower (with a copy thereof to the Administrative Agent) with
written notice and demand with respect to such increased costs or reduced
amounts and within five (5) Business Days after receipt of the certificate
required under subsection (c) below, the Borrower shall pay to such Lender or
such Issuing Bank, as the case may be, such additional amounts as will
compensate such Lender or such Issuing Bank for any such increased costs
incurred or reduction suffered.

(b) If any Lender or any Issuing Bank shall have determined that on or after the
date of this Agreement any Change in Law regarding capital and liquidity
requirements has or would have the effect of reducing the rate of return on such
Lender’s or such Issuing Bank’s capital or assets (or on the capital or assets
of the Parent Company of such Lender or such Issuing Bank) as a consequence of
its obligations hereunder or under or in respect of any Letter of Credit to a
level below that which such Lender, such Issuing Bank or such Parent Company
could have achieved but for such Change in Law (taking into consideration such
Lender’s or such Issuing Bank’s policies or the policies of such Parent Company
with respect to capital adequacy and liquidity), then, from time to time, such
Lender or such Issuing Bank may provide the Borrower (with a copy thereof to the
Administrative Agent) with written notice and demand with respect to such
reduced amounts, and within five (5) Business Days after receipt of the
certificate required under subsection (c) below, the Borrower shall pay to such
Lender or such Issuing Bank, as the case may be, such additional amounts as will
compensate such Lender, such Issuing Bank or such Parent Company for any such
reduction suffered.

(c) A certificate of such Lender or such Issuing Bank setting forth (x) the
amount or amounts necessary to compensate such Lender, such Issuing Bank or the
Parent Company of such Lender or such Issuing Bank, as the case may be,
specified in subsection (a) or (b) of this Section and (y) a reasonably detailed
explanation of the applicable Change in Law, shall be delivered to the Borrower
(with a copy to the Administrative Agent) and shall be conclusive, absent
manifest error.

 

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(d) Failure or delay on the part of any Lender or any Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or such Issuing Bank’s right to demand such compensation; provided that
the Borrower shall not be required to compensate a Lender or Issuing Bank
pursuant to this Section for any increased costs incurred or reductions suffered
more than six months prior to the date that such Lender or Issuing Bank notifies
the Borrower of the Change in Law giving rise to such increased costs or
reductions and of such Lender’s or Issuing Bank’s intention to claim
compensation therefor (except that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the six-month period referred
to above shall be extended to include the period of retroactive effect thereof).

Section 2.19. Funding Indemnity. In the event of (a) the payment of any
principal of a Eurodollar Loan other than on the last day of the Interest Period
applicable thereto (including as a result of an Event of Default), (b) the
conversion or continuation of a Eurodollar Loan other than on the last day of
the Interest Period applicable thereto, or (c) the failure by the Borrower to
borrow, prepay, convert or continue any Eurodollar Loan on the date specified in
any applicable notice (regardless of whether such notice is withdrawn or
revoked), then, in any such event, the Borrower shall compensate each Lender,
within five (5) Business Days after written demand from such Lender, for any
loss, cost or expense attributable to such event. In the case of a Eurodollar
Loan, such loss, cost or expense shall be deemed to include an amount determined
by such Lender to be the excess, if any, of (A) the amount of interest that
would have accrued on the principal amount of such Eurodollar Loan if such event
had not occurred at Adjusted LIBOR applicable to such Eurodollar Loan for the
period from the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert or continue,
for the period that would have been the Interest Period for such Eurodollar
Loan) over (B) the amount of interest that would accrue on the principal amount
of such Eurodollar Loan for the same period if Adjusted LIBOR were set on the
date such Eurodollar Loan was prepaid or converted or the date on which the
Borrower failed to borrow, convert or continue such Eurodollar Loan. A
certificate as to any additional amount payable under this Section submitted to
the Borrower by any Lender (with a copy to the Administrative Agent) shall be
conclusive, absent manifest error.

Section 2.20. Taxes.

(a) Any and all payments by or on account of any obligation of the Borrower or
any other Loan Party hereunder or under any other Loan Document shall be made
free and clear of and without deduction or withholding for any Indemnified Taxes
or Other Taxes; provided that if any applicable law requires the deduction or
withholding of any Tax from any such payment, then the applicable Withholding
Agent shall make such deduction and timely pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law and, if such
Tax is an Indemnified Tax or Other Tax, then the sum payable by the Borrower or
other Loan Party, as applicable, shall be increased as necessary so that after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) the
applicable Recipient shall receive an amount equal to the sum it would have
received had no such deductions or withholdings been made.

(b) In addition, without limiting the provisions of subsection (a) of this
Section, the Borrower shall timely pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

(c) The Borrower shall indemnify each Recipient, within five (5) Business Days
after written demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes paid or payable by such Recipient (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrower by the applicable Recipient shall be conclusive, absent manifest
error.

 

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(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by the Borrower or any other Loan Party to a Governmental Authority, the
Borrower or other Loan Party, as applicable, shall deliver to the Administrative
Agent an original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.

(e) Tax Forms.

(i) Any Lender that is a U.S. Person shall deliver to the Borrower and the
Administrative Agent, on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Administrative Agent), duly executed
copies of IRS Form W-9 certifying, to the extent such Lender is legally entitled
to do so, that such Lender is exempt from U.S. federal backup withholding tax.

(ii) Any Lender that is a Foreign Person and that is entitled to an exemption
from or reduction of withholding tax under the Code or any treaty to which the
United States is a party with respect to payments under this Agreement shall
deliver to the Borrower and the Administrative Agent, at the time or times
prescribed by applicable law, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the Borrower or the
Administrative Agent as will permit such payments to be made without withholding
or at a reduced rate of withholding. Without limiting the generality of the
foregoing, each Lender that is a Foreign Person shall, to the extent it is
legally entitled to do so, (w) on or prior to the date such Lender becomes a
Lender under this Agreement, (x) on or prior to the date on which any such form
or certification expires or becomes obsolete, (y) after the occurrence of any
event requiring a change in the most recent form or certification previously
delivered by it pursuant to this subsection, and (z) from time to time upon the
reasonable request by the Borrower or the Administrative Agent, deliver to the
Borrower and the Administrative Agent (in such number of copies as shall be
requested by the Borrower or the Administrative Agent), whichever of the
following is applicable:

(A) if such Lender is claiming eligibility for benefits of an income tax treaty
to which the United States is a party (x) with respect to payments of interest
under any Loan Document, duly executed copies of IRS Form W-8BEN or IRS Form
W-8BEN-E, as applicable, or any successor form thereto, establishing an
exemption from, or reduction of, U.S. federal withholding tax pursuant to the
“interest” article of such tax treaty, and (y) with respect to any other
applicable payments under any Loan Document, duly executed copies of IRS Form
W-8BEN or IRS Form W-8BEN-E, as applicable, or any successor form thereto,
establishing an exemption from, or reduction of, U.S. federal withholding tax
pursuant to the “business profits” or “other income” article of such tax treaty;

(B) duly executed copies of IRS Form W-8ECI, or any successor form thereto,
certifying that the payments received by such Lender are effectively connected
with such Lender’s conduct of a trade or business in the United States;

 

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(C) if such Lender is claiming the benefits of the exemption for portfolio
interest under Section 871(h) or Section 881(c) of the Code, duly executed
copies of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or any successor
form thereto, together with a certificate (a “U.S. Tax Compliance Certificate”)
upon which such Lender certifies that (1) such Lender is not a bank for purposes
of Section 881(c)(3)(A) of the Code, or the obligation of the Borrower hereunder
is not, with respect to such Lender, a loan agreement entered into in the
ordinary course of its trade or business, within the meaning of that Section,
(2) such Lender is not a 10% shareholder of the Borrower within the meaning of
Section 871(h)(3) or Section 881(c)(3)(B) of the Code, (3) such Lender is not a
controlled foreign corporation that is related to the Borrower within the
meaning of Section 881(c)(3)(C) of the Code, and (4) the interest payments in
question are not effectively connected with a U.S. trade or business conducted
by such Lender; or

(D) if such Lender is not the beneficial owner (for example, a partnership or a
participating Lender granting a typical participation), duly executed copies of
IRS Form W-8IMY, or any successor form thereto, accompanied by IRS Form W-9, IRS
Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance
Certificate, and/or other certification documents from each beneficial owner, as
applicable.

(iii) Each Lender agrees that if any form or certification it previously
delivered under this Section expires or becomes obsolete or inaccurate in any
respect and such Lender is not legally entitled to provide an updated form or
certification, it shall promptly notify the Borrower and the Administrative
Agent of its inability to update such form or certification.

(f) If a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower 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 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 has complied with such Lender’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment.

(g) Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 2.20 (including by
the payment of additional amounts pursuant to this Section 2.20), it shall pay
to the indemnifying party an amount equal to such refund (but only to the extent
of indemnity payments made under this Section 2.20 with respect to the Taxes
giving rise to such refund), net of all out-of-pocket expenses (including Taxes)
of such indemnified party and without interest (other than any interest paid by
the relevant Governmental Authority with respect to such refund). Such
indemnifying party, upon the request of such indemnified party, shall repay to
such indemnified party the amount paid over pursuant to this paragraph (g) (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary
in this paragraph (g) in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this paragraph (g) the payment
of which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid. This paragraph shall not be construed
to require any indemnified party to make available its Tax returns (or any other
information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.

 

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(h) Survival. Each party’s obligations under this Section 2.20 shall survive the
resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Commitments
and the repayment, satisfaction or discharge of all obligations under any Loan
Document.

Section 2.21. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

(a) The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 2.18, 2.19 or 2.20, or otherwise) prior to
12:00 noon on the date when due, in immediately available funds, free and clear
of any defenses, rights of set-off, counterclaim, or withholding or deduction of
taxes. Any amounts received after such time on any date may, in the discretion
of the Administrative Agent, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. All such
payments shall be made to the Administrative Agent at the Payment Office, except
payments to be made directly to the applicable Issuing Bank or the Swingline
Lender as expressly provided herein and except that payments pursuant to
Sections 2.18, 2.19, 2.20 and 10.3 shall be made directly to the Persons
entitled thereto. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof. If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be made payable for the period of such extension. All
payments hereunder shall be made in Dollars.

(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
as follows: first, to all fees and reimbursable expenses of the Administrative
Agent then due and payable pursuant to any of the Loan Documents; second, to all
reimbursable expenses of the Lenders and all fees and reimbursable expenses of
the Issuing Banks then due and payable pursuant to any of the Loan Documents,
pro rata to the Lenders and the Issuing Banks based on their respective pro rata
shares of such fees and expenses; third, to all interest and fees then due and
payable hereunder, pro rata to the Lenders based on their respective pro rata
shares of such interest and fees; and fourth, to all principal of the Loans and
unreimbursed LC Disbursements then due and payable hereunder, pro rata to the
parties entitled thereto based on their respective pro rata shares of such
principal and unreimbursed LC Disbursements.

(c) If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans or participations in LC Disbursements or Swingline Loans then due that
would result in such Lender receiving payment of a greater proportion of the
aggregate amount of its Revolving Credit Exposure, Term Loans and accrued
interest and fees thereon (as applicable) than the proportion received by any
other Lender with respect to its Revolving Credit Exposure or Term Loans (as
applicable), then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Revolving Credit Exposure and
Term Loans (as applicable) of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Revolving Credit Exposure and Term Loans (as applicable);
provided that (i) if any such participations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of

 

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such recovery, without interest, and (ii) the provisions of this subsection
shall not be construed to apply to any payment made by the Borrower pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Revolving Credit Exposure or Term Loans to any
assignee or participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this subsection shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.

(d) Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Administrative Agent for
the account of the Lenders or the Issuing Banks hereunder that the Borrower will
not make such payment, the Administrative Agent may assume that the Borrower has
made such payment on such date in accordance herewith and may, in reliance upon
such assumption, distribute to the Lenders or the Issuing Banks, as the case may
be, the amount or amounts due. In such event, if the Borrower has not in fact
made such payment, then each of the Lenders or the Issuing Banks, as the case
may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or such Issuing Bank with
interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative
Agent, at the greater of the Federal Funds Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.

Section 2.22. Letters of Credit.

(a) During the Availability Period, each Issuing Bank, in reliance upon the
agreements of the other Revolving Lenders pursuant to subsections (d) and (e) of
this Section, shall issue, at the request of the Borrower, Letters of Credit for
the account of the Borrower on the terms and conditions hereinafter set forth;
provided that (i) each Letter of Credit shall expire on the earlier of (A) the
date one year after the date of issuance of such Letter of Credit (or, in the
case of any renewal or extension thereof (which may be an automatically renewing
or extending Letter of Credit), one year after such renewal or extension) and
(B) the date that is five (5) Business Days prior to the latest Revolving
Commitment Termination Date; (ii) each Letter of Credit shall be in a stated
amount of at least $50,000; and (iii) the Borrower may not request any Letter of
Credit if, after giving effect to such issuance, (A) the aggregate LC Exposure
would exceed the LC Commitment or (B) the aggregate Revolving Credit Exposure of
all Lenders would exceed the Aggregate Revolving Commitment Amount. Each Lender
with a Revolving Commitment shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the applicable Issuing Bank without
recourse a participation in each Letter of Credit equal to such Lender’s Pro
Rata Share of the aggregate amount available to be drawn under such Letter of
Credit on the date of issuance. Each issuance of a Letter of Credit shall be
deemed to utilize the Revolving Commitment of each Lender by an amount equal to
the amount of such participation. If the Maturity Date in respect of any tranche
of Revolving Commitments occurs prior to the expiration of any Letter of Credit
(such maturity date, the “Earlier LC Maturity Date”), then (i) on such Earlier
LC Maturity Date, if one or more other tranches of Revolving Commitments in
respect of which the Maturity Date shall not have occurred are then in effect,
such Letters of Credit shall automatically be deemed to have been issued
(including for purposes of the obligations of the Revolving Lenders to purchase
participations therein and to make Revolving Loans and payments in respect
thereof pursuant to this Section) under (and ratably participated in by
Revolving Lenders pursuant to) the Revolving Commitments in respect of such
non-terminating tranches up to an aggregate amount not to exceed the aggregate
principal amount of the unutilized Revolving Commitments thereunder at such time
(it being understood that no partial face amount of any Letter of Credit may be
so reallocated) and (ii) to the extent not reallocated pursuant to the
immediately preceding clause (i), the Borrower shall Cash Collateralize any such
Letter of Credit. Except

 

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to the extent of reallocations of participations pursuant to clause (i) of the
immediately preceding sentence, the occurrence of a Maturity Date with respect
to a given tranche of Revolving Commitments shall have no effect upon (and shall
not diminish) the percentage participations of the Revolving Lenders in any
Letter of Credit issued before such Maturity Date.

(b) To request the issuance of a Letter of Credit (or any amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall give the
applicable Issuing Bank and the Administrative Agent irrevocable written notice
prior to 1:00 p.m. at least three (3) Business Days prior to the requested date
of such issuance specifying the date (which shall be a Business Day) such Letter
of Credit is to be issued (or amended, renewed or extended, as the case may be),
the expiration date of such Letter of Credit, the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. In addition to the satisfaction of the conditions in Section 3.2, the
issuance of such Letter of Credit (or any amendment which increases the amount
of such Letter of Credit) will be subject to the further conditions that such
Letter of Credit shall be in such form and contain such terms as the applicable
Issuing Bank shall approve and that the Borrower shall have executed and
delivered any additional applications, agreements and instruments relating to
such Letter of Credit as such Issuing Bank shall reasonably require; provided
that in the event of any conflict between such applications, agreements or
instruments and this Agreement, the terms of this Agreement shall control.

(c) At least two (2) Business Days prior to the issuance of any Letter of
Credit, the applicable Issuing Bank will confirm with the Administrative Agent
(by telephone or in writing) that the Administrative Agent has received such
notice, and, if not, such Issuing Bank will provide the Administrative Agent
with a copy thereof. Unless such Issuing Bank has received notice from the
Administrative Agent, on or before the Business Day immediately preceding the
date such Issuing Bank is to issue the requested Letter of Credit, directing
such Issuing Bank not to issue the Letter of Credit because such issuance is not
then permitted hereunder because of the limitations set forth in subsection
(a) of this Section or that one or more conditions specified in Section 3.2 are
not then satisfied, then, subject to the terms and conditions hereof, such
Issuing Bank shall, on the requested date, issue such Letter of Credit in
accordance with such Issuing Bank’s usual and customary business practices.

(d) Each Issuing Bank shall examine all documents purporting to represent a
demand for payment under a Letter of Credit promptly following its receipt
thereof. The applicable Issuing Bank shall notify the Borrower and the
Administrative Agent of such demand for payment and whether such Issuing Bank
has made or will make a LC Disbursement thereunder; provided that any failure to
give or delay in giving such notice shall not relieve the Borrower of its
obligation to reimburse such Issuing Bank and the Revolving Lenders with respect
to such LC Disbursement. The Borrower shall be irrevocably and unconditionally
obligated to reimburse such Issuing Bank for any LC Disbursements paid by such
Issuing Bank in respect of such drawing, without presentment, demand or other
formalities of any kind. Unless the Borrower shall have notified the applicable
Issuing Bank and the Administrative Agent prior to 11:00 a.m. on the Business
Day immediately following the date on which such drawing is honored that the
Borrower intends to reimburse such Issuing Bank for the amount of such drawing
in funds other than from the proceeds of Revolving Loans, the Borrower shall be
deemed to have timely given a Notice of Borrowing to the Administrative Agent
requesting the Revolving Lenders to make a Base Rate Borrowing on such date in
an exact amount due to such Issuing Bank; provided that for purposes solely of
such Borrowing, the conditions precedent set forth in Section 3.2 hereof shall
not be applicable. The Administrative Agent shall notify the Revolving Lenders
of such Borrowing in accordance with Section 2.3, and each Revolving Lender
shall make the proceeds of its Base Rate Loan included in such Borrowing
available to the Administrative Agent for the account of such Issuing Bank in
accordance with Section 2.6. The proceeds of such Borrowing shall be applied
directly by the Administrative Agent to reimburse such Issuing Bank for such LC
Disbursement.

 

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(e) If for any reason a Base Rate Borrowing may not be (as determined in the
sole discretion of the Administrative Agent), or is not, made in accordance with
the foregoing provisions, then each Revolving Lender (other than the applicable
Issuing Bank) shall be obligated to fund the participation that such Revolving
Lender purchased pursuant to subsection (a) of this Section in an amount equal
to its Pro Rata Share of such LC Disbursement on and as of the date which such
Base Rate Borrowing should have occurred. Each Revolving Lender’s obligation to
fund its participation shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right that such Revolving Lender or
any other Person may have against the applicable Issuing Bank or any other
Person for any reason whatsoever, (ii) the existence of a Default or an Event of
Default or the termination of the Aggregate Revolving Commitments, (iii) any
adverse change in the condition (financial or otherwise) of the Borrower or any
of its Subsidiaries, (iv) any breach of this Agreement by the Borrower or any
other Lender, (v) any amendment, renewal or extension of any Letter of Credit or
(vi) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing. On the date that such participation is required
to be funded, each Revolving Lender shall promptly transfer, in immediately
available funds, the amount of its participation to the Administrative Agent for
the account of the applicable Issuing Bank. Whenever, at any time after the
applicable Issuing Bank has received from any such Revolving Lender the funds
for its participation in a LC Disbursement, such Issuing Bank (or the
Administrative Agent on its behalf) receives any payment on account thereof, the
Administrative Agent or such Issuing Bank, as the case may be, will distribute
to such Revolving Lender its Pro Rata Share of such payment; provided that if
such payment is required to be returned for any reason to the Borrower or to a
trustee, receiver, liquidator, custodian or similar official in any bankruptcy
proceeding, such Revolving Lender will return to the Administrative Agent or
such Issuing Bank any portion thereof previously distributed by the
Administrative Agent or such Issuing Bank to it.

(f) To the extent that any Revolving Lender shall fail to pay any amount
required to be paid pursuant to subsection (d) or (e) of this Section on the due
date therefor, such Revolving Lender shall pay interest to the applicable
Issuing Bank (through the Administrative Agent) on such amount from such due
date to the date such payment is made at a rate per annum equal to the Federal
Funds Rate; provided that if such Revolving Lender shall fail to make such
payment to the applicable Issuing Bank within three (3) Business Days of such
due date, then, retroactively to the due date, such Revolving Lender shall be
obligated to pay interest on such amount at the rate set forth in
Section 2.13(c).

(g) If any Event of Default shall occur and be continuing, on the Business Day
that the Borrower receives notice from the Administrative Agent or the Required
Lenders demanding that its reimbursement obligations with respect to the Letters
of Credit be Cash Collateralized pursuant to this subsection, the Borrower shall
deposit in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of each Issuing Bank and the Revolving
Lenders, an amount in cash equal to 103% of the aggregate LC Exposure of all
Lenders as of such date plus any accrued and unpaid fees thereon; provided that
such obligation to Cash Collateralize the reimbursement obligations of the
Borrower with respect to the Letters of Credit shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in Section 8.1(h) or (i). Such deposit shall
be held by the Administrative Agent as collateral for the payment and
performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. The Borrower agrees to execute
any documents and/or certificates to effectuate the intent of this subsection.
Other than any interest earned on the investment of such deposits, which
investments shall be made at the option and sole discretion of the
Administrative Agent and at the Borrower’s risk and expense, such deposits shall
not bear interest. Interest and profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall be applied by the
Administrative Agent to reimburse the applicable Issuing Bank for

 

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LC Disbursements for which it had not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated, with the consent of the Required Lenders, be applied to
satisfy other obligations of the Borrower under this Agreement and the other
Loan Documents. If the Borrower is required to Cash Collateralize its
reimbursement obligations with respect to the Letters of Credit as a result of
the occurrence of an Event of Default, such cash collateral so posted (to the
extent not so applied as aforesaid) shall be returned to the Borrower within
three (3) Business Days after all Events of Default have been cured or waived.

(h) Upon the request of any Revolving Lender, but no more frequently than
quarterly, each Issuing Bank shall deliver (through the Administrative Agent) to
each Revolving Lender and the Borrower a report describing the aggregate Letters
of Credit issued by such Issuing Bank and then outstanding. Upon the request of
any Revolving Lender from time to time, each Issuing Bank shall deliver to such
Revolving Lender any other information reasonably requested by such Revolving
Lender with respect to each Letter of Credit issued by such Issuing Bank and
then outstanding.

(i) The Borrower’s obligation to reimburse LC Disbursements hereunder shall be
absolute, unconditional and irrevocable and shall be performed strictly in
accordance with the terms of this Agreement under all circumstances whatsoever
and irrespective of any of the following circumstances:

(i) any lack of validity or enforceability of any Letter of Credit or this
Agreement;

(ii) the existence of any claim, set-off, defense or other right which the
Borrower or any Subsidiary or Affiliate of the Borrower may have at any time
against a beneficiary or any transferee of any Letter of Credit (or any Persons
or entities for whom any such beneficiary or transferee may be acting), any
Lender (including any Issuing Bank) or any other Person, whether in connection
with this Agreement or the Letter of Credit or any document related hereto or
thereto or any unrelated transaction;

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

(iv) payment by any Issuing Bank under a Letter of Credit against presentation
of a draft or other document to such Issuing Bank that does not comply with the
terms of such Letter of Credit;

(v) any other event or circumstance whatsoever, whether or not similar to any of
the foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of set-off against, the
Borrower’s obligations hereunder; or

(vi) the existence of a Default or an Event of Default.

Neither the Administrative Agent, any Issuing Bank, any Lender nor any Related
Party of any of the foregoing shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to above), or any error, omission, interruption, loss
or delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), any error in interpretation of

 

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technical terms or any consequence arising from causes beyond the control of the
applicable Issuing Bank; provided that the foregoing shall not be construed to
excuse any Issuing Bank from liability to the Borrower to the extent of any
actual direct damages (as opposed to special, indirect (including claims for
lost profits or other consequential damages), or punitive damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by such Issuing Bank’s
failure to exercise due care when determining whether drafts or other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or willful
misconduct on the part of any Issuing Bank (as finally determined by a court of
competent jurisdiction), such Issuing Bank shall be deemed to have exercised due
care in each such determination. In furtherance of the foregoing and without
limiting the generality thereof, the parties agree that, with respect to
documents presented that appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the applicable Issuing Bank may, in its
sole discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

(j) Unless otherwise expressly agreed by the applicable Issuing Bank and the
Borrower when a Letter of Credit is issued and subject to applicable laws,
(i) each standby Letter of Credit shall be governed by the “International
Standby Practices 1998” (ISP98) (or such later revision as may be published by
the Institute of International Banking Law & Practice on any date any Letter of
Credit may be issued), (ii) each documentary Letter of Credit shall be governed
by the Uniform Customs and Practices for Documentary Credits (2007 Revision),
International Chamber of Commerce Publication No. 600 (or such later revision as
may be published by the International Chamber of Commerce on any date any Letter
of Credit may be issued) and (iii) the Borrower shall specify the foregoing in
each letter of credit application submitted for the issuance of a Letter of
Credit.

Section 2.23. Increase of Commitments; Additional Lenders.

(a) From time to time after the Closing Date and in accordance with this
Section, the Borrower and one or more Increasing Lenders or Additional Lenders
(each as defined below) may enter into an agreement to (i) increase the
aggregate principal amount of the Revolving Commitments and/or (ii) establish
one or more tranches of Incremental Term Loan Commitments hereunder (each such
increase or additional tranche, an “Incremental Commitment” and the principal
amount thereof, the “Incremental Commitment Amount”) so long as the following
conditions are satisfied:

(i) the aggregate principal amount of all such Incremental Commitments made
pursuant to this Section shall not exceed $30,000,000;

(ii) the Borrower shall execute and deliver such documents and instruments and
take such other actions as may be reasonably required by the Administrative
Agent in connection with and at the time of any such proposed increase;

(iii) subject, in the case of an Incremental Term Loan (and related Incremental
Term Loan Commitments) used to finance a Limited Condition Acquisition, to
Section 1.5, at the time of and immediately after giving effect to any such
Incremental Commitment, (x) no Event of Default shall exist; provided that
(A) in the case of any Incremental Commitment obtained for the purposes of
financing an Acquisition not prohibited by this Agreement, the Lenders providing
such Incremental Commitment and the Administrative Agent may agree that such
condition shall be limited to an absence of an Event of Default under
Section 8.1(a), (b), (g), (h) or (i) and (B) if the Borrower makes an LCA
Election pursuant to Section 1.5 and such condition is tested as of the
applicable LCA Test Date, it shall also be a condition that

 

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no Event of Default under Section 8.1(a), (b), (g), (h) or (i) shall have
occurred and be continuing or would result from the incurrence of such
Incremental Term Loan (and related Term Loan Commitments) and the transactions
consummated in connection therewith (including the incurrence of any
Indebtedness and the use proceeds thereof) on the date on which such Incremental
Term Loan (and related Incremental Term Loan Commitments) is incurred and the
applicable Limited Condition Acquisition is consummated, and (y) all
representations and warranties of each Loan Party set forth in the Loan
Documents shall be true and correct in all material respects (other than those
representations and warranties that are expressly qualified by Material Adverse
Effect or other materiality, in which case such representations and warranties
shall be true and correct in all respects) as of the date of the establishment
of such Incremental Commitment (or, if such representation or warranty relates
to an earlier date, as of such earlier date); provided that in the case of any
Incremental Commitment obtained for the purposes of financing an Acquisition or
other Investment not prohibited by this Agreement, the Lenders providing such
Incremental Commitment may agree that the only representations and warranties
the accuracy of which shall be a condition to such Incremental Commitment (and
the Incremental Term Loans or Revolving Loans provided thereunder) shall be
(I) the Specified Representations and (II) the representations and warranties
made by or on behalf of the applicable target in the purchase, acquisition or
similar agreement governing such Acquisition or other Investment as are material
to the interests of the Lenders, but only to the extent that the Borrower (or
the Borrower’s applicable Affiliates or Subsidiaries) has the right (determined
without regard to any notice requirement) not to consummate or the right to
terminate (or cause the termination of) the Borrower’s (or such Affiliates’ or
Subsidiaries’) obligations under such purchase, acquisition or other agreement
as a result of a breach of such representations or warranties in such purchase,
acquisition or other agreement (or the failure of such representations or
warranties to be accurate or to satisfy the closing conditions in such purchase,
acquisition or other agreement applicable to such representations or warranties)
(such representations and warranties, the “Specified Target Representations”);

(iv) (x) any incremental term loans made pursuant to this Section (the
“Incremental Term Loans” and, the commitments with respect thereto, the
“Incremental Term Loan Commitments”) shall have a maturity date no earlier than
the latest Maturity Date in effect at the time such Incremental Term Loans are
incurred, shall have a Weighted Average Life to Maturity no shorter than that of
any then-outstanding Term Loans (without giving effect to previous reductions in
and previously made amortization payments on such Term Loans) and shall
otherwise have terms (other than pricing and any representations, warranties,
covenants and other provisions applicable only to periods after the latest
Maturity Date hereunder at such time) that either are consistent with the
applicable terms of the existing Loans and Commitments hereunder or are
reasonably satisfactory to the Administrative Agent (it being understood and
agreed that to the extent that any more restrictive terms are added for the
benefit of any Incremental Term Loan Commitments and related Incremental Term
Loans, no consent shall be required from the Administrative Agent or any Lender
to the extent that such terms are also added for the benefit of the existing
Loans and Commitments (to the extent applicable)), and (y) any incremental
Revolving Commitments provided pursuant to this Section (the “Incremental
Revolving Commitments”) shall have identical terms (including pricing and
termination date; provided that upfront fees for any Incremental Revolving
Commitments will be permitted and shall be determined by the Borrower and the
Lenders providing such Incremental Revolving Commitments) to the Revolving
Commitments and be treated as the same Class as the Revolving Commitments and
the Borrower shall, after the establishment of any Incremental Revolving
Commitments pursuant to this Section, repay and incur Revolving Loans ratably as
between the Incremental Revolving Commitments and the Revolving Commitments
outstanding immediately prior to such increase (provided that such repayment and
incurrence may, with the Administrative

 

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Agent’s consent, be effectuated through assignments among Lenders with Revolving
Commitments, which shall not require an Assignment and Acceptance and may be
effectuated by the Administrative Agent through changes in the Register and
fundings from such Lenders providing Incremental Commitments); provided,
further, that Interest Periods applicable to Incremental Term Loans or Revolving
Loans advanced pursuant to Incremental Revolving Commitments may, at the
election of the Administrative Agent and the Borrower, be made with Interest
Period(s) identical to the then remaining Interest Period(s) applicable to any
existing Term Loans of the relevant Class or existing Revolving Loans of the
applicable Class (and allocated to such Interest Period(s) on a proportional
basis);

(v) subject, in the case of an Incremental Term Loan (and related Incremental
Term Loan Commitments) used to finance a Limited Condition Acquisition, to
Section 1.5, the Borrower and its Subsidiaries shall be in pro forma compliance
with each of the financial covenants set forth in Article VI as of the most
recently ended Test Period, calculated as if all such Incremental Term Loans had
been made and all such Incremental Revolving Commitments had been established
(and fully funded) as of the first day of the relevant period for testing
compliance (including giving effect to any Acquisitions on a Pro Forma Basis
that are contemplated to be funded with such Incremental Term Loans or
Incremental Revolving Commitments); and

(vi) any collateral securing any such Incremental Commitments shall also secure
all other Obligations on a pari passu basis.

(b) The Borrower shall provide at least ten (10) days’ (or such shorter period
of time as may be agreed to by the Administrative Agent in its sole discretion)
written notice to the Administrative Agent (who shall promptly provide a copy of
such notice to each Lender) of any proposal to establish an Incremental
Commitment. The Borrower may also, but is not required to, specify any fees
offered to those Lenders (the “Increasing Lenders”) that agree to increase the
principal amount of their Revolving Commitments and/or provide Incremental Term
Loan Commitments, which fees may be variable based upon the amount by which any
such Lender is willing to increase the principal amount of its Revolving
Commitment and/or the principal amount of the Incremental Term Loan Commitment
such Lender is willing to provide, as applicable. No Lender (or any successor
thereto) shall have any obligation, express or implied, to offer to increase the
aggregate principal amount of its Revolving Commitment and/or provide an
Incremental Term Loan Commitment, and any decision by a Lender to increase its
Revolving Commitment and/or provide an Incremental Term Loan Commitment shall be
made in its sole discretion independently from any other Lender. Only the
consent of each Increasing Lender shall be required for Incremental Commitments
pursuant to this Section. No Lender which declines to increase the principal
amount of its Revolving Commitment and/or provide an Incremental Term Loan
Commitment may be replaced with respect to its existing Revolving Commitment,
its existing Term Loan Commitment (if any) and/or its existing Term Loans (if
any), as applicable, as a result thereof without such Lender’s consent. The
Borrower may accept some or all of the offered amounts from existing Lenders or
designate new lenders that are acceptable to the Administrative Agent (any such
consent to be required only to the extent required under Section 10.4(b) for an
assignment of Loans or Commitments of such Type to such new lender), the
Borrower and, in the case of any Incremental Revolving Commitments, each Issuing
Bank (such approvals of the Administrative Agent, the Borrower and the Issuing
Banks not to be unreasonably withheld) as additional Lenders hereunder in
accordance with this Section (the “Additional Lenders”), which Additional
Lenders may assume all or a portion of such Incremental Commitment. The Borrower
shall have discretion to adjust the allocation of such Incremental Revolving
Commitments and/or such Incremental Term Loans among the then-existing Lenders
and the Additional Lenders (as it may elect). The sum of the increase in the
principal amount of the Revolving Commitments and the aggregate principal amount
of the Incremental Term Loan Commitments of the Increasing Lenders plus the
principal amount of the Revolving Commitments and the aggregate principal amount
of the Term Loan Commitments of the Additional Lenders shall not in the
aggregate exceed the unsubscribed amount of the Incremental Commitment Amount.

 

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(c) Subject to subsections (a) and (b) of this Section, any increase requested
by the Borrower shall be effective upon delivery to the Administrative Agent of
each of the following documents:

(i) an originally executed copy of an instrument of joinder (each, an
“Incremental Commitment Joinder”), in form and substance reasonably acceptable
to the Administrative Agent, executed by the Administrative Agent, by the
Borrower, by each Additional Lender and by each Increasing Lender, setting forth
the Incremental Revolving Commitments and/or Incremental Term Loan Commitments,
as applicable, of such Lenders and setting forth the agreement of each
Additional Lender to become a party to this Agreement and to be bound by all of
the terms and provisions hereof;

(ii) such evidence of appropriate corporate authorization on the part of the
Borrower with respect to such Incremental Commitment and such opinions of
counsel for the Borrower with respect to such Incremental Commitment as the
Administrative Agent may reasonably request;

(iii) a certificate of the Borrower signed by a Responsible Officer, in form and
substance reasonably acceptable to the Administrative Agent, certifying that
each of the conditions in subsection (a) of this Section has been satisfied;
provided that, in the case of an Incremental Term Loan (and related Incremental
Term Loan Commitments) used to finance a Limited Condition Acquisition, the
conditions set forth in subsection (a) of this Section that are tested as of the
applicable LCA Test Date shall be certified in the applicable LCA Election
Certificate instead of the certificate delivered pursuant to this subsection
(iii);

(iv) to the extent requested by any Additional Lender or any Increasing Lender,
executed promissory notes evidencing such Incremental Revolving Commitments
and/or such Incremental Term Loans, issued by the Borrower in accordance with
Section 2.10; and

(v) any other certificates or documents that the Administrative Agent shall
reasonably request, in form and substance reasonably satisfactory to the
Administrative Agent.

Upon the effectiveness of any such Incremental Commitment, the Commitments and
Pro Rata Share of each Lender will be adjusted to give effect to the Incremental
Commitments and/or the Incremental Term Loans, as applicable, and Schedule I
shall automatically be deemed amended accordingly.

(d) If any Incremental Term Loan Commitments are to be established pursuant to
this Section, other than as set forth herein, all terms with respect thereto
shall be as set forth in the applicable Incremental Commitment Joinder, the
execution and delivery of which agreement shall be a condition to the
effectiveness of the establishment of the Incremental Term Loan Commitments.
Notwithstanding anything to the contrary in Section 10.2, the Administrative
Agent is expressly permitted to amend the Loan Documents to the extent necessary
to give effect to any increase in Commitments and/or establishment of a new
Incremental Term Loan Commitment pursuant to this Section and mechanical changes
necessary or advisable in connection therewith (including amendments to
implement the requirements in the preceding sentence or the foregoing clause
(a)(iv) of this Section, amendments to ensure pro rata allocations of Eurodollar
Loans and Base Rate Loans between Loans incurred pursuant to this Section and
Loans outstanding immediately prior to any such incurrence and amendments to
implement ratable participation in Letters of Credit between the Incremental
Revolving Commitments and the Revolving Commitments outstanding immediately
prior to any such incurrence).

 

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(e) This Section 2.23 shall supersede any provisions in Section 2.21 or 10.2 to
the contrary.

Section 2.24. Mitigation of Obligations. If any Lender requests compensation
under Section 2.18, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.20, then such Lender shall use reasonable efforts to
designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or Affiliates, if, in the sole judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable under
Section 2.18 or Section 2.20, as the case may be, in the future and (ii) would
not subject such Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay
all costs and expenses incurred by any Lender in connection with such
designation or assignment.

Section 2.25. Replacement of Lenders. If (a) any Lender requests compensation
under Section 2.18, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.20 or any Lender has failed to approve an amendment or
waiver that requires the consent of all Lenders or all Lenders of a particular
Class or all affected Lenders (and such amendment or waiver has been approved by
Requisite Lenders or Lenders with a majority of the Commitments or Loans of a
particular Class or a majority of affected Lenders), or (b) any Lender is a
Defaulting 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 set forth in Section 10.4(b)), all of its interests, rights (other
than its existing rights to payments pursuant to Section 2.18 or 2.20, as
applicable) and obligations under this Agreement to an assignee that shall
assume such obligations (which assignee may be another Lender) (a “Replacement
Lender”); provided that (i) the Borrower shall have received the prior written
consent of the Administrative Agent, which consent shall not be unreasonably
withheld, (ii) such Lender shall have received payment of an amount equal to the
outstanding principal amount of all Loans owed to it, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder from the assignee (in
the case of such outstanding principal and accrued interest) and from the
Borrower (in the case of all other amounts), and (iii) in the case of a claim
for compensation under Section 2.18 or payments required to be made pursuant to
Section 2.20, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
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. If a Lender fails to execute an Assignment and
Assumption Acceptance giving effect to the assignment contemplated under this
Section 2.25, such Assignment and Acceptance may be executed by the Borrower,
the Administrative Agent and any Replacement Lender and become effective without
the consent of such replaced Lender.

Section 2.26. Defaulting Lenders.

(a) Cash Collateral

(i) At any time that there shall exist a Defaulting Lender, within one Business
Day following the written request of the Administrative Agent or any Issuing
Bank (with a copy to the Administrative Agent) the Borrower shall Cash
Collateralize each Issuing Bank’s LC Exposure with respect to such Defaulting
Lender (determined after giving effect to Section 2.26(b)(iv) and any Cash
Collateral provided by such Defaulting Lender) in an amount not less than 103%
of such Issuing Bank’s LC Exposure with respect to such Defaulting Lender.

 

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(ii) The Borrower, and to the extent provided by any Defaulting Lender, such
Defaulting Lender, hereby grants to the Administrative Agent, for the benefit of
the Issuing Banks, and agrees to maintain, a first priority security interest in
all such Cash Collateral as security for the Defaulting Lenders’ obligation to
fund participations in respect of Letters of Credit, to be applied pursuant to
clause (iii) below. If at any time the Administrative Agent determines that Cash
Collateral is subject to any right or claim of any Person other than the
Administrative Agent and the Issuing Banks as herein provided, or that the total
amount of such Cash Collateral is less than the minimum amount required pursuant
to clause (i) above, the Borrower will, promptly upon demand by the
Administrative Agent, pay or provide to the Administrative Agent additional Cash
Collateral in an amount sufficient to eliminate such deficiency (after giving
effect to any Cash Collateral provided by the Defaulting Lender).

(iii) Notwithstanding anything to the contrary contained in this Agreement, Cash
Collateral provided under this Section 2.26(a) or Section 2.26(b) in respect of
Letters of Credit shall be applied to the satisfaction of the Defaulting
Lender’s obligation to fund participations in respect of Letters of Credit or LC
Disbursements (including, as to Cash Collateral provided by a Defaulting Lender,
any interest accrued on such obligation) for which the Cash Collateral was so
provided, prior to any other application of such property as may otherwise be
provided for herein.

(iv) Cash Collateral (or the appropriate portion thereof) provided to reduce any
Issuing Bank’s LC Exposure shall no longer be required to be held as Cash
Collateral pursuant to this Section 2.26(a) following (A) the elimination of the
applicable LC Exposure (including by the termination of Defaulting Lender status
of the applicable Lender), or (ii) the determination by the Administrative Agent
and each Issuing Bank that there exists excess Cash Collateral; provided that,
subject to Section 2.26(b) through (d), the Person providing Cash Collateral and
each Issuing Bank may agree that Cash Collateral shall be held to support future
anticipated LC Exposure or other obligations and provided further that to the
extent that such Cash Collateral was provided by the Borrower, such Cash
Collateral shall remain subject to the security interest granted pursuant to the
Loan Documents.

(b) Defaulting Lender Adjustments. Notwithstanding anything to the contrary
contained in this Agreement, if any Lender becomes a Defaulting Lender, then,
until such time as such Lender is no longer a Defaulting Lender, to the extent
permitted by applicable law:

(i) Such Defaulting Lender’s right to approve or disapprove any amendment,
waiver or consent with respect to this Agreement shall be restricted as set
forth in the definition of Required Lenders and in Section 10.2.

(ii) Any payment of principal, interest, fees or other amounts received by the
Administrative Agent for the account of such Defaulting Lender (whether
voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or
received by the Administrative Agent from a Defaulting Lender pursuant to
Section 10.7 shall be applied at such time or times as may be determined by the
Administrative Agent as follows: first, to the payment of any amounts owing by
such Defaulting Lender to the Administrative Agent hereunder; second, to the
payment on a pro rata basis of any amounts owing by such Defaulting Lender to
each Issuing Bank or the Swingline Lender hereunder; third, to Cash
Collateralize the Issuing Banks’ LC Exposure with respect to such Defaulting
Lender in accordance with Section 2.26(a); fourth, as the Borrower

 

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may request (so long as no Default or Event of Default exists), to the funding
of any Loan in respect of which such Defaulting Lender has failed to fund its
portion thereof as required by this Agreement, as determined by the
Administrative Agent; fifth, if so determined by the Administrative Agent and
the Borrower, to be held in a deposit account and released pro rata in order to
(x) satisfy such Defaulting Lender’s potential future funding obligations with
respect to Loans under this Agreement and (y) Cash Collateralize the Issuing
Banks’ future LC Exposure with respect to such Defaulting Lender with respect to
future Letters of Credit issued under this Agreement, in accordance with
Section 2.26(a); sixth, to the payment of any amounts owing to the Lenders, the
Issuing Banks or the Swingline Lender as a result of any judgment of a court of
competent jurisdiction obtained by any Lender, any Issuing Bank or the Swingline
Lender against such Defaulting Lender as a result of such Defaulting Lender’s
breach of its obligations under this Agreement; seventh, so long as no Default
or Event of Default exists, to the payment of any amounts owing to the Borrower
as a result of any judgment of a court of competent jurisdiction obtained by the
Borrower against such Defaulting Lender as a result of such Defaulting Lender’s
breach of its obligations under this Agreement; and eighth, to such Defaulting
Lender or as otherwise directed by a court of competent jurisdiction; provided
that if (x) such payment is a payment of the principal amount of any Loans or LC
Disbursements in respect of which such Defaulting Lender has not fully funded
its appropriate share, and (y) such Loans were made or the related Letters of
Credit were issued at a time when the conditions set forth in Section 3.2 were
satisfied or waived, such payment shall be applied solely to pay the Loans of,
and LC Disbursements owed to, all Non-Defaulting Lenders on a pro rata basis
prior to being applied to the payment of any Loans of, or LC Disbursements owed
to, such Defaulting Lender until such time as all Loans and funded and unfunded
participations in respect of Letters of Credit and Swingline Loans are held by
the Lenders pro rata in accordance with the Commitments without giving effect to
sub-section (iv) below. Any payments, prepayments or other amounts paid or
payable to a Defaulting Lender that are applied (or held) to pay amounts owed by
a Defaulting Lender or to post Cash Collateral pursuant to this
Section 2.26(b)(ii) shall be deemed paid to and redirected by such Defaulting
Lender, and each Lender irrevocably consents hereto.

(iii)(A) No Defaulting Lender shall be entitled to receive any commitment fees
pursuant to Section 2.14(b) for any period during which that Lender is a
Defaulting Lender (and the Borrower shall not be required to pay any such fee
that otherwise would have been required to have been paid to that Defaulting
Lender).

(B) Each Defaulting Lender shall be entitled to receive letter of credit fees
pursuant to Section 2.14(c) for any period during which that Lender is a
Defaulting Lender only to the extent allocable to that portion of its LC
Exposure for which it has provided Cash Collateral pursuant to Section 2.26(a).

(C) With respect to any letter of credit fee not required to be paid to any
Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall
(x) pay to each Non-Defaulting Lender that portion of any such fee otherwise
payable to such Defaulting Lender with respect to such Defaulting Lender’s
participation in Letters of Credit or Swingline Loans that has been reallocated
to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to each
Issuing Bank and the Swingline Lender, as applicable, the amount of any such fee
otherwise payable to such Defaulting Lender to the extent allocable to such
Issuing Bank’s LC Exposure or Swingline Lender’s Swingline Exposure with respect
to such Defaulting Lender that has not been Cash Collateralized, and (z) not be
required to pay the remaining amount of any such fee.

 

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(iv) All or any part of such Defaulting Lender’s participation in Letters of
Credit and Swingline Loans shall be reallocated among the Non-Defaulting Lenders
in accordance with their respective Pro Rata Shares of the Revolving Commitments
(calculated without regard to such Defaulting Lender’s Revolving Commitment) but
only to the extent that (x) the conditions set forth in Section 3.2 are
satisfied at the time of such reallocation (and, unless the Borrower shall have
otherwise notified the Administrative Agent at such time, the Borrower shall be
deemed to have represented and warranted that such conditions are satisfied at
such time), and (y) such reallocation does not cause the aggregate Revolving
Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting
Lender’s Revolving Commitment. No reallocation hereunder shall constitute a
waiver or release of any claim of any party hereunder against a Defaulting
Lender arising from that Lender having become a Defaulting Lender, including any
claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s
increased exposure following such reallocation.

(v) If the reallocation described in clause (iv) above cannot, or can only
partially, be effected, the Borrower shall, without prejudice to any right or
remedy available to it hereunder or under law, (x) first, prepay Swingline Loans
in an amount equal to the Swingline Lender’s Swingline Exposure with respect to
such Defaulting Lender and (y) second, Cash Collateralize the Issuing Banks’ LC
Exposure with respect to such Defaulting Lender in accordance with the
procedures set forth in Section 2.26(a).

(c) Defaulting Lender Cure. If the Borrower, the Administrative Agent, Swingline
Lender and Issuing Banks agree in writing that a Lender is no longer a
Defaulting Lender, 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
Cash Collateral), that Lender will, to the extent applicable, purchase at par
that portion of outstanding Loans of the other Lenders or take such other
actions as the Administrative Agent may determine to be necessary to cause the
Loans and funded and unfunded participations in Letters of Credit and Swingline
Loans to be held pro rata by the Lenders in accordance with the applicable
Commitments (without giving effect to Section 2.26(b)(iv)), whereupon such
Lender will cease to be a Defaulting Lender; provided that no adjustments will
be made retroactively with respect to fees accrued or payments made by or on
behalf of the Borrower while that Lender was a Defaulting Lender; and provided,
further, that except to the extent otherwise expressly agreed by the affected
parties, no change hereunder from Defaulting Lender to Lender will constitute a
waiver or release of any claim of any party hereunder arising from that Lender’s
having been a Defaulting Lender.

(d) New Swingline Loans/Letters of Credit. So long as any Lender is a Defaulting
Lender, (i) the Swingline Lender shall not be required to fund any Swingline
Loans unless it is satisfied that it will have no Swingline Exposure after
giving effect to such Swingline Loan and (ii) no Issuing Bank shall be required
to issue, extend, renew or increase any Letter of Credit unless it is satisfied
that it will have no LC Exposure after giving effect thereto.

Section 2.27. Request for Extended Facilities. Notwithstanding anything to the
contrary in this Agreement, pursuant to one or more offers (each, an “Extension
Offer”) made from time to time by the Borrower to all Lenders of Term Loans with
a like Maturity Date or all Lenders with Revolving Commitments of the same
Class, in each case on a pro rata basis (based on the outstanding amount of the
respective Loans or the aggregate amount of the Revolving Commitments, as the
case may be, with the same Maturity Date) and on the same terms to each such
Lender, the Borrower may from time to time offer (but no Lender is obligated to
accept such offer) to extend the maturity date, modify the interest rate or fees
payable in respect of such Term Loans and/or Revolving Commitments (and related
outstandings) and/or modify the amortization schedule in respect of such Term
Loans (each, an “Extension”, and each group of Term Loans or Revolving
Commitments, as applicable, in each case as so extended, as well as the original
Term Loans and Revolving Commitments (in each case not so extended), being a
tranche;

 

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any Extended Term Loans shall constitute a separate tranche of Term Loans from
the tranche of Term Loans from which they were converted, and any Extended
Revolving Commitments shall constitute a separate tranche of Revolving
Commitments from the tranche of Revolving Commitments from which they were
converted), all as set forth in greater detail in an Extended Facility Agreement
so long as the terms set forth below are satisfied:

(i) (A) no Event of Default shall have occurred and be continuing at the time an
Extension Offer is delivered to the Lenders or at the time of the Extended
Facility Closing Date and (B) all representations and warranties of each Loan
Party set forth in the Loan Documents shall be true and correct in all material
respects (other than those representations and warranties that are expressly
qualified by Material Adverse Effect or other materiality, in which case such
representations and warranties shall be true and correct in all respects) as of
the Extended Facility Closing Date (or, if such representation or warranty
relates to an earlier date, as of such earlier date);

(ii) except as to interest rates, fees and final maturity, the Revolving
Commitment of any Lender (an “Extending Revolving Lender”) extended pursuant to
an Extension (an “Extended Revolving Commitment”), and the related outstandings,
shall be a Revolving Commitment (or related Revolving Loan outstandings, as the
case may be) with the same terms as the original Revolving Commitments (and
related Revolving Loan outstandings); provided that (x) subject to the
provisions of Sections 2.22(a) and 2.4(f) to the extent dealing with Letters of
Credit and Swingline Loans which mature or expire after a Maturity Date when
there exist Extended Revolving Commitments with a longer Maturity Date, all
Letters of Credit and Swingline Loans shall be participated in on a pro rata
basis by all Lenders with Revolving Commitments in accordance with their Pro
Rata Share of the Aggregate Revolving Commitment Amount (and except as provided
in Sections 2.22(a) and 2.4(f), without giving effect to changes thereto on an
earlier Maturity Date with respect to Swingline Loans and Letters of Credit
theretofore incurred or issued) and all Borrowings under Revolving Commitments
and repayments thereunder shall be made on a pro rata basis (except for
(A) payments of interest and fees at different rates on Extended Revolving
Commitments (and related outstandings) and (B) repayments required upon the
Maturity Date for the non-extending Revolving Commitments) and (y) at no time
shall there be Revolving Commitments hereunder (including Extended Revolving
Commitments and any original Revolving Commitments) which have more than five
(5) different Maturity Dates;

(iii) except as to interest rates, fees, amortization schedule, final maturity
date, premium, required prepayment dates and participation in prepayments, the
Term Loans of any Lender (an “Extending Term Loan Lender”) extended pursuant to
any Extension (“Extended Term Loans”) shall have the same terms as the tranche
of Term Loans subject to such Extension Offer except to the extent that such
terms are less favorable to the Extending Term Loan Lenders than to the Lenders
of the non-extended Term Loans or apply solely to periods after the Maturity
Date of the non-extended Term Loans;

(iv) the final maturity date for any Extended Term Loans shall be no earlier
than the then latest Maturity Date hereunder or under any existing Extended
Facility Agreement and the amortization schedule applicable to such Extended
Term Loans for periods prior to the maturity date of the Term Loans extended
thereby may not be increased from any then existing amortization schedule
applicable to Term Loans;

 

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(v) the Weighted Average Life to Maturity of any Extended Term Loans shall be no
shorter than the remaining Weighted Average Life to Maturity of the Term Loans
extended thereby;

(vi) any Extended Term Loans may participate on a pro rata basis or a less than
pro rata basis (but not greater than a pro rata basis) in any voluntary or
mandatory repayments or prepayments hereunder, in each case as specified in the
respective Extended Facility Agreement;

(vii) if the aggregate principal amount of applicable Term Loans (calculated on
the face amount thereof) or Revolving Commitments, as the case may be, in
respect of which applicable Lenders holding Term Loans or Lenders holding
Revolving Commitments, as the case may be, shall have accepted the relevant
Extension Offer shall exceed the maximum aggregate principal amount of
applicable Term Loans or Revolving Commitments, as the case may be, offered to
be extended by Borrower pursuant to such Extension Offer, then the applicable
Term Loans or Revolving Commitments, as the case may be, of the applicable
Lenders holding Term Loans or Lenders holding Revolving Commitments, as the case
may be, shall be extended ratably up to such maximum amount based on the
respective principal amounts (but not to exceed actual holdings of record) with
respect to which such Lenders holding Term Loans or Lenders holding Revolving
Commitments, as the case may be, have accepted such Extension Offer;

(viii) all documentation in respect of such Extension shall be consistent with
the foregoing;

(ix) any Extended Facility requested by the Borrower shall be in a minimum
amount of $20,000,000; and

(x) the Administrative Agent and the lenders party thereto shall enter into an
Extended Revolving Credit Facility Agreement or an Extended Term Facility
Agreement, as the case may be, and the conditions precedent set forth therein
shall have been satisfied or waived in accordance with its terms.

Subject to compliance with the terms of this Section 2.27, the Administrative
Agent, each Issuing Bank and the Lenders hereby consent to the Extensions and
the other transactions contemplated by this Section 2.27 (including, for the
avoidance of doubt, payment of any interest, fees or premium in respect of any
Extended Term Loans and/or Extended Revolving Commitments on such terms as may
be set forth in the relevant Extended Facility Agreement) and hereby waive the
requirements of any provision of this Agreement (including, without limitation,
Sections 2.21, 10.2, or any other provisions regarding the sharing of payments)
or any other Loan Document that may otherwise prohibit any such Extension or any
other transaction contemplated by this Section 2.27. The Lenders hereto agree
that the Extended Facility Lenders party to any Extended Facility Agreement may,
from time to time, make amendments to such Extended Facility Agreement or to
this Agreement and the other Loan Documents to give effect to the Extended
Facility Agreement without the consent of any other Lenders so long as such
Extended Facility Agreement, as amended, complies with the terms set forth in
this Section 2.27.

Section 2.28. Refinancing Amendment. At any time after the Closing Date, the
Borrower may obtain, from any Lender or any Refinancing Lender, Credit Agreement
Refinancing Indebtedness in respect of all or any portion of the Loans or
Revolving Commitments then outstanding under this Agreement (which for purposes
of this Section 2.28 will be deemed to include any then outstanding Other
Refinancing Term Loans, Other Refinancing Revolving Commitments, Incremental
Term Loans, Incremental Revolving Commitments, Extended Term Loans or Extended
Revolving Commitments), in

 

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the form of Other Refinancing Loans or Other Refinancing Commitments in each
case pursuant to a Refinancing Amendment; provided that such Credit Agreement
Refinancing Indebtedness (i) will rank pari passu or junior in right of payment
and of security with the other Loans and Commitments hereunder and (ii) will
have such pricing, premiums and optional prepayment or redemption terms as may
be agreed by the Borrower and the Lenders thereof. Any Other Refinancing Loans
or Other Refinancing Commitments, as applicable, may participate on a pro rata
basis or on a less than pro rata basis (but not on a greater than pro rata
basis) in any voluntary or mandatory prepayments hereunder, as specified in the
applicable Refinancing Amendment. The effectiveness of any Refinancing Amendment
shall be subject to the satisfaction or waiver on the date thereof of each of
the conditions set forth in Section 3.2 and, to the extent reasonably requested
by the Administrative Agent, receipt by the Administrative Agent of (a) board
resolutions, officers’ certificates and/or reaffirmation agreements consistent
with those delivered on the Closing Date under Section 3.1 and (b) customary
legal opinions reasonably acceptable to the Administrative Agent. Each issuance
of Credit Agreement Refinancing Indebtedness incurred under this Section 2.28
shall be in an aggregate principal amount that is not less than $25,000,000. The
Administrative Agent shall promptly notify each Lender as to the effectiveness
of each Refinancing Amendment. Each of the parties hereto hereby agrees that,
upon the effectiveness of any Refinancing Amendment, this Agreement shall be
deemed amended to the extent (but only to the extent) necessary or advisable to
reflect the existence and terms of the Credit Agreement Refinancing Indebtedness
incurred pursuant thereto (including any amendments necessary to treat the Loans
and Commitments subject thereto as Other Refinancing Loans and/or Other
Refinancing Commitments). Any Refinancing Amendment may, without the consent of
any other Lenders, effect such amendments to this Agreement and the other Loan
Documents as may be necessary or appropriate, in the reasonable opinion of the
Administrative Agent and the Borrower, to effect the provisions of this
Section 2.28. This Section 2.28 shall supersede any provisions in Sections 2.21
or 10.2 to the contrary.

ARTICLE III

CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT

Section 3.1. Conditions to Effectiveness. The obligations of the Lenders
(including the Swingline Lender) to make Loans and the obligation of each
Issuing Bank to issue any Letters of Credit hereunder shall not become effective
until the date on which each of the following conditions is satisfied (or waived
in accordance with Section 10.2 or otherwise permitted to be satisfied after the
Closing Date pursuant to Section 5.16):

(a) The Administrative Agent shall have received payment of all fees, expenses
and other amounts due and payable on or prior to the Closing Date, including,
without limitation, reimbursement or payment of all out-of-pocket expenses of
the Administrative Agent, the Lead Arrangers and their Affiliates (including
reasonable fees, charges and disbursements of one primary counsel to the
Administrative Agent, one local counsel in each applicable jurisdiction and any
special regulatory counsel) required to be reimbursed or paid by the Borrower
hereunder, under any other Loan Document and under any agreement with the
Administrative Agent or the Lead Arrangers.

(b) The Administrative Agent (or its counsel) shall have received the following,
each to be in form and substance satisfactory to the Administrative Agent:

(i) a counterpart of this Agreement signed by or on behalf of each party hereto
or written evidence satisfactory to the Administrative Agent (which may include
telecopy or email transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement;

 

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(ii) a certificate of the Secretary or Assistant Secretary of each Loan Party in
the form of Exhibit 3.1(b)(ii), attaching and certifying copies of (A) such Loan
Party’s articles or certificate of incorporation, formation, organization or
limited partnership, or other registered organizational documents, which shall,
if a recently certified copy thereof has been received by the Loan Parties from
such Secretary of State prior to the Closing Date, be certified as of a recent
date by the Secretary of State of the jurisdiction of organization of such Loan
Party, (B) such Loan Party’s bylaws, limited liability company agreement or
partnership agreement, as applicable, (C) the resolutions of such Loan Party’s
board of directors, managers, members, general partner or other equivalent
governing body, authorizing the execution, delivery and performance of the Loan
Documents to which it is a party, (D) certificates of good standing or
existence, as applicable, from the Secretary of State of the jurisdiction of
incorporation or organization of such Loan Party and each other jurisdiction
where the failure of such Loan Party to be qualified to do business as a foreign
company would have a Material Adverse Effect, in each case as of a recent date,
and (E) a certificate of incumbency containing the name, title and true
signature of each officer of such Loan Party executing the Loan Documents to
which such Loan Party is a party;

(iii) favorable written opinions of Kirkland & Ellis LLP, counsel to the Loan
Parties, and Snell & Wilmer L.L.P., Nevada counsel to the Loan Parties, in each
case, addressed to the Administrative Agent, each Issuing Bank and each of the
Lenders, and covering such matters relating to the Loan Parties, the Loan
Documents and the transactions contemplated therein as the Administrative Agent
or the Required Lenders shall reasonably request;

(iv) a certificate in the form of Exhibit 3.1(b)(iv), dated the Closing Date and
signed by a Responsible Officer, certifying that after giving effect to the
Related Transactions, (A) no Default or Event of Default has occurred and is
continuing on the Closing Date, (B) all representations and warranties of each
Loan Party set forth in the Loan Documents are true and correct in all material
respects (other than those representations and warranties that are expressly
qualified by Material Adverse Effect or other materiality, in which case such
representations and warranties shall be true and correct in all respects),
(C) since December 31, 2018, there has been no change which has had or could
reasonably be expected to have a Material Adverse Effect and (D) the conditions
set forth in clause (b)(vii) and (xiii) below have been satisfied;

(v) a duly executed Notice of Borrowing for each Borrowing on the Closing Date;

(vi) a report setting forth the sources and uses of the proceeds hereof;

(vii) all consents, approvals, authorizations, registrations and filings and
orders required to be made or obtained under any Requirement of Law, or by any
Contractual Obligation of any Loan Party, in connection with the execution,
delivery, performance, validity and enforceability of the Loan Documents, the
other Related Transaction Documents or any of the transactions contemplated
thereby, and such consents, approvals, authorizations, registrations, filings
and orders shall be in full force and effect and all applicable waiting periods
shall have expired, and no investigation or inquiry by any governmental
authority regarding the Commitments or any transaction being financed with the
proceeds thereof shall be ongoing;

(viii) copies of (A) the quarterly financial statements of the Borrower and its
Subsidiaries on a combined basis for the Fiscal Quarter ended March 31, 2019 and
the Fiscal Quarter ended June 30, 2019, including, in each case, the related
statements of income and cash flows, (B) the audited combined financial
statements for the Borrower and its Subsidiaries for the

 

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Fiscal Year ended December 31, 2018, including in each case the related
statements of income, shareholders’ equity and cash flows, (C) a pro forma
balance sheet and related pro forma statements of income and cash flows of the
Borrower and its Subsidiaries (for the avoidance of doubt, excluding Ensign and
its Subsidiaries) as of and for (x) the twelve-month period ending on
December 31, 2018 and (y) the twelve-month period ending on the last day of each
Fiscal Quarter ending after December 31, 2018 and at least 60 days prior to the
Closing Date, in each case, prepared so as to give effect to the Related
Transactions as if the Related Transactions had occurred as of such date (in the
case of such balance sheet) or at the beginning of such period (in the case of
such other financial statements) and (D) financial projections of the Borrower
and its Subsidiaries (for the avoidance of doubt, excluding Ensign and its
Subsidiaries) on an annual basis through December 31, 2024;

(ix) a duly completed and executed Compliance Certificate, including
calculations of the financial covenants set forth in Article VI hereof as of
June 30, 2019, calculated on a pro forma basis as if the initial Borrowing(s)
had been funded and the Pennant Transaction and the other Related Transactions
had occurred, in each case, as of the first day of the relevant period for
testing compliance (and setting forth in reasonable detail such calculations);

(x) a certificate, dated the Closing Date and signed by the chief financial
officer of the Borrower, confirming that the Borrower is, and the Borrower and
its Subsidiaries, on a consolidated basis, are, Solvent before and after giving
effect to the funding of the initial Borrowing(s) and the consummation of the
Pennant Transaction and the other Related Transactions contemplated to occur on
the Closing Date;

(xi) the Guaranty and Security Agreement, duly executed by the Borrower and each
of its Domestic Subsidiaries (other than the Excluded Subsidiaries), together
with (A) UCC financing statements and other applicable documents under the laws
of all necessary or appropriate jurisdictions with respect to the perfection of
the Liens granted under the Guaranty and Security Agreement, as requested by the
Administrative Agent in order to perfect such Liens, duly authorized by the Loan
Parties, (B) copies of favorable UCC, tax and judgment lien search reports in
all necessary or appropriate jurisdictions, as requested by the Administrative
Agent, indicating that there are no prior Liens on any of the Collateral other
than Permitted Encumbrances and other Liens permitted under Section 7.2 and
Liens to be released on the Closing Date, (C) a Perfection Certificate, duly
completed and executed by the Borrower, (D) duly executed Patent Security
Agreements, Trademark Security Agreements and Copyright Security Agreements,
(E) original certificates evidencing all issued and outstanding shares of
Capital Stock of all Subsidiaries (other than the Excluded Subsidiaries) owned
directly by any Loan Party; provided that, in the case of Capital Stock of any
Foreign Subsidiary that is a CFC and Capital Stock of any Pass-Through Foreign
Holdco, such original certificates shall be limited to 65% of the issued and
outstanding voting Capital Stock and 100% of the issued and outstanding
non-voting Capital Stock of such Foreign Subsidiary or such Pass-Through Foreign
Holdco, as applicable, (F) stock or membership interest powers or other
appropriate instruments of transfer executed in blank and (G) a master
intercompany promissory note duly executed by the Borrower and its Subsidiaries;

(xii) certificates of insurance, in form and detail acceptable to the
Administrative Agent, describing the types and amounts of insurance (property
and liability) maintained by any of the Loan Parties, in each case naming the
Administrative Agent as loss payee or additional insured, as the case may be,
together with endorsements in form and substance reasonably satisfactory to the
Administrative Agent;

 

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(xiii) evidence that (A) Ensign has declared the dividend or distribution
constituting the Pennant Transaction and (B) the Pennant Transaction has been
consummated or will be consummated substantially concurrently with the
effectiveness of this Agreement on the Closing Date, in each case, in form and
substance satisfactory to the Administrative Agent;

(xiv) at least three (3) days prior to the Closing Date, (A) all documentation
and other information with respect to the Borrower and each other Loan Party
that the Administrative Agent or any Lender reasonably determines is required by
regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including, without limitation, the Patriot Act
and the Beneficial Ownership Regulation, to the extent reasonably requested by
the Administrative Agent at least ten (10) days before the Closing Date, and
(B) if the Borrower qualifies as a “legal entity customer” under the Beneficial
Ownership Regulation, a Beneficial Ownership Certification in relation to the
Borrower;

(xv) an executed payoff or release letter, executed by the administrative agent
under the Ensign Credit Agreement, together with (a) UCC-3 or other appropriate
termination statements releasing all Liens of the administrative agent and
lenders under the Ensign Credit Agreement and related loan documents upon any of
the personal property of the Borrower and its Subsidiaries granted pursuant
thereto and (b) any other releases, terminations or other documents reasonably
required by the Administrative Agent to evidence the release of the Borrower and
its Subsidiaries from their respective obligations under the Ensign Credit
Agreement and related loan documents, in each case of the foregoing, in form and
substance reasonably satisfactory to the Administrative Agent (such documents,
and the release of the Borrower and its Subsidiaries pursuant thereto, the
“Closing Date Release”); and

(xvi) all Control Account Agreements and Sweep Agreements required under
Section 5.11, duly executed by the applicable Loan Parties, the applicable
depositary or securities intermediary and the Administrative Agent.

Without limiting the generality of the provisions of this Section, for purposes
of determining compliance with the conditions specified in this Section, each
Lender that has signed this Credit Agreement shall be deemed to have consented
to, approved of, accepted or been satisfied with each document or other matter
required thereunder to be consented to, approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

Section 3.2. Conditions to Each Credit Event. The obligation of each Lender to
make a Loan on the occasion of any Borrowing and of each Issuing Bank to issue,
amend, renew or extend any Letter of Credit is subject to Section 2.26(c) and
the satisfaction of the following conditions:

(a) at the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default or Event of Default shall exist;

(b) at the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, all representations and warranties of each Loan Party set forth in
the Loan Documents shall be true and correct in all material respects, unless
such representation or warranty expressly relates to an earlier date, in which
case such representation or warranty shall be true and correct in all material
respects as of such earlier date (other than those representations and
warranties that are expressly qualified by a Material Adverse Effect or other
materiality, in which case such representations and warranties shall be true and
correct in all respects); and

 

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(c) the Borrower shall have delivered the required Notice of Borrowing.

Each Borrowing and each issuance, amendment, renewal or extension of any Letter
of Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in subsections (a) and
(b) of this Section. Notwithstanding the foregoing, the incurrence of
Incremental Commitments and the initial borrowing of Incremental Term Loans (but
not Revolving Loans) thereunder shall be subject solely to the conditions set
forth in Section 2.23.

Section 3.3. Delivery of Documents. All of the Loan Documents, certificates,
legal opinions and other documents and papers referred to in Section 3.1, unless
otherwise specified, shall be delivered to the Administrative Agent for the
account of each of the Lenders and, if requested by a Lender, in sufficient
counterparts or copies for each such Lender.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants, both before and after giving effect to the
Related Transactions, to the Administrative Agent, each Lender and each Issuing
Bank as follows:

Section 4.1. Existence; Power. The Borrower and each of its Subsidiaries (i) is
duly organized, validly existing and in good standing as a corporation,
partnership or limited liability company under the laws of the jurisdiction of
its organization, (ii) has all requisite power and authority to carry on its
business as now conducted, and (iii) is duly qualified to do business, and is in
good standing, in each jurisdiction where such qualification is required, except
where a failure to be so qualified could not reasonably be expected to result in
a Material Adverse Effect.

Section 4.2. Organizational Power; Authorization. The execution, delivery and
performance by each Loan Party of the Loan Documents and the other Related
Transaction Documents to which it is a party are within such Loan Party’s
organizational powers and have been duly authorized by all necessary
organizational and, if required, shareholder, partner or member action. This
Agreement has been duly executed and delivered by the Borrower and constitutes,
and each other Loan Document and Related Transaction Document to which any Loan
Party is a party, when executed and delivered by such Loan Party, will
constitute, valid and binding obligations of the Borrower or such Loan Party (as
the case may be), enforceable against it in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity.

Section 4.3. Governmental Approvals; No Conflicts. The execution, delivery and
performance by each Loan Party of the Loan Documents and the other Related
Transaction Documents to which it is a party (a) do not require any consent or
approval of, registration or filing with, or any action by, any Governmental
Authority, except those as have been obtained or made and are in full force and
effect and except for filings necessary to perfect or maintain perfection of the
Liens created under the Loan Documents, (b) will not violate any Requirement of
Law applicable to the Borrower or any of its Subsidiaries or any judgment, order
or ruling of any Governmental Authority, (c) will not violate or result in a
default under any Contractual Obligation of the Borrower or any of its
Subsidiaries or any of its assets or give rise to a right thereunder to require
any payment to be made by the Borrower or any of its Subsidiaries, (d) will not
result in the creation or imposition of any Lien on any asset of the Borrower or
any of its Subsidiaries, except Liens (if any) created under the Loan Documents,
and (e) do not affect the Borrower’s or any Subsidiary’s right to receive, or
reduce the amount of, payments and reimbursements from Third Party Payors, or
materially adversely affect any Health Care Permit.

 

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Section 4.4. Financial Statements. The Borrower has furnished to each Lender
(i) the audited combined balance sheet of the Borrower and its Subsidiaries as
of December 31, 2018, and the related audited combined statements of income,
shareholders’ equity and cash flows for the Fiscal Year then ended, audited by
Deloitte & Touche, LLP and (ii) the unaudited combined balance sheet of the
Borrower and its Subsidiaries as of June 30, 2019, and the related unaudited
combined statements of income and cash flows for the Fiscal Quarter and
year-to-date period then ended, certified by a Responsible Officer. Such
financial statements fairly present the combined financial condition of the
Borrower and its Subsidiaries as of such dates and the combined results of
operations for such periods in conformity with GAAP consistently applied,
subject to year-end audit adjustments and the absence of footnotes in the case
of the statements referred to in clause (ii). Since December 31, 2018, there
have been no changes with respect to the Borrower and its Subsidiaries which
have had or could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.

Section 4.5. Litigation and Environmental Matters.

(a) No litigation, investigation or proceeding of or before any arbitrators or
Governmental Authorities is pending against or, to the knowledge of the
Borrower, threatened in writing against or affecting the Borrower or any of its
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination that could reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect or (ii) which could reasonably be
expected to result in the invalidity or unenforceability of this Agreement or
any other Loan Document or any other Related Transaction Document.

(b) Neither the Borrower nor any of its Subsidiaries (i) has failed to comply
with any Environmental Law or to obtain, maintain or comply with any permit,
license or other approval required under any Environmental Law, (ii) has become
subject to any Environmental Liability, (iii) has received notice of any claim
with respect to any Environmental Liability or (iv) knows of any basis for any
Environmental Liability, in the case of each of clauses (i), (ii), (iii) and
(iv) which have had or could reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect.

Section 4.6. Compliance with Laws and Agreements. The Borrower and each of its
Subsidiaries is in compliance with (a) all Requirements of Law and all
judgments, decrees and orders of any Governmental Authority and (b) all
indentures, agreements or other instruments binding upon it or its properties,
except where non-compliance, either individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

Section 4.7. Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is (a) an “investment company” or is “controlled” by an “investment
company”, as such terms are defined in, or subject to regulation under, the
Investment Company Act of 1940, as amended and in effect from time to time, or
(b) otherwise subject to any other regulatory scheme limiting its ability to
incur debt or requiring any approval or consent from, or registration or filing
with, any Governmental Authority in connection therewith.

Section 4.8. Taxes. The Borrower and its Subsidiaries and each other Person for
whose Taxes the Borrower or any of its Subsidiaries could become liable have
timely filed or caused to be filed all Federal income tax returns and all other
material tax returns that are required to be filed by them, and have paid all
Taxes shown to be due and payable on such returns or on any assessments made
against it or its property and all other Taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority, except where the same
are currently being contested in good faith by appropriate proceedings and for
which the Borrower or such Subsidiary, as the case may be, has set aside on its
books adequate reserves in accordance with GAAP.

 

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Section 4.9. Use of Proceeds; Margin Regulations. None of the proceeds of any of
the Loans or Letters of Credit will be used, directly or indirectly, for
“purchasing” or “carrying” any “margin stock” within the respective meanings of
each of such terms under Regulation U or for any purpose that violates the
provisions of Regulation T, Regulation U or Regulation X. Neither the Borrower
nor any of its Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying “margin stock”. The Borrower will use the Revolving Loans and the
Swingline Loans for working capital, capital expenditures, dividends,
distributions and Permitted Acquisitions not prohibited by this Agreement, for
other general corporate purposes of the Borrower and its Subsidiaries and for
any other purpose not prohibited by this Agreement. The Borrower will use the
proceeds of any Incremental Term Loans or Other Refinancing Term Loans for the
purposes set forth in any Incremental Commitment Joinder or Refinancing
Amendment.

Section 4.10. ERISA. Except as would not reasonably be expected to have a
Material Adverse Effect, each Plan is in substantial compliance in form and
operation with its terms and with ERISA and the Code (including, without
limitation, the Code provisions compliance with which is necessary for any
intended favorable tax treatment) and all other applicable laws and regulations.
Each Plan (and each related trust, if any) which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service to the effect that it meets the requirements
of Sections 401(a) and 501(a) of the Code covering all applicable tax law
changes, or is comprised of a master or prototype plan that has received a
favorable opinion letter from the Internal Revenue Service, and, except as would
not reasonably be expected to have a Material Adverse Effect, nothing has
occurred since the date of such determination that would adversely affect such
determination (or, in the case of a Plan with no determination, nothing has
occurred that would adversely affect the issuance of a favorable determination
letter or otherwise adversely affect such qualification). No ERISA Event has
occurred or is reasonably expected to occur. There exists no Unfunded Pension
Liability with respect to any Plan. None of the Borrower, any of its
Subsidiaries or any ERISA Affiliate is making or accruing an obligation to make
contributions, or has, within any of the five calendar years immediately
preceding the date this assurance is given or deemed given, made, or accrued an
obligation to make, contributions to any Multiemployer Plan. There are no
actions, suits or claims pending against or involving a Plan (other than routine
claims for benefits) or, to the knowledge of the Borrower, any of its
Subsidiaries or any ERISA Affiliate, threatened in writing, which would
reasonably be expected to be asserted successfully against any Plan and, if so
asserted successfully, would reasonably be expected either singly or in the
aggregate to result in a Material Adverse Effect. Except as would not reasonably
be expected either individually or in the aggregate to have a Material Adverse
Effect, the Borrower, each of its Subsidiaries and each ERISA Affiliate have
made all contributions to or under each Plan and Multiemployer Plan required by
law within the applicable time limits prescribed thereby, by the terms of such
Plan or Multiemployer Plan, respectively, or by any contract or agreement
requiring contributions to a Plan or Multiemployer Plan. No Plan which is
subject to Section 412 of the Code or Section 302 of ERISA has applied for or
received an extension of any amortization period within the meaning of
Section 412 of the Code or Section 303 or 304 of ERISA. None of the Borrower,
any of its Subsidiaries or any ERISA Affiliate have ceased operations at a
facility so as to become subject to the provisions of Section 4068(a) of ERISA,
withdrawn as a substantial employer so as to become subject to the provisions of
Section 4063 of ERISA or ceased making contributions to any Plan subject to
Section 4064(a) of ERISA to which it made contributions. None of the Borrower or
any of its Subsidiaries has established, contributes to or maintains any
Non-U.S. Plan.

 

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Section 4.11. Ownership of Property; Insurance.

(a) Each of the Borrower and its Subsidiaries has good title to, or valid
leasehold interests in or other right to occupy, all of its real and personal
property material to the operation of its business, including all such
properties reflected in the most recent audited consolidated balance sheet of
the Borrower referred to in Section 4.4 or purported to have been acquired by
the Borrower or any of its Subsidiaries after said date (except as sold or
otherwise disposed of in the ordinary course of business), in each case free and
clear of Liens prohibited by this Agreement. All leases that individually or in
the aggregate are material to the business or operations of the Borrower and its
Subsidiaries taken as a whole are valid and subsisting and are in full force.
The Borrower has delivered to Administrative Agent a true, complete and correct
copy of each Master Lease.

(b) Each of the Borrower and its Subsidiaries owns, or is licensed or otherwise
has the right to use, all patents, trademarks, service marks, trade names,
copyrights and other intellectual property material to its business, and the use
thereof by the Borrower and its Subsidiaries does not infringe on the rights of
any other Person, except in any manner to the extent that such failure to do so
or such infringement would not reasonably be expected to result in a Material
Adverse Effect.

(c) The properties of the Borrower and its Subsidiaries are insured with
financially sound and reputable insurance companies which are not Affiliates of
the Borrower, in such amounts with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Borrower or any applicable Subsidiary
operates.

(d) Set forth on Schedule 4.11 are all the locations where the Borrower or any
other Loan Party (i) maintains fee-owned Real Estate or (ii) maintains leased
Real Estate that is leased under any PropCo Master Lease, any Ensign Master
Lease or any other lease pursuant to which annual payments are in excess of
$2,000,000.

Section 4.12. Disclosure. None of the reports (including, without limitation,
all reports that the Borrower is required to file with the Securities and
Exchange Commission), financial statements (including, for the avoidance of
doubt, the pro forma financial statements referred to in
Section 3.1(b)(viii)(C)), certificates or other information furnished by or on
behalf of the Borrower to the Administrative Agent or any Lender in connection
with the negotiation or syndication of this Agreement or any other Loan Document
or delivered hereunder or thereunder (as modified or supplemented by any other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, taken as a
whole in light of the circumstances under which they were made, not materially
misleading; provided that, with respect to projected financial information, the
Borrower represents only that such projected information was prepared in good
faith based upon assumptions believed to be reasonable at the time, it being
understood and agreed that such projected information is subject to
contingencies and assumptions, many of which are not within the control of the
Borrower, and no assurances can be given that any projections will be realized,
and any divergences from projected results may be material. As of the Closing
Date, the information included in the Beneficial Ownership Certification is true
and correct in all respects.

Section 4.13. Labor Relations. There are no strikes, lockouts or other labor
disputes or grievances against the Borrower or any of its Subsidiaries, or, to
the Borrower’s knowledge, threatened in writing against or affecting the
Borrower or any of its Subsidiaries, and no unfair labor practice charges or
grievances are pending against the Borrower or any of its Subsidiaries, or, to
the Borrower’s knowledge, threatened in writing against any of them before any
Governmental Authority, in each case, that would, either individually or in the
aggregate, reasonably be expected to result in a Material Adverse

 

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Effect. All payments due from the Borrower or any of its Subsidiaries pursuant
to the provisions of any collective bargaining agreement have been paid or
accrued as a liability on the books of the Borrower or any such Subsidiary,
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.

Section 4.14. Subsidiaries. As of the Closing Date and as of each date on which
such schedule is subsequently updated pursuant to the terms of this Agreement,
Schedule 4.14 sets forth the name of, the ownership interest of the applicable
owner in, the jurisdiction of incorporation or organization of, and the type of
each Subsidiary of the Borrower and the other Loan Parties and identifies each
Subsidiary that is a Subsidiary Loan Party and each Subsidiary that is an
Excluded Subsidiary.

Section 4.15. Solvency. After giving effect to the execution and delivery of the
Loan Documents and the other Related Transaction Documents and the making of the
Loans under this Agreement and the consummation of the other Related
Transactions, the Borrower is, and the Borrower and its Subsidiaries, on a
consolidated basis, are, Solvent.

Section 4.16. [Reserved].

Section 4.17. Collateral Documents.

(a) The Guaranty and Security Agreement is effective to create in favor of the
Administrative Agent for the ratable benefit of the Secured Parties a legal,
valid and enforceable security interest in the Collateral (as defined therein),
and when UCC financing statements in appropriate form are filed in the offices
specified on Schedule 3 to the Guaranty and Security Agreement, the Guaranty and
Security Agreement shall constitute a fully perfected Lien (to the extent that
such Lien may be perfected by the filing of a UCC financing statement) on, and
security interest in, all right, title and interest of the grantors thereunder
in such Collateral, in each case prior and superior in right to any other
Person, other than with respect to Liens expressly permitted by Section 7.2.
When the certificates evidencing all Capital Stock pledged pursuant to the
Guaranty and Security Agreement are delivered to the Administrative Agent,
together with appropriate stock powers or other similar instruments of transfer
duly executed in blank, the Liens in such Capital Stock shall be fully perfected
first priority security interests, perfected by “control” as defined in the UCC.

(b) When the filings in subsection (a) of this Section are made and when, if
applicable, the Patent Security Agreements and the Trademark Security Agreements
are filed in the United States Patent and Trademark Office and the Copyright
Security Agreements are filed in the United States Copyright Office, the
Guaranty and Security Agreement shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in the
Patents, Trademarks and Copyrights, if any, in which a security interest may be
perfected by filing, recording or registering a security agreement, financing
statement or analogous document in the United States Patent and Trademark Office
or the United States Copyright Office, as applicable, in each case prior and
superior in right to any other Person, subject to inchoate Liens permitted
hereunder that do not secure Indebtedness.

(c) Each Mortgage, when duly executed and delivered by the relevant Loan Party,
will be effective to create in favor of the Administrative Agent for the ratable
benefit of the Secured Parties a legal, valid and enforceable Lien on all of
such Loan Party’s right, title and interest in and to the Real Estate of such
Loan Party covered thereby and the proceeds thereof, and when such Mortgage is
filed in the real estate records where the respective Mortgaged Property is
located, such Mortgage shall give constructive notice to third parties of the
Lien and security interest created by such Mortgage on all right, title and
interest of such Loan Party in such Real Estate and the proceeds thereof, in
each case prior and superior in right to any other Person, other than with
respect to Liens expressly permitted by Section 7.2.

 

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(d) No Mortgage encumbers improved real property that is located in an area that
has been identified by the Secretary of Housing and Urban Development or the
Federal Emergency Management Agency (or any successor agency thereto) as an area
having special flood hazards and in which flood insurance has been made
available under the Flood Insurance Laws, except to the extent that the
applicable Loan Party maintains flood insurance with respect to such improved
real property in compliance with the requirements of Section 5.8.

Section 4.18. [Reserved].

Section 4.19. Healthcare Matters.

(a) Compliance with Health Care Laws. The Borrower and each of its Subsidiaries
is, and at all times during the four calendar years immediately preceding the
Closing Date has been, in compliance with all Health Care Laws and requirements
of Third Party Payor Programs applicable to it, its assets, business or
operations, except where the failure to do so has not had or could not
reasonably be expected to have, in the aggregate, a Material Adverse Effect. No
circumstance exists or event has occurred which could result in a violation of
any Health Care Law or any requirement of any Third Party Payor Program that
could reasonably be expected to result in a Material Adverse Effect.

(b) Health Care Permits. The Borrower and each of its Subsidiaries holds, and at
all times during the four calendar years immediately preceding the Closing Date
has held, all Health Care Permits necessary for it to own, lease, sublease or
operate its assets or to conduct its business or operations for the period
covered by such Health Care Permit. All such Health Care Permits are, and at all
times during the four calendar years immediately preceding the Closing Date have
been, in full force and effect and there is and has been no material default
under, violation of, or other noncompliance with the terms and conditions of any
such Health Care Permit. No condition exists or event has occurred which, in
itself or with the giving of notice or lapse of time or both, has resulted or
would result in the suspension, revocation, termination, restriction,
limitation, modification or non-renewal of any Health Care Permit that could
reasonably be expected to have, in the aggregate, a Material Adverse Effect.
Other than as set forth on Schedule 4.19, no Governmental Authority has taken,
or to the knowledge of the Borrower or any of its Subsidiaries intends to take,
action to suspend, revoke, terminate, place on probation, restrict, limit,
modify or not renew any Health Care Permit of the Borrower or any of its
Subsidiaries. As of the Closing Date, Schedule 4.19 sets forth an accurate,
complete and current list of all material Health Care Permits, and all Third
Party Payor Authorizations for Third Party Payor Programs in which the Borrower
or any of its Subsidiaries participates.

(c) Third Party Payor Authorizations. The Borrower and each of its Subsidiaries
holds, and at all times during the four calendar years immediately preceding the
Closing Date has held, in full force and effect, all Third Party Payor
Authorizations necessary to participate in and be reimbursed by all Third Party
Payor Programs in which the Borrower or any of its Subsidiaries participates,
except where the failure to do so has not had or could not reasonably be
expected to have, in the aggregate, a Material Adverse Effect. There is no
investigation, audit, claim review, or other action pending or, to the knowledge
of the Borrower or any of its Subsidiaries, threatened in writing, which could
result in a suspension, revocation, termination, restriction, limitation,
modification or non-renewal of any Third Party Payor Authorization or result in
the exclusion of the Borrower or any of its Subsidiaries from any Third Party
Payor Program that could reasonably be expected to have, in the aggregate, a
Material Adverse Effect.

 

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(d) Licensed Personnel. The Licensed Personnel have complied and currently are
in compliance with all applicable Health Care Laws and hold, and, at all times
that such Persons have been Licensed Personnel of the Borrower or any of its
Subsidiaries, have held, all professional licenses and other Health Care Permits
and all Third Party Payor Authorizations required in the performance of such
Licensed Personnel’s duties for the Borrower or any of its Subsidiaries, and
each such Health Care Permit and Third Party Payor Authorization is in full
force and effect and, to the knowledge of the Borrower and its Subsidiaries, no
suspension, revocation, termination, impairment, modification or non-renewal of
any such Health Care Permit or Third Party Payor Authorization is pending or
threatened in writing, except where the failure to do so has not had or could
not reasonably be expected to have, in the aggregate, a Material Adverse Effect.

(e) Accreditation. The Borrower and each of its Subsidiaries has obtained and
maintains accreditation in good standing and without limitation or impairment by
all applicable accrediting organizations, to the extent prudent and customary in
the industry in which it is engaged or required by law (including any foreign
law or equivalent regulation), except where the failure to have or maintain such
accreditation in good standing or imposition of limitation or impairment would
not have, in the aggregate, a Material Adverse Effect.

(f) Proceedings; Audits. There are no pending (or, to the knowledge of the
Borrower or any of its Subsidiaries, threatened) Proceedings against or
affecting the Borrower or any of its Subsidiaries or, to the knowledge of the
Borrower or any of its Subsidiaries, any Licensed Personnel, relating to any
actual or alleged non-compliance with any Health Care Law or requirement of any
Third Party Payor Program, in each case, that could reasonably be expected to
have, in the aggregate, a Material Adverse Effect. There are no facts,
circumstances or conditions that would reasonably be expected to form the basis
for any such Proceeding against or affecting any Loan Party or, to the knowledge
of the Borrower or any of its Subsidiaries, any Licensed Personnel that could
reasonably be expected to have, in the aggregate, a Material Adverse Effect.
There currently exist no restrictions, deficiencies, required plans of
correction or other such remedial measures with respect to any Health Care
Permit of the Borrower or any of its Subsidiaries, or the participation by the
Borrower or any of its Subsidiaries in any Third Party Payor Program, in each
case, that could reasonably be expected to have, in the aggregate, a Material
Adverse Effect. Without limiting the foregoing, no validation review, program
integrity review, audit or other investigation related to the Borrower or any of
its Subsidiaries or its operations, or the consummation of the transactions
contemplated in the Loan Documents or related to the Collateral, (i) has been
conducted by or on behalf of any Governmental Authority, or (ii) is scheduled,
pending or, to the knowledge of the Borrower or any of its Subsidiaries,
threatened in writing, in each case that could reasonably be expected to have,
in the aggregate, a Material Adverse Effect.

(g) Overpayments. Neither the Borrower nor any of its Subsidiaries (i) has
knowingly retained an overpayment received from, or failed to refund any amount
due to, any Third Party Payor in material violation of any Health Care Law or
contract; or (ii) except as set forth on Schedule 4.19, has received written
notice of, or has knowledge of, any material overpayment or refunds due to any
Third Party Payor.

(h) Material Statements. Neither the Borrower nor any of its Subsidiaries, nor
any officer, Affiliate, employee or agent of the Borrower or any of its
Subsidiaries, has made an untrue statement of a material fact or fraudulent
statement to any Governmental Authority, failed to disclose a material fact that
must be disclosed to any Governmental Authority, or committed an act, made a
statement or failed to make a statement that, at the time such statement,
disclosure or failure to disclose occurred, in each case, that could reasonably
be expected to have, in the aggregate, a Material Adverse Effect.

 

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(i) Prohibited Transactions. Except as where any of the following could not be
reasonably expected to result in a Material Adverse Effect, neither the Borrower
nor any of its Subsidiaries, nor any officer, Affiliate or managing employee of
the Borrower or any of its Subsidiaries, directly or indirectly, has (i) offered
or paid or solicited or received any remuneration, in cash or in kind, or made
any financial arrangements, in violation of any Health Care Law; (ii) given or
agreed to give, or is aware that there has been made or that there is any
agreement to make, any gift or gratuitous payment of any kind, nature or
description (whether in money, property or services) in violation of any Health
Care Law; (iii) made or agreed to make, or is aware that there has been made or
that there is any agreement to make, any contribution, payment or gift of funds
or property to, or for the private use of, any governmental official, employee
or agent where either the contribution, payment or gift or the purpose of such
contribution, payment or gift is or was illegal under the laws of any
Governmental Authority having jurisdiction over such payment, contribution or
gift; (iv) established or maintained any unrecorded fund or asset for any
purpose or made any misleading, false or artificial entries on any of its books
or records for any reason; or (v) made, or agreed to make, or is aware that
there has been made or that there is any agreement to make, any payment to any
person with the intention or understanding that any part of such payment would
be in violation of any Health Care Law or used or was given for any purpose
other than that described in the documents supporting such payment. To the
knowledge of the Borrower and its Subsidiaries, no Person has filed or has
threatened in writing to file against the Borrower, any of its Subsidiaries or
any of their Affiliates an action under any federal or state whistleblower
statute, including, without limitation, under the False Claims Act of 1863 (31
U.S.C. § 3729 et seq.), to the extent such a filing, if adversely determined,
would reasonably be expected to result in a Material Adverse Effect.

(j) Exclusion. Except as where any of the following could not be reasonably
expected to result in a Material Adverse Effect, neither the Borrower nor any of
its Subsidiaries, nor any owner, officer, director, partner, agent, managing
employee or Person with a “direct or indirect ownership interest” (as that
phrase is defined in 42 C.F.R. § 420.201) in the Borrower or any of its
Subsidiaries, nor any Licensed Personnel of the Borrower or any of its
Subsidiaries, has been (or has been threatened to be) (i) excluded from any
Third Party Payor Program pursuant to 42 U.S.C. § 1320a-7 and related
regulations, (ii) “suspended” or “debarred” from selling products to the U.S.
government or its agencies pursuant to the Federal Acquisition Regulation,
relating to debarment and suspension applicable to federal government agencies
generally (42 C.F.R. Subpart 9.4), or other applicable laws or regulations,
(iii) debarred, disqualified, suspended or excluded from participation in any
Third Party Payor Program or is listed on the General Services Administration
list of excluded parties, nor is any such debarment, disqualification,
suspension or exclusion threatened or pending, or (iv) made a party to any other
action by any Governmental Authority that may prohibit it from selling products
or providing services to any governmental or other purchaser pursuant to any
federal, state or local laws or regulations.

Section 4.20. Sanctions. Neither any Loan Party nor any of its Subsidiaries or
Affiliates or, to the knowledge of any Loan Party, any of their respective
directors, officers, employees or agents, is an individual or entity that is, or
is owned or controlled by any individual or entity that is, (i) currently the
subject or target of any Sanctions, (ii) a Sanctioned Person or (iii) located,
organized or resident in a Sanctioned Country. Each of the Loan Parties and
their Subsidiaries, and to the knowledge of the Loan Parties, each of their
respective directors, officers, employees, agents and Affiliates is in
compliance with all applicable Sanctions and has instituted and maintained
policies and procedures designed to promote and achieve compliance with all
applicable Sanctions.

Section 4.21. Anti-Corruption Laws. The Loan Parties and their Subsidiaries and
Affiliates have conducted their businesses in compliance in all material
respects with the United States Foreign Corrupt Practices Act of 1977, the UK
Bribery Act of 2010, and other applicable legislation or laws and regulations
concerning or relating to bribery, money laundering or corruption in other
jurisdictions (collectively, the “Anti-Corruption Laws”) and have instituted and
maintained policies and procedures designed to promote and achieve compliance
with such Anti-Corruption Laws.

 

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Section 4.22. Patriot Act. Neither any Loan Party nor any of its Subsidiaries is
an “enemy” or an “ally of the enemy” within the meaning of Section 2 of the
Trading with the Enemy Act or any enabling legislation or executive order
relating thereto. Neither any Loan Party nor any or its Subsidiaries is in
violation of (a) the Trading with the Enemy Act, (b) any of the foreign assets
control regulations of the United States Treasury Department (31 C.F.R.,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto or (c) the Patriot Act. None of the Loan Parties (i) is a
blocked person described in Section 1 of the Anti-Terrorism Order or (ii) to the
best of its knowledge, engages in any dealings or transactions, or is otherwise
associated, with any such blocked person.

Section 4.23. EEA Financial Institutions. Neither the Borrower nor any
Subsidiary is an EEA Financial Institution.

ARTICLE V

AFFIRMATIVE COVENANTS

The Borrower covenants and agrees that until Payment in Full of the Obligations:

Section 5.1. Financial Statements and Other Information. The Borrower will
deliver to the Administrative Agent:

(a) as soon as available and in any event within 90 days after the end of each
Fiscal Year of the Borrower (or if the Borrower is no longer required to file
periodic reports under Section 13(a) or Section 15(d) of the Exchange Act, then
120 days after the end of each Fiscal Year) (commencing with the Fiscal Year
ending December 31, 2019), a copy of the annual audited report for such Fiscal
Year for the Borrower and its Subsidiaries, containing a consolidated balance
sheet of the Borrower and its Subsidiaries as of the end of such Fiscal Year and
the related consolidated statements of income, stockholders’ equity and cash
flows (together with all footnotes thereto) of the Borrower and its Subsidiaries
for such Fiscal Year, setting forth in each case in comparative form the figures
for the previous Fiscal Year, all in reasonable detail and reported on by
Deloitte & Touche, LLP or other independent public accountants of nationally
recognized standing (without a “going concern” or like qualification, exception
or explanation and without any qualification or exception as to the scope of
such audit (other than any “going concern” or similar qualification or exception
related to the maturity or refinancing of the Obligations)) to the effect that
such financial statements present fairly in all material respects the financial
condition and the results of operations of the Borrower and its Subsidiaries for
such Fiscal Year on a consolidated basis in accordance with GAAP, and that the
examination by such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing
standards;

(b) as soon as available and in any event within 45 days after the end of each
of the first three Fiscal Quarters of the Borrower (or if the Borrower is no
longer required to file periodic reports under Section 13(a) or Section 15(d) of
the Exchange Act, then 60 days after the end of each Fiscal Quarter) (commencing
with the Fiscal Quarter ending September 30, 2019), an unaudited consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of such Fiscal
Quarter and the related unaudited consolidated statements of income and cash
flows of the Borrower and its Subsidiaries for such Fiscal Quarter and the then
elapsed portion of such Fiscal Year, setting forth in each case in comparative
form the figures for the corresponding Fiscal Quarter and the corresponding
portion of the Borrower’s previous Fiscal Year;

 

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(c) concurrently with the delivery of the financial statements referred to in
subsections (a) and (b) of this Section, a Compliance Certificate signed by the
principal executive officer or the principal financial officer of the Borrower
(i) certifying that such financial statements fairly present the financial
condition, results of operations, shareholders’ equity and cash flows of the
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP,
in the case of quarterly financial statements subject only to normal year-end
audit adjustments and the absence of footnotes, (ii) certifying as to whether
there exists a Default or Event of Default on the date of such certificate and,
if a Default or an Event of Default then exists, specifying the details thereof
and the action which the Borrower has taken or proposes to take with respect
thereto, (iii) setting forth in reasonable detail calculations demonstrating
compliance with the financial covenants set forth in Article VI (beginning with
the Fiscal Quarter ended September 30, 2019), (iv) specifying any change in the
identity of the Borrower or any of its Subsidiaries as of the end of such Fiscal
Year or Fiscal Quarter from the Borrower or any of its Subsidiaries identified
to the Lenders on the Closing Date or as of the most recent Fiscal Year or
Fiscal Quarter, as the case may be, (v) stating whether any change in GAAP or
the application thereof has occurred since the date of the mostly recently
delivered audited financial statements of the Borrower and its Subsidiaries,
and, if any change has occurred, specifying the effect of such change on the
financial statements accompanying such Compliance Certificate, (vi) setting
forth a list of all Subsidiaries of the Borrower (other than Excluded
Subsidiaries and Specified Subsidiaries) that are not Subsidiary Loan Parties as
of such date and setting forth in reasonable detail calculations of total assets
of such Subsidiaries as of such date (and the percentage obtained by dividing
such total assets by the total assets of the Borrower and its Subsidiaries
(other than Excluded Subsidiaries) as of such date) and the total revenue of
such Subsidiaries for the Test Period then ended (and the percentage obtained by
dividing such total revenue by the total revenue of the Borrower and its
Subsidiaries (other than Excluded Subsidiaries) for the Test Period then ended)
and (vii) setting forth a list of all Excluded Subsidiaries as of such date and
setting forth in reasonable detail calculations of (x) Indebtedness of such
Excluded Subsidiaries incurred pursuant to Section 7.1(h) that remains
outstanding as of such date, (y) the total amount of Investments made in
Excluded Subsidiaries pursuant to Section 7.4(h) as of such date and (z) that
portion of Consolidated EBITDA that is attributable to such Excluded
Subsidiaries (and their respective Subsidiaries) with respect to the applicable
Fiscal Year or Fiscal Quarter end;

(d) as soon as available and in any event within 60 days after the end of the
calendar year, a budget for the succeeding Fiscal Year, containing an income
statement, balance sheet and statement of cash flow;

(e) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed with the
Securities and Exchange Commission, or any Governmental Authority succeeding to
any or all functions of said Commission, or with any national securities
exchange, or distributed by the Borrower to its shareholders generally, as the
case may be; and

(f) promptly following any request therefor, such other information regarding
the results of operations, business affairs and financial condition of the
Borrower or any of its Subsidiaries (including information and documentation for
purposes of compliance with applicable “know your customer” and
anti-money-laundering rules and regulations, including, without limitation, the
Patriot Act and the Beneficial Ownership Regulation) as the Administrative Agent
may reasonably request (provided that no such information shall be required to
be provided if providing such information would violate confidentiality
agreements or result in a loss of attorney-client privilege or a claim of
attorney work product with respect to such information so long as the Borrower
notifies the Administrative Agent that such information is being withheld and
the reason therefor).

 

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So long as the Borrower is required to file periodic reports under Section 13(a)
or Section 15(d) of the Exchange Act, the Borrower shall be deemed to have
satisfied its obligation to deliver the financial statements referred to in
clauses (a), (b) and (e) upon the filing of such reports with the Securities and
Exchange Commission.

Section 5.2. Notices of Material Events. The Borrower will furnish to the
Administrative Agent (for distribution to each Lender) prompt written notice of
the following:

(a) the occurrence of any Default or Event of Default;

(b) the filing or commencement of, or any material development in, any action,
suit, proceeding, audit, claim, demand, order or dispute with, by or before any
arbitrator or Governmental Authority against or, to the knowledge of the
Borrower, affecting the Borrower or any of its Subsidiaries that (i) seeks
injunctive or similar relief, (ii) alleges potential or actual violations of any
Health Care Law by the Borrower or any of its Subsidiaries or any of its
Licensed Personnel and (iii) would, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect;

(c) the occurrence of any event or any other development by which the Borrower
or any of its Subsidiaries (i) fails to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) becomes subject to any Environmental
Liability, (iii) receives notice of any claim with respect to any Environmental
Liability, or (iv) becomes aware of any basis for any Environmental Liability,
in each case which, either individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect;

(d) promptly and in any event within 15 days after (i) the Borrower, any of its
Subsidiaries or any ERISA Affiliate knows or has reason to know that any ERISA
Event has occurred, a certificate of the chief financial officer of the Borrower
describing such ERISA Event and the action, if any, proposed to be taken with
respect to such ERISA Event and a copy of any notice filed with the PBGC or the
IRS pertaining to such ERISA Event and any notices received by the Borrower,
such Subsidiary or such ERISA Affiliate from the PBGC or any other governmental
agency with respect thereto, and (ii) becoming aware (1) that there has been a
material increase in Unfunded Pension Liabilities (not taking into account Plans
with negative Unfunded Pension Liabilities) since the date the representations
hereunder are given or deemed given, or from any prior notice, as applicable,
(2) of the existence of any material Withdrawal Liability, (3) of the adoption
of, or the commencement of contributions to, any Plan subject to Section 412 of
the Code by the Borrower, any of its Subsidiaries or any ERISA Affiliate, or
(4) of the adoption of any amendment to a Plan subject to Section 412 of the
Code which results in a material increase in contribution obligations of the
Borrower, any of its Subsidiaries or any ERISA Affiliate, a detailed written
description thereof from the chief financial officer of the Borrower;

(e) the occurrence of any event of default, or the receipt by the Borrower or
any of its Subsidiaries of any written notice of an alleged event of default,
with respect to any Material Indebtedness of the Borrower or any of its
Subsidiaries;

(f) any termination, expiration or loss of any Material Agreement that,
individually or in the aggregate, could reasonably be expected to result in a
reduction in Consolidated EBITDA of 10% or more on a consolidated basis from the
prior Fiscal Year; and

(g) any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect.

The Borrower will furnish to the Administrative Agent and each Lender the
following:

 

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(x) notice of any change (i) in any Loan Party’s legal name (but, for the
avoidance of doubt, excluding any trade names), (ii) in any Loan Party’s chief
executive office, (iii) in any Loan Party’s organizational existence or (iv) in
any Loan Party’s federal taxpayer identification number or organizational number
or jurisdiction of organization, in each case, prior to or concurrently with
such change; and

(y) promptly and in any event no later than three (3) Business Days after any
Responsible Officer of the Borrower or any of its Subsidiaries has actual
knowledge of:

(i) the voluntary disclosure by the Borrower or any of its Subsidiaries to the
Office of the Inspector General of the United States Department of Health and
Human Services, or any Third Party Payor Program (including to any intermediary,
carrier or contractor of such Program), of an actual overpayment matter
involving the submission of claims to a Third Party Payor in an amount greater
than $1,000,000;

(ii) that the Borrower or any of its Subsidiaries, or an owner, officer,
manager, employee or Person with a “direct or indirect ownership interest” (as
that phrase is defined in 42 C.F.R. §420.201) in the Borrower or any of its
Subsidiaries, (i) has had a civil monetary penalty assessed against him or her
pursuant to 42 U.S.C. §1320a-7a or is the subject of a proceeding seeking to
assess such penalty; (ii) has been excluded from participation in a Federal
Health Care Program (as that term is defined in 42 U.S.C. §1320a-7b) or is the
subject of a proceeding seeking to assess such penalty; (iii) has been convicted
(as that term is defined in 42 C.F.R. §1001.2) of any of those offenses
described in 42 U.S.C. §1320a-7b or 18 U.S.C. §§669, 1035, 1347, 1518 or is the
subject of a proceeding seeking to assess such penalty; or (iv) has been
involved or named in a U.S. Attorney complaint made or any other action taken
pursuant to the False Claims Act under 31 U.S.C. §§3729-3731 or in any qui tam
action brought pursuant to 31 U.S.C. §3729 et seq.;

(iii) any claim to recover any alleged overpayments (other than any such claim
made against the Borrower or any of its Subsidiaries that relates to a period
during which the Borrower or such Subsidiary did not operate the respective
facility) with respect to any receivables in excess of $500,000;

(iv) notice of any final and documented material reduction in the level of
reimbursement expected to be received with respect to receivables;

(v) any allegations of licensure violations or fraudulent acts or omissions
involving the Borrower or any of its Subsidiaries, or, to the knowledge of the
Borrower or any of its Subsidiaries, any Licensed Personnel that would, in the
aggregate, have a Material Adverse Effect;

(vi) the pending or threatened imposition of any material fine or penalty by any
Governmental Authority under any Health Care Law against the Borrower or any of
its Subsidiaries, or, to the knowledge of the Borrower or any of its
Subsidiaries, any Licensed Personnel;

(vii) any changes in any Health Care Law (including the adoption of a new Health
Care Law) known to the Borrower or any of its Subsidiaries that would, in the
aggregate, have a Material Adverse Effect;

(viii) any pending or threatened (in writing) revocation, suspension,
termination, probation, restriction, limitation, denial, or non-renewal with
respect to any Health Care Permit or Third Party Payor Authorization;

 

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(ix) any non-routine and material inspection of any facility of the Borrower or
any of its Subsidiaries by any Governmental Authority; and

(x) without duplication, any failure of the Borrower or any of its Subsidiaries
to comply with the covenants and conditions of Section 5.15.

Each notice or other document delivered under this Section shall be accompanied
by a written statement of a Responsible Officer setting forth the details of the
event or development requiring such notice or other document and any action
taken or proposed to be taken with respect thereto.

Section 5.3. Existence; Conduct of Business. The Borrower will, and will cause
each of its Subsidiaries to, do or cause to be done all things necessary to
(i) maintain in full force and effect its legal existence and (ii) preserve,
renew and maintain its respective rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its business (except, in the case of this clause (ii), as would not
reasonably be expected to result in a Material Adverse Effect); provided that
nothing in this Section shall prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 7.3.

Section 5.4. Compliance with Laws. The Borrower will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations and requirements of
any Governmental Authority applicable to its business and properties, including,
without limitation, all Environmental Laws, ERISA and OSHA, except where the
failure to do so, either individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect. The Borrower will, and will
cause each of its Subsidiaries to, comply with all applicable Sanctions and in
all material respects with the laws, rules, regulations and requirements
referenced in Sections 4.20, 4.21, and 4.22.

Section 5.5. Payment of Obligations. The Borrower will, and will cause each of
its Subsidiaries to, pay and discharge at or before maturity all of its
obligations and liabilities (including, without limitation, all taxes,
assessments and other governmental charges, levies and all other claims that
could result in a statutory Lien) before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings and the Borrower or such Subsidiary has
set aside on its books adequate reserves with respect thereto in accordance with
GAAP or (b) the failure to make any such payment could not reasonably be
expected to result in a Material Adverse Effect.

Section 5.6. Books and Records. The Borrower will, and will cause each of its
Subsidiaries to, keep proper books of record and account in which full, true and
correct entries shall be made of all dealings and transactions in relation to
its business and activities to the extent necessary to prepare the consolidated
financial statements of the Borrower in conformity with GAAP.

Section 5.7. Visitation and Inspection. The Borrower will, and will cause each
of its Subsidiaries to, permit any representative of the Administrative Agent or
any Lender to visit and inspect its properties, to examine its books and records
and to make copies and take extracts therefrom, and to discuss its affairs,
finances and accounts with any of its officers and with its independent
certified public accountants, all at such reasonable times as the Administrative
Agent or any Lender may reasonably request after reasonable prior notice to the
Borrower; provided that (a) so long as no Event of Default shall have occurred
and be continuing, the Administrative Agent and the Lenders shall not make more
than one (1) such visit and inspection in any Fiscal Year; (b) if an Event of
Default has occurred and is continuing, no prior notice shall be required and
the limitation on the number of visits and inspections shall no longer apply;
(c) any such inspection and examination, copies and discussions shall not be
permitted to the extent it would violate confidentiality agreements or result in
a loss of attorney-client privilege or claim of attorney work product so long as
the Borrower notifies the Administrative Agent of such limitation and the reason
therefor; and (d) any such inspection and examination, copies and discussions
shall be subject to the terms of any applicable Master Lease and the
accompanying Collateral Access Agreement.

 

 

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Section 5.8. Maintenance of Properties; Insurance. The Borrower will, and will
cause each of its Subsidiaries to, (a) keep and maintain all property material
to the conduct of its business in good working order and condition, ordinary
wear and tear, force majeure, casualty and condemnation events excepted,
(b) maintain with financially sound and reputable insurance companies, or with
Affiliates of the Borrower (as permitted in Section 4.11(c)(ii)), (i) insurance
with respect to its properties and business, and the properties and business of
its Subsidiaries, against loss or damage of the kinds customarily insured
against by companies in the same or similar businesses operating in the same or
similar locations (including, in any event, flood insurance as described in the
definition of Real Estate Documents for any Mortgaged Property) and (ii) all
insurance required to be maintained pursuant to the Collateral Documents, and
will, upon request of the Administrative Agent, furnish to each Lender a
certificate of a Responsible Officer setting forth the nature and extent of all
insurance maintained by the Borrower and its Subsidiaries in accordance with
this Section, and (c) at all times shall name the Administrative Agent as
additional insured on all liability policies of the Borrower and the other Loan
Parties and as loss payee (pursuant to a loss payee endorsement approved by the
Administrative Agent) on all casualty and property insurance policies of the
Borrower and the other Loan Parties; provided that, so long as no Event of
Default shall have occurred and be continuing, the Administrative Agent shall
not make more than two requests for a certificate pursuant to clause (b)(ii) of
this Section in any Fiscal Year; provided, further, that if an Event of Default
has occurred and is continuing, the limitation on the number of requests for
such a certificate shall no longer apply.

Section 5.9. Use of Proceeds; Margin Regulations. The Borrower (i) will use the
proceeds of the initial Borrowing(s) on the Closing Date to pay transaction
costs and expenses arising in connection with this Agreement and the Related
Transactions and for working capital and other general corporate purposes, and
(ii) after the Closing Date, will use the proceeds of the Revolving Loans and
the Swingline Loans for working capital, capital expenditures, dividends,
distributions and Permitted Acquisitions not prohibited by this Agreement, for
other general corporate purposes of the Borrower and its Subsidiaries and for
any other purpose not prohibited by this Agreement. The Borrower will use the
proceeds of any Incremental Term Loans or Other Refinancing Term Loans for the
purposes set forth in the applicable Incremental Commitment Joinder or
Refinancing Amendment. No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that would violate any rule or
regulation of the Board of Governors of the Federal Reserve System, including
Regulation T, Regulation U or Regulation X. All Letters of Credit will be used
for general corporate purposes.

Section 5.10. [Reserved].

Section 5.11. Cash Management.

(a) The Borrower shall, and shall cause each Loan Party to, execute and deliver
to the Administrative Agent, and thereafter maintain in effect, Control Account
Agreements with respect to all deposit accounts and securities accounts (other
than any (i) such accounts that are used solely to fund payroll and payroll
taxes and other employee wage and benefit payments in the ordinary course of
business on a current basis, (ii) escrow accounts (to the extent maintained
exclusively by any Loan Party for the purpose of establishing or maintaining
escrow amounts for third parties), (iii) trust accounts (to the extent
maintained exclusively by any Loan Party for the purpose of establishing or
maintaining trust amounts for third parties), (iv) such accounts not located in
the United States or any of its states or territories, (v) zero-balance accounts
for the purpose of managing local disbursements, payroll, withholding and other
fiduciary accounts, (vi) Lender Accounts, (vii) such accounts (other than such

 

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accounts referred to in the foregoing clauses (i) through (vi)) that have an
average daily account balance of less than $500,000 individually and less than
$1,000,000 in the aggregate for all such accounts, (viii) any deposit or
securities account established by a Subsidiary of the Borrower, and into which
amounts are deposited, in the ordinary course of business the balance of which
is swept at the end of each Business Day into a Controlled Account or a Lender
Account and (ix) Governmental Deposit Accounts) (each, a “Controlled Account”);
each Controlled Account shall be a cash collateral account, with all cash,
checks and other similar items of payment in such account securing payment of
the Obligations, and in which the Borrower and each other Loan Party shall have
granted a first priority Lien to the Administrative Agent, on behalf of the
Secured Parties, pursuant to such Control Account Agreements.

(b) The Borrower shall, and shall cause each Loan Party to, execute and deliver
to the Administrative Agent, and thereafter maintain in effect, a “sweep”
agreement (each, a “Sweep Agreement”) with respect to each Governmental Deposit
Account pursuant to which the applicable depository bank will agree to sweep
amounts deposited therein on a daily basis to a Controlled Account or a Lender
Account as and when funds clear and become available in accordance with such
depository bank’s customary procedures, each with such financial institution and
each in form and substance reasonably acceptable to the Administrative Agent; no
Loan Party will change any sweep instruction set forth in such Sweep Agreement
without the prior written consent of the Administrative Agent. The
Administrative Agent agrees and confirms that the Loan Parties will have sole
dominion and “control” (within the meaning of Section 9-104 of the UCC and the
common law) over each Governmental Deposit Account and all funds therein and the
Administrative Agent disclaims any right of any nature whatsoever to control or
otherwise direct or make any claim against the funds held in any Governmental
Deposit Account from time to time.

(c) The Borrower shall, and shall cause each Loan Party to, deposit promptly,
and in any event no later than 10 Business Days after the date of receipt
thereof, all cash, checks, drafts or other similar items of payment relating to
or constituting payments made in respect of any and all accounts and other
Collateral into Controlled Accounts, Lender Accounts or Governmental Deposit
Accounts, in each case except for cash and Permitted Investments the aggregate
value of which does not exceed $250,000 at any time.

(d) At any time after the occurrence and during the continuance of an Event of
Default, at the request of the Required Lenders, the Borrower will, and will
cause each other Loan Party to, cause all payments constituting proceeds of
accounts or other Collateral to be directed into lockbox accounts under
agreements in form and substance satisfactory to the Administrative Agent.

Section 5.12. Additional Subsidiaries and Collateral.

(a) In the event that, subsequent to the Closing Date, any Person becomes a
Domestic Subsidiary that is a Material Subsidiary (excluding any Excluded
Subsidiary, any Specified Subsidiary and any Subsidiary that is already a
Guarantor) (a “Joining Guarantor”), whether pursuant to formation, acquisition
or otherwise (including if any Domestic Subsidiary ceases to qualify as an
Immaterial Subsidiary or is the subject of an Excluded Subsidiary Revocation)
(x) the Borrower shall promptly notify the Administrative Agent and the Lenders
thereof and of any Material Real Estate owned by such Joining Guarantor and
(y) within 60 days (or such longer period as may be agreed to by the
Administrative Agent in its sole discretion) after such Person becomes a Joining
Guarantor, the Borrower shall cause such Joining Guarantor (A) to become a new
Guarantor and to grant Liens in favor of the Administrative Agent in all of its
personal property subject to the Guaranty and Security Agreement by executing
and delivering to the Administrative Agent a supplement to the Guaranty and
Security Agreement in form and substance reasonably satisfactory to the
Administrative Agent, executing and delivering a Copyright Security Agreement,
Patent Security Agreement and Trademark Security

 

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Agreement, as and to the extent applicable, and authorizing and delivering, at
the request of the Administrative Agent, such UCC financing statements or
similar instruments required by the Administrative Agent to perfect the Liens in
favor of the Administrative Agent and granted under any of the Loan Documents,
(B) to deliver all such other documentation (including, without limitation,
certified organizational documents, resolutions, lien searches and, if requested
by the Administrative Agent, legal opinions, provided, that legal opinions shall
only be required for a Joining Guarantor having a fair market value in excess of
$25,000,000) and to take all such other actions as such Joining Guarantor would
have been required to deliver and take pursuant to Section 3.1 if such Joining
Guarantor had been a Loan Party on the Closing Date, (C) to comply with
Section 5.11, and (D) to deliver Collateral Access Agreements with respect to
leased Real Estate (to the extent the landlord of any such leased Real Estate is
a PropCo Landlord, an Ensign Landlord or a landlord under a Material Master
Lease), in each case, of the type required under Section 5.13, (ii) pledge, or
cause the applicable Loan Party to pledge, all of the Capital Stock of such
Joining Guarantor to the Administrative Agent as security for the Obligations by
executing and delivering a supplement to the Guaranty and Security Agreement in
form and substance reasonably satisfactory to the Administrative Agent, and
(iii) deliver the original certificates (if any and to the extent not prohibited
under applicable law) evidencing such pledged Capital Stock to the
Administrative Agent, together with appropriate powers executed in blank. In
addition, subject to Section 5.13(b), if a Mortgage Trigger Event has occurred
prior to such Joining Guarantor becoming a Loan Party, within 60 days (or such
longer period as may be agreed to by the Administrative Agent in its sole
discretion) after such Joining Guarantor becomes a Loan Party, the Borrower
shall cause such Joining Guarantor to execute and deliver to the Administrative
Agent, with respect to all Material Real Estate owned by such Loan Party, such
Real Estate Documents as the Administrative Agent shall require; provided that
no owned Real Estate shall be taken as Collateral unless (i) the Administrative
Agent and all Lenders have received at least 45 days advance written notice
(which may be provided via email or via posting on any datasite to which the
Lenders have access) thereof and (ii) each Lender has notified the
Administrative Agent in writing (which notice may be provided via email) that
such Lender has completed its flood insurance due diligence and compliance
procedures.

(b) In the event that, subsequent to the Closing Date, any Person becomes a
Foreign Subsidiary or a Subsidiary that is a Pass-Through Foreign Holdco (in
each case, other any Excluded Subsidiary or Immaterial Subsidiary) that is
directly owned by a Loan Party, whether pursuant to formation, acquisition or
otherwise, (x) the Borrower shall promptly notify the Administrative Agent and
the Lenders thereof and (y) within 60 days (or such longer period as may be
agreed to by the Administrative Agent in its sole discretion) after such Person
becomes a Foreign Subsidiary or a Pass-Through Foreign Holdco, as applicable,
the Borrower shall, or shall cause the applicable Loan Parties to (i) pledge all
of the Capital Stock of such Foreign Subsidiary or such Pass-Through Foreign
Holdco to the Administrative Agent as security for the Obligations pursuant to
the Guaranty and Security Agreement; provided that, in the case of any such
Foreign Subsidiary that is a CFC and any such Pass-Through Foreign Holdco, such
pledge shall be limited to 65% of the issued and outstanding voting Capital
Stock and 100% of the issued and outstanding non-voting Capital Stock of such
Foreign Subsidiary or such Pass-Through Foreign Holdco, as applicable,
(ii) deliver the original certificates (if any and to the extent not prohibited
under applicable law) evidencing such pledged Capital Stock to the
Administrative Agent, together with appropriate powers executed in blank and
(iii) deliver all such other documentation (including, without limitation,
certified organizational documents, resolutions, lien searches and, if requested
by the Administrative Agent, legal opinions) and to take all such other actions
as the Administrative Agent may reasonably request.

(c) The Borrower agrees that, following the delivery of any Collateral Documents
required to be executed and delivered by this Section, the Administrative Agent
shall have a valid and enforceable, first priority perfected Lien on the
property required to be pledged pursuant to subsections (a) or (b) of this
Section (to the extent that such Lien can be perfected by execution, delivery
and/or

 

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recording of the Collateral Documents or UCC financing statements, or possession
of such Collateral), free and clear of all Liens other than Liens expressly
permitted by Section 7.2. All actions to be taken pursuant to this Section shall
be at the expense of the Borrower or the applicable Loan Party, and shall be
taken to the reasonable satisfaction of the Administrative Agent.

Section 5.13. Mortgages; Collateral Access Agreements.

(a) If a Mortgage Trigger Event occurs, (i) the Borrower shall promptly notify
the Administrative Agent of such Mortgage Trigger Event, and (ii) each Loan
Party shall execute and deliver or cause to be executed and delivered to the
Administrative Agent, within sixty (60) days after the Mortgage Trigger Event
occurring (or such later date to which the Administrative Agent may agree in its
sole discretion), with respect to all Material Real Estate owned by such Loan
Party such Real Estate Documents as the Administrative Agent shall require;
provided that no owned Real Estate shall be taken as Collateral unless (i) the
Administrative Agent and all Lenders have received at least 45 days advance
written notice (which may be provided via email or via posting on any datasite
to which the Lenders have access) thereof and (ii) each Lender has notified
(which notice may be provided via email) the Administrative Agent that such
Lender has completed its flood insurance due diligence and compliance
procedures.

(b) To the extent that the Borrower demonstrates to the Administrative Agent, by
delivery of a certificate of a Responsible Officer of the Borrower that a
Mortgage Release Event has occurred, then the Administrative Agent shall
promptly release any Mortgages (at the expense of the Borrower and without
recourse or warranty to the Secured Parties) on Mortgaged Properties.

(c) To the extent otherwise permitted hereunder, if any Loan Party proposes to
lease any Real Estate from a PropCo Landlord or an Ensign Landlord under a
Master Lease or any landlord that is party to a Material Master Lease, it shall
first provide to the Administrative Agent a copy of such lease (if the
Administrative Agent has not previously received a copy of such lease) and a
Collateral Access Agreement from the landlord of such leased property; provided
that with regard to landlords other than PropCo Landlords and the Ensign
Landlords, no such Collateral Access Agreement shall be required if the Borrower
is unable to obtain such Collateral Access Agreement following use of
commercially reasonable efforts to do so.

Section 5.14. Further Assurances. The Borrower will, and will cause each other
Loan Party to, execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements, fixture filings, Mortgages and
other documents), which may be required under any applicable law, or which the
Administrative Agent or the Required Lenders may reasonably request, to
effectuate the transactions contemplated by the Loan Documents or to grant,
preserve, protect or perfect the Liens created by the Collateral Documents or
the validity or priority of any such Lien, all at the expense of the Loan
Parties; provided that no owned Real Estate shall be taken as Collateral unless
(i) the Administrative Agent and all Lenders have received at least 45 days
advance written notice (which may be provided via email or via posting on any
datasite to which the Lenders have access) thereof and (ii) each Lender has
notified (which notice may be provided via email) the Administrative Agent that
such Lender has completed its flood insurance due diligence and compliance
procedures. The Borrower also agrees to provide to the Administrative Agent,
from time to time upon reasonable request, evidence reasonably satisfactory to
the Administrative Agent as to the perfection and priority of the Liens created
or intended to be created by the Collateral Documents.

 

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Section 5.15. Health Care Matters.

(a) Without limiting or qualifying Section 5.4, or any other provision of this
Agreement, the Borrower and each of its Subsidiaries will be in material
compliance with all applicable Health Care Laws relating to the operation of
such Person’s business.

(b) Each of the Borrower and its Subsidiaries shall:

(i) obtain, maintain and preserve, and cause each of its Subsidiaries to obtain,
maintain and preserve, and take all necessary action to timely renew, all
material Health Care Permits (including, as applicable, Health Care Permits
necessary for it to be eligible to receive payment and compensation from and to
participate in Medicare, Medicaid or any other Third Party Payor programs) which
are necessary or useful in the proper conduct of its business;

(ii) be and remain in material compliance with all requirements for
participation in, and for licensure required to provide the goods or services
that are reimbursable under, Medicare, Medicaid and other Third Party Payor
Programs;

(iii) cause all Licensed Personnel to be in material compliance with all
applicable Health Care Laws in the performance of their duties to or for the
Borrower and its Subsidiaries, and to maintain in full force and effect all
professional licenses and other Health Care Permits required to perform such
duties; and

(iv) keep and maintain all records required to be maintained by any Governmental
Authority or otherwise under any Health Care Law.

(c) The Borrower and each of its Subsidiaries shall maintain a corporate and
health care regulatory compliance program (“CCP”) which addresses the
requirements of Health Care Laws, including, without limitation, HIPAA and
includes at least the following components and allows the Administrative Agent
(and/or its consultants) from time to time to review such CCP: (i) standards of
conduct and procedures that describe compliance policies regarding laws with an
emphasis on prevention of fraud and abuse; (ii) a specific officer within
high-level personnel identified as having overall responsibility for compliance
with such standards and procedures; (iii) training and education programs which
effectively communicate the compliance standards and procedures to employees and
agents, including, without limitation, fraud and abuse laws and illegal billing
practices; (iv) auditing and monitoring systems and reasonable steps for
achieving compliance with such standards and procedures, including, without
limitation, publicizing a report system to allow employees and other agents to
anonymously report criminal or suspect conduct and potential compliance
problems; (v) disciplinary guidelines and consistent enforcement of compliance
policies, including, without limitation, discipline of individuals responsible
for the failure to detect violations of the CCP; and (vi) mechanisms to
immediately respond to detected violations of the CCP. The Borrower and its
Subsidiaries shall modify such CCPs from time to time, as may be necessary to
ensure continuing compliance with all applicable Health Care Laws. Upon request,
the Administrative Agent (and/or its consultants) shall be permitted to review
such CCPs.

Section 5.16. Post-Closing Matters. The Borrower will, and will cause each other
Loan Party to, satisfy the requirements set forth on Schedule 5.16 on or before
the date specified for such requirement or such later date as agreed to by the
Administrative Agent in its sole discretion.

Section 5.17. [Reserved].

 

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Section 5.18. Limitations on Designation of Excluded Subsidiaries.

(a) The Borrower may, on or after the Closing Date, designate any Subsidiary of
the Borrower as an “Excluded Subsidiary” under this Agreement (an “Excluded
Subsidiary Designation”) only if:

(i) no Default or Event of Default shall have occurred and be continuing at the
time of or immediately after giving effect to such Excluded Subsidiary
Designation;

(ii) the Borrower would be permitted under this Agreement to make an Investment
at the time of such Excluded Subsidiary Designation (assuming the effectiveness
of such Excluded Subsidiary Designation) in an amount (the “Excluded Subsidiary
Designation Amount”) equal to the sum of the book value (or, in the case of
cash, the amount of cash invested) (without duplication) of Investments held by
the Borrower or other Loan Parties in such Subsidiary determined net of any
payments received with respect to such Investment from the date that such
Investment was made through the date of such Excluded Subsidiary Designation (to
be determined without duplication of other Investments permitted under
Section 7.4);

(iii) after giving effect to such Excluded Subsidiary Designation and any
Acquisition or Disposition permitted by this Agreement consummated since the
most recently ended Test Period, the Borrower shall be in compliance on a Pro
Forma Basis with the covenants set forth in Article VI as of the end of the most
recently ended Test Period as if such Excluded Subsidiary Designation had
occurred, and any Indebtedness incurred in connection therewith was incurred, on
the first day of such Test Period;

(iv) substantially concurrent with such Excluded Subsidiary Designation, either
(x) such Subsidiary incurs or assumes Indebtedness that is permitted pursuant to
Section 7.1(h) that is secured by Liens that are permitted pursuant to
Section 7.2(f), (y) such Subsidiary enters into a lease with respect to Real
Estate to be operated or otherwise used by such Subsidiary, which lease requires
such Subsidiary to grant a first priority Lien in favor of such landlord on such
Subsidiary’s accounts receivable and/or the Capital Stock of such Subsidiary or
otherwise prohibits such Subsidiary from granting a first priority Lien in favor
of the Administrative Agent on such Subsidiary’s accounts receivable and/or the
Capital Stock of such Subsidiary (or results in a lease default if such Lien is
granted), provided, that the Borrower shall not be required to designate such
Subsidiary as an Excluded Subsidiary to the extent such Subsidiary is a
Subsidiary Loan Party and the Liens and security interests in favor of the
landlord on the assets of such Subsidiary Loan Party are permitted pursuant to,
and subject to an intercreditor agreement contemplated by, Section 7.2(i) or
(z) with respect to a lease that was previously entered into by such Subsidiary
with respect to Real Estate to be operated or otherwise used by such Subsidiary
and in connection with such lease the landlord under such lease was granted a
Lien on and security interest in the assets of such Subsidiary that were
permitted immediately prior to such Excluded Subsidiary Designation pursuant to,
and subject to an intercreditor agreement contemplated by, Section 7.2(i), the
date occurs that is 75 days prior to the date provided in the applicable
intercreditor agreement whereupon any of the Liens on and security interests in
favor of such landlord on the assets of such Subsidiary will cease to have the
relative lien priority necessary for such Liens and security interests to be
permitted pursuant to Section 7.2(i); and

(v) such Subsidiary is not (A) except in the case of a tenant that is required
to grant a Lien on its assets to secure Indebtedness of the applicable Ensign
Landlord, a tenant under any Ensign Master Lease or (B) a tenant under any
PropCo Master.

 

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(b) Upon any such Excluded Subsidiary Designation after the Closing Date, the
Borrower and its Subsidiaries shall be deemed to have made an Investment in such
Excluded Subsidiary in an amount equal to the Excluded Subsidiary Designation
Amount.

(c) Borrower may revoke any Excluded Subsidiary Designation of a Subsidiary as
an Excluded Subsidiary (an “Excluded Subsidiary Revocation”), whereupon such
Subsidiary shall cease to be an Excluded Subsidiary, if:

(i) no Default or Event of Default shall have occurred and be continuing at the
time and immediately after giving effect to such Excluded Subsidiary Revocation;

(ii) all Liens and Indebtedness of such Excluded Subsidiary and its Subsidiaries
outstanding immediately following such Excluded Subsidiary Revocation would, if
incurred at the time of such Excluded Subsidiary Revocation, have been permitted
to be incurred for all purposes of this Agreement; and

(iii) such Subsidiary (and any other applicable Loan Party) executes and
delivers the documents and takes the actions described in Section 5.12(a) as if
such Subsidiary was a Joining Guarantor.

(d) All Excluded Subsidiary Designations and Excluded Subsidiary Revocations
occurring after the Closing Date must be evidenced by a certificate of a
Responsible Officer of the Borrower delivered to the Administrative Agent
certifying compliance with the foregoing provisions of this Section 5.18(a) (in
the case of any such Excluded Subsidiary Designations) and of Section 5.18(c)
(in the case of any such Excluded Subsidiary Revocations).

(e) If the Borrower designates a Guarantor as an Excluded Subsidiary in
accordance with this Section 5.18, the Obligations of such Guarantor under the
Loan Documents shall terminate and be of no further force and effect and all
Liens granted by such Guarantor under the applicable Collateral Documents shall
terminate and be released and be of no further force and effect, and all Liens
on the Capital Stock and debt obligations of such Guarantor shall be terminated
and released and of no further force and effect, in each case, without any
action required by the Administrative Agent. At the Borrower’s request, the
Administrative Agent will execute and deliver any instrument evidencing such
termination and the Administrative Agent shall take all actions appropriate in
order to effect such termination and release of such Liens and without recourse
or warranty by the Administrative Agent (including the execution and delivery of
appropriate UCC termination statements and such other instruments and releases
as may be necessary and appropriate to effect such release). Any such foregoing
actions taken by the Administrative Agent shall be at the sole cost and expense
of the Borrower.

Section 5.19. Anti-Corruption Laws; Sanctions. The Borrower will comply and
conduct its, and cause its Subsidiaries to comply and conduct their, business in
compliance in all material respects with the Anti-Corruption Laws and all
applicable Sanctions and institute and maintain policies and procedures designed
to promote and achieve compliance by the Borrower and its Subsidiaries and their
respective directors, officers, employees, agents and Affiliates with such
Anti-Corruption Laws and Sanctions.

 

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ARTICLE VI

FINANCIAL COVENANTS

The Borrower covenants and agrees that so long as any Lender has a Commitment
hereunder or any Obligation remains unpaid or outstanding:

Section 6.1. Leverage Ratio. The Borrower will maintain, as of the end of each
Test Period, commencing with the Test Period ended on September 30, 2019, a
Leverage Ratio of not greater than 2.50:1.00 (the “Maximum Leverage Threshold”);
provided that if the aggregate consideration paid in connection with all
Permitted Acquisitions or other Acquisitions permitted hereunder consummated
during any six (6) consecutive month period exceeds $20,000,000, then, at the
election of the Borrower by written notice to the Administrative Agent (with a
description in reasonable detail of the Permitted Acquisitions or other
Acquisitions permitted hereunder consummated during such period and the
consideration paid), the Maximum Leverage Threshold shall be increased to
3.00:1.00 for the current Fiscal Quarter and the immediately following three
Fiscal Quarters; provided, further, that the Maximum Leverage Threshold shall
not be increased pursuant to the preceding proviso (i) more than four times (or
with respect to more than twelve Fiscal Quarters) during the term of this
Agreement and (ii) unless in the most recently ended four consecutive Fiscal
Quarter period there shall be at least one Fiscal Quarter in respect of which
the Maximum Leverage Threshold has not been increased.

Section 6.2. Interest/Rent Coverage Ratio. The Borrower will maintain, as of the
end of each Test Period, commencing with the Test Period ended on September 30,
2019, an Interest/Rent Coverage Ratio of not less than the Interest/Rent
Coverage Ratio set forth below for such Test Period:

 

Test Period Ending

  

Interest/Rent Coverage Ratio

September 30, 2019

   1.25:1.00

December 31, 2019

   1.25:1.00

March 31, 2020

   1.25:1.00

June 30, 2020

   1.25:1.00

September 30, 2020

   1.25:1.00

December 31, 2020

   1.25:1.00

March 31, 2021

   1.25:1.00

June 30, 2021

   1.25:1.00

September 30, 2021

   1.25:1.00

December 31, 2021 and thereafter

   1.50:1.00

 

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ARTICLE VII

NEGATIVE COVENANTS

The Borrower covenants and agrees that until Payment in Full of the Obligations:

Section 7.1. Indebtedness and Preferred Equity. The Borrower will not, and will
not permit any of its Subsidiaries to, create, incur, assume or suffer to exist
any Indebtedness, except:

(a) Indebtedness created pursuant to the Loan Documents;

(b) Indebtedness of the Borrower and its Subsidiaries existing on the date
hereof and set forth on Schedule 7.1 and extensions, renewals and replacements
of any such Indebtedness that do not increase the outstanding principal amount
thereof (immediately prior to giving effect to such extension, renewal or
replacement) or shorten the maturity or the weighted average life thereof;

(c) Indebtedness of the Borrower or any of its Subsidiaries incurred to finance
the acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations (it being understood that the completion of
the construction or development of additional beds at existing facilities or new
facilities shall constitute the acquisition of property), and any Indebtedness
assumed in connection with the acquisition of any such assets or secured by a
Lien on any such assets (provided that such Indebtedness is incurred prior to or
within 90 days after such acquisition or the completion of such construction or
improvements), and extensions, renewals, refinancings or replacements of any
such Indebtedness that do not increase the outstanding principal amount thereof
(immediately prior to giving effect to such extension, renewal, refinancing or
replacement, other than in an amount not to exceed unpaid interest and fees and
expenses incurred in connection therewith) or shorten the maturity or the
weighted average life thereof; provided that the aggregate principal amount of
such Indebtedness at any time outstanding does not exceed the greater of
$5,000,000 and, if the Lease-Adjusted Leverage Ratio (calculated on a pro forma
basis giving effect to the incurrence of such Indebtedness) is less than or
equal to 5.00:1.00 at the time of incurrence thereof, 25.0% of Consolidated
EBITDA for the most recently ended Test Period; provided, further, that the
aggregate principal amount of Capital Lease Obligations that are permitted under
subsection (j) of this Section shall not be included in calculating the
aggregate principal amount of Indebtedness for purposes of the limitation set
forth in this subsection;

(d) Indebtedness of the Borrower owing to any Subsidiary and of any Subsidiary
owing to the Borrower or any other Subsidiary; provided that any such
Indebtedness that is owed by a Subsidiary that is not a Subsidiary Loan Party
shall be subject to Section 7.4;

(e) Guarantees by the Borrower of Indebtedness of any Subsidiary and by any
Subsidiary of Indebtedness of the Borrower or any other Subsidiary; provided
that Guarantees by any Loan Party of Indebtedness of any Subsidiary that is not
a Subsidiary Loan Party shall be subject to Section 7.4; provided, further, that
the Borrower may Guarantee on an unsecured basis all Indebtedness permitted
under Section 7.1(h);

(f) Indebtedness of any Person which becomes a Subsidiary (other than an
Excluded Subsidiary) after the date of this Agreement and Indebtedness secured
by assets acquired by the Borrower or any of its Subsidiaries (other than an
Excluded Subsidiary) after the date of this Agreement; provided that in each
case (i) such Indebtedness exists at the time that such Person becomes a
Subsidiary or such asset is acquired and is not created in contemplation of or
in connection with such Person becoming a Subsidiary or such asset being
acquired, and (ii) the aggregate principal amount of all such Indebtedness
permitted hereunder at any time outstanding shall not exceed the greater of
$5,000,000 and, if the Lease-Adjusted Leverage Ratio (calculated on a pro forma
basis giving effect to the incurrence of such Indebtedness) is less than or
equal to 5.00:1.00 at the time of incurrence thereof, 25.0% of Consolidated
EBITDA for the most recently ended Test Period;

(g) Hedging Obligations permitted by Section 7.10;

 

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(h) Indebtedness of an Excluded Subsidiary secured by Liens permitted by
Section 7.2(f) in an aggregate principal amount, when taken together with the
aggregate amount of Investments in any Excluded Subsidiaries made pursuant to
Section 7.4(h) that remain outstanding at such time (other than any portion of
such Investment made in reliance on the Available Amount), for all such
Indebtedness not to exceed at any time outstanding the greater of
(x) $50,000,000 and (y) an amount equal to (I) Consolidated EBITDA for the most
recently ended Test Period multiplied by (II) two; provided that, at the time of
and immediately after giving effect to the incurrence or assumption of any such
Indebtedness, (A) no Default or Event of Default shall exist and (B) the
Borrower and its Subsidiaries shall be in pro forma compliance with Sections 6.1
and 6.2 as of the most recently ended Test Period, calculated as if all such
Indebtedness had been incurred as of the first day of the relevant period for
testing compliance;

(i) other unsecured Indebtedness of the Borrower or its Subsidiaries; provided
that, at the time of and immediately after giving effect to any such
Indebtedness, (A) no Default or Event of Default shall exist and (B) the
Borrower and its Subsidiaries shall be in pro forma compliance with Sections 6.1
and 6.2 as of the most recently ended Test Period, calculated as if all such
Indebtedness had been incurred as of the first day of the relevant period for
testing compliance;

(j) Capital Lease Obligations incurred in connection with any Permitted
Acquisition structured as a capital lease;

(k) unsecured Indebtedness of a Subsidiary Loan Party owing to its landlord or
Affiliates of such landlord under a lease of Real Estate for loans advanced by
such landlord or its Affiliates for the purpose of funding capital expenditures
with respect to healthcare facilities located on such Real Estate, provided that
the aggregate amount of Indebtedness at any time outstanding pursuant to this
Section 7.1(k) shall not exceed the greater of $5,000,000 and, if the
Lease-Adjusted Leverage Ratio (calculated on a pro forma basis giving effect to
the incurrence of such Indebtedness) is less than or equal to 5.00:1.00 at the
time of incurrence thereof, 25.0% of Consolidated EBITDA for the most recently
ended Test Period;

(l) Indebtedness in respect of workers’ compensation claims, self-insurance
obligations, performance bonds, surety appeal or similar bonds, completion
guarantees and letters of credit arising in the ordinary course of its business;

(m) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within five (5) Business Days of its incurrence;

(n) Indebtedness arising in connection with endorsement of instruments for
deposit in the ordinary course of business;

(o) Indebtedness consisting of the financing of insurance premiums in the
ordinary course of business; and

(p) other Indebtedness of the Borrower or its Subsidiaries in an aggregate
principal amount at any time outstanding not to exceed the greater of $1,500,000
and, if the Lease-Adjusted Leverage Ratio (calculated on a pro forma basis
giving effect to the incurrence of such Indebtedness) is less than or equal to
5.00:1.00 at the time of incurrence thereof, 10.0% of Consolidated EBITDA for
the most recently ended Test Period.

The Borrower will not, and will not permit any Subsidiary to, issue any
preferred stock or other preferred equity interest that (i) matures or is
mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(ii) is or may become redeemable or repurchaseable by the Borrower or such
Subsidiary at the option of the holder thereof, in whole or in part, or (iii) is
convertible or exchangeable at the option of the holder thereof for Indebtedness
or preferred stock or any other preferred equity interest described in this
paragraph, on or prior to, in the case of clause (i), (ii) or (iii), the date
that is 180 days after the later of the Revolving Commitment Termination Date
and the then latest Maturity Date.

 

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Section 7.2. Liens. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien on any of its
assets or property now owned or hereafter acquired, except:

(a) Liens securing the Obligations; provided that no Liens may secure Hedging
Obligations or Bank Product Obligations without securing all other Obligations
on a basis at least pari passu with such Hedging Obligations or Bank Product
Obligations and subject to the priority of payments set forth in Section 2.21
and Section 8.2;

(b) Permitted Encumbrances;

(c) Liens on any property or asset of the Borrower or any of its Subsidiaries
existing on the date hereof and set forth on Schedule 7.2; provided that such
Liens shall not apply to any other property or asset of the Borrower or any
Subsidiary;

(d) purchase money Liens upon or in any fixed or capital assets to secure the
purchase price or the cost of construction or improvement of such fixed or
capital assets or to secure Indebtedness incurred solely for the purpose of
financing the acquisition, construction or improvement of such fixed or capital
assets (including Liens securing any Capital Lease Obligations); provided that
(i) any such Lien secures Indebtedness permitted by Section 7.1(c), (ii) any
such Lien attaches to such asset concurrently or within 90 days after the
acquisition or the completion of the construction or improvements thereof (or,
in the case of an extension, refinancing, replacement or renewal, at the time of
such extension, refinancing, replacement or renewal), (iii) any such Lien does
not extend to any other asset other than accessions and reasonable extensions
thereof, and (iv) the Indebtedness secured thereby does not exceed the cost
(including interest costs) of acquiring, constructing or improving such fixed or
capital assets;

(e) any Lien (x) existing on any asset of any Person at the time such Person
becomes a Subsidiary of the Borrower, (y) existing on any asset of any Person
(other than any Subsidiary of the Borrower) at the time such Person is merged
with or into the Borrower or any of its Subsidiaries, or (z) existing on any
asset prior to the acquisition thereof by the Borrower or any of its
Subsidiaries; provided that (i) any such Lien was not created in the
contemplation of any of the foregoing and (ii) any such Lien secures only those
obligations which it secures on the date that such Person becomes a Subsidiary
or the date of such merger or the date of such acquisition;

(f) Liens on the assets of, and Capital Stock in, any Excluded Subsidiary;
provided that (i) to the extent any such Lien secures Indebtedness, any such
Lien secures only Indebtedness permitted by Section 7.1(h), (ii) no such Lien is
prohibited by any other Contractual Obligation of the Borrower or any of its
Subsidiaries and (iii) at the time of and immediately after giving effect to any
such Lien (which for Liens on the assets of, and Capital Stock in, any Excluded
Subsidiary that is designated pursuant to Section 5.18(a)(iv)(z) shall be the
date of such designation), (A) no Default or Event of Default shall exist and
(B) the Borrower and its Subsidiaries shall be in pro forma compliance with
Sections 6.1 and 6.2 as of the most recently ended Test Period, calculated as if
all Indebtedness secured by such Lien had been incurred as of the first day of
the relevant period for testing compliance and all Acquisitions permitted
hereunder since the end of such Test Period had been consummated as of the first
day of the relevant period for testing compliance;

(g) [Reserved];

 

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(h) extensions, renewals, or replacements of any Lien referred to in subsections
(b) through (g) of this Section; provided that the principal amount of the
Indebtedness secured thereby is not increased (other than in an amount not to
exceed unpaid interest and fees, and expenses incurred in connection therewith)
and that any such extension, renewal or replacement is limited to the assets
originally encumbered thereby;

(i) to the extent required by the landlord under a lease of Real Estate entered
into by a Subsidiary Loan Party with a landlord that is not (x) an Affiliate of
the Borrower or (y) a PropCo Landlord, Liens on the assets of a Subsidiary Loan
Party or such Subsidiary Loan Party’s Subsidiaries (but not, for the avoidance
of doubt, on the Capital Stock of such Subsidiary Loan Party or such Subsidiary
Loan Party’s Subsidiaries) to secure the obligations of such Subsidiary Loan
Party under such lease; provided that such Subsidiary Loan Party and its
Subsidiaries shall not be required to become Excluded Subsidiaries on account of
such lease and shall instead be Subsidiary Loan Parties to the extent any such
lien granted to or in favor of such landlord is subject to a customary
intercreditor agreement between the Administrative Agent and the landlord under
such lease that provides that any such Liens of such landlord on accounts
receivable (and proceeds thereof, books and records related thereto and accounts
into which the same are deposited) of such Subsidiary Loan Party or such
Subsidiary Loan Party’s Subsidiary (collectively, “Accounts Collateral”) shall
be junior to the Lien of the Administrative Agent on such Accounts Collateral;
provided further that, to the extent any such intercreditor agreement provides
that the Liens of such landlord on Accounts Collateral that are initially junior
to the Lien of the Administrative Agent on such Accounts Collateral are to
become senior to the Lien of the Administrative Agent on such Accounts
Collateral, such Liens of such landlord on Accounts Collateral shall cease to be
permitted pursuant to this clause (i) on the date that is 75 days prior to the
date provided in such intercreditor agreement whereupon the Liens of such
landlord on Accounts Collateral will cease to be junior to the Liens of the
Administrative Agent on such Accounts Collateral; and

(j) Liens on the assets of the Borrower or its Subsidiaries not otherwise
permitted by this Section 7.2, securing an aggregate principal amount of
obligations at any time outstanding not to exceed the greater of $1,500,000 and,
if the Lease-Adjusted Leverage Ratio (calculated on a pro forma basis giving
effect to the incurrence of such Liens and any Indebtedness secured thereby) is
less than or equal to 5.00:1.00 at the time of incurrence thereof, 10.0% of
Consolidated EBITDA for the most recently ended Test Period.

Section 7.3. Fundamental Changes.

(a) The Borrower will not, and will not permit any of its Subsidiaries to, merge
into or consolidate into any other Person, or permit any other Person to merge
into or consolidate with it, or sell, lease, transfer or otherwise dispose of
(in a single transaction or a series of transactions) all or substantially all
of the assets of the Borrower and its Subsidiaries on a consolidated basis (in
each case, whether now owned or hereafter acquired) or liquidate or dissolve;
provided that if, at the time thereof and immediately after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing,
(i) the Borrower or any Subsidiary may merge with a Person if the Borrower (or
such Subsidiary if the Borrower is not a party to such merger and if any party
to such merger is a Subsidiary Loan Party, a Subsidiary Loan Party shall be the
surviving Person (unless the Borrower is a party thereto, in which case the
Borrower shall be the surviving Person)) is the surviving Person, (ii) any
Subsidiary may merge into another Subsidiary, provided that if any party to such
merger is a Subsidiary Loan Party, the Subsidiary Loan Party shall be the
surviving Person, (iii) any Subsidiary may sell, transfer, lease or otherwise
dispose of all or substantially all of its assets to the Borrower or to a
Subsidiary Loan Party, (iv) any Subsidiary 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 is not materially disadvantageous to the
Lenders; provided that if such Subsidiary is a Subsidiary Loan Party, the assets
of such Subsidiary shall be

 

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distributed to the Borrower or a Subsidiary Loan Party, (v) subject to clause
(ii), any Subsidiary may merge, dissolve or consolidate in connection with the
consummation of any Permitted Acquisition, and (vi) any Subsidiary that is not a
Loan Party may sell, transfer, lease or otherwise dispose of all or
substantially all of its assets to the Borrower or any Subsidiary of the
Borrower.

(b) The Borrower will not, and will not permit any of its Subsidiaries to,
engage in any business other than businesses of the type conducted by the
Borrower and its Subsidiaries on the date hereof and businesses ancillary or
reasonably related to, or extensions of, the business of the Borrower and its
Subsidiaries.

Section 7.4. Investments, Loans. The Borrower will not, and will not permit any
of its Subsidiaries to, purchase, hold or acquire (including pursuant to any
merger with any Person that was not a wholly owned Subsidiary prior to such
merger) any Capital Stock, evidence of Indebtedness or other securities
(including any option, warrant, or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, Guarantee any obligations
of, or make or permit to exist any investment or any other interest in, any
other Person (all of the foregoing being collectively called “Investments”), or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person that constitute a business unit, or create or
form any Subsidiary, except:

(a) (x) Investments existing on the date hereof in Excluded Subsidiaries that
are set forth on Schedule 7.4 and (y) other Investments (other than Permitted
Investments) existing on the date hereof (including Investments in
Subsidiaries);

(b) Permitted Investments;

(c) Permitted Alternative Investments;

(d) Guarantees by the Borrower and its Subsidiaries constituting Indebtedness
permitted by Section 7.1; provided that the aggregate principal amount of
Indebtedness of Subsidiaries that are not Subsidiary Loan Parties that is
Guaranteed by any Loan Party shall be subject to the limitation set forth in
subsection (e) of this Section;

(e) Investments made by the Borrower in or to any Subsidiary and by any
Subsidiary to the Borrower or in or to another Subsidiary; provided that
(i) Investments by the Loan Parties in or to, and Guarantees by the Loan Parties
of Indebtedness of, Subsidiaries that are not Loan Parties (other than Excluded
Subsidiaries) pursuant to this clause (e) shall not exceed in the aggregate at
any time outstanding the greater of $2,500,000 and, if the Lease-Adjusted
Leverage Ratio (calculated on a pro forma basis giving effect to such
Investment) is less than or equal to 5.00:1.00 at the time such Investment is
made, 15.0% of Consolidated EBITDA for the most recently ended Test Period and
(ii) Investments by the Loan Parties or Subsidiaries that are not Excluded
Subsidiaries in or to, and Guarantees by the Loan Parties or Subsidiaries that
are not Excluded Subsidiaries of Indebtedness of, Excluded Subsidiaries shall
not be permitted under this clause (e);

(f) loans or advances to employees, officers or directors of the Borrower or any
of its Subsidiaries in the ordinary course of business for travel, relocation
and related expenses; provided that the aggregate amount of all such loans and
advances does not exceed $1,500,000 at any time outstanding;

(g) Hedging Transactions permitted by Section 7.10;

 

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(h) (x) Permitted Acquisitions, (y) so long as no Event of Default then exists
or would result therefrom, Investments in Excluded Subsidiaries made for the
purpose of financing the construction, development, refurbishment or expansion
of any health care facility and (z) Investments constituting Excluded Subsidiary
Designation Amounts (other than, in the case of this clause (z), cash or cash
equivalents funded by any Loan Party into an Excluded Subsidiary prior to such
Subsidiary being designated as an Excluded Subsidiary, except to the extent of
cash or cash equivalents funded for the purpose of financing the Permitted
Acquisition of such Subsidiary or the construction, development, refurbishment
or expansion of any health care facility); provided that (i) the aggregate
amount of Acquisition Consideration paid in connection with Permitted
Acquisitions of Persons (other than Excluded Subsidiaries) that do not become
Loan Parties and assets (other than assets that are acquired by Excluded
Subsidiaries) that do not become owned by Loan Parties shall not exceed
$3,000,000 at any time outstanding and (ii) the aggregate amount of Acquisition
Consideration paid in connection with Permitted Acquisitions of Excluded
Subsidiaries (determined at the time of such Permitted Acquisition) and
Investments in Excluded Subsidiaries made for the purpose of financing the
construction, development, refurbishment or expansion of any health care
facility and Excluded Subsidiary Designation Amounts, together with the amount
of any then outstanding Indebtedness that was incurred or assumed pursuant to
Section 7.1(h) and any other then outstanding Investment in any Excluded
Subsidiary arising pursuant to this Section 7.4(h) (in each case, without
duplication), shall not exceed at any time the sum of (A) the greater of
(x) $50,000,000 and (y) an amount equal to (I) Consolidated EBITDA for the most
recently ended four consecutive Fiscal Quarter period for which financial
statements were required to have been delivered pursuant to Section 5.1(a) or
(b) multiplied by (II) two plus (B) the Available Amount; provided, that, (i) in
the event of a Permitted Acquisition consisting of the purchase or acquisition
of both (x) entities that do not become, or assets that do not become owned by,
Loan Parties or Excluded Subsidiaries and (y) entities that become, or assets
that become owned by, Loan Parties or Excluded Subsidiaries, the aggregate
amount of Acquisition Consideration attributable to such entities that do not
become, and assets that do not become owned by, Loan Parties or Excluded
Subsidiaries for purposes of this clause (h), shall be determined by the
Borrower in good faith and be reasonably acceptable to the Administrative Agent,
(ii) in the event of a Permitted Acquisition consisting of the purchase or
acquisition of both (x) Excluded Subsidiaries or assets that become owned by
Excluded Subsidiaries and (y) entities that do not become, or assets that do not
become owned by, Excluded Subsidiaries, the aggregate amount of Acquisition
Consideration attributable to the Excluded Subsidiaries for purposes of this
clause (h), shall be determined by the Borrower in good faith and be reasonably
acceptable to the Administrative Agent and (iii) the amount of Investments made
(or Acquisition Consideration payable) under this Section 7.4(h) in connection
with a Permitted Acquisition of an Excluded Subsidiary shall be determined
without duplication of any Indebtedness incurred or assumed under Section 7.1(h)
in connection therewith to the extent such Indebtedness is included in the
determination of Acquisition Consideration for such Permitted Acquisition;

(i) Investments in joint ventures with a joint venture partner that is
reasonably acceptable to the Administrative Agent (it being understood and
agreed that the potential joint venture partner identified to the Administrative
Agent on or prior to the Closing Date is reasonably acceptable to the
Administrative Agent and the Lenders); provided that (A) the aggregate amount of
Investments made pursuant to this clause (i) shall not exceed $11,000,000 at any
time outstanding, (ii) the Capital Stock of the joint venture entities (the “JV
entities”) that is owned or held by the Borrower and its Subsidiaries shall be
directly owned by Loan Parties and shall be pledged as Collateral pursuant to
the Collateral Documents, (iii) the documentation and other arrangements of such
joint ventures shall be reasonably acceptable to the Administrative Agent (such
reasonably acceptable documents, the “JV Documents”), (iv) at the time of any
such Investment, no Default or Event of Default shall exist or would result from
such Investment and (v) the Borrower and its Subsidiaries shall be in pro forma
compliance with Sections 6.1 and 6.2 as of the most recently ended Test Period
(calculated on a pro forma basis as if such Investment had been made on the
first day of such Test Period).

 

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(j) other Investments that in the aggregate do not exceed at any time
outstanding the greater of $1,500,000 and, if the Lease-Adjusted Leverage Ratio
(calculated on a pro forma basis giving effect to such Investment) is less than
or equal to 5.00:1.00 at the time such Investment is made, 10.0% of Consolidated
EBITDA for the most recently ended Test Period; and

(k) Investments held by a Subsidiary Loan Party that is acquired after the
Closing Date, or of a Person (other than a Subsidiary of the Borrower) merged or
consolidated with or into the Borrower or a Subsidiary Loan Party, in each case
in accordance with the terms of this Agreement to the extent that such
Investments were not made in contemplation of or in connection with such
acquisition, merger or consolidation and were in existence on the date of such
acquisition, merger or consolidation (such Investments, “Acquired Investments”);
provided, however, that (i) the aggregate amount of Acquired Investments that
would not otherwise be permitted as an Investment pursuant to clauses
(a) through (j) of this Section 7.4 shall not exceed 10% of the book value of
such Subsidiary Loan Party (and its Subsidiaries) that is acquired after the
Closing Date or such Person (and its Subsidiaries) that is merged or
consolidated with or into the Borrower or a Subsidiary Loan Party, as of the
date of such acquisition, merger or consolidation and (ii) Acquired Investments
shall not include (and in no event shall this Section 7.4(k) permit) Investments
in or with respect to Excluded Subsidiaries (including, for the avoidance of
doubt, Investments constituting Excluded Subsidiary Designation Amounts).

The amount of any Investment (other than Investments made using the Available
Amount) shall be deemed to be the amount actually invested, without adjustment
for subsequent increases or decreases in the value of such Investment but
determined net of all payments received with respect to such Investment whether
constituting sale proceeds thereof, dividends, distributions, interest, return
of capital or otherwise, and the amount of any Investment constituting a
Guarantee shall be reflective of the principal amount subject to such Guarantee
from time to time.

Notwithstanding the foregoing, in no event shall any Excluded Subsidiary make,
purchase, hold or acquire any Investments in the Capital Stock of any Loan
Party.

Section 7.5. Restricted Payments. The Borrower will not, and will not permit any
of its Subsidiaries to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, except:

(i) dividends payable by the Borrower solely in interests of any class of its
common equity;

(ii) Restricted Payments made by any Subsidiary to the Borrower or to another
Subsidiary, on at least a pro rata basis with any other shareholders if such
Subsidiary is not wholly owned by the Borrower and other wholly owned
Subsidiaries of the Borrower;

(iii) [reserved];

(iv) the Borrower may repurchase common stock or common stock options from
present or former officers, directors or employees (or heirs of, estates of or
trusts formed by such Persons) of the Borrower or any Subsidiary upon the death,
disability, retirement or termination of employment or position of such officer,
director or employee or pursuant to the terms of any stock option plan or like
agreement; provided, however, that the aggregate amount of payments under this
clause (except to the extent made with Equity Issuance Proceeds received for
such purpose that are not used to increase the Available Amount or otherwise
applied to increase basket capacity hereunder) shall not exceed the lesser of
(i) $2,500,000 in any Fiscal Year or (ii) $12,500,000 during the term of this
Agreement;

 

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(v) other Restricted Payments (including, for the avoidance of doubt, payments
with respect to subordinated Indebtedness) in an aggregate amount not to exceed
$2,500,000 in any Fiscal Year;

(vi) the Borrower and its Subsidiaries may (x) repurchase Capital Stock to the
extent deemed to occur upon exercise of stock options, warrants or rights in
respect thereof to the extent such Capital Stock represents a portion of the
exercise price of such options, warrants or rights in respect thereof and (y) if
such payments are made pursuant to a stock option plan or an incentive plan,
make payments in respect of withholding or similar taxes payable or expected to
be payable by any present or former member of management, director, officer,
employee, or consultant of the Borrower or any of its Subsidiaries or family
members, spouses or former spouses, heirs of, estates of or trusts formed by
such Persons in connection with the exercise of stock options or grant, vesting
or delivery of Capital Stock;

(vii) the Borrower and its Subsidiaries may make Restricted Payments to allow
the payment of cash in lieu of the issuance of fractional shares upon the
exercise of options or, warrants or rights or upon the conversion or exchange of
or into Capital Stock, or payments or distributions to dissenting stockholders
pursuant to applicable law;

(viii) the Borrower may make a Restricted Payment to Ensign on or after the
Closing Date and on or prior to October 4, 2019 in connection with the Pennant
Transaction in an amount not to exceed $11,000,000 pursuant to
Section 2.1(a)(iii) of the Pennant Master Separation Agreement;

(ix) the refinancing of any Indebtedness that is subordinated to the
Obligations; provided that (A) no Default or Event of Default shall have
occurred and be continuing or would result therefrom; (B) any such refinancing
Indebtedness shall (x) not have a stated maturity or, other than in the case of
a revolving credit facility, a Weighted Average Life to Maturity that is shorter
than that of the Indebtedness being refinanced, (y) if the Indebtedness being
refinanced is subordinated to the Obligations by its terms or by the terms of
any agreement or instrument relating to such Indebtedness, be at least as
subordinate to the Obligations as the Indebtedness being refinanced (and
unsecured if the refinanced Indebtedness is unsecured) and (z) be in a principal
amount that does not exceed the principal amount so refinanced, plus, accrued
interest, plus, any premium or other payment required to be paid in connection
with such refinancing, plus, the amount of fees and expenses of the Borrower or
any of its Subsidiaries incurred in connection with such refinancing, plus, any
unutilized commitments thereunder; and (C) the obligors on such refinancing
Indebtedness shall be the obligors on such Indebtedness being refinanced;
provided, further, however, that (i) the borrower of the refinancing
indebtedness shall be the Borrower or the borrower of the Indebtedness being
refinanced, (ii) any Loan Party shall be permitted to guarantee any such
refinancing Indebtedness of any other Loan Party and (iii) any non-Loan Party
shall be permitted to guarantee any such refinancing Indebtedness of any other
non-Loan Party; and

(x) in addition to the other Restricted Payments otherwise permitted under this
Section 7.5, the Borrower and its Subsidiaries may make additional Restricted
Payments so long as (A) no Default or Event of Default shall have occurred and
be continuing or would result therefrom, (B) the Leverage Ratio for the most
recently ended four consecutive Fiscal Quarter period for which financial
statements were required to have been delivered pursuant to Section 5.1(a) or
(b) (calculated on a pro forma basis as if such Restricted Payment (and any
other Restricted Payment or Investment that occurs subsequent to such four
consecutive Fiscal Quarter period for which the pro forma financial effect of
such events has been calculated under this

 

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Agreement) had been made on the first day of such four consecutive Fiscal
Quarter period) does not exceed 0.75:1.00 and (C) the Borrower and its
Subsidiaries shall be in pro forma compliance with Sections 6.1 and 6.2 as of
the most recently ended Test Period (calculated on a pro forma basis as if such
Restricted Payment (and any other Restricted Payment or Investment that occurs
subsequent to such Test Period) had been made on the first day of such Test
Period).

Section 7.6. Sale of Assets. The Borrower will not, and will not permit any of
its Subsidiaries to, convey, sell, lease, assign, transfer or otherwise dispose
of any of its assets, business or property or, in the case of any Subsidiary
(other than an Immaterial Subsidiary), any shares of such Subsidiary’s Capital
Stock, in each case whether now owned or hereafter acquired, to any Person other
than the Borrower or any wholly owned Subsidiary of the Borrower (or to qualify
directors if required by applicable law), except:

(a) the sale or other disposition of obsolete or worn out property or other
property not necessary for operations or no longer useful in the business
disposed of in the ordinary course of business;

(b) the sale of inventory and Permitted Investments in the ordinary course of
business;

(c) dispositions of cash and cash equivalents;

(d) dispositions of equipment to the extent that (i) such equipment is exchanged
for credit against the purchase price of similar replacement equipment and
(ii) the proceeds of such disposition are applied in whole or in part to
purchases of such replacement equipment;

(e) assets sold in connection with condemnation, eminent domain or insurance
claims;

(f) asset sales or other dispositions in an aggregate amount (determined based
on the fair market value of the assets sold or otherwise disposed of (as
determined by the Borrower in good faith)) not to exceed in any Fiscal Year the
greater of $1,500,000 and, if the Lease-Adjusted Leverage Ratio (calculated on a
pro forma basis giving effect to such asset sale or disposition) is less than or
equal to 5.00:1.00 at the time such asset sale or disposition is consummated,
10.0% of Consolidated EBITDA for the most recently ended Test Period; provided
that (i) at the time of such sale or other disposition, no Event of Default then
exists or would arise therefrom, and (ii) the Borrower or any of its
Subsidiaries shall receive not less than 75% of such consideration in the form
of (x) cash or Permitted Investments or (y) real property (and improvements
thereon related to one or more healthcare facilities) acquired in an exchange
pursuant to or intended to qualify under Section 1031 (or any successor section)
of the Code (it being understood that for the purposes of clause (f)(ii)(x), the
following shall be deemed to be cash: (A) any liabilities (as shown on the
Borrower’s most recent balance sheet provided hereunder or in the footnotes
thereto) of the Borrower or such Subsidiary, other than liabilities that are by
their terms subordinated to the payment in cash of the Obligations, that are
assumed by the transferee with respect to the applicable sale or disposition and
for which all of its Subsidiaries shall have been validly released by all
applicable creditors in writing, (B) any securities received by such Subsidiary
from such transferee that are converted by such Subsidiary into cash or
Permitted Investments (to the extent of the cash or Permitted Investments
received) within one hundred and eighty (180) days following the closing of the
applicable disposition and (C) any Designated Non-Cash Consideration received in
respect of such disposition having an aggregate fair market value, taken
together with all other Designated Non-Cash Consideration received pursuant to
this clause (C) that is at that time outstanding, not in excess of $1,000,000,
with the fair market value of each item of Designated Non-Cash Consideration
being measured at such date of receipt or such agreement, as applicable, and
without giving effect to subsequent changes in value).

 

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Section 7.7. Transactions with Affiliates. The Borrower will not, and will not
permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except:

(a) in the ordinary course of business at prices and on terms and conditions not
less favorable to the Borrower or such Subsidiary than could be obtained on an
arm’s-length basis from unrelated third parties;

(b) transactions between or among the Borrower and its Subsidiaries in the
ordinary course of business; and

(c) any Restricted Payment permitted by Section 7.5 and Investments permitted by
Section 7.4.

Section 7.8. Restrictive Agreements. The Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly, enter into, incur or permit
to exist any agreement (including any lease of Real Estate) that prohibits,
restricts or imposes any condition upon (a) the ability of the Borrower or any
of its Subsidiaries to create, incur or permit any Lien as security for the
Obligations upon any of its assets or properties, whether now owned or hereafter
acquired, or (b) the ability of any of its Subsidiaries to pay dividends or
other distributions with respect to its Capital Stock, to make or repay loans or
advances to the Borrower or any other Subsidiary thereof, to Guarantee
Indebtedness of the Borrower or any other Subsidiary thereof or to transfer any
of its property or assets to the Borrower or any other Subsidiary thereof;
provided that (i) the foregoing shall not apply to restrictions or conditions
imposed by law or by this Agreement or any other Loan Document, (ii) the
foregoing shall not apply to customary restrictions and conditions contained in
agreements relating to the sale of a Subsidiary pending such sale, provided such
restrictions and conditions apply only to the Subsidiary that is to be sold and
such sale is permitted hereunder, (iii) the foregoing shall not apply to
restrictions contained in the leases of Real Estate listed on Schedule 7.8 as in
effect as of the Closing Date, (iv) the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions and conditions
apply only to the property or assets securing such Indebtedness, (v) the
foregoing shall not apply to customary provisions in leases restricting the
assignment thereof, (vi) the foregoing shall not apply to Excluded Subsidiaries
or the Capital Stock of Excluded Subsidiaries, (vii) the foregoing shall not
apply to restrictions in Indebtedness described in Section 7.1(f) to the extent
relating solely to the applicable assets or Persons acquired after the Closing
Date in connection with the assumption of such Indebtedness, (viii) the
foregoing shall not apply to restrictions in leases of Real Estate binding upon
the tenants thereunder (or guarantors thereof), (ix) the foregoing shall not
apply to Indebtedness permitted under Section 7.1(i) to the extent the
restrictions thereunder are no more restrictive, in any material respect, taken
as a whole, than such restrictions contained herein, (x) the foregoing shall not
apply to customary restrictions in joint venture arrangements, provided that
such restrictions are limited to the assets of such joint ventures and the
Capital Stock of the Persons party to such joint venture arrangements and
(xi) the foregoing shall not apply to customary non-assignment provisions in
contracts entered into in the ordinary course of business, provided that such
restrictions are limited to the assets subject to such contracts and the Capital
Stock of the Persons party to such contracts.

 

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Section 7.9. Sale and Leaseback Transactions. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any arrangement, directly or
indirectly, whereby it shall sell or transfer any property, real or personal,
used or useful in its business, whether now owned or hereinafter acquired, and
thereafter rent or lease such property or other property that it intends to use
for substantially the same purpose or purposes as the property sold or
transferred (each, a “Sale/Leaseback Transaction”), unless at the time such
Sale/Leaseback Transaction is entered into (a) no Default or Event of Default
has occurred and is continuing, (b) after giving pro forma effect to such
Sale/Leaseback Transaction, the Borrower and its Subsidiaries are in compliance
with the financial covenants set forth in Article VI and (c) the Borrower has
delivered a certificate to the Lenders certifying the conditions set forth in
clauses (a) and (b) and setting forth in reasonable detail calculations
demonstrating pro forma compliance with the financial covenants set forth in
Article VI.

Section 7.10. Hedging Transactions. The Borrower will not, and will not permit
any of its Subsidiaries to, enter into any Hedging Transaction, other than
Hedging Transactions entered into in the ordinary course of business to hedge or
mitigate risks to which the Borrower or any of its Subsidiaries is exposed in
the conduct of its business or the management of its liabilities, including,
without limitation, any Hedging Transaction entered into in order to hedge
against fluctuations in interest rates or currency values that arise in
connection with any Borrowing or any other Indebtedness. Solely for the
avoidance of doubt, the Borrower acknowledges that a Hedging Transaction entered
into for speculative purposes or of a speculative nature (which shall be deemed
to include any Hedging Transaction under which the Borrower or any of its
Subsidiaries is or may become obliged to make any payment (i) in connection with
the purchase by any third party of any Capital Stock or any Indebtedness or
(ii) as a result of changes in the market value of any Capital Stock or any
Indebtedness) is not a Hedging Transaction entered into in the ordinary course
of business to hedge or mitigate risks.

Section 7.11. Amendment to Material Documents. The Borrower will not, and will
not permit any of its Subsidiaries to, amend, modify or waive any of its rights
under (a) its certificate of incorporation, bylaws or other organizational
documents or (b) any Material Agreements, in each case in any manner that is
materially adverse to the interests of the Lenders or the Administrative Agent.

Section 7.12. PropCo Master Leases and Ensign Master Leases.

(a) The Borrower will not, and will not permit any of its Subsidiaries to,
terminate or allow or consent to the termination of any PropCo Master Lease or
enter into any amendment, waiver or modification to any PropCo Master Lease if
(i) such amendment, waiver or modification could reasonably be expected to have
a Material Adverse Effect or (ii) after giving pro forma effect to such
amendment, waiver or modification, the Borrower will not be in compliance with
the provisions of Article VI; provided that, notwithstanding the foregoing, the
Borrower will not, and will not permit any of its Subsidiaries to, allow any
amendment, waiver or modification of any PropCo Master Lease that (i) shortens
the term of such PropCo Master Lease to less than twelve (12) years (including
extension or renewal options) from the date of such amendment, waiver or
modification, (ii) amends, waives or modifies Articles X, XI, or XVI of such
PropCo Master Lease (including by amendment of the defined terms used therein)
in a manner adverse in any material respects to the interests of the Secured
Parties or (iii) amends, waives or modifies Section 5.13 of such PropCo Master
Lease to the extent adversely impacting the ability of the Secured Parties to
obtain or maintain a Lien on any assets of the Borrower or any of its
Subsidiaries (other than the leasehold interests in such PropCo Master Lease),
in each case, without the consent of the Required Lenders. No tenant under any
PropCo Master Lease shall transfer its rights or obligations under such PropCo
Master Lease to any Person other than to the Borrower or any other Loan Party;
provided, however, that no such transfer shall be permitted hereunder unless
expressly permitted under such PropCo Master Lease or consented to in writing by
landlord under such PropCo Master Lease.

 

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(b) The Borrower will not, and will not permit any of its Subsidiaries to,
terminate or allow or consent to the termination of any Ensign Master Lease or
enter into any amendment, waiver or modification to any Ensign Master Lease if
(i) such amendment, waiver or modification could reasonably be expected to have
a Material Adverse Effect or (ii) after giving pro forma effect to such
amendment, waiver or modification, the Borrower will not be in compliance with
the provisions of Article VI; provided that, notwithstanding the foregoing, the
Borrower will not, and will not permit any of its Subsidiaries to, allow any
amendment, waiver or modification of any Ensign Master Lease that (i) shortens
the term of such Ensign Master Lease to less than twelve (12) years (including
extension or renewal options) from the date of such amendment, waiver or
modification, (ii) amends, waives or modifies Articles X, XI, XVI or XIX of such
Ensign Master Lease (including by amendment of the defined terms used therein)
in a manner adverse in any material respects to the interests of the Secured
Parties or (iii) amends, waives or modifies Section 5.13 of such Ensign Master
Lease to the extent adversely impacting the ability of the Secured Parties to
obtain or maintain a Lien on any assets of the Borrower or any of its
Subsidiaries (other than the leasehold interests in such Ensign Master Lease),
in each case, without the consent of the Required Lenders. No tenant under any
Ensign Master Lease shall transfer its rights or obligations under such Ensign
Master Lease to any Person other than (x) in the case of a tenant that is a Loan
Party, any other Loan Party or (y) in the case of any tenant that is an Excluded
Subsidiary, any other Excluded Subsidiary; provided, however, that no such
transfer shall be permitted hereunder unless expressly permitted under such
Ensign Master Lease or consented to in writing by landlord under such Ensign
Master Lease.

Section 7.13. Accounting Changes. The Borrower will not, and will not permit any
of its Subsidiaries to, change the fiscal year of the Borrower or of any of its
Subsidiaries, except to change the fiscal year of a Subsidiary to conform its
fiscal year to that of the Borrower.

Section 7.14. Government Regulation. The Borrower will not, and will not permit
any of its Subsidiaries to, be or become subject at any time to any law,
regulation or list of any Governmental Authority of the United States
(including, without limitation, the OFAC list) that prohibits or limits the
Lenders or the Administrative Agent from making any advance or extension of
credit to the Borrower or from otherwise conducting business with the Loan
Parties.

Section 7.15. Sanctions. The Borrower will not, and will not permit any of its
Subsidiaries to, use any Loan or Letter of Credit or the proceeds of any Loan
and/or Letter of Credit, or lend, contribute or otherwise make available any
Loan or Letter Credit or the proceeds of any Loan or Letter of Credit to any
Sanctioned Person, to fund any activities of or business with any Sanctioned
Person or in any Sanctioned Country, or in any other manner that will result in
a violation by any Person (including any Person participating in the
transaction, whether as a Lead Arranger, the Administrative Agent, a Lender
(including a Swingline Lender) or an Issuing Bank or otherwise) of Sanctions.

Section 7.16. Anti-Corruption Laws. The Borrower will not, and will not permit
any of its Subsidiaries to, use any Loan or Letter of Credit or the proceeds
therefrom for any purpose that would violate any Anti-Corruption Laws.

 

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ARTICLE VIII

EVENTS OF DEFAULT

Section 8.1. Events of Default. If any of the following events (each, an “Event
of Default”) shall occur:

(a) the Borrower shall fail to pay any principal of any Loan or of any
reimbursement obligation in respect of any LC Disbursement, when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment or otherwise; or

(b) the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount payable under subsection (a) of this Section
or an amount related to a Bank Product Obligation) payable under this Agreement
or any other Loan Document, when and as the same shall become due and payable,
and such failure shall continue unremedied for a period of five (5) days; or

(c) any representation or warranty made or deemed made by or on behalf of the
Borrower or any of its Subsidiaries in or in connection with this Agreement or
any other Loan Document (including the Schedules attached hereto and thereto),
or in any amendments or modifications hereof or waivers hereunder, or in any
certificate, report, financial statement or other document submitted to the
Administrative Agent or the Lenders by any Loan Party or any representative of
any Loan Party pursuant to or in connection with this Agreement or any other
Loan Document shall prove to be incorrect in any material respect (other than
any representation or warranty that is expressly qualified by a Material Adverse
Effect or other materiality, in which case such representation or warranty shall
prove to be incorrect in any respect) when made or deemed made or submitted; or

(d) the Borrower shall fail to observe or perform any covenant or agreement
contained in Section 5.3 (with respect to the Borrower’s legal existence),
Section 5.18 or Article VI or VII; or

(e) (i) any Loan Party shall fail to observe or perform any covenant or
agreement contained in Section 5.1 or 5.2, and such failure shall remain
unremedied for fifteen (15) days after the earlier of (x) any Responsible
Officer of the Borrower becomes aware of such failure, or (y) notice thereof
shall have been given to the Borrower by the Administrative Agent or any Lender,
or (ii) any Loan Party shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those referred to in
subsections (a), (b), (d) and (e)(i) of this Section) or any other Loan Document
or related to any Bank Product Obligation, and such failure shall remain
unremedied for 30 days after the earlier of (x) any Responsible Officer of the
Borrower becomes aware of such failure, or (y) notice thereof shall have been
given to the Borrower by the Administrative Agent or any Lender; or

(f) the Borrower or any of its Subsidiaries (whether as primary obligor or as
guarantor or other surety) shall fail to pay any principal of, or premium or
interest on, any Material Indebtedness that is outstanding, when and as the same
shall become due and payable (whether at scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument evidencing or governing such Indebtedness; or any other event shall
occur or condition shall exist under any agreement or instrument relating to any
Material Indebtedness and shall continue after the applicable grace period, if
any, specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or permit the acceleration of, the maturity of such
Indebtedness; or any Material Indebtedness 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 any
offer to prepay, redeem, purchase or defease such Indebtedness shall be required
to be made, in each case prior to the stated maturity thereof (excluding (i) any
prepayment or redemption requirements in connection with a sale of assets that
secures Material Indebtedness to the extent such Material Indebtedness is repaid
in connection with such sale and (ii) any offer to prepay or redeem Indebtedness
of any Person or securing any assets acquired in a Permitted Acquisition); or

 

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(g) the Borrower or any of its Material Subsidiaries shall (i) commence a
voluntary case or other proceeding or file any petition seeking liquidation,
reorganization or other relief under any federal, state or foreign bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a custodian, trustee, receiver, liquidator or other similar
official of it or any substantial part of its property, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (i) of this subsection, (iii) apply
for or consent to the appointment of a custodian, trustee, receiver, liquidator
or other similar official for the Borrower or any such Material Subsidiary or
for a substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, or (vi) take any action for the
purpose of effecting any of the foregoing; or

(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Borrower or any of its Material Subsidiaries or its debts, or any
substantial part of its assets, under any federal, state or foreign bankruptcy,
insolvency or other similar law now or hereafter in effect or (ii) the
appointment of a custodian, trustee, receiver, liquidator or other similar
official for the Borrower or any of its Material Subsidiaries or for a
substantial part of its assets, and in any such case, such proceeding or
petition shall remain undismissed for a period of 60 days or an order or decree
approving or ordering any of the foregoing shall be entered; or

(i) the Borrower or any of its Material Subsidiaries shall become unable to pay,
shall admit in writing its inability to pay, or shall fail to pay, its debts as
they become due; or

(j) (i) an ERISA Event shall have occurred, (ii) there is or arises an Unfunded
Pension Liability (not taking into account Plans with negative Unfunded Pension
Liability), or (iii) there is or arises any potential Withdrawal Liability,
which, with respect to any of the foregoing clauses (i) through (iii), could
reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect; or

(k) any judgment or order for the payment of money in excess of $7,500,000 in
the aggregate, to the extent not adequately covered by insurance as to which a
solvent insurance company has not contested or denied coverage, shall be
rendered against the Borrower or any of its Subsidiaries, and there shall be a
period of 60 consecutive days during which (i) a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect or (ii) such judgment or order shall remain undischarged, unvacated or
unbonded; or

(l) any non-monetary judgment or order shall be rendered against the Borrower or
any of its Subsidiaries that could reasonably be expected, either individually
or in the aggregate for all such events, to have a Material Adverse Effect, and
there shall be a period of 60 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

(m) a Change in Control shall occur or exist; or

(n) (i) there shall occur any revocation, suspension, termination, rescission,
non-renewal or forfeiture or any similar final administrative action with
respect to one or more Health Care Permits, Third Party Payor Programs or Third
Party Payor Authorizations that could reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect or (ii) the
Borrower or any of its Subsidiaries shall be named in any action, fully or
partially unsealed, in which the United States has affirmatively intervened,
alleging violation of the federal False Claims Act or any other applicable law
and, in connection with such action, the Borrower shall have offered, agreed or
paid to, or received a final judgment requiring payment to, any Governmental
Authority for payment of any fine, penalty or overpayment in excess of
$25,000,000; or

 

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(o) any material provision of the Guaranty and Security Agreement or any other
Collateral Document shall for any reason cease to be valid and binding on, or
enforceable against, any Loan Party, or any Loan Party shall so state in
writing, or any Loan Party shall seek to terminate its obligation under the
Guaranty and Security Agreement or any other Collateral Document (other than the
release of any guaranty or collateral to the extent permitted pursuant to
Section 9.11); or

(p) any Lien purported to be created under any Collateral Document (with respect
to a material portion of the Collateral) shall fail or cease to be, or shall be
asserted by any Loan Party not to be, a valid and perfected Lien on any
Collateral, with the priority required by the applicable Collateral Documents
(other than as a result of the failure by the Administrative Agent to take any
action within its control); or

(q) (i) any PropCo Master Lease shall terminate or otherwise cease to be
effective, other than upon the expiration or termination thereof with respect to
any particular property or properties pursuant to Section 10.4 or Article XI of
such PropCo Master Lease or pursuant to an amendment, waiver or modification of
such PropCo Master Lease not prohibited by Section 7.12(a) of this Agreement, or
an “Event of Default” (as defined in such PropCo Master Lease) shall have
occurred and is continuing under Section 12.1.1, Section 12.1.2, Section 12.1.3
(for the avoidance of doubt, in the case of Sections 12.1.2 and 12.1.3, after
the expiration of the applicable cure period set forth therein),
Section 12.1.15, Section 12.1.16 (other than with respect to Section 5.11 and
5.12.3 thereof), or Section 16.1 of such PropCo Master Lease, or the landlord
under such PropCo Master Lease shall have given the tenant under such PropCo
Master Lease notice of termination of such PropCo Master Lease following an
“Event of Default” (as defined in such PropCo Master Lease) or the landlord has
issued a “Termination Notice” pursuant to Section 12.2.6 of the PropCo Master
Lease, (ii) any Ensign Master Lease shall terminate or otherwise cease to be
effective, other than upon the expiration or termination thereof with respect to
any particular property or properties pursuant to Section 10.4 or Article XI of
such Ensign Master Lease or pursuant to an amendment, waiver or modification of
such Ensign Master Lease not prohibited by Section 7.12(b) of this Agreement, or
an “Event of Default” (as defined in such Ensign Master Lease) shall have
occurred and is continuing under Section 12.1.1, Section 12.1.2, Section 12.1.3
(for the avoidance of doubt, in the case of Sections 12.1.2 and 12.1.3, after
the expiration of the applicable cure period set forth therein),
Section 12.1.15, Section 12.1.16 (other than with respect to Section 5.11 and
5.12.3 thereof), or Section 16.1 of such Ensign Master Lease, or the landlord
under such Ensign Master Lease shall have given the tenant under such Ensign
Master Lease notice of termination of such Ensign Master Lease following an
“Event of Default” (as defined in such Ensign Master Lease) or the landlord has
issued a “Termination Notice” pursuant to Section 12.2.6 of the Ensign Master
Lease or (iii) any event of the type described in the foregoing clause (i) or
(ii) shall have occurred with respect to any Material Master Lease;

then, and in every such event (other than an event with respect to the Borrower
described in subsection (g), (h) or (i) of this Section) and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and upon the written request of the Required Lenders shall, by notice to the
Borrower, take any or all of the following actions, at the same or different
times: (i) terminate the Commitments, whereupon the Commitment of each Lender
shall terminate immediately, (ii) declare the principal of and any accrued
interest on the Loans, and all other Obligations owing hereunder, to be,
whereupon the same shall become, due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower, (iii) exercise all remedies contained in any
other Loan Document and (iv) exercise any other remedies available at law or in
equity; provided that, if an Event of Default with respect to the Borrower
specified in either subsection (g), (h) or (i) shall occur, the Commitments
shall automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon, and all fees and all other Obligations
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower.

 

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Section 8.2. Application of Proceeds from Collateral. All proceeds from each
sale of, or other realization upon, all or any part of the Collateral by any
Secured Party after an Event of Default arises shall be applied as follows:

(a) first, to the reimbursable expenses of the Administrative Agent incurred in
connection with such sale or other realization upon the Collateral, until the
same shall have been paid in full;

(b) second, to the fees and other reimbursable expenses of the Administrative
Agent, the Swingline Lender and each Issuing Bank then due and payable pursuant
to any of the Loan Documents, until the same shall have been paid in full;

(c) third, to all reimbursable expenses, if any, of the Lenders then due and
payable pursuant to any of the Loan Documents, until the same shall have been
paid in full;

(d) fourth, to the fees and interest then due and payable under the terms of
this Agreement, until the same shall have been paid in full;

(e) fifth, to the aggregate outstanding principal amount of the Loans, the LC
Exposure, the Bank Product Obligations and the Hedging Obligations that
constitute Obligations, until the same shall have been paid in full, allocated
pro rata among the Secured Parties based on their respective pro rata shares of
the aggregate amount of such Loans, LC Exposure, Bank Product Obligations and
Hedging Obligations;

(f) sixth, to additional cash collateral for the aggregate amount of all
outstanding Letters of Credit until the aggregate amount of all cash collateral
held by the Administrative Agent pursuant to this Agreement is at least 103% of
the LC Exposure after giving effect to the foregoing clause fifth; and

(g) seventh, to the extent any proceeds remain, to the Borrower or as otherwise
provided by a court of competent jurisdiction.

All amounts allocated pursuant to the foregoing clauses third through fifth to
the Lenders as a result of amounts owed to the Lenders under the Loan Documents
shall be allocated among, and distributed to, the Lenders pro rata based on
their respective Pro Rata Shares; provided that all amounts allocated to that
portion of the LC Exposure comprised of the aggregate undrawn amount of all
outstanding Letters of Credit pursuant to clauses fifth and sixth shall be
distributed to the Administrative Agent, rather than to the Lenders, and held by
the Administrative Agent in an account in the name of the Administrative Agent
for the benefit of each Issuing Bank and the Lenders as cash collateral for the
LC Exposure, such account to be administered in accordance with Section 2.22(g).
All cash collateral for LC Exposure shall be applied to satisfy drawings under
the Letters of Credit as they occur; if any amount remains on deposit on cash
collateral after all letters of credit have either been fully drawn or expired,
such remaining amount shall be applied to other Obligations, if any, in the
order set forth above.

Notwithstanding the foregoing, Bank Product Obligations and Hedging Obligations
shall be excluded from the application described above if the Administrative
Agent has not received written notice thereof, together with such supporting
documentation as the Administrative Agent may request, from the Bank Product
Provider or the Lender-Related Hedge Provider, as the case may be. Each Bank
Product Provider or Lender-Related Hedge Provider that has given the notice
contemplated by the preceding sentence shall, by such notice, be deemed to have
acknowledged and accepted the appointment of the Administrative Agent pursuant
to the terms of Article IX hereof for itself and its Affiliates as if a “Lender”
party hereto.

 

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ARTICLE IX

THE ADMINISTRATIVE AGENT

Section 9.1. Appointment of the Administrative Agent.

(a) Each Lender irrevocably appoints SunTrust Bank as the Administrative Agent
and authorizes it to take such actions on its behalf and to exercise such powers
as are delegated to the Administrative Agent under this Agreement and the other
Loan Documents, together with all such actions and powers that are reasonably
incidental thereto. The Administrative Agent may perform any of its duties
hereunder or under the other Loan Documents by or through any one or more
sub-agents or attorneys-in-fact appointed by the Administrative Agent. The
Administrative Agent and any such sub-agent or attorney-in-fact may perform any
and all of its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions set forth in this Article
shall apply to any such sub-agent, attorney-in-fact or Related Party and shall
apply to their respective activities in connection with the syndication of the
credit facilities provided for herein as well as activities as the
Administrative Agent.

(b) Each Issuing Bank shall act on behalf of the Revolving Lenders with respect
to any Letters of Credit issued by it and the documents associated therewith
until such time and except for so long as the Administrative Agent may agree at
the request of the Required Lenders to act for such Issuing Bank with respect
thereto; provided that each Issuing Bank shall have all the benefits and
immunities (i) provided to the Administrative Agent in this Article with respect
to any acts taken or omissions suffered by such Issuing Bank in connection with
Letters of Credit issued by it or proposed to be issued by it and the
application and agreements for letters of credit pertaining to the Letters of
Credit as fully as if the term “Administrative Agent” as used in this Article
included such Issuing Bank with respect to such acts or omissions and (ii) as
additionally provided in this Agreement with respect to such Issuing Bank.

Section 9.2. Nature of Duties of the Administrative Agent and the Other Agents.
The Administrative Agent and the other Agents shall not have any duties or
obligations except those expressly set forth in this Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, (a) the
Administrative Agent and the other Agents shall not be subject to any fiduciary
or other implied duties, regardless of whether a Default or an Event of Default
has occurred and is continuing, (b) the Administrative Agent and the other
Agents shall not have any duty to take any discretionary action or exercise any
discretionary powers, except those discretionary rights and powers expressly
contemplated by the Loan Documents that the Administrative Agent is required to
exercise in writing by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 10.2), provided that the Administrative Agent shall not be required to
take any action that, in its opinion or the opinion of its counsel, may expose
the Administrative Agent to liability or that is contrary to any Loan Document
or applicable law, including for the avoidance of doubt any action that may be
in violation of the automatic stay under any Debtor Relief Law or that may
effect a forfeiture, modification or termination of property of a Defaulting
Lender in violation of any Debtor Relief Law, and (c) the Administrative Agent
and each other Agent shall not have any duty or responsibility to disclose, and
shall not be liable for the failure to disclose to any Lender or Issuing Bank,
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of any of the Loan
Parties or any of their Affiliates that is communicated to, obtained by or in
the possession of the Administrative Agent, such other Agent or any of their
respective Related Parties in any capacity, except for notices, reports and
other documents

 

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expressly required to be furnished to the Lenders and Issuing Banks by the
Administrative Agent herein or in any other Loan Document. The Administrative
Agent shall not be liable for any action taken or not taken by it, its
sub-agents or its attorneys-in-fact with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 10.2) or in the absence
of its own gross negligence or willful misconduct (as determined by a court of
competent jurisdiction by final and non-appealable judgment). The Administrative
Agent shall not be responsible for the negligence or misconduct of any
sub-agents or attorneys-in-fact selected by it with reasonable care. The
Administrative Agent shall not be deemed to have knowledge of any Default or
Event of Default unless and until written notice thereof (which notice shall
include an express reference to such event being a “Default” or “Event of
Default” hereunder) is given to the Administrative Agent by the Borrower or any
Lender, and the Administrative Agent and each other Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with any Loan Document,
(ii) the contents of any certificate, report or other document delivered
hereunder or thereunder or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements, or other terms
and conditions set forth in any Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of any Loan Document or any other
agreement, instrument or document, or (v) the satisfaction of any condition set
forth in Article III or elsewhere in any Loan Document, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent.
The Administrative Agent may consult with legal counsel (including counsel for
the Borrower) concerning all matters pertaining to such duties.

Section 9.3. Lack of Reliance on the Agents, the Issuing Banks and the Lenders.
Each Lender and each Issuing Bank expressly acknowledges that none of the Agents
has made any representation or warranty to it, and that no act by any Agent
hereafter taken, including any consent to, and acceptance of any assignment or
review of the affairs of any Loan Party or any Affiliate thereof, shall be
deemed to constitute any representation or warranty by any Agent to any Issuing
Bank or Lender as to any matter, including whether any Agent disclosed material
information in its (or its Related Parties’) possession. Each Lender and each
Issuing Bank represents to each Agent, each other Issuing Bank and each other
Lender that it has, independently and without reliance upon any Agent, any other
Issuing Bank, any other Lender or any of their Related Parties and based on such
documents and information as it has deemed appropriate, made its own credit
analysis of, appraisal of, and investigation into, the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their Subsidiaries, and all applicable bank or other regulatory
laws relating to the transactions contemplated hereby, and made its own decision
to enter into this Agreement and to extend credit to the Borrower hereunder.
Each Lender and each Issuing Bank also acknowledges that it will, independently
and without reliance upon any Agent, any other Issuing Bank, any other Lender or
any of their Related Parties and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own credit
analysis, appraisals and decisions in taking or not taking any action under or
based on this Agreement, any other Loan Document or any related agreement or any
document furnished hereunder or thereunder, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Loan
Parties. Each Lender and each Issuing Bank represents and warrants that (i) the
Loan Documents set forth the terms of a commercial lending facility and (ii) it
is engaged in making, acquiring or holding commercial loans in the ordinary
course and is entering into this Agreement as a Lender or Issuing Bank for the
purpose of making, acquiring or holding commercial loans and providing other
facilities set forth herein as may be applicable to such Lender or Issuing Bank,
and not for the purpose of purchasing, acquiring or holding any other type of
financial instrument, and each Lender and each Issuing Bank agrees not to assert
a claim in contravention of the foregoing. Each Lender and each Issuing Bank
represents and warrants that it is sophisticated with respect to decisions to
make, acquire and/or hold commercial loans and to provide other facilities set
forth herein, as may be applicable to such Lender or such Issuing Bank, and
either it, or the Person exercising discretion in making its decision to make,
acquire and/or hold such commercial loans or to provide such other facilities,
is experienced in making, acquiring or holding such commercial loans or
providing such other facilities.

 

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Section 9.4. Certain Rights of the Administrative Agent. If the Administrative
Agent shall request instructions from the Required Lenders with respect to any
action or actions (including the failure to act) in connection with this
Agreement, the Administrative Agent shall be entitled to refrain from such act
or taking such act unless and until it shall have received instructions from
such Lenders, and the Administrative Agent shall not incur liability to any
Person by reason of so refraining. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Administrative Agent as a
result of the Administrative Agent acting or refraining from acting hereunder in
accordance with the instructions of the Required Lenders where required by the
terms of this Agreement.

Section 9.5. Reliance by the Administrative Agent. The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument, document
or other writing (including any electronic message, posting or other
distribution) believed by it to be genuine and to have been signed, sent or made
by the proper Person. The Administrative Agent may also rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person and shall not incur any liability for relying thereon. The Administrative
Agent may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or not taken by it in accordance with the advice of
such counsel, accountants or experts.

Section 9.6. The Administrative Agent in its Individual Capacity. The bank
serving as the Administrative Agent shall have the same rights and powers under
this Agreement and any other Loan Document in its capacity as a Lender as any
other Lender and may exercise or refrain from exercising the same as though it
were not the Administrative Agent; and the terms “Lenders”, “Required Lenders”,
“Required Revolving Lenders”, or any similar terms shall, unless the context
clearly otherwise indicates, include the Administrative Agent in its individual
capacity. The bank acting as the Administrative Agent and its Affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Subsidiary or Affiliate of the Borrower as if
it were not the Administrative Agent hereunder.

Section 9.7. Successor Administrative Agent.

(a) The Administrative Agent may resign at any time by giving notice thereof to
the Lenders and the Borrower. Upon any such resignation, the Required Lenders
shall have the right to appoint a successor Administrative Agent, subject to
approval by the Borrower provided that no Default or Event of Default shall
exist at such time. If no successor Administrative Agent shall have been so
appointed, and shall have accepted such appointment within 30 days after the
retiring Administrative Agent gives notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be a commercial bank organized under the laws
of the United States or any state thereof or a bank which maintains an office in
the United States, having a combined capital and surplus of at least
$500,000,000.

(b) Upon the acceptance of its appointment as the Administrative Agent hereunder
by a successor, such successor Administrative Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents. If, within 45 days after written notice is given of the retiring
Administrative Agent’s resignation under this Section, no successor
Administrative Agent shall have been appointed and shall have accepted such
appointment, then on such 45th day (i) the retiring Administrative Agent’s

 

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resignation shall become effective, (ii) the retiring Administrative 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 Administrative Agent under the Loan Documents until such time as the
Required Lenders appoint a successor Administrative Agent as provided above.
After any retiring Administrative Agent’s resignation hereunder, the provisions
of this Article shall continue in effect for the benefit of such retiring
Administrative Agent and its representatives and agents in respect of any
actions taken or not taken by any of them while it was serving as the
Administrative Agent.

(c) In addition to the foregoing, if a Lender becomes, and during the period it
remains, a Defaulting Lender, and if any Default has arisen from a failure of
the Borrower to comply with Section 2.26(a), then each Issuing Bank and the
Swingline Lender may, upon prior written notice to the Borrower and the
Administrative Agent, resign as an Issuing Bank or as Swingline Lender, as the
case may be, effective at the close of business Atlanta, Georgia time on a date
specified in such notice (which date may not be less than five (5) Business Days
after the date of such notice).

Section 9.8. Withholding Tax.

(a) To the extent required by any applicable law, the Administrative Agent may
withhold from any payment to any Lender an amount equivalent to any applicable
withholding tax. If the Internal Revenue Service or any authority of the United
States or any other jurisdiction asserts a claim that the Administrative Agent
did not properly withhold tax from amounts paid to or for the account of any
Lender (because the appropriate form was not delivered or was not properly
executed, or because such Lender failed to notify the Administrative Agent of a
change in circumstances that rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason), such Lender shall
indemnify the Administrative Agent (to the extent that the Administrative Agent
has not already been reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so) fully for all amounts paid, directly or
indirectly, by the Administrative Agent as tax or otherwise, including penalties
and interest, together with all expenses incurred, including legal expenses,
allocated staff costs and any out of pocket expenses; provided that if the
Administrative Agent is subsequently reimbursed by the Borrower or any other
Loan Party for any such amounts, the Administrative Agent shall reasonably
promptly refund to the applicable Lender the amount of any excess reimbursement.

(b) Without duplication of any indemnity provided under subsection (a) of this
Section, each Lender shall also indemnify the Administrative Agent, within 10
days after demand therefor, for (i) any Indemnified Taxes or Other Taxes
attributable to such Lender (to the extent that the Administrative Agent has not
already been reimbursed by the Borrower and without limiting the obligation of
the Borrower to do so); provided that if the Administrative Agent is
subsequently reimbursed by the Borrower or any other Loan Party for any such
amounts, the Administrative Agent shall reasonably promptly refund to the
applicable Lender the amount of any excess reimbursement, (ii) any Taxes
attributable to such Lender’s failure to comply with the provisions of
Section 10.4(d) relating to the maintenance of a Participant Register and
(iii) any Excluded Taxes attributable to such Lender, in each case, that are
payable or paid by the Administrative Agent in connection with any Loan
Document, and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount of such payment
or liability delivered to any Lender by the Administrative Agent shall be
conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due
to the Administrative Agent under this subsection.

 

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Section 9.9. The Administrative Agent May File Proofs of Claim.

(a) In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Loan Party, the Administrative Agent
(irrespective of whether the principal of any Loan or any Revolving Credit
Exposure shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether the Administrative Agent shall have made
any demand on the Borrower) shall be entitled and empowered, by intervention in
such proceeding or otherwise:

(i) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans or Revolving Credit Exposure and all
other Obligations that are owing and unpaid and to file such other documents as
may be necessary or advisable in order to have the claims of the Lenders, each
Issuing Bank and the Administrative Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Lenders,
each Issuing Bank and the Administrative Agent and its agents and counsel and
all other amounts due the Lenders, each Issuing Bank and the Administrative
Agent under Section 10.3) allowed in such judicial proceeding; and

(ii) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same.

(b) Any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and each Issuing Bank to make such payments to the Administrative
Agent and, if the Administrative Agent shall consent to the making of such
payments directly to the Lenders and each Issuing Bank, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under Section 10.3.

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender or any
Issuing Bank any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.

Section 9.10. Authorization to Execute Other Loan Documents. Each Lender hereby
authorizes the Administrative Agent to execute on behalf of all Lenders all Loan
Documents (including, without limitation, the Collateral Documents and any
subordination agreements permitted hereunder) other than this Agreement, subject
to any approval of the Lenders or the Required Lenders required by the Loan
Documents.

Section 9.11. Collateral and Guaranty Matters. The Lenders irrevocably authorize
the Administrative Agent, at its option and discretion to effectuate the
releases and subordination agreements contemplated by Section 10.17. Upon
request by the Administrative Agent at any time, the Required Lenders will
confirm in writing the Administrative Agent’s authority to release its interest
in particular types or items of property or to release any Loan Party from its
obligations under the applicable Collateral Documents pursuant to Section 10.17.

Section 9.12. Co-Documentation Agents; Co-Syndication Agents; Lead Arrangers.
Each Lender hereby designates BBVA USA, Citizens Bank, N.A., Fifth Third Bank
and Wells Fargo Bank, National Association as Co-Documentation Agents (the
“Co-Documentation Agents”) and agrees that the Co-Documentation Agents shall
have no duties or obligations under any Loan Documents to any Lender or any Loan
Party. Each Lender hereby designates Bank of America, N.A. and Regions Bank as
Co-Syndication Agents (the “Co-Syndication Agents”) and agrees that the
Co-Syndication Agents shall have no duties or obligations under any Loan
Documents to any Lender or any Loan Party. Each Lender agrees that the Lead
Arrangers shall have no duties or obligations under any Loan Documents to any
Lender or any Loan Party.

 

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Section 9.13. Right to Realize on Collateral and Enforce Guarantee. Anything
contained in any of the Loan Documents to the contrary notwithstanding, the
Borrower, the Administrative Agent and each Lender hereby agree that (i) no
Lender shall have any right individually to realize upon any of the Collateral
or to enforce the Collateral Documents, it being understood and agreed that all
powers, rights and remedies hereunder and under the Collateral Documents may be
exercised solely by the Administrative Agent, and (ii) in the event of a
foreclosure by the Administrative Agent on any of the Collateral pursuant to a
public or private sale or other disposition, the Administrative Agent or any
Lender may be the purchaser or licensor of any or all of such Collateral at any
such sale or other disposition and the Administrative Agent, as agent for and
representative of the Lenders (but not any Lender or Lenders in its or their
respective individual capacities unless the Required Lenders shall otherwise
agree in writing), shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Obligations
as a credit on account of the purchase price for any collateral payable by the
Administrative Agent at such sale or other disposition.

Section 9.14. Secured Bank Product Obligations and Hedging Obligations. No Bank
Product Provider or Lender-Related Hedge Provider that obtains the benefits of
Section 8.2, the Collateral Documents or any Collateral by virtue of the
provisions hereof or of any other Loan Document shall have any right to notice
of any action or to consent to, direct or object to any action hereunder or
under any other Loan Document or otherwise in respect of the Collateral
(including the release or impairment of any Collateral) other than in its
capacity as a Lender and, in such case, only to the extent expressly provided in
the Loan Documents. Notwithstanding any other provision of this Article to the
contrary, the Administrative Agent shall not be required to verify the payment
of, or that other satisfactory arrangements have been made with respect to, Bank
Product Obligations and Hedging Obligations unless the Administrative Agent has
received written notice of such Obligations, together with such supporting
documentation as the Administrative Agent may request, from the applicable Bank
Product Provider or Lender-Related Hedge Provider, as the case may be.

Section 9.15. Certain ERISA Matters.

(a) Each Lender (x) represents and warrants, as of the date such Person became a
Lender party hereto, and (y) covenants, from the date such Person became a
Lender party hereto to the date such Person ceases being a Lender party hereto,
for the benefit of, the Administrative Agent and the Lead Arrangers and their
respective Affiliates, and not, for the avoidance of doubt, to or for the
benefit of the Borrower or any other Loan Party, that at least one of the
following is and will be true:

(i) such Lender is not using “plan assets” (within the meaning of Section 3(42)
of ERISA or otherwise for purposes of Title I of ERISA or Section 4975 of the
Code) of one or more Benefit Plans in connection with the Loans, the Letters of
Credit or the Commitments,

(ii) the prohibited transaction exemption set forth in one or more PTEs, such as
PTE 84-14 (a class exemption for certain transactions determined by independent
qualified professional asset managers), PTE 95-60 (a class exemption for certain
transactions involving insurance company general accounts), PTE 90-1 (a class
exemption for certain transactions involving insurance company pooled separate
accounts), PTE 91-38 (a class exemption for certain transactions involving bank
collective investment funds) or PTE 96-23 (a class exemption for certain
transactions determined by in-house asset managers), is applicable so as to
exempt from the prohibitions of Section 406 of ERISA and Section 4975 of the
Code such Lender’s entrance into, participation in, administration of and
performance of the Loans, the Letters of Credit, the Commitments and this
Agreement,

 

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(iii) (A) such Lender is an investment fund managed by a “Qualified Professional
Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified
Professional Asset Manager made the investment decision on behalf of such Lender
to enter into, participate in, administer and perform the Loans, the Letters of
Credit, the Commitments and this Agreement, (C) the entrance into, participation
in, administration of and performance of the Loans, the Letters of Credit, the
Commitments and this Agreement satisfies the requirements of sub-sections
(b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such
Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied
with respect to such Lender’s entrance into, participation in, administration of
and performance of the Loans, the Letters of Credit, the Commitments and this
Agreement, or

(iv) such other representation, warranty and covenant as may be agreed in
writing between the Administrative Agent, in its sole discretion, and such
Lender.

(b) In addition, unless either (1) sub-clause (i) in the immediately preceding
clause (a) is true with respect to a Lender or (2) a Lender has provided another
representation, warranty and covenant in accordance with sub-clause (iv) in the
immediately preceding clause (a), such Lender further (x) represents and
warrants, as of the date such Person became a Lender party hereto, and
(y) covenants, from the date such Person became a Lender party hereto to the
date such Person ceases being a Lender party hereto, for the benefit of, the
Administrative Agent and the Lead Arrangers and their respective Affiliates, and
not, for the avoidance of doubt, to or for the benefit of the Borrower or any
other Loan Party, that none of the Administrative Agent or the Lead Arrangers or
any of their respective Affiliates is a fiduciary with respect to the assets of
such Lender involved in the Loans, the Letters of Credit, the Commitments and
this Agreement (including in connection with the reservation or exercise of any
rights by the Administrative Agent under this Agreement, any Loan Document or
any documents related to hereto or thereto).

ARTICLE X

MISCELLANEOUS

Section 10.1. Notices.

(a) Written Notices.

(i) Except in the case of notices and other communications expressly permitted
to be given by telephone, all notices and other communications to any party
herein to be effective shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopy, as follows:

 

To the Borrower:

   The Pennant Group, Inc.    1675 East Riverside Drive, Suite 150    Eagle, ID
83616    Attention: Jennifer L. Freeman, Chief Financial Officer    Telecopy
Number: (208) 576-6909    Email: JFreeman@pennantservices.com

 

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  With a copy to:    Pennant Services, Inc.      1675 East Riverside Drive,
Suite 150      Eagle, ID 83616      Attention: Legal      Telecopy Number: (208)
576-6909      Email: Legal@pennantservices.com   To the Administrative Agent:   
SunTrust Bank      3333 Peachtree Road      7th Floor      Atlanta, Georgia
30326      Attention: Portfolio Manager      Email: Katherine.Bass@SunTrust.com
  With copies to (for      informational purposes only):         SunTrust Bank  
   3333 Peachtree Road      Atlanta, Georgia 30326      Attn: Ron Caldwell     
Telecopy Number: (404) 926-5248      Email: Ron.Caldwell@SunTrust.com     
SunTrust Bank      Agency Services      303 Peachtree Street, N.E. / 25th Floor
     Atlanta, Georgia 30308      Attention: Agency Services Manager     
Telecopy Number: (404) 221-2001      and      Latham & Watkins LLP      355
South Grand Avenue, Suite 100      Los Angeles, CA 90071-1560      Attention:
Jason Bosworth      Telecopy Number: (213) 891-8291      Email:
jason.bosworth@lw.com   To the Issuing Bank:    SunTrust Bank      Attn: Standby
Letter of Credit Dept.      245 Peachtree Center Ave., 17th FL      Atlanta,
GA 30303      Telephone: (800) 951-7847      Telecopy Number: (801) 567-6205  
   Email: LCandTradeServices@SunTrust.com

 

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   To the Swingline Lender:    SunTrust Bank       Agency Services       303
Peachtree Street, N.E. / 25th Floor       Atlanta, Georgia 30308      
Attention: Agency Services Manager       Telecopy Number: (404) 221-2001    To
any other Lender:    the address set forth in the Administrative Questionnaire
or the Assignment and Acceptance executed by such Lender

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All such notices
and other communications shall be effective upon actual receipt by the relevant
Person or, if delivered by overnight courier service, upon the first Business
Day after the date deposited with such courier service for overnight (next-day)
delivery or, if sent by telecopy, upon transmittal in legible form by facsimile
machine or, if mailed, upon the third Business Day after the date deposited into
the mail or, if delivered by hand, upon delivery; provided that notices
delivered to the Administrative Agent, any Issuing Bank or the Swingline Lender
shall not be effective until actually received by such Person at its address
specified in this Section.

(ii) Any agreement of the Administrative Agent, any Issuing Bank or any Lender
herein to receive certain notices by telephone or facsimile is solely for the
convenience and at the request of the Borrower. The Administrative Agent, each
Issuing Bank and each Lender shall be entitled to rely on the authority of any
Person purporting to be a Person authorized by the Borrower to give such notice
and the Administrative Agent, each Issuing Bank and the Lenders shall not have
any liability to the Borrower or other Person on account of any action taken or
not taken by the Administrative Agent, any Issuing Bank or any Lender in
reliance upon such telephonic or facsimile notice. The obligation of the
Borrower to repay the Loans and all other Obligations hereunder shall not be
affected in any way or to any extent by any failure of the Administrative Agent,
any Issuing Bank or any Lender to receive written confirmation of any telephonic
or facsimile notice or the receipt by the Administrative Agent, any Issuing Bank
or any Lender of a confirmation which is at variance with the terms understood
by the Administrative Agent, such Issuing Bank and such Lender to be contained
in any such telephonic or facsimile notice.

(b) Electronic Communications.

(i) Notices and other communications to the Lenders and each Issuing Bank
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by the
Administrative Agent, provided that the foregoing shall not apply to notices to
any Lender or any Issuing Bank pursuant to Article II unless such Lender, such
Issuing Bank, as applicable, and the Administrative Agent have agreed to receive
notices under any Section thereof by electronic communication and have agreed to
the procedures governing such communications. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

 

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(ii) Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement); provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

(c) Certification of Public Information. The Borrower and each Lender
acknowledge that certain of the Lenders may be Public Lenders and, if documents
or notices required to be delivered pursuant to Section 5.1 or Section 5.2
otherwise are being distributed through Syndtrak, Intralinks or any other
Internet or intranet website or other information platform (the “Platform”), any
document or notice that the Borrower has indicated contains Non-Public
Information shall not be posted on that portion of the Platform designated for
such Public Lenders. The Borrower agrees to clearly designate all information
provided to the Administrative Agent by or on behalf of the Borrower which is
suitable to make available to Public Lenders. If the Borrower has not indicated
whether a document or notice delivered pursuant to Section 5.1 or Section 5.2
contains Non-Public Information, the Administrative Agent reserves the right to
post such document or notice solely on that portion of the Platform designated
for Lenders who wish to receive Non-Public Information.

(d) Private Side Information Contacts. Each Public Lender agrees to cause at
least one individual at or on behalf of such Public Lender to at all times have
selected the “Private Side Information” or similar designation on the content
declaration screen of the Platform in order to enable such Public Lender or its
delegate, in accordance with such Public Lender’s compliance procedures and
applicable law, including Unites States federal and state securities laws, to
make reference to information that is not made available through the “Public
Side Information” portion of the Platform and that may contain Non-Public
Information with respect to the Borrower, its Affiliates or any of their
securities or loans for purposes of United States federal or state securities
laws. In the event that any Public Lender has determined for itself not to
access any information disclosed through the Platform or otherwise, such Public
Lender acknowledges that (i) other Lenders may have availed themselves of such
information and (ii) neither the Borrower nor the Administrative Agent has any
responsibility for such Public Lender’s decision to limit the scope of the
information it has obtained in connection with this Agreement and the other Loan
Documents.

Section 10.2. Waiver; Amendments.

(a) No failure or delay by the Administrative Agent, any Issuing Bank or any
Lender in exercising any right or power hereunder or under any other Loan
Document, and no course of dealing between the Borrower and the Administrative
Agent or any Lender, shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power hereunder
or thereunder. The rights and remedies of the Administrative Agent, each Issuing
Bank and the Lenders hereunder and under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies provided by law. No waiver of
any provision of this Agreement or of any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by subsection (b) of this Section, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the making of
a Loan or the issuance of a Letter of Credit shall not be construed as a waiver
of any Default or Event of Default, regardless of whether the Administrative
Agent, any Lender or any Issuing Bank may have had notice or knowledge of such
Default or Event of Default at the time.

 

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(b) Subject to Section 2.16(b), no amendment or waiver of any provision of this
Agreement or of the other Loan Documents (other than the Fee Letter), nor
consent to any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Borrower and the
Required Lenders, or the Borrower and the Administrative Agent with the consent
of the Required Lenders, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided that, in addition to the consent of the Required Lenders, no
amendment, waiver or consent shall:

(i) extend or increase the Commitment of any Lender without the written consent
of such Lender;

(ii) reduce the principal amount of any Loan or LC Disbursement or reduce the
rate of interest thereon, or reduce any fees payable hereunder or in any other
Loan Document, without the written consent of each Lender directly affected
thereby (provided that any change to the calculation of the Leverage Ratio or
the component definitions used therein shall not require consent of each Lender
directly affected thereby and shall only be subject to Required Lender
approval);

(iii) postpone the date fixed for any payment (other than any mandatory
prepayment) of any principal of, or interest on, any Loan or LC Disbursement or
any fees hereunder or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date for the termination or reduction of any Commitment,
without the written consent of each Lender directly affected thereby (provided
that any change to the calculation of the Leverage Ratio or the component
definitions used therein shall not require consent of each Lender directly
affected thereby and shall only be subject to Required Lender approval);

(iv) change Section 2.21(b) or (c) or Section 8.2 in a manner that would alter
the pro rata sharing of payments required thereby, without the written consent
of each Lender directly affected thereby;

(v) change any of the provisions of this subsection (b) or the percentage set
forth in the definition of “Required Lenders” or any other provision hereof
specifying the number or percentage of Lenders which are required to waive,
amend or modify any rights hereunder or make any determination or grant any
consent hereunder, without the consent of each Lender;

(vi) release all or substantially all of the guarantors, or limit the liability
of all or substantially all of the guarantors, under any guaranty agreement
guaranteeing any of the Obligations, without the written consent of each Lender;
or

(vii) release all or substantially all collateral (if any) securing any of the
Obligations, without the written consent of each Lender;

provided, further, that (x) no such amendment, waiver or consent shall amend,
modify or otherwise affect the rights, duties or obligations of the
Administrative Agent, the Swingline Lender or any Issuing Bank without the prior
written consent of such Person, and (y) no amendment, waiver or consent shall,
unless signed by the Borrower and the Required Revolving Lenders, or the
Borrower and the Administrative Agent with the consent of the Required Revolving
Lenders:

(1) amend or waive compliance with the conditions precedent to the obligations
of the Revolving Lenders to make any Revolving Loan or LC Disbursement;

(2) amend or waive non-compliance with any provision of Section 2.12(d);

 

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(3) waive any Default or Event of Default for the purpose of satisfying the
conditions precedent to the obligations of the Revolving Lenders to make any
Revolving Loan or LC Disbursement; or

(4) change any of the provisions of this clause (y);

provided, further, that no such amendment, waiver or consent shall change the
number or percentage contained in the definition of “Required Revolving Lenders”
or any other provision hereof specifying the number or percentage of Revolving
Lenders which are required to waive, amend or modify any rights hereunder or
make any determination or grant any consent hereunder, without the consent of
each Revolving Lender.

(c) Notwithstanding anything to the contrary herein, no Defaulting Lender shall
have any right to approve or disapprove any amendment, waiver or consent
hereunder, except that the Commitment of such Lender may not be increased or
extended, and amounts payable to such Lender hereunder may not be permanently
reduced, without the consent of such Lender (other than reductions in fees and
interest in which such reduction does not disproportionately affect such
Lender). Notwithstanding anything contained herein to the contrary, this
Agreement may be amended and restated without the consent of any Lender (but
with the consent of the Borrower and the Administrative Agent) if, upon giving
effect to such amendment and restatement, such Lender shall no longer be a party
to this Agreement (as so amended and restated), the Commitments of such Lender
shall have terminated (but such Lender shall continue to be entitled to the
benefits of Sections 2.18, 2.19, 2.20 and 10.3), such Lender shall have no other
commitment or other obligation hereunder and such Lender shall have been paid in
full all principal, interest and other amounts owing to it or accrued for its
account under this Agreement.

(d) Notwithstanding the foregoing, this Agreement may be amended (or amended and
restated) with the written consent of the Required Lenders, Administrative Agent
and Borrower (a) to add one or more additional credit facilities to this
Agreement and to permit extensions of credit from time to time outstanding
thereunder and the accrued interest and fees in respect thereof to share ratably
in the benefits of this Agreement and the other Loan Documents with the Term
Loans and the Revolving Loans and the accrued interest and fees in respect
thereof and (b) to include appropriately the Lenders holding such credit
facilities in any determination of the Required Lenders.

(e) Notwithstanding anything to the contrary herein, any Loan Document may be
waived, amended, supplemented or modified pursuant to an agreement or agreements
in writing entered into by the Borrower and the Administrative Agent (without
the consent of any Lender) solely to effect administrative changes that are not
adverse to any Lender or to correct administrative errors or omissions or to
cure an ambiguity, defect or error (including, without limitation, to revise the
legal description of any Collateral), or to grant a new Lien for the benefit of
the Secured Parties or extend an existing Lien over additional property.
Notwithstanding anything to the contrary herein, (A) additional extensions of
credit consented to by the Required Lenders shall be permitted hereunder on a
ratable basis with the existing Loans (including as to proceeds of, and sharing
in the benefits of, Collateral and sharing of prepayments), and (B) the
Administrative Agent shall enter into the intercreditor agreement upon the
request of the Borrower as contemplated by Section 7.2(i) solely to the extent
such intercreditor agreement is reasonably acceptable to the Administrative
Agent.

 

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Section 10.3. Expenses; Indemnification.

(a) The Borrower shall pay (i) all reasonable, documented out-of-pocket costs
and expenses of the Administrative Agent, the Lead Arrangers and their
Affiliates, including the reasonable fees, charges and disbursements of one
outside counsel for the Administrative Agent, the Lead Arrangers and their
Affiliates, in connection with the syndication of the credit facilities provided
for herein, the preparation and administration of the Loan Documents and any
amendments, modifications or waivers thereof (whether or not the transactions
contemplated in this Agreement or any other Loan Document shall be consummated),
(ii) all reasonable, documented out-of-pocket expenses incurred by any Issuing
Bank in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all documented
out-of-pocket costs and expenses which shall be limited, in the case of outside
counsel, to the reasonable fees, charges and disbursements of one outside
counsel to the Secured Parties, taken as a whole, any applicable local counsel
required for the Secured Parties in any applicable jurisdiction and any special
regulatory counsel (and, solely in the case of a conflict of interest, one
additional of each such counsel for each group of similarly situated Secured
Parties)) incurred by the Administrative Agent, any Issuing Bank or any Lender
in connection with the enforcement or protection of its rights in connection
with this Agreement, including its rights under this Section, or in connection
with the Loans made or any Letters of Credit issued hereunder, including all
such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

(b) The Borrower shall indemnify the Administrative Agent (and any sub-agent
thereof), each Lender and each Issuing Bank, and each Related Party of any of
the foregoing Persons (each such Person being called an “Indemnitee”) against,
and hold each Indemnitee harmless from, any and all losses, claims, penalties,
damages, liabilities and related expenses (including the reasonable and
documented fees, charges and disbursements of one primary counsel for the
Indemnitees, taken as a whole, any local counsel for the Indemnitees in any
applicable jurisdiction and any special regulatory counsel (and, solely in the
case of a conflict of interest, one additional of each such counsel for each
group of similarly situated Indemnitees)) incurred by any Indemnitee or asserted
against any Indemnitee by any third party or by the Borrower or any other Loan
Party arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations hereunder or thereunder or the consummation of
the transactions contemplated hereby or thereby, (ii) any Loan or Letter of
Credit or the use or proposed use of the proceeds therefrom (including any
refusal by any Issuing Bank to honor a demand for payment under a Letter of
Credit if the documents presented in connection with such demand do not strictly
comply with the terms of such Letter of Credit), (iii) any actual or alleged
presence or Release of Hazardous Materials on or from any property owned or
operated by the Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of its Subsidiaries, or
(iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory, whether brought by a third party or by the Borrower or any other Loan
Party, and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, penalties, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and non-appealable
judgment to have resulted from (x) the gross negligence or willful misconduct of
such Indemnitee or (y) a material breach of such Indemnitee’s obligations
hereunder or under any other Loan Document. No Indemnitee shall be liable for
any damages arising from the use by others of any information or other materials
obtained through Syndtrak, Intralinks or any other Internet or intranet website,
except as a result of such Indemnitee’s gross negligence or willful misconduct
as determined by a court of competent jurisdiction in a final and non-appealable
judgment.

(c) The Borrower shall pay, and hold the Administrative Agent, each Issuing Bank
and each of the Lenders harmless from and against, any and all present and
future stamp, documentary, and other similar taxes with respect to this
Agreement and any other Loan Documents, any collateral described therein or any
payments due thereunder, and save the Administrative Agent, each Issuing Bank
and each Lender harmless from and against any and all liabilities with respect
to or resulting from any delay or omission to pay such taxes.

 

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(d) To the extent that the Borrower fails to pay any amount required to be paid
to the Administrative Agent, any Issuing Bank or the Swingline Lender under
subsection (a), (b) or (c) hereof, each Lender severally agrees to pay to the
Administrative Agent, the applicable Issuing Bank or the Swingline Lender, as
the case may be, such Lender’s pro rata share (in accordance with its respective
Revolving Commitment (or Revolving Credit Exposure, as applicable) and Term Loan
determined as of the time that the unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified payment, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Administrative Agent, the
applicable Issuing Bank or the Swingline Lender in its capacity as such.

(e) To the extent permitted by applicable law, each party hereto waives, and
agrees not to assert, any claim against any other party hereto, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to actual or direct damages) arising out of, in connection with or as a result
of this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby, the transactions contemplated therein, any Loan or any
Letter of Credit or the use of proceeds thereof.

(f) All amounts due under this Section shall be payable promptly after written
demand therefor.

Section 10.4. Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Administrative Agent and each Lender, and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an assignee in
accordance with the provisions of subsection (b) of this Section, (ii) by way of
participation in accordance with the provisions of subsection (d) of this
Section or (iii) by way of pledge or assignment of a security interest subject
to the restrictions of subsection (f) of this Section (and any other attempted
assignment or transfer by any party hereto shall be null and void). Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in subsection (d) of this
Section and, to the extent expressly contemplated hereby, the Related Parties of
each of the Administrative Agent and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

(b) Any Lender may at any time assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitments, Loans and other Revolving Credit Exposure at the time owing
to it); provided that any such assignment shall be subject to the following
conditions:

(i) Minimum Amounts.

(A) in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitments, Loans and other Revolving Credit Exposure at the time
owing to it or in the case of an assignment to a Lender, an Affiliate of a
Lender or an Approved Fund, no minimum amount need be assigned; and

 

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(B) in any case not described in subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which, in the case of Revolving Commitments,
includes Revolving Loans and Revolving Credit Exposure outstanding thereunder)
or, if the applicable Commitment is not then in effect, the principal
outstanding balance of the Loans and/or Revolving Credit Exposure, as
applicable, of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent or, if “Trade Date” is specified in the
Assignment and Acceptance, as of the Trade Date) shall not be less than
$1,000,000 with respect to Term Loans and $5,000,000 with respect to Revolving
Loans and Revolving Commitments and in minimum increments of $1,000,000, unless
each of the Administrative Agent and, so long as no Event of Default has
occurred and is continuing, the Borrower otherwise consents (each such consent
not to be unreasonably withheld, conditioned or delayed).

(ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans, other Revolving
Credit Exposure or the Commitments assigned, except that this subsection (b)(ii)
shall not prohibit any Lender from assigning all or a portion of its rights and
obligations among separate Commitments or Classes on a non-pro rata basis.

(iii) Required Consents. No consent shall be required for any assignment except
to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrower shall be required (such consent not to be
unreasonably withheld, conditioned or delayed) unless (x) an Event of Default
has occurred and is continuing at the time of such assignment or (y) (1) in the
case of Term Loans such assignment is to a Lender, an Affiliate of such Lender
or an Approved Fund of such Lender, or (2) in the case of Revolving Commitments
or Revolving Loans, such assignment is to a Lender holding Revolving Commitments
or an Affiliate of such Lender or an Approved Fund of such Lender;

(B) the consent of the Administrative Agent (such consent not to be unreasonably
withheld, conditioned or delayed) shall be required unless (1) such assignment
is of a Term Loan to a Lender, an Affiliate of such Lender or an Approved Fund
of such Lender, or (2) in the case of Revolving Commitments or Revolving Loans,
such assignment is to a Lender holding Revolving Commitments or an Affiliate of
such Lender or an Approved Fund; and

(C) the consent of each Issuing Bank (such consent not to be unreasonably
withheld, conditioned or delayed) shall be required for any assignment that
increases the obligation of the assignee to participate in exposure under one or
more Letters of Credit (whether or not then outstanding), and the consent of the
Swingline Lender (such consent not to be unreasonably withheld, conditioned or
delayed) shall be required for any assignment in respect of the Revolving
Commitments unless such assignment is to a Lender holding Revolving Commitments
or Revolving Loans, an Affiliate of such Lender or an Approved Fund of such
Lender.

(iv) Assignment and Acceptance. The parties to each assignment shall deliver to
the Administrative Agent (A) a duly executed Assignment and Acceptance, (B) a
processing and recordation fee of $3,500 (except with respect to any assignment
by a Lender to one of its Affiliates or Approved Funds), (C) an Administrative
Questionnaire unless the assignee is already a Lender and (D) the documents
required under Section 2.20(e).

 

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(v) No Assignment to the Borrower. No such assignment shall be made to the
Borrower or any of the Borrower’s Affiliates or Subsidiaries.

(vi) No Assignment to Natural Persons, Defaulting Lenders or Disqualified
Institutions. No such assignment shall be made to a natural person, a Defaulting
Lender or a Disqualified Institution.

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) of this Section, from and after the effective date specified
in each Assignment and Acceptance, the assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Acceptance, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 2.18, 2.19, 2.20 and 10.3 with
respect to facts and circumstances occurring prior to the effective date of such
assignment; provided that, except to the extent otherwise expressly agreed by
the affected parties, no assignment by a 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. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section. If the consent of the Borrower to an assignment
is required hereunder (including a consent to an assignment which does not meet
the minimum assignment thresholds specified above), the Borrower shall be deemed
to have given its consent unless it shall object thereto by written notice to
the Administrative Agent within ten (10) Business Days after notice thereof has
actually been delivered by the assigning Lender (through the Administrative
Agent) to the Borrower.

(c) The Administrative Agent, acting solely for this purpose as a non-fiduciary
agent of the Borrower, shall maintain at one of its offices in Atlanta, Georgia
a copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount of the Loans and Revolving Credit Exposure owing to, each
Lender pursuant to the terms hereof from time to time (the “Register”).
Information contained in the Register with respect to any Lender shall be
available for inspection by such Lender at any reasonable time and from time to
time upon reasonable prior notice; information contained in the Register shall
also be available for inspection by the Borrower at any reasonable time and from
time to time upon reasonable prior notice. In establishing and maintaining the
Register, the Administrative Agent shall serve as the Borrower’s agent solely
for tax purposes and solely with respect to the actions described in this
Section, and the Borrower hereby agrees that, to the extent SunTrust Bank serves
in such capacity, SunTrust Bank and its officers, directors, employees, agents,
sub-agents and Affiliates shall constitute “Indemnitees”.

(d) Any Lender may at any time, without the consent of, or notice to, the
Borrower, the Administrative Agent, the Swingline Lender or any Issuing Bank,
sell participations to any Person (other than a natural person, a Disqualified
Institution, the Borrower or any of the Borrower’s Affiliates or Subsidiaries)
(each, a “Participant”) in all or a portion of such Lender’s rights and/or
obligations under this Agreement (including all or a portion of its Commitment
and/or the Loans owing to it); provided that (i) such Lender’s obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Administrative Agent, each Issuing Bank, the
Swingline Lender and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

 

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Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver with respect to the following to the
extent affecting such Participant: (i) increase the Commitment of such Lender;
(ii) reduce the principal amount of any Loan or LC Disbursement or reduce the
rate of interest thereon, or reduce any fees payable hereunder (excluding the
right of any Participant to consent to changes in the calculation of the
Leverage Ratio or the component definitions thereof); (iii) postpone the date
fixed for any payment of any principal of, or interest on, any Loan or LC
Disbursement or any fees hereunder or reduce the amount of, waive or excuse any
such payment, or postpone the scheduled date for the termination or reduction of
any Commitment (excluding the right of any Participant to consent to changes in
the calculation of the Leverage Ratio or the component definitions thereof);
(iv) change Section 2.21(b) or (c) in a manner that would alter the pro rata
sharing of payments required thereby; (v) change any of the provisions of
Section 10.2(b) or the definition of “Required Lenders” or “Required Revolving
Lenders” or any other provision hereof specifying the number or percentage of
Lenders which are required to waive, amend or modify any rights hereunder or
make any determination or grant any consent hereunder; (vi) release all or
substantially all of the guarantors, or limit the liability of all or
substantially all of the guarantors, under any guaranty agreement guaranteeing
any of the Obligations; or (vii) release all or substantially all collateral (if
any) securing any of the Obligations. Subject to subsection (e) of this Section,
the Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.18, 2.19, and 2.20 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to subsection (b) of this Section;
provided that such Participant agrees to be subject to Section 2.24 as though it
were a Lender. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.7 as though it were a Lender; provided
that such Participant agrees to be subject to Section 2.21 as though it were a
Lender.

Each Lender that sells a participation shall, acting solely for this purpose as
a non-fiduciary agent of the Borrower, maintain a register in the United States
on which it enters the name and address of each Participant and the principal
amounts (and stated interest) of each Participant’s interest in the Loans or
other obligations under the Loan Documents (the “Participant Register”);
provided that no Lender shall have any obligation to disclose all or any portion
of the Participant Register to any Person (including the identity of any
Participant or any information relating to a Participant’s interest in any
commitments, loans, letters of credit or other obligations under any Loan
Document) except to the extent that such disclosure is necessary to establish
that such commitment, loan, letter of credit or other obligation is in
registered form under Section 5f.103-1(c) or Proposed Section 1.163-5(B) of the
United States Treasury Regulations (or, in each case, any amended or successor
version). The entries in the Participant Register shall be conclusive, absent
manifest error, and such Lender shall treat each person whose name is recorded
in the Participant Register as the owner of such participation for all purposes
of this Agreement notwithstanding any notice to the contrary.

(e) A Participant shall not be entitled to receive any greater payment under
Sections 2.18 and 2.20 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent. A Participant shall not be entitled to the benefits of
Section 2.20 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Sections 2.20(e) and (f) as though it were a Lender (it being
understood that the documentation required under Sections 2.20(e) and (f) shall
be delivered to the participating Lender).

 

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(f) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including, without limitation, any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

(g) The Administrative Agent shall not have any responsibility for ensuring that
an assignee of, or a participant in, a Loan or Commitment is not a Disqualified
Institution, and shall not have any liability in the event that Loans or
Commitments, or a participation therein, are transferred to any Disqualified
Institution.

(h) For the avoidance of doubt, the addition of any Person to the Disqualified
Institution List shall solely apply prospectively and shall have no effect with
respect to any assignment or participation that occurs or any Loans, Commitments
or Revolving Credit Exposure acquired by such Person, in each case prior to the
date such Person is added to the Disqualified Institution List.

Section 10.5. Governing Law; Jurisdiction; Consent to Service of Process.

(a) This Agreement and the other Loan Documents and any claim, controversy,
dispute or cause of action (whether in contract or tort or otherwise) based
upon, arising out of or relating to this Agreement or any other Loan Document
(except, as to any other Loan Document, as expressly set forth therein) and the
transactions contemplated hereby and thereby shall be construed in accordance
with and be governed by the law of the State of New York.

(b) The Borrower hereby irrevocably and unconditionally submits, for itself and
its property, to the exclusive jurisdiction of the United States District Court
for the Southern District of New York, and of the Supreme Court of the State of
New York sitting in New York county, and of any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or any other Loan Document or the transactions contemplated hereby or
thereby, 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 may be heard and determined in such
District Court or New York state court or, to the extent permitted by applicable
law, such appellate 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 or any other Loan Document shall
affect any right that the Administrative Agent, any Issuing Bank or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
or any other Loan Document against the Borrower or its properties in the courts
of any jurisdiction.

(c) The Borrower irrevocably and unconditionally waives any objection which it
may now or hereafter have to the laying of venue of any such suit, action or
proceeding described in subsection (b) of this Section and brought in any court
referred to in subsection (b) of this Section. Each of the parties hereto
irrevocably waives, to the fullest extent permitted by applicable law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

(d) Each party to this Agreement irrevocably consents to the service of process
in the manner provided for notices in Section 10.1. Nothing in this Agreement or
in any other Loan Document will affect the right of any party hereto to serve
process in any other manner permitted by law.

 

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Section 10.6. WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 10.7. Right of Set-off. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
each Lender and each Issuing Bank shall have the right, at any time or from time
to time upon the occurrence and during the continuance of an Event of Default,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, to set off and apply
against all deposits (general or special, time or demand, provisional or final)
of the Borrower at any time held or other obligations at any time owing by such
Lender and such Issuing Bank to or for the credit or the account of the Borrower
against any and all Obligations held by such Lender or such Issuing Bank, as the
case may be, irrespective of whether such Lender or such Issuing Bank shall have
made demand hereunder and although such Obligations may be unmatured. Each
Lender and each Issuing Bank agrees promptly to notify the Administrative Agent
and the Borrower after any such set-off and any application made by such Lender
or such Issuing Bank, as the case may be; provided that the failure to give such
notice shall not affect the validity of such set-off and application. Each
Lender and each Issuing Bank agrees to apply all amounts collected from any such
set-off to the Obligations before applying such amounts to any other
Indebtedness or other obligations owed by the Borrower and any of its
Subsidiaries to such Lender or such Issuing Bank.

Section 10.8. Counterparts; Integration. This Agreement may be executed by one
or more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. This Agreement, the Fee Letter, the other Loan
Documents, and any separate letter agreements relating to any fees payable to
the Administrative Agent and its Affiliates constitute the entire agreement
among the parties hereto and thereto and their Affiliates regarding the subject
matters hereof and thereof and supersede all prior agreements and
understandings, oral or written, regarding such subject matters. Delivery of an
executed counterpart to this Agreement or any other Loan Document by facsimile
transmission or by electronic mail in pdf format shall be as effective as
delivery of a manually executed counterpart hereof.

Section 10.9. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates, reports, notices
or other instruments delivered in connection with or pursuant to this Agreement
shall be considered to have been relied upon by the other parties hereto and
shall survive the execution and delivery of this Agreement and the other Loan
Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent, any Issuing Bank or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.18, 2.19, 2.20, and 10.3 and Article IX shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.

 

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Section 10.10. Severability. Any provision of this Agreement or any other Loan
Document held to be illegal, invalid or unenforceable in any jurisdiction,
shall, as to such jurisdiction, be ineffective to the extent of such illegality,
invalidity or unenforceability without affecting the legality, validity or
enforceability of the remaining provisions hereof or thereof; and the
illegality, invalidity or unenforceability of a particular provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

Section 10.11. Confidentiality. Each of the Administrative Agent, the Issuing
Banks and the Lenders agrees to maintain the confidentiality of any information
relating to the Borrower or any of its Subsidiaries or any of their respective
businesses, to the extent designated in writing as confidential and provided to
it by the Borrower or any of its Subsidiaries, other than any such information
that is available to the Administrative Agent, any Issuing Bank or any Lender on
a non-confidential basis prior to disclosure by the Borrower or any of its
Subsidiaries, except that such information may be disclosed (i) to any Related
Party of the Administrative Agent, any such Issuing Bank or any such Lender
including, without limitation, accountants, legal counsel and other advisors who
need to know such information in connection with the Related Transactions and
are informed of the confidential nature of such information, (ii) pursuant to
the order of any court or administrative agency or in any pending legal or
administrative proceeding, or otherwise as required by applicable law or
regulation or compulsory legal process (in which case such disclosing party
agrees to inform the Borrower reasonably promptly thereof prior to such
disclosure to the extent not prohibited by law, rule or regulation), (iii) to
the extent requested by any regulatory agency or authority purporting to have
jurisdiction over such disclosing party or its Affiliates (including any
self-regulatory authority such as the National Association of Insurance
Commissioners) (in which case such disclosing party agrees to inform the
Borrower reasonably promptly thereof prior to such disclosure to the extent not
prohibited by law, rule or regulation), (iv) to the extent that such information
becomes publicly available other than as a result of a breach of this Section,
or which becomes available to the Administrative Agent, any Issuing Bank, any
Lender or any Related Party of any of the foregoing on a non-confidential basis
from a source other than the Borrower or any of its Subsidiaries that is not, to
such disclosing party’s knowledge, subject to confidentiality obligations to the
Borrower and its Subsidiaries, (v) in connection with the exercise of any remedy
hereunder or under any other Loan Documents or any suit, action or proceeding
relating to this Agreement or any other Loan Documents or the enforcement of
rights hereunder or thereunder, (vi) subject to execution by such Person of an
agreement containing provisions substantially the same as those of this Section
(or language substantially similar to this paragraph, including provisions
customary in the syndicated loan market), to (A) any assignee of or Participant
in, or any prospective assignee of or Participant in, any of such disclosing
party’s rights or obligations under this Agreement, or (B) any direct or
indirect actual or prospective contractual counterparty (and its Related
Parties) to any swap, derivative or similar product that is to be secured by the
Collateral, (vii) to the CUSIP Service Bureau or any similar organization,
(viii) for purposes of establishing a “due diligence” defense, (ix) to the
extent that such information is independently developed by such disclosing party
(other than with confidential information provided to such disclosing party by
the Borrower and its Subsidiaries), (x) to industry trade organizations, general
information with respect to this Agreement that is customary for inclusion in
league table measurements or (xi) with the consent of the Borrower. Any Person
required to maintain the confidentiality of any information as provided for 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 its own
confidential information. In the event of any conflict between the terms of this
Section and those of any other Contractual Obligation entered into with any Loan
Party (whether or not a Loan Document), the terms of this Section shall govern.

 

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Section 10.12. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which may be treated as interest on such
Loan under applicable law (collectively, the “Charges”), shall exceed the
maximum lawful rate of interest (the “Maximum Rate”) which may be contracted
for, charged, taken, received or reserved by a Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Rate to the date of
repayment (to the extent permitted by applicable law), shall have been received
by such Lender.

Section 10.13. Waiver of Effect of Corporate Seal. The Borrower represents and
warrants that neither it nor any other Loan Party is required to affix its
corporate seal to this Agreement or any other Loan Document pursuant to any
Requirement of Law, agrees that this Agreement is delivered by the Borrower
under seal and waives any shortening of the statute of limitations that may
result from not affixing the corporate seal to this Agreement or such other Loan
Documents.

Section 10.14. Patriot Act and Beneficial Ownership Regulation. The
Administrative Agent and each Lender hereby notifies the Loan Parties that,
pursuant to the requirements of the Patriot Act and the Beneficial Ownership
Regulation, 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 the
Administrative Agent, as applicable, to identify such Loan Party in accordance
with the Patriot Act and the Beneficial Ownership Regulation. The Borrower will,
and will cause its Subsidiaries to, provide documentary and other evidence of
the identity of the Loan Parties as may be requested by the Lenders or the
Administrative Agent at any time to enable the Lenders or the Administrative
Agent to verify the identity of the Loan Parties or to comply with any
applicable law or regulation, including, without limitation, Section 326 of the
Patriot Act at 31 U.S.C. Section 5318 and the Beneficial Ownership Regulation.

Section 10.15. No Advisory or Fiduciary Responsibility. In connection with all
aspects of each transaction contemplated hereby (including in connection with
any amendment, waiver or other modification hereof or of any other Loan
Document), the Borrower and each other Loan Party acknowledges and agrees and
acknowledges its Affiliates’ understanding that (i) (A) the services regarding
this Agreement provided by the Administrative Agent and/or the Lenders are
arm’s-length commercial transactions between the Borrower, each other Loan Party
and their respective Affiliates, on the one hand, and the Administrative Agent
and the Lenders, on the other hand, (B) each of the Borrower and the other Loan
Parties have consulted their own legal, accounting, regulatory and tax advisors
to the extent they have deemed appropriate, and (C) the Borrower and each other
Loan Party is capable of evaluating and understanding, and understands and
accepts, the terms, risks and conditions of the transactions contemplated hereby
and by the other Loan Documents; (ii) (A) each of the Administrative Agent and
the Lenders is and has been acting solely as a principal and, except as
expressly agreed in writing by the relevant parties, has not been, is not, and
will not be acting as an advisor, agent or fiduciary for the Borrower, any other
Loan Party or any of their respective Affiliates, or any other Person, and
(B) neither the Administrative Agent nor any Lender has any obligation to the
Borrower, any other Loan Party or any of their Affiliates with respect to the
credit facilities contemplated hereby except those obligations expressly set
forth herein and in the other Loan Documents; and (iii) the Administrative
Agent, the Lenders and their respective Affiliates may be engaged in a broad
range of transactions that involve interests that differ from those of the
Borrower, the other Loan Parties and their respective Affiliates, and each of
the Administrative Agent and the Lenders has no obligation to disclose any of
such interests to the Borrower, any other Loan Party or any of their respective
Affiliates. To the fullest extent permitted by law, each of the Borrower and the
other Loan Parties hereby waives and releases any claims that it may have
against the Administrative Agent or any Lender with respect to any breach or
alleged breach of agency or fiduciary duty in connection with any aspect of any
transaction contemplated hereby.

 

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Section 10.16. Location of Closing. Each Lender and each Issuing Bank
acknowledges and agrees that it has delivered, with the intent to be bound, its
executed counterparts of this Agreement to the Administrative Agent, c/o
Latham & Watkins LLP, 885 3rd Ave, New York, NY 10022. The Borrower acknowledges
and agrees that it has delivered, with the intent to be bound, its executed
counterparts of this Agreement and each other Loan Document, together with all
other documents, instruments, opinions, certificates and other items required
under Section 3.1, to the Administrative Agent, c/o Latham & Watkins LLP, 885
3rd Ave, New York, NY 10022. All parties agree that the closing of the
transactions contemplated by this Agreement has occurred in New York.

Section 10.17. Releases of Collateral. The Administrative Agent agrees with the
Borrower that the Administrative Agent shall:

(a) release any Lien on any property granted to or held by the Administrative
Agent under any Loan Document (i) upon Payment in Full of all Obligations,
(ii) when such property is sold as part of or in connection with any sale
permitted hereunder or under any other Loan Document, (iii) if such release is
approved, authorized or ratified in writing in accordance with Section 10.2 or
(iv) when such property is subject to Liens permitted under Section 7.2(d)
(solely to the extent required by the holder of such Lien), (e), (f), and, to
the extent relating to extensions, renewals or replacements of such Liens,
Section 7.2(h);

(b) release any Lien on any Mortgaged Properties upon the occurrence of the
Mortgage Release Event;

(c) release any Loan Party from its obligations under the applicable Collateral
Documents (i) if such Person ceases to be a Subsidiary as a result of a
transaction permitted hereunder or (ii) if such Subsidiary becomes an Excluded
Subsidiary in accordance with the requirements set forth in Section 5.18;

(d) release any Lien on any Capital Stock of any Subsidiary that (i) ceases to
be a Subsidiary as a result of any transaction permitted hereunder or (ii) is an
Excluded Subsidiary; and

(e) subordinate the Liens and security interests of the Administrative Agent on
any Collateral (other than Capital Stock and accounts receivable) to the extent
contemplated by, and in accordance with the requirements of (including, without
limitation, that any intercreditor agreement entered into in connection
therewith be reasonably satisfactory to the Administrative Agent),
Section 7.2(i);

in each case, upon delivery by the Borrower of a certificate of a Responsible
Officer to the Administrative Agent requesting and certifying as to the grounds
for such release or subordination pursuant to this Section 10.17, as applicable.

In each case as specified in this Section 10.17, the Administrative Agent is
authorized by the Secured Parties and the Borrower and shall, 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
Collateral from the Liens granted under the applicable Collateral Documents, or
release such Loan Party from its obligations under the applicable Collateral
Documents, in each case in accordance with the terms of the Loan Documents and
this Section.

 

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Section 10.18. Acknowledgement and Consent to Bail-In of EEA Financial
Institutions. Notwithstanding anything to the contrary in any Loan Document or
in any other agreement, arrangement or understanding among any such parties,
each party hereto acknowledges that any liability of any EEA Financial
Institution arising under any Loan Document, to the extent such liability is
unsecured, may be subject to the Write-Down and Conversion Powers of an EEA
Resolution Authority and agrees and consents to, and acknowledges and agrees to
be bound by:

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution
Authority to any such liabilities arising hereunder which may be payable to it
by any party hereto that is an EEA Financial Institution; and

(b) the effects of any Bail-in Action on any such liability, including, if
applicable (i) a reduction in full or in part or cancellation of any such
liability, (ii) a conversion of all, or a portion of, such liability into shares
or other instruments of ownership in such EEA Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise
conferred on it, and that such shares or other instruments of ownership will be
accepted by it in lieu of any rights with respect to any such liability under
this Agreement or any other Loan Document or (iii) the variation of the terms of
such liability in connection with the exercise of the Write-Down and Conversion
Powers of any EEA Resolution Authority.

Section 10.19. Acknowledgement Regarding Any Supported QFCs. To the extent that
the Loan Documents provide support, through a guarantee or otherwise, for any
agreement providing for any Hedging Transactions or Hedging Obligations, or any
other agreement or instrument that is a QFC (such support, “QFC Credit Support”
and each such QFC a “Supported QFC”), the parties acknowledge and agree as
follows with respect to the resolution power of the Federal Deposit Insurance
Corporation under the Federal Deposit Insurance Act and Title II of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the
regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in
respect of such Supported QFC and QFC Credit Support (with the provisions below
applicable notwithstanding that the Loan Documents and any Supported QFC may in
fact be stated to be governed by the laws of the State of New York and/or of the
United States or any other state of the United States):

(a) In the event a Covered Entity that is party to a Supported QFC (each, a
“Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution
Regime, the transfer of such Supported QFC and the benefit of such QFC Credit
Support (and any interest and obligation in or under such Supported QFC and such
QFC Credit Support, and any rights in property securing such Supported QFC or
such QFC Credit Support) from such Covered Party will be effective to the same
extent as the transfer would be effective under the U.S. Special Resolution
Regime if the Supported QFC and such QFC Credit Support (and any such interest,
obligation and rights in property) were governed by the laws of the United
States or a state of the United States. In the event a Covered Party or a BHC
Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S.
Special Resolution Regime, Default Rights under the Loan Documents that might
otherwise apply to such Supported QFC or any QFC Credit Support that may be
exercised against such Covered Party are permitted to be exercised to no greater
extent than such Default Rights could be exercised under the U.S. Special
Resolution Regime if the Supported QFC and the Loan Documents were governed by
the laws of the United States or a state of the United States. Without
limitation of the foregoing, it is understood and agreed that rights and
remedies of the parties with respect to a Defaulting Lender shall in no event
affect the rights of any Covered Party with respect to a Supported QFC or any
QFC Credit Support.

 

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Section 10.20. MIRE Events. Notwithstanding anything set forth herein to the
contrary (including in Section 10.2), at any time that a Mortgage is in effect
(or will be required after giving effect to the relevant transactions), no
modification of a Loan Document shall add, increase, renew or extend the
maturity date of any Loan, Commitment or credit line hereunder until the
Administrative Agent has been notified (which notice may be provided via email)
by each Lender that such Lender has completed and is reasonably satisfied with
such Lender’s flood insurance due diligence and compliance, and Borrower shall
cooperate with such flood insurance due diligence and compliance, including
delivering all further documents as any such Lender reasonably shall require.

(remainder of page left intentionally blank)

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

THE PENNANT GROUP, INC. By:  

/s/ Derek Bunker

Name: Derek Bunker

Title: Chief Investment Officer, Executive Vice

          President and Secretary

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SUNTRUST BANK as the Administrative Agent, as an Issuing Bank, as the Swingline
Lender and as a Lender By:  

/s/ Katherine Bass

Name: Katherine Bass Title: Director

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[LENDERS SIGNATURE PAGES ON FILE WITH ADMINISTRATIVE AGENT]