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

 
 
ETERM CREDIT AGREEMENT
DATED AS OF FEBRUARY 25, 2013
 
AMONG
 
NURSE ON CALL, INC. AND THE WHOLLY OWNED
SUBSIDIARIES THEREOF SIGNATORY HERETO
as Borrowers,
 
HOME HEALTH CARE HOLDINGS, LLC, EMERICARE NOC LLC,
EMERITUS PROPERTIES III, LLC AND EMERITUS CORPORATION,
as Guarantors,
 
AND
 
KEYBANK NATIONAL ASSOCIATION,
as a Lender and Agent
 
AND
 
THE OTHER LENDERS WHICH ARE OR MAY BECOME
PARTIES TO THIS AGREEMENT
 
AND
 
KEYBANC CAPITAL MARKETS
and
CADENCE BANK
as Co-Lead Arrangers
 
AND
 
KEYBANC CAPITAL MARKETS
as Syndication Agent and Documentation Agent
 

 
 

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TABLE OF CONTENTS
Page

 
§1.
DEFINITIONS AND RULES OF INTERPRETATION
1
§1.1
Definitions
1
§1.2
Rules of Interpretation.
20
§2.
LOANS
21
§2.1
Commitment to Lend.
21
§2.2
Notes.
21
§2.3
Interest on Loans.
21
§2.4
Requests for Loans.
22
§2.5
Funds for Loans.
22
§2.6
Use of Proceeds.
23
§3.
REPAYMENT AND PREPAYMENT OF THE LOANS
23
§3.1
Repayment; Stated Maturity; Extension Option.
23
§3.2
Mandatory Prepayments.
24
§3.3
Optional Prepayments.
24
§3.4
Partial Prepayments.
24
§4.
CERTAIN GENERAL PROVISIONS
24
§4.1
Conversion Options; Number of LIBOR Contracts.
24
§4.2
Certain Fees.
25
§4.3
Funds for Payment.
25
§4.4
Taxes.
25
§4.5
Computations.
29
§4.6
Inability to Determine LIBOR Rate.
29
§4.7
Illegality.
29
§4.8
Additional Interest.
29
§4.9
Additional Costs, Capital Adequacy, Etc.
30
§4.10
Mitigation Obligations.
31
§4.11
Indemnity by Borrowers.
32
§4.12
Interest on Overdue Amounts.
32
§4.13
Certificate.
32
§4.14
Limitation on Interest.
32
§5.
COLLATERAL SECURITY
33
§5.1
Collateral.
33
§5.2
Operating Account; Collection Account.
33
§6.
REPRESENTATIONS AND WARRANTIES AND COVENANTS
34
§6.1
Corporate Authority, Etc.
34
§6.2
Approvals.
34
§6.3
Title to Properties; Leases.
35
§6.4
Financial Statements.
35

 
 
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§6.5
No Material Changes.
35
§6.6
Franchises, Patents, Copyrights, Licences, Etc.
36
§6.7
Litigation.
36
§6.8
No Materially Adverse Contracts, Etc.
36
§6.9
Compliance with Organizational Documents, Other Instruments, Laws, Etc.
36
§6.10
Tax Status.
36
§6.11
No Event of Default.
37
§6.12
Investment Company Act.
37
§6.13
Reserved.
37
§6.14
Setoff, Etc.
37
§6.15
Certain Transactions.
37
§6.16
Employee Benefit Plans.
37
§6.17
Regulations T, U and X.
38
§6.18
Environmental Compliance.
38
§6.19
Loan Documents.
39
§6.20
Reserved.
40
§6.21
Brokers.
40
§6.22
Ownership.
40
§6.23
OFAC.
40
§6.24
No Fraudulent Intent.
40
§6.25
Transaction in Best Interests of  Loan Parties; Consideration.
40
§6.26
Solvency.
41
§6.27
No Bankruptcy Filing.
41
§6.28
Other Debt.
41
§7.
AFFIRMATIVE COVENANTS OF LOAN PARTIES
42
§7.1
Punctual Payment.
42
§7.2
Maintenance of Office.
42
§7.3
Records and Accounts.
42
§7.4
Financial Statements, Certificates and Information.
42
§7.5
Notices.
44
§7.6
Existence; Maintenance of Properties.
46
§7.7
Insurance.
46
§7.8
Taxes.
47
§7.9
Inspection of the Loan Parties’ Books.
47
§7.10
Compliance with Laws, Contracts, Licenses, and Permits.
47
§7.11
Further Assurances.
48
§7.12
Plan Assets.
48
§7.13
Business Operations.
48
§7.14
Transfer of Collection Account.
48
§7.15
Additional Subsidiaries; Additional Borrowers.
49
§8.
CERTAIN NEGATIVE COVENANTS OF LOAN PARTIES
49
§8.1
Restrictions on Indebtedness.
49
§8.2
Restrictions on Liens, Etc.
50
§8.3
Restrictions on Investments.
52
§8.4
Merger, Consolidation.
54

 
 
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§8.5
Sale and Leaseback.
54
§8.6
Compliance with Environmental Laws.
54
§8.7
Distributions.
55
§8.8
Asset Sales.
55
§8.9
Reserved.
56
§8.10
Negative Pledges, Restrictive Agreements, Etc.
56
§8.11
Organizational Documents.
57
§8.12
Affiliate Transactions.
57
§8.13
Management Fees, Expenses, Etc.
58
§9.
FINANCIAL COVENANTS
58
§9.1
NOC Financial Covenants.
58
§9.2
ESC Financial Covenants.
59
§10.
CLOSING CONDITIONS
59
§10.1
Loan Documents.
59
§10.2
Certified Copies of Organizational Documents.
59
§10.3
Resolutions.
60
§10.4
Incumbency Certificate; Authorized Signers.
60
§10.5
Opinion of Counsel.
60
§10.6
Payment of Fees.
60
§10.7
Insurance.
60
§10.8
Performance; No Default.
60
§10.9
Representations and Warranties.
61
§10.10
Proceedings and Documents.
61
§10.11
Security Documents.
61
§10.12
Other Documents.
61
§10.13
No Litigation.
61
§10.14
Other.
61
§11.
CONDITIONS TO ALL BORROWINGS
61
§11.1
Representations True; No Default.
61
§11.2
No Legal Impediment.
62
§11.3
Borrowing Documents.
62
§12.
EVENTS OF DEFAULT; ACCELERATION; ETC.
62
§12.1
Events of Default and Acceleration.
62
§12.2
Limitation of Cure Periods.
65
§12.3
Remedies.
65
§12.4
Distribution of Collateral Proceeds.
65
§13.
SETOFF
66
§14.
THE AGENT
66
§14.1
Authorization.
67
§14.2
Employees and Agents.
67
§14.3
No Liability.
67

 
 
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§14.4
No Representations.
68
§14.5
Payments.
69
§14.6
Holders of Notes.
70
§14.7
Indemnity.
70
§14.8
Agent as Lender.
70
§14.9
Resignation.
70
§14.10
Duties in the Case of Enforcement.
71
§14.11
Request for Agent Action.
71
§14.12
Removal of Agent.
72
§14.13
Bankruptcy.
72
§15.
EXPENSES
72
§16.
INDEMNIFICATION
73
§17.
SURVIVAL OF COVENANTS, ETC.
74
§18.
ASSIGNMENT AND PARTICIPATION
74
§18.1
Conditions to Assignment by Lenders.
74
§18.2
Register.
76
§18.3
New Notes.
76
§18.4
Participations.
76
§18.5
Pledge by Lender.
77
§18.6
No Assignment by Borrowers.
77
§18.7
Cooperation; Disclosure.
77
§18.8
Mandatory Assignment.
78
§18.9
Co-Agents.
78
§18.10
Treatment of Certain Information; Confidentiality.
79
§19.
NOTICES
79
§20.
RELATIONSHIP
81
§21.
GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE
82
§22.
HEADINGS
82
§23.
COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION
82
§24.
ENTIRE AGREEMENT, ETC.
83
§25.
WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS
83
§26.
DEALINGS WITH THE BORROWERS
84
§27.
CONSENTS, AMENDMENTS, WAIVERS, ETC.
84

 
 
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§28.
SEVERABILITY
86
§29.
NO UNWRITTEN AGREEMENTS; NO STRICT CONSTRUCTION
86
§30.
ACKNOWLEDGMENT OF INDEMNITY OBLIGATIONS
86
§31.
REPLACEMENT OF NOTES
86
§32.
TIME IS OF THE ESSENCE
86
§33.
RIGHTS OF THIRD PARTIES
86
§34.
GUARANTY
87
§34.1
The Guaranty.
87
§34.2
Obligations Unconditional.
87
§34.3
Reinstatement.
89
§34.4
Certain Waivers.
89
§34.5
Remedies.
89
§34.6
Rights of Contribution.
90
§34.7
Guaranty of Payment; Continuing Guaranty.
90

 
Exhibits and schedules
 
Exhibit A                                Form of Note
Exhibit B                                Form of Compliance Certificate
Exhibit C                                Form of Assignment and Assumption
Agreement
Exhibit D                                Patriot Act and OFAC Transferee and
Assignee Identifying Information Form
Exhibit E                                Form of Subsidiary Joinder
Schedule 1.1                                           Lenders and Commitments
Schedule 6.1(b)                                           Subsidiaries of ESC
Schedule 6.7                                           Litigation
Schedule 6.10                                           Tax Audits
Schedule 6.15                                           Transactions with
Affiliates
Schedule 6.22                                           Equity Interests; Rights
to Purchase; Voting Rights
Schedule 6.28                                           Permitted Existing
Indebtedness
Schedule 8.3                                           Investments

 

 
v

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TERM CREDIT AGREEMENT
 
THIS TERM CREDIT AGREEMENT (this “Agreement”) is made the 25th day of February,
2013, by and among NURSE ON CALL, INC., a Delaware corporation (“NOC”),
“NURSE-ON-CALL” HOME CARE, INC., a Florida corporation, NURSE-ON-CALL OF
BROWARD, INC., a Florida corporation, NURSE-ON-CALL OF SOUTH FLORIDA, INC., a
Florida corporation, UNITY HOME HEALTH SERVICES, INC., a Florida corporation,
NURSE ON CALL OF TEXAS, INC., a Delaware corporation, and the wholly owned
direct and indirect Subsidiaries of NOC that hereafter become signatory hereto,
as borrowers (collectively, with NOC, the “Borrowers”), HOME HEALTH CARE
HOLDINGS, LLC, a Delaware limited liability company, EMERICARE NOC LLC, a
Delaware limited liability company, EMERITUS PROPERTIES III, INC., a Washington
corporation, and EMERITUS CORPORATION, a Washington corporation (collectively,
the “Guarantors”), KEYBANK NATIONAL ASSOCIATION, a national banking association
(“KeyBank”), with the other lending institutions that are or may become parties
hereto pursuant to §18 as lenders (“Lenders”), and KEYBANK NATIONAL ASSOCIATION,
as administrative agent (“Agent”) for itself and the other Lenders.
 
RECITALS
 
WHEREAS, Borrowers have requested that Lenders make available to them a term
loan facility;
 
WHEREAS, the Lenders are willing to make such term loan facility available to
Borrowers, all upon the terms and conditions contained herein;
 
NOW, THEREFORE, in consideration of the recitals herein and the mutual covenants
and agreements contained herein, the parties hereto hereby agree as follows:
 
§1.           DEFINITIONS AND RULES OF INTERPRETATION
 
§1.1 Definitions
 
The following terms shall have the meanings set forth in this §1 or elsewhere in
the provisions of this Agreement referred to below:
 
Affected Lender.  See §18.8.
 
Affiliates.  As applied to any Person, any other Person directly or indirectly
controlling, controlled by, or under common control with, that Person.  For
purposes of this definition, “control” (including, with correlative meanings,
the terms “controlling”, “controlled by” and “under common control with”), as
applied to any Person, means (a) the possession, directly or indirectly, of the
power to vote fifty percent (50%) or more of the stock, shares, voting trust
certificates, beneficial interests, partnership interests, member interests or
other interests having voting power for the election of directors of such Person
or otherwise to direct or cause the direction of the management and policies of
that Person, whether through the ownership of
 

 
 

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voting securities or by contract or otherwise, or (b) the ownership of (i) a
general partnership interest, (ii) a managing member’s interest in a limited
liability company or (iii) a limited partnership interest or preferred stock (or
other ownership interest) with voting rights representing fifty percent (50%) or
more of the outstanding voting rights of such Person.
 
Agent.  KeyBank, acting as Agent for itself and the other Lenders, its
successors and assigns.
 
Agent’s Office.  Agent’s office located at 127 Public Square, Cleveland, Ohio
44114, or at such other location as Agent may designate from time to time by
notice to Borrower and the other Lenders.
 
Agent’s Special Counsel. Bryan Cave LLP or such other counsel as may be selected
by Agent.
 
Agreement.  This Term Credit Agreement, including the Schedules and Exhibits
hereto.
 
Agreement Regarding Fees.  The Fee Letter dated as of February 25, 2013, among
Agent, Arranger and Borrower regarding certain fees payable by Borrowers in
connection with this Agreement.
 
Applicable Base Rate Spread.  One of the following per annum rates:  (i) 3.75%
if the Total Leverage Ratio is equal to or greater than 2.50 to 1.0, (ii) 3.25%
if the Total Leverage Ratio is equal to or greater than 2.0 to 1.0 and less than
2.50 to 1.0, or (iii) 2.75% if the Total Leverage Ratio is less than 2.0 to
1.0.  The Total Leverage Ratio used to compute the Applicable Base Rate Spread
shall be the Total Leverage Ratio most recently calculated and reported pursuant
to § 7.4(d).  Changes in the Applicable Base Rate Spread resulting from a change
in the Total Leverage Ratio shall become effective upon delivery of a new
Compliance Certificate as required by § 7.4(d).  If a Compliance Certificate is
not delivered with respect to a fiscal quarter as and when required pursuant to
§ 7.4(d), the Applicable Base Rate Spread, from and including the date on which
it was required to be delivered to but not including the actual date of delivery
of such Compliance Certificate, shall conclusively be presumed to equal the
highest Applicable Base Rate Spread set forth above.
 
Applicable LIBOR Rate Spread.  One of the following per annum rates:  (i) 4.75%
if the Total Leverage Ratio is equal to or greater than 2.50 to 1.0, (ii) 4.25%
if the Total Leverage Ratio is equal to or greater than 2.0 to 1.0 and less than
2.50 to 1.0, or (iii) 3.75% if the Total Leverage Ratio is less than 2.0 to
1.0.  The Total Leverage Ratio used to compute the Applicable LIBOR Rate Spread
shall be the Total Leverage Ratio most recently calculated and reported pursuant
to § 7.4(d).  Changes in the Applicable LIBOR Rate Spread resulting from a
change in the Total Leverage Ratio shall become effective upon delivery of a new
Compliance Certificate as required by § 7.4(d).  If a Compliance Certificate is
not delivered with respect to a fiscal quarter as and when required pursuant to
§ 7.4(d), the Applicable LIBOR Rate Spread, from and including the date on which
it was required to be delivered to but not including the actual date of delivery
of such Compliance Certificate, shall conclusively be presumed to equal the
highest Applicable LIBOR Rate Spread set forth above.
 
Arranger.  KeyBanc Capital Markets.
 

 
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Assignment and Assumption Agreement.  See §18.1.
 
Available Liquidity.  As of any date of determination, an amount equal to the
sum of (a) unrestricted cash (without regard to any restrictions imposed by the
Loan Documents) plus (b) Cash Equivalents which are not pledged or encumbered
and the use of which is not restricted by the terms of any agreement (without
regard to any pledges, encumbrances or restrictions imposed by the Loan
Documents).
 
Base Rate.  The term Base Rate shall mean, for any day, a fluctuating interest
rate per annum as shall be in effect from time to time which rate per annum
shall at all times be equal to the greatest of:  (i) the rate of interest
established by KeyBank from time to time as its “prime rate” whether or not
publicly announced, which interest rate may or may not be the lowest rate
charged by it for commercial loans or other extensions of credit; (ii) the
Federal Funds Effective Rate in effect from time to time, determined one
Business Day in arrears, plus ½ of one percent (0.5%) per annum; or (iii) the
then-applicable LIBOR Rate for a one (1) month Interest Period plus one percent
(1.0%) per annum.
 
Base Rate Loans.  Those Loans bearing interest by reference to the Base Rate.
 
 
Borrowers.  As defined in the preamble hereto.
 
Borrower’s Knowledge or Knowledge.  The actual knowledge of the chief executive
officer, Principal Financial Officer, chief financial officer (if different from
the Principal Financial Officer), or general counsel of NOC and of ESC.
 
Business Day.  Any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the State of Washington, the state where Agent’s Office is located
and, if such day relates to any LIBOR Rate Loan, means any such day on which
dealings in Dollar deposits are conducted by and between banks in the London
interbank market.
 
Capitalized Lease.  A lease under which a Person is the lessee or obligor, the
discounted future rental payment obligations under which are required to be
capitalized on the balance sheet of the lessee or obligor in accordance with
GAAP.
 
Cash Equivalents.  Investments of the type described in §8.3(a) through (f).
 
CERCLA.  See §6.18.
 
Change in Law.  The occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or
treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided that notwithstanding anything herein to the
contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith and (y) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
 

 
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Supervision (or any successor or similar authority) or the United States or
foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “Change in Law”, regardless of the date enacted,
adopted or issued.
 
Change of Control.  A Change of Control shall exist upon the occurrence of any
of the following:
 
(a) a transaction in which any “person” or “group” (within the meaning of
Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended)
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended), directly or indirectly, of a sufficient
number of shares of all classes of stock then outstanding of ESC ordinarily
entitled to vote in the election of directors, empowering such “person” or
“group” to elect a majority of the Board of Directors of ESC, who did not have
such power before such transaction;
 
(b) As of any date a majority of the Board of Directors (“Board”) of ESC
consists of individuals who were not either (i) directors or trustees of ESC as
of the corresponding date of the previous year, or (ii) selected or nominated to
become directors by the Corporate Governance and Nominating Committee of ESC
which is comprised solely of independent directors, as required by the New York
Stock Exchange, and approved by a majority of the Board of ESC, which majority
consisted of individuals described in clause (i) above, or (iii) selected or
nominated to become directors or trustees by the Corporate Governance and
Nominating Committee of ESC and approved by a majority of the Board of ESC,
which majority consisted of individuals described in clause (i) above and
individuals described in clause (ii) above (excluding, in the case of both
clause (ii) and (iii) above, any individual whose initial nomination for, or
assumption of office as, a member of the Board occurs as a result of an actual
or threatened solicitation of proxies or consents for the election or removal of
one or more directors or trustees by any Person or group other than a
solicitation for the election of one or more directors or trustees by or on
behalf of the Board); or
 
(c) the Borrowers (other than any Borrower that is released from the Obligations
in accordance with §8.8(a)(viii)) cease for any reason to be the direct or
indirect Subsidiaries of ESC, except for dispositions of any Borrowers permitted
by §8.8(a)(viii); or
 
(d) the Borrowers other than NOC or other than any Borrower that is released
from the Obligations in accordance with §8.8(a)(viii) cease for any reason to be
wholly owned direct or indirect Subsidiaries of NOC.
 
Notwithstanding the foregoing, none of the events or transactions described
above in paragraphs (a) or (b) shall constitute a Change of Control, provided
ESC or Person(s) surviving any transaction involving the disposition,
consolidation or merger of ESC that assumes all of the obligations of ESC under
its Guaranty Agreement, after giving effect to any such transaction, is in
compliance with the Threshold Covenants.
 
Closing Date.  The first date on which all of the conditions set forth in §10
have been satisfied or waived in writing by Agent.
 

 
4

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Code.  The Internal Revenue Code of 1986, as amended.
 
Collateral.  All of the property, rights and interests of Borrowers and Holdings
which are or are intended to be subject to the security interests, security
title, and liens created by the Security Documents.
 
Collection Account.  Account no. 0048562343 maintained by NOC at Regions Bank,
or such separate or replacement collection account to be maintained at
KeyBank, which collection account shall be acceptable to the Agent in its
reasonable discretion.
 
Collection Account Agreement.  The Collection Account Agreement (Government
Receivables) dated as of February 25, 2013 among NOC, Agent and Regions Bank
with respect to the Collection Account, or such similar collection account
control agreement in form and substance acceptable to the Agent in its
reasonable discretion with respect to a separate or replacement collection
account
 
Commitment.  With respect to each Lender, the amount set forth on Schedule 1.1
hereto as the amount of such Lender’s Commitment to make or maintain Loans to
Borrowers, as the same may be changed from time to time in accordance with the
terms of §2.7 of this Agreement.
 
Commitment Percentage.  With respect to each Lender, the percentage set forth on
Schedule 1.1 hereto as such Lender’s percentage of the aggregate Commitments of
all of Lenders, as the same may be changed from time to time in accordance with
the terms of §18.1 of this Agreement.
 
Compliance Certificate.  See §7.4(e).
 
Consolidated.  With reference to any term defined herein, that term as applied
to the financial condition or operating results of a Person and its
Subsidiaries, determined on a consolidated or combined basis in accordance with
GAAP.
 
Conversion Request.  A notice given by Lead Borrower to Agent of Borrowers’
election to convert or continue a Loan in accordance with §4.1.
 
DDA Account.  Each checking, savings or other demand deposit account maintained
by any of the Borrowers.
 
Debt Service.  For any Test Period, the sum of (i) interest expense plus (ii)
scheduled principal payments due with respect to Funded Debt, other than balloon
payments due upon the maturity of any Funded Debt.
 
Debt Service Coverage Ratio.  With respect to NOC and its Subsidiaries, on a
Consolidated basis, for any Test Period, the ratio of (x) EBITDA to (y) Debt
Service.
 
Debtor Relief Law.  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.
 

 
5

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Default.  Any event or condition that constitutes an Event of Default or that,
with the giving of notice, the passage of time, or both, would be an Event of
Default.
 
Default Rate.  See §4.12.
 
Defaulting Lender.  Subject to §14.5(c), any Lender that (a) has failed to (i)
fund all or any portion of its Loans within two Business Days of the date such
Loans were required to be funded hereunder unless such Lender notifies Agent and
Borrowers in writing that such failure is the result of such Lender’s
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
Agent or any other Lender any other amount required to be paid by it within two
Business Days of the date when due, (b) 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 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 Agent that a Lender is a Defaulting Lender under
clauses (a) or (b) above shall be conclusive and binding absent manifest error,
and such Lender shall be deemed to be a Defaulting Lender (subject to §14.5(c))
upon delivery of written notice of such determination to the Borrower and each
Lender.
 
Deposit Account Bank.  Each bank or other financial institution at which any
Borrower maintains a deposit account that has entered into a Deposit Account
Control Agreement.
 
Deposit Account Control Agreement.  Each deposit account control agreement, in
form and substance satisfactory to Agent, from time to time executed by a
Deposit Account Bank in favor of Agent for the benefit of Agent and Lenders.
 
Distribution.  With respect to any Person, the payment of any cash, cash flow,
dividend or distribution (whether in the form of cash or property) on or in
respect of any shares of any class of capital stock, partnership interest,
membership interest or other beneficial interest of such Person; the purchase,
redemption, exchange or other retirement for value of any shares of any class of
capital stock, partnership interest, membership interest or other beneficial
interest of such Person, directly or indirectly through a Subsidiary of such
Person or otherwise; the return of capital (whether in the form of cash or
property) by a Person to its shareholders, partners, members or other beneficial
owners as such; or any other distribution on or in respect of any shares of any
class of capital stock, partnership interest, membership interest or other
beneficial interest of such Person.
 
Dollars or $.  Dollars in lawful currency of the United States of America.
 

 
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Domestic Lending Office.  Initially, the office of each Lender designated as
such in Schedule 1.1 hereto; thereafter, such other office of such Lender, if
any, located within the United States that will be making or maintaining Base
Rate Loans.
 
Drawdown Date.  The date on which any Loan is made or is to be made, and the
date on which any Loan is converted to a Loan of the other Type.
 
EBITDA.  With respect to NOC and its Subsidiaries, on a Consolidated basis, for
any fiscal period, the sum of (a) Net Income of such Persons, plus (b) without
duplication and to the extent the following have been deducted in the
calculation of Net Income for such period, (i) interest expense, (ii) federal,
state and local income tax expense, (iii) depletion, depreciation and
amortization expense, (iv) non-recurring cash expenses incurred in connection
with acquisitions and financing transactions of up to $500,000 in any
consecutive twelve (12) month period, (v) expenses arising under the Tax Sharing
Agreement, and (vi) all non-recurring non-cash expenses or charges (excluding
any such non-cash item to the extent that it represents an accrual or reserve
for potential cash items in any future period or amortization of a prepaid cash
item that was paid in a prior period), minus (c) all non-recurring non-cash
items increasing Net Income of such Person for such period (excluding (x) the
accrual of revenue or recording of receivables in the ordinary course of
business and (y) any such non-cash item to the extent it represents the reversal
of an accrual or reserve for potential cash item in any prior period), all
determined without duplication and in accordance with GAAP.
 
EBITDAR.  With respect to ESC and its Subsidiaries, on a Consolidated basis, for
any fiscal period, the sum of (a) Net Income for such Persons, plus (b) without
duplication and to the extent the following have been deducted in the
calculation of Net Income for such period, (i) interest expenses, (ii) federal,
state and local income tax expense, (iii) depletion, depreciation and
amortization expense, (iv) Operating Lease Expense, (v) all non-recurring
non-cash expenses or charges (excluding any such non-cash item to the extent
that it represents an accrual or reserve for potential cash items in any future
period or amortization of a prepaid cash item that was paid in a prior period),
(vi) non-recurring cash expenses incurred in connection with acquisitions and
financing transactions of up to $2,000,000 in any consecutive twelve (12) month
period and (vii) non-cash stock based compensation, minus (c)(i) all
non-recurring non-cash items increasing Net Income of such Person for such
period (excluding (x) the accrual of revenue or recording of receivables in the
ordinary course of business and (y) any such non-cash item to the extent it
represents the reversal of an accrual or reserve for potential cash item in any
prior period), and (ii) “Recurring Capital Expenditures” as shown on ESC’s
Consolidated financial statements for such period.
 
Eligible Assignee:  (a) Any Lender or any Affiliate of a Lender; (b) any
commercial bank, savings bank, savings and loan association, investment or
mutual fund (at the time any Event of Default exists), or similar financial
institution which (i) has total assets of $1,000,000,000 or more, (ii) is “well
capitalized” within the meaning of such term under the regulations promulgated
under the auspices of the Federal Deposit Insurance Corporation Improvement Act
of 1991, as amended, (iii) in the sole judgment of Agent, is engaged in the
business of lending money and extending credit, and buying loans or
participations in loans under credit facilities substantially similar to those
extended under this Agreement, and (iv) in the sole judgment of Agent, is
operationally and procedurally able to meet the obligations of a
 

 
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Lender hereunder; (c) any insurance company in the business of writing insurance
which (i) has total assets of $1,000,000,000 or more (ii) is “best capitalized”
within the meaning of such term under the applicable regulations of the National
Association of Insurance Commissioners, and (iii) meets the requirements set
forth in subclauses (iii) and (iv) of clause (b) above; and (d) any other
financial institution having total assets of $1,000,000,000  (including a mutual
fund or other fund under management of any investment manager having under its
management total assets of $1,000,000,000 or more, and any of its Related Funds)
which meets the requirement set forth in subclauses (iii) and (iv) of clause (b)
above; provided that each Eligible Assignee must (A) be organized under the Laws
of the United States of America, any state thereof or the District of Columbia,
or, if a commercial bank, be organized under the Laws of the United States of
America, any State thereof or the District of Columbia, the Cayman Islands or
any country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of such a country, (B) act under the
Loan Documents through a branch, agency or funding office located in the United
States of America, (C) be exempt from withholding of tax on payments hereunder
and deliver the documents related thereto pursuant to the Internal Revenue Code
as in effect from time to time, and (D) not be a Loan Party or an Affiliate of a
Loan Party.
 
Employee Benefit Plan.  Any employee benefit plan within the meaning of §3(3) of
ERISA maintained or contributed to by a Loan Party or any ERISA Affiliate, other
than a Multiemployer Plan.
 
Environmental Laws.  See §6.18(a).
 
EPA.  See §6.18(b).
 
Equity Interests.  With respect to any Person, all shares of capital stock,
partnership interests, membership interests in a limited liability company or
other ownership in participation or equivalent interests (however designated,
whether voting or non-voting) of such Person’s equity capital (including any
warrants, options or conversion or other purchase rights with respect to the
foregoing) whether now outstanding or issued after the Closing Date.
 
ERISA.  The Employee Retirement Income Security Act of 1974, as amended and in
effect from time to time and any rules and regulations promulgated pursuant
thereto.
 
ERISA Affiliate.  Any Person which is treated as a single employer with NOC
under §414 (b) or (c) of the Code.
 
ERISA Reportable Event.  A reportable event with respect to a Guaranteed Pension
Plan within the meaning of §4043 (c) of ERISA and the regulations promulgated
thereunder as to which the requirement of notice has not been waived.
 
ESC.  Emeritus Corporation, a Washington corporation.
 
Event of Default.  See §12.1.
 
Excluded Taxes.  Any of the following Taxes imposed on or with respect to a
Recipient or required to be withheld or deducted from a payment to a Recipient,
(a) Taxes imposed on or
 

 
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measured by net income (however denominated), franchise Taxes, and branch
profits Taxes, in each case, (i) imposed as a result of such Recipient being
organized under the laws of, or having its principal office or, in the case of
any Lender, its applicable lending office located in, the jurisdiction imposing
such Tax (or any political subdivision thereof) or (ii) that are Other
Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes
imposed on amounts payable to or for the account of such Lender with respect to
an applicable interest in a Loan or Commitment pursuant to a law in effect on
the date on which (i) such Lender acquires such interest in the Loan or
Commitment (other than pursuant to an assignment request by Borrower under
§4.10) or (ii) such Lender changes its lending office, except in each case to
the extent that, pursuant to §4.4, amounts with respect to such Taxes were
payable either to such Lender’s assignor immediately before such Lender became a
party hereto or to such Lender immediately before it changed its lending office,
(c) Taxes attributable to such Recipient’s failure to comply with §4.4(f) and
(d) any U.S. federal withholding imposed under FATCA.
 
Extension Period.  See §3.1(c).
 
FATCA.  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.
 
Federal Funds Effective Rate.  For any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by Agent from three (3)
Federal funds brokers of recognized standing selected by Agent.  Any change in
the Federal Funds Effective Rate shall become effective as of the opening of
business on the day on which such change in the Federal Funds Effective Rate
becomes effective, without notice or demand of any kind.
 
Fixed Charge Coverage Ratio.  With respect to ESC and its Subsidiaries, on a
Consolidated basis, for any Test Period, the ratio of (x) EBITDAR to (y) Fixed
Charges.
 
Fixed Charges.  For any Test Period, the sum of (i) interest expense, plus (ii)
Operating Lease Expense, plus (iii) scheduled principal payments due with
respect to Funded Debt other than balloon payments due upon maturity of any
Funded Debt; provided, however, that $2,500,000 of principal payments on the
Loans may be excluded in each Test Period.
 
Foreign Lender.  (a) if Borrower is a U.S. Person, a Lender that is not a U.S.
Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident
or organized under the laws of a jurisdiction other than that in which the
Borrower is resident for tax purposes.
 
Funded Debt.  With respect to any Person, without duplication all outstanding
Indebtedness of such Person, other than (a) Indebtedness described in clause (e)
of the definition of Indebtedness herein except to the extent the letter of
credit or similar instrument has been drawn upon but not reimbursed, (b)
Indebtedness described in clause (f) of the definition of
 

 
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Indebtedness herein, (c) Indebtedness payable to any Loan Party, and (d) any
obligations under the Tax Sharing Agreement.
 
GAAP.  Generally accepted accounting principles in the United States, applied on
a basis consistent with the principles used in preparing a Person’s audited
consolidated financial statements for the fiscal year then ended, as such
principles may be revised as a result of changes in such accounting principles
implemented by such Person and its consolidated Subsidiaries subsequent to such
date.  If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth herein and NOC, ESC or the Required
Lenders shall so request, Agent, Lenders, and the Loan Parties shall negotiate
in good faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change in GAAP (subject to the approval of the Required
Lenders); provided that, until so amended, such ratio or requirement shall
continue to be computed in accordance with GAAP as in effect prior to such
change therein.
 
Governmental Authority.  Any international, foreign, federal, state, county or
municipal government, or political subdivision thereof; any governmental,
quasi-governmental or regulatory agency, authority, board, bureau, commission,
department, instrumentality or public body; or any court or administrative
tribunal.
 
Guaranteed Pension Plan.  Any employee pension benefit plan within the meaning
of §3(2) of ERISA maintained or contributed to by a Loan Party or any ERISA
Affiliate the benefits of which are guaranteed on termination in full or in part
by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan.
 
Guarantors.  The parties signatory hereto as guarantors.
 
Guaranty Agreement.  The agreements set forth in §34 of this Agreement and any
guaranties of the Obligations (or portions thereof) executed by a Guarantor in
favor of Agent, for the benefit of the Lenders, after the date hereof, all such
guaranties to be in form and substance satisfactory to Agent as of the date such
guaranties are delivered, and as the same may be modified or amended hereafter.
 
Hazardous Substances.  See §6.18(b).
 
Hedge Agreement.  Any interest rate cap, collar, floor, forward rate, forward
starting, or swap agreement or similar protective agreement regarding the
hedging of interest rate risk exposure now or hereafter entered into between
Borrowers and any Lender with respect to the Loans.
 
Holdings.  Home Health Care Holdings, LLC, a Delaware limited liability company.
 
Holdings Pledge Agreement.  The Pledge Agreement executed by Holdings in favor
of Agent for the benefit of Lenders granting a first priority security interest
in and to one hundred percent (100%) of the Equity Interests in NOC, which
Pledge Agreement shall be in form and substance satisfactory to Agent.
 

 
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Indebtedness.  With respect to any Person means, without duplication:  (a) all
indebtedness for money borrowed and any obligations evidenced by bonds,
debentures, notes or similar debt instruments; (b) all liabilities secured by
any mortgage, deed of trust, deed to secure debt, pledge, security interest,
lien, charge or other encumbrance existing on property owned or acquired subject
thereto, whether or not the liability secured thereby shall have been assumed;
(c) all guarantees, endorsements and other contingent obligations whether direct
or indirect in respect of indebtedness of others, including any obligation to
supply funds to or in any manner to invest directly or indirectly in a Person,
to purchase indebtedness, or to assure the owner of indebtedness against loss
through an agreement to purchase goods, supplies or services for the purpose of
enabling the debtor to make payment of the indebtedness held by such owner,
through indemnity or otherwise, and the obligation to reimburse the issuer in
respect of any letter of credit; (d) any obligation as a lessee or obligor under
a Capitalized Lease; (e) all reimbursement obligations with respect to letters
of credit or similar instruments issued by a Person; and (f) all indebtedness,
obligations or other liabilities under or with respect to (i) interest rate
swap, collar, cap or similar agreements providing interest rate protection,
including, without limitation, any Hedge Agreement and (ii) foreign currency
exchange agreements.
 
Indemnified Taxes.  (a) Taxes, other than Excluded Taxes, imposed on or with
respect to any payment made by or on account of any obligation of Borrowers
under any Loan Document and (b) to the extent not otherwise described in (a),
Other Taxes.
 
Indemnitee.  See §16.
 
Interest Payment Date.  With respect to each Loan, the first day of each
calendar month during the term of such Loan.
 
Interest Period.  With respect to each LIBOR Rate Loan, (a) initially, the
period commencing on the Drawdown Date of such Loan and ending one (1), two (2)
or three (3) months thereafter, and (b) thereafter, each period commencing on
the day following the last day of the immediately preceding Interest Period
applicable to such LIBOR Rate Loan and ending on the last day of one of the
periods set forth above, as selected by Borrower in a Loan Request or Conversion
Request; provided that all of the foregoing provisions relating to Interest
Periods are subject to the following:
 
(i) the first day of each Interest Period must be a Business Day.
 
(ii) if any Interest Period with respect to a LIBOR Rate Loan would otherwise
end on a day that is not a Business Day, such Interest Period shall be extended
to the next succeeding Business Day, unless such Business Day falls in the next
calendar month, in which case the Interest Period shall end on the next
preceding Business Day; and
 
(iii) no Interest Period relating to any LIBOR Rate Loan shall extend beyond the
Maturity Date.
 
Investments.  With respect to any Person, all shares of capital stock,
partnership interests, limited liability company interests or other ownership
interests, evidences of Indebtedness and other securities issued by any other
Person, all loans, advances, or extensions of credit to, or contributions to the
capital of, any other Person, all purchases of the securities or all or
 

 
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substantially all of the business or line of business of any other Person and
commitments to make such purchases and all interests in real property (exclusive
of interests arising from entering into leases as lessee); provided, however,
that the term “Investment” shall not include (i) equipment, inventory and other
personal property acquired in the ordinary course of business, or (ii) trade and
customer accounts receivable for services rendered in the ordinary course of
business and payable in accordance with customary trade terms.  In determining
the aggregate amount of Investments outstanding at any particular time:  (a) the
amount of any investment represented as a guaranty shall be taken at not less
than the principal amount of the obligations guaranteed and still outstanding;
(b) there shall be included as an Investment all interest accrued with respect
to Indebtedness constituting an Investment unless and until such interest is
paid; (c) there shall be deducted in respect of each such Investment any amount
received as a return of capital (including the payment of dividends and
distributions); (d) there shall not be deducted or increased in respect of any
Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued interest included as
provided in the foregoing clause (b) may be deducted when paid; and (e) there
shall not be deducted from, or added to, the aggregate amount of Investments any
decrease or increase, respectively, in the value thereof.
 
KeyBank.  KeyBank National Association, a national banking association.
 
Lead Borrower.  NOC, as agent for Borrowers party hereto.  Each Borrower hereby
designates and appoints the Lead Borrower as such Borrower’s agent for such
purposes as are provided herein.
 
Lenders.  KeyBank and the other lending institutions which are or may become
parties to this Agreement, pursuant to § 18 hereof, as is defined in the first
paragraph of this Agreement.
 
LIBOR Lending Office.  Initially, the office of each Lender designated as such
in Schedule 1.1 hereto; thereafter, such other office of such Lender, if any,
that shall be making or maintaining LIBOR Rate Loans.
 
LIBOR Rate.  As applicable to any LIBOR Rate Loan, the rate per annum as
determined on the basis of the offered rates for deposits in Dollars, for a
period of time comparable to the Interest Period for such LIBOR Rate Loan which
appears on the Reuters Screen LIBOR01 Page as of 11:00 a.m. London time on the
day that is two (2) LIBOR Business Days preceding the first day of the Interest
Period for such LIBOR Rate Loan; provided, however, if the rate described above
does not appear on such service on any applicable interest determination date,
the LIBOR Rate shall be the rate (rounded upward, if necessary, to the nearest
one hundred-thousandth of a percentage point), determined on the basis of the
offered rates for deposits in Dollars for a period of time comparable to the
Interest Period for such LIBOR Rate Loan which are offered by four (4) major
banks in the London interbank market at approximately 11:00 a.m. London time, on
the day that is two (2) LIBOR Business Days preceding the first day of the
Interest Period for the LIBOR Rate Loan as selected by Agent.  The principal
London office of each of the four (4) major London banks will be requested to
provide a quotation of its Dollar deposit offered rate.  If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations.  If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted for loans
in Dollars to leading European banks for a
 

 
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period of time comparable to the Interest Period for such LIBOR Rate Loan
offered by major banks in New York City at approximately 11:00 a.m. (eastern
time), on the day that is two (2) LIBOR Business Days preceding the first day of
the Interest Period for the LIBOR Rate Loan.  In the event that Agent is unable
to obtain any such quotation as provided above, it will be deemed that the LIBOR
Rate for a LIBOR Rate Loan cannot be determined and §4.6 shall apply.  In such
event, the Loan shall bear interest at the Base Rate.  In the event that the
Board of Governors of the Federal Reserve System shall impose a Reserve
Percentage with respect to LIBOR deposits of Agent, then for any period during
which such Reserve Percentage shall apply, the LIBOR Rate shall be equal to the
amount determined above divided by an amount equal to one (1) minus the Reserve
Percentage.
 
LIBOR Rate Loans.  Those Loans bearing interest calculated by reference to the
LIBOR Rate.
 
Liquid Assets.  The following assets, provided that such assets (A) are not
subject to any lien, claim or other encumbrance (other than a lien for the
benefit of Agent or Lenders); (B) are not the subject of any arrangement with
any creditor to have such creditor’s claim satisfied out of such asset prior to
general creditors (other than an arrangement for the benefit of Agent or
Lenders); (C) if not cash, may be converted to cash within five (5) days; and
(D) are not subject to any legal or contractual restrictions (other than those
inherent in or typical to the instrument or those for the benefit of or imposed
by Agent or Lenders):
 
(a) cash on hand;
 
(b) United States Treasury notes, bonds, bills, or certificates of indebtedness,
or those for which the full faith and credit of the United States are pledged
for the full and timely payment of principal and interest (including State and
Local Government Series);
 
(c) obligations, participations, or other instruments of or issued by a federal
agency or a United States government-sponsored enterprise, the principal of and
interest on which is unconditionally guaranteed by the United States;
 
(d) any obligations on which the interest is exempt from federal income taxation
and which are rated by a nationally recognized rating service in one of its two
highest long-term or short-term rating categories;
 
(e) certificates of deposit issued by, or time or demand deposits or other
banking arrangements with, a nationally or state-chartered bank or a savings
association having a minimum capital of $500,000,000 and rated within the top
two ratings of a nationally recognized rating service;
 
(f) taxable government money market portfolios rated “AAA” by a nationally
recognized rating service and restricted to obligations with maturities of one
year or less issued or guaranteed as to payment of principal and interest by the
full faith and credit of the United States of America, and which are rated by
such nationally recognized rating service in one of its two highest short term
rating categories; and
 
(g) Readily Marketable Securities.
 

 
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(h) Liens.  See §8.2.
 
Loan Documents.  Collectively, this Agreement, the Notes, the Security
Documents, the Hedge Agreements, and all other documents, instruments or
agreements now or hereafter assumed, executed or delivered by or on behalf of
any Loan Party in favor of the Agent or the Lenders in connection with the
Loans, as the same may be amended, modified, renewed, extended, consolidated,
supplemented or restated from time to time.
 
Loan Parties.  Collectively, the Borrowers and the Guarantors, any of which may
be sometimes referred to individually as a Loan Party.
 
Loan Request.  See §2.4.
 
Loans.  Collectively, the aggregate Loans to be made by Lenders under §2.1 on
the Closing Date under the Commitment not to exceed $50,000,000.
 
Material Adverse Effect.  A materially adverse effect on (a) the business,
assets, liabilities, condition (financial or otherwise), or results of
operations of either (i) NOC and its Subsidiaries taken as a whole, or (ii) ESC
and its Subsidiaries taken as a whole, (b) the ability of any Loan Party to
perform its obligations under the Loan Documents to which it is a party, (c) the
validity or enforceability of any of the Loan Documents, or (d) the material
rights, benefits or interests of Lenders and Agent in and to this Agreement, any
other Loan Document or the Collateral.
 
Maturity Date.  February 25, 2017, or if the Maturity Date is extended pursuant
to §3.1(c), February 25, 2018, or such earlier date on which the Loans shall
become due and payable pursuant to the terms hereof.
 
Moody’s.  Moody’s Investors Service, Inc.
 
Multiemployer Plan.  Any multiemployer plan within the meaning of §4001(a)(3) of
ERISA to which Borrower or any ERISA Affiliate is making, or is required to
make, contributions.
 
Net Cash Proceeds.  With respect to any sale of assets under §8.8(a)(viii), an
amount equal to (a) the cash proceeds received in respect of such sale, net of
(b) the sum of (i) reasonable fees and out-of-pocket expenses paid by Borrower
to third parties in connection with such sale, (ii) the amount of all payments
required to be paid by the applicable Borrower as a result of such sale to repay
Indebtedness (other than the Obligations) secured by the asset sold, if any and
(iii) the amount of all taxes paid (or reasonably estimated to be payable) by
the applicable Borrower that are directly attributable to such sale.
 
Net Income.  With respect to any Person for any Test Period, the net income (or
deficit) of such Person, after deduction of all expenses, taxes and other
property charges, determined in accordance with GAAP.
 
Net Worth.  The amount by which Total Assets exceeds Total Liabilities.
 

 
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NOC.  Nurse on Call, Inc., a Delaware corporation.
 
NOC Net Cash Flow.  For each fiscal quarter:
 
(a) the sum of:
 
(i)  
all cash received by NOC and its Consolidated Subsidiaries during such fiscal
quarter; plus

 
(ii)  
all amounts that the Board of Directors of NOC releases during such fiscal
quarter from the existing Reserves;

 
(b) reduced, without duplication, (but not to less than zero) by the sum of:
 
(i)  
all cash payments made by NOC and its Consolidated Subsidiaries during such
fiscal quarter to cover their respective liabilities, obligations, working
capital needs and expenses (including any payments to ESC pursuant to the Tax
Sharing Agreement, to the extent not previously taken into account as Reserves);
plus

 
(ii)  
all cash that the Board of Directors of NOC elects, in its reasonable discretion
exercised in good faith, to expend in connection with an acquisition, merger or
other business investment; plus

 
(iii)  
all cash that the Board of Directors of NOC elects, in its reasonable discretion
exercised in good faith, to set aside as additional Reserves.

 
NOC-Broward.  Nurse-on-Call of Broward, Inc., a Florida corporation.
 
NOC-HC.  “Nurse-on-Call” Home Care, Inc., a Florida corporation.
 
NOC-SF.  Nurse-on-Call of South Florida, Inc., a Florida corporation.
 
NOC-Texas.  Nurse on Call of Texas, Inc., a Delaware corporation.
 
Non-Consenting Lender.  See §18.8.
 
Notes.  See §2.2.
 
Notice.  See §19.
 
Obligations.  All indebtedness, obligations and liabilities of Borrowers and
Guarantors to any of Lenders and Agent, individually or collectively, under this
Agreement or any of the other Loan Documents or in respect of any of the Loans
or the Notes, or other instruments at any time evidencing any of the foregoing,
whether existing on the date of this Agreement or arising or incurred hereafter,
direct or indirect, joint or several, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured, arising by
contract, operation of law or otherwise (including, without limitation, advances
made by Agent to protect or preserve
 

 
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the Collateral or the security interests therein), and including interest and
fees that accrue after the commencement by or against any Loan Party of any
proceeding under the United States Bankruptcy Code or other similar federal or
State law, naming such Person as the debtor in such proceeding, regardless of
whether or not such interest and fees are allowed claims in such proceeding.  To
the extent this definition of “Obligations” is referenced in any Security
Document, the definition shall also include any Indebtedness, obligations and
liabilities of Borrowers under any and all Hedge Agreements.
 
OFAC Review Process.  That certain review process established by Agent to
determine if any potential transferee of any interests or any assignee of any
portion of the Loans or any of their members, officers or partners are a party
with whom Agent and any Lender are restricted from doing business under (i) the
regulations of OFAC, including those Persons named on OFAC’s Specially
Designated and Blocked Persons list, or (ii) any other statute, executive order
or other governmental action or list (including the September 24, 2001 Executive
Order Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism.
 
Operating Account.  See §5.2.
 
Operating Lease Expense.  Lease expense as determined by GAAP that is paid in
cash, excluding any such lease expense for the headquarters facilities of ESC.
 
Organizational Document.  With respect to any Person other than a natural
person, its articles or certificate of incorporation, formation or organization,
partnership agreement, operating agreement, by-laws and all shareholder
agreements, voting trusts and similar arrangements applicable to any of its
authorized Equity Interests.
 
Other Connection Taxes.  With respect to any Recipient, Taxes imposed as a
result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Loan or Loan Document).
 
Other Taxes.  all present or future stamp, court or documentary, intangible,
recording, filing or similar Taxes that arise from any payment made under, from
the execution, delivery, performance, enforcement or registration of, from the
receipt or perfection of a security interest under, or otherwise with respect
to, any Loan Document, except any such Taxes that are Other Connection Taxes
imposed with respect to an assignment (other than an assignment made pursuant to
§4.10).
 
Outstanding.  With respect to the Loans, the aggregate unpaid principal thereof
as of any date of determination.
 
Patriot Act Customer Identification Process.  That certain customer
identification and review process established by Agent pursuant to the
requirements of 31 U.S.C. §5318(1) and 31 C.F.R. §103.121 to verify the identity
of all permitted transferees of interests in Borrower and any assignees of a
portion of the Loan hereunder.
 

 
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PBGC.  The Pension Benefit Guaranty Corporation created by §4002 of ERISA and
any successor entity or entities having similar responsibilities.
 
Perfection Certificate.  As defined in the Security Agreement.
 
Permitted Acquisitions.  See § 8.3(n).
 
Permitting Existing Indebtedness.  The Indebtedness of Borrowers set forth on
Schedule 6.28 attached hereto.
 
Permitted Liens.  Liens, security interests and other encumbrances permitted by
§8.2.
 
Person.  Any individual, corporation, partnership, limited liability company,
trust, unincorporated association, business, or other legal entity, and any
government or any governmental agency or political subdivision thereof.
 
Plan Assets.  Assets of any Employee Benefit Plan subject to Part 4, Subtitle A,
Title I of ERISA.
 
Principal Financial Officer:  With respect to each of NOC and ESC, the chief
financial officer, chief accounting officer or controller responsible for the
preparation and certification of financial statements.
 
RCRA.  See §6.18(a).
 
Readily Marketable Securities.  Marketable securities listed or admitted to
trading on the New York Stock Exchange or the American Stock Exchange or quoted
on the NASDAQ National Market with a market price equal to or greater than $2.00
per share, so long as, in the case of any such securities the transfer of which
is restricted by Rule 144, a minimum of two years shall have elapsed since the
later of (a) the date of the acquisition by the owner of such marketable
securities from the respective issuers thereof or from any affiliate (as that
term is defined in paragraph (a)(1) of Rule 144) of any of such issuers and (b)
the date of payment by the owner of the full purchase price or other
consideration paid or given to acquire such marketable securities from the
respective issuers thereof or from any affiliate (as that term is defined in
paragraph (a)(1) of rule 144).
 
Recipient.  Agent and any Lender, as applicable.
 
Record.  The grid attached to any Note, or the continuation of such grid, or any
other similar record, including computer records, maintained by Agent with
respect to any Loan referred to in such Note.
 
Register.  See §18.2.
 
Related Fund.  With respect to any fund that invests in loans, any other fund
that invests in loans that is managed by the same investment advisor as such
Lender or by an Affiliate of such Lender or such investment advisor.
 

 
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Related Parties.  With respect to any Person, such Person’s Affiliates and the
partners, directors, officers, employees, agents and advisors of such Person and
of such Person’s Affiliates.
 
Release.  See §6.18(c) (iii).
 
Required Lenders.  As of any date, the Lender or Lenders (not including any
Defaulting Lender, which shall not be entitled to vote) whose aggregate
Commitment Percentage exceeds sixty-six and 2/3 percent (66-2/3%).
 
Requirements.  Any applicable federal or state law or governmental regulation,
or any local ordinance, order or regulation, including but not limited to laws,
regulations, or ordinances relating to zoning, building use and occupancy,
subdivision control, fire protection, health, sanitation, safety, handicapped
access, historic preservation and protection, tidelands, wetlands, flood control
and Environmental Laws, including without limitation, the Americans With
Disabilities Act or any state laws regarding disability requirements.
 
Reserves.  The funds set aside and held by NOC, in amounts reasonably determined
by the Board of Directors of NOC, to cover the payment of future expenses,
capital expenditures, improvements, retirement of indebtedness, operations and
contingencies of NOC and its Subsidiaries, known or unknown, liquidated or
unliquidated, including, without limitation, liabilities that may be incurred in
litigation and liabilities undertaken pursuant to the indemnification provisions
of the operating agreement of Holdings and any accrued but unpaid liabilities
under the Tax Sharing Agreement, after taking into consideration the amount of
cash on the Consolidated balance sheet of NOC and its Subsidiaries and the
amount of reasonably expected future Net Income of NOC and its Subsidiaries.
 
Reserve Percentage.  As of any date, the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which is
imposed on member banks of the Federal Reserve System against “Euro-currency
Liabilities” as defined in Regulation D.  The LIBOR Rate for each outstanding
LIBOR Rate Loan shall be adjusted automatically as of the effective date of any
change in the Reserve Percentage.
 
S&P.  Standard & Poor’s Ratings Service, a division of The McGraw-Hill
Companies.
 
SARA.  See §6.18(a).
 
SEC.  United States Securities and Exchange Commission.
 
Security Agreement.  The Pledge and Security Agreement executed by Borrowers in
favor of Agent for the benefit of Lenders granting a first priority security
interest in all personal property assets of Borrowers, which Security Agreement
shall be in form and substance satisfactory to Agent.
 
Security Documents.  Collectively, the Security Agreement, the Deposit Account
Control Agreements, the Holdings Pledge Agreement and any further collateral
assignments now or hereafter delivered by Borrowers or Holdings to Agent for the
benefit of Lenders, including, without limitation, UCC-1 financing statements
filed or recorded in connection therewith, as
 

 
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each may be further amended, modified, renewed, consolidated, supplemented or
extended, from time to time.
 
State.  A state of the United States of America, or the District of Columbia.
 
Subsidiary.  Any corporation, association, partnership, limited liability
company, trust or other business or legal entity of which the designated parent
shall at any time own, directly or indirectly through a Person or Persons, a
greater than fifty percent (50%) ownership interest.
 
Subsidiary Joinder Agreement.  An agreement in the form attached hereto and made
a part hereof as Exhibit E, whereby a Person shall become an additional joint
and several Borrower pursuant to § 7.15.
 
Taxes.  All present or future taxes, levies, imposts, duties, deductions,
withholdings, (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.
 
Tax Sharing Agreement.  The Tax Sharing Agreement dated as of November 1, 2012,
between ESC and Holdings.
 
Test Period.  See §9.1(a).
 
Threshold Covenants.  As determined with respect to ESC and its Subsidiaries on
a Consolidated basis, or with respect to Person(s) described in the last
paragraph of the definition of Change of Control above, on a Consolidated basis
(with such Person’s Subsidiaries) or on a combined basis if more than one Person
assumes the obligations of ESC under its Guaranty Agreement, (a) a Fixed Charge
Coverage Ratio for the most recently completed four (4) fiscal quarters of not
less than 1.25 to 1.0, (b) a ratio of (i) Funded Debt plus Capitalized Lease
obligations to (ii) to EBITBAR for the most recently completed four (4) fiscal
quarters of not greater than 6.0 to 1.0, (c) Net Worth of not less than
$400,000,000, and (d) Liquid Assets of not less than $20,000,000.
 
Total Assets.  All assets of a Person determined in accordance with GAAP.
 
Total Funded Debt.  As of any date of determination, an amount equal to one
hundred percent (100%) of all Funded Debt of NOC and its Subsidiaries.
 
Total Leverage Ratio.  With respect to NOC and its Subsidiaries, on a
Consolidated basis, for any Test Period, the ratio of (i) Total Funded Debt as
of the end of such period to (ii) EBITDA for such period.
 
Total Liabilities.  All liabilities of a Person determined in accordance with
GAAP.
 
Type.  As to any Loan, its nature as a Base Rate Loan or a LIBOR Rate Loan.
 
UCC.  As defined in the Security Agreement.
 

 
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Unit Purchase Agreement.  The Unit Purchase Agreement dated as of November 1,
2012 among Holdings, ESC, Emericare NOC LLC, the members of Holdings and
Kinderhook Industries, LLC.
 
Unity.  Unity Home Health Services, Inc., a Florida corporation.
 
Voting Interests.  Stock, partnership, membership or similar ownership interests
of any class or classes (however designated), the holders of which are at the
time entitled, as such holders, (a) to vote for the election of a majority of
the directors (or persons performing similar functions) of the corporation,
association, partnership, limited liability company, trust or other business
entity involved, or (b) to control, manage, or conduct the business of the
corporation, partnership, limited liability company, association, trust or other
business entity involved.
 
Withholding Agent.  Borrowers and Agent.
 
§1.2 Rules of Interpretation.
 
(a) A reference to any document or agreement shall include such document or
agreement as amended, modified or supplemented from time to time in accordance
with its terms and the terms of this Agreement.
 
(b) The singular includes the plural and the plural includes the singular.
 
(c) A reference to any law includes any amendment or modification to such law.
 
(d) A reference to any Person includes its permitted successors and permitted
assigns.
 
(e) Accounting terms not otherwise defined herein have the meanings assigned to
them by GAAP applied on a consistent basis by the accounting entity to which
they refer.
 
(f) The words “include”, “includes” and “including” are not limiting.
 
(g) The words “approval” and “approved” as the context so determines, means an
approval in writing given to the party seeking approval after full and fair
disclosure to the party giving approval of all material facts necessary in order
to determine whether approval should be granted.
 
(h) All terms not specifically defined herein or by GAAP, which terms are
defined in the Uniform Commercial Code as in effect in the State of New York,
have the meanings assigned to them therein.
 
(i) Reference to a particular “§”, refers to that section of this Agreement
unless otherwise indicated.
 

 
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(j) The words “herein”, “hereof”, “hereunder” and words of like import shall
refer to this Agreement as a whole and not to any particular section or
subdivision of this Agreement.
 
(k) All references in this Agreement to “Cleveland time” shall refer to
prevailing time in Cleveland, Ohio.
 
§2.           LOANS
 
§2.1 Commitment to Lend.
 
Subject to the terms and conditions set forth in this Agreement, each of the
Lenders severally agrees to lend to Borrowers, and Borrowers will borrow on the
Closing Date, an amount equal to such Lender’s Commitment; provided, that, in
all events no Default or Event of Default shall have occurred and be continuing;
and provided, further, that the outstanding principal amount of the Loans (after
giving effect to all amounts requested), shall not at any time exceed the
aggregate Commitments of all  Lenders.  The Loans shall be made pro rata in
accordance with each Lender’s Commitment Percentage.  Borrowers’ request for the
Loans hereunder shall constitute a representation and warranty by Borrowers that
all of the conditions set forth in §10 have been satisfied on the date of such
request.  No Lender shall have any obligation to make Loans to Borrowers in a
principal amount of more than the principal face amount of such Lender’s
Commitment.  Borrowers shall be jointly and severally liable for the Loans.
 
§2.2 Notes.
 
If requested by a Lender, the Loans of such Lender shall be evidenced by a
separate term promissory note of Borrowers in favor of the Lenders in
substantially the form of Exhibit A hereto (such notes and any substitute or
replacement notes therefore, the “Notes”).  A Note shall be payable to each
Lender in the principal face amount equal to such Lender’s Commitment, or, if
less, the outstanding amount of all Loans made by such Lender, plus interest
accrued thereon, as set forth below.  Each such Note shall be issued by
Borrowers to the applicable Lender and shall be duly executed and delivered by
an authorized officer of Borrowers.  Borrowers irrevocably authorize Agent to
make or cause to be made, at or about the time of the Drawdown Date of any Loan
or the time of receipt of any payment of principal thereof, an appropriate
notation on Agent’s Record reflecting the making of such Loan or the receipt of
such payment.  The Outstanding amount of the Loans set forth on Agent’s Record
shall be prima facie evidence of the principal amount thereof owing and unpaid
to each Lender, but the failure to record, or any error in so recording, any
such amount on Agent’s Record shall not limit or otherwise affect the
obligations of Borrowers, hereunder or under any Note to make payments of
principal of or interest on any Note when due.
 
§2.3 Interest on Loans.
 
(a) Each LIBOR Rate Loan shall bear interest for each day during each Interest
Period with respect thereto at a rate per annum equal to the sum of (A) the
LIBOR Rate, plus (B) the Applicable LIBOR Rate Spread; and
 

 
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(b) Each Base Rate Loan shall bear interest commencing with the Drawdown Date
thereof until repayment or conversion to a LIBOR Rate Loan at a rate per annum
equal to the sum of (A) the Base Rate, plus (B) the Applicable Base Rate Spread.
 
(c) Borrowers promise to pay interest on the Loans in arrears on each Interest
Payment Date with respect thereto.
 
(d) Base Rate Loans and LIBOR Rate Loans may be converted to Loans of the other
Type as provided in §4.1.
 
§2.4 Requests for Loans.
 
Lead Borrower shall give to Agent written or telephonic notice (with telephonic
notice confirmed in writing) of the Loan (the “Loan Request”) by 12:00 noon
(Cleveland time) on the Business Day prior to the proposed Drawdown Date with
respect to Base Rate Loans and three (3) Business Days prior to such Drawdown
Date with respect to LIBOR Rate Loans.  Such notice shall specify the Type of
Loan, the initial Interest Period (if applicable) and the Drawdown Date.  Such
notice for the borrowing to occur on the Closing Date shall also contain a
statement that the conditions to borrowing set forth in §10 hereof have been
satisfied or waived in writing by Agent.  Promptly upon receipt of any such
notice, Agent shall notify each of Lenders thereof.  Such Loan Request shall be
irrevocable and binding on Borrowers and shall obligate Borrowers to accept the
Loan requested from Lenders on the proposed Drawdown Date.  Each Loan Request
shall be (a) for a Base Rate Loan in a minimum aggregate amount of $1,000,000 or
an integral multiple of $100,000 in excess thereof; or (b) for a LIBOR Rate Loan
in a minimum aggregate amount of $2,000,000 or an integral multiple of $100,000
in excess thereof; provided, however, that there shall be no more than four
(4) LIBOR Rate Loans outstanding at any one time.
 
§2.5 Funds for Loans.
 
(a) Not later than 2:00 p.m. (Cleveland time) on the proposed Drawdown Date of
any Loans, each Lender will make available to Agent, at Agent’s Office, in
immediately available funds, the amount of such Lender’s Commitment Percentage
of the amount of the requested Loans which may be disbursed pursuant
hereto.  Upon receipt from each Lender of such amount, and upon receipt of the
documents required by §10 (in the case of Loans to be made on the Closing Date
only) and §11 and the satisfaction of the other conditions set forth therein, to
the extent applicable, Agent will make available to Borrowers the aggregate
amount of such Loans made available to Agent by Lenders by crediting such amount
to the account of Borrowers maintained at Agent’s Head Office.  The failure or
refusal of any Lender to make available to Agent at the aforesaid time and place
on any Drawdown Date the amount of its Commitment Percentage of the requested
Loans shall not relieve any other Lender from its several obligation hereunder
to make available to Agent the amount of such other Lender’s Commitment
Percentage of any requested Loans, including any additional  Loans that may be
requested subject to the terms and conditions hereof to provide funds to replace
those not advanced by the Lender so failing or refusing.  In the event of any
such failure or refusal, the Lenders not so failing or refusing shall be
entitled to a priority secured position as against the
 

 
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Lender or Lenders so failing or refusing to make available to Borrowers the
amount of its or their Commitment Percentage for such Loans as provided
in §12.5.
 
(b) Unless Agent shall have been notified by any Lender prior to the applicable
Drawdown Date that such Lender will not make available to Agent such Lender’s
Commitment Percentage of a proposed Loan, Agent may in its discretion assume
that such Lender has made such Loan available to Agent in accordance with the
provisions of this Agreement and Agent may, if it chooses, in reliance upon such
assumption make such Loan available to Borrowers, and such Lender shall be
liable to Agent for the amount of such advance.  If such Lender does not pay
such corresponding amount upon Agent’s demand therefor, Agent will promptly
notify Lead Borrower, and Borrowers shall promptly pay such corresponding amount
to Agent.  Agent shall also be entitled to recover from the Lender or Borrowers,
as the case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by Agent to Borrowers
to the date such corresponding amount is recovered by Agent at a per annum rate
equal to (i) from Borrowers at the applicable rate for such Loan or (ii) from a
Lender at the Federal Funds Effective Rate.
 
§2.6 Use of Proceeds.
 
Borrowers will use the proceeds of the Loans solely (i) to pay closing costs and
expenses in connection with this Agreement and all other transaction documents
relating thereto; (ii) to make Distributions to shareholders of NOC; and (iii)
for general business purposes.
 
§3.           REPAYMENT AND PREPAYMENT OF THE LOANS
 
§3.1 Repayment; Stated Maturity; Extension Option.
 
(a) Principal Amortization Payments.  Commencing on July 1, 2013 and continuing
on the first day of each October, January, April and July thereafter during the
term of the Loans (including any Extension Period), quarterly principal payments
on the Loans in an amount equal to $1,875,000 shall be due and payable.
 
(b) Maturity Date.  Borrowers promise to pay on the Maturity Date, and there
shall become absolutely due and payable on the Maturity Date, the entire
Outstanding principal amount of all Loans outstanding on such date, together
with any and all accrued and unpaid interest thereon.
 
(c) Extension Option.  Borrowers shall have the option to extend the Maturity
Date for a one (1) year period (the “Extension Period”) by Lead Borrower giving
Agent written Notice of such election to extend not more than 90 days and not
less than 60 days prior to the Maturity Date, provided that (i) no Default or
Event of Default exists either on the date such notice is given or on the
original Maturity Date, (ii) each of the representations and warranties made by
the Loan Parties in this Agreement or the other Loan Documents or in any
document or instrument delivered pursuant to or in connection with this
Agreement shall be true in all material respects as of the date they were made,
as of the date notice of extension is given and as of the original Maturity Date
(except to the extent of changes resulting from transactions permitted by the
Loan Documents, it being understood and agreed that any representation or
 

 
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warranty which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified date),
and (iii) Borrowers shall have paid to Agent on or before the original Maturity
Date, for the account of the Lenders in accordance with their respective
percentage of the aggregate Commitments of all Lenders, an extension fee equal
to thirty-five one hundredths percent (0.35%) of the aggregate Outstanding Loans
as of the original Maturity Date.
 
§3.2 Mandatory Prepayments.
 
The Loans shall be subject to mandatory principal prepayment from Net Cash
Proceeds as provided in §8.8(a)(viii).
 
§3.3 Optional Prepayments.
 
Borrowers shall have the right, at their election, to prepay the outstanding
amount of the Loans, as a whole or in part, at any time without penalty or
premium, provided that if any full or partial prepayment of the outstanding
amount of any LIBOR Rate Loans is made on a date that is not the last day of the
Interest Period relating thereto, such payment shall be accompanied by the
amount payable pursuant to §4.8.  Lead Borrower shall give Agent, no later than
10:00 a.m., Cleveland time, at least three (3) Business Days prior written
notice of any prepayment pursuant to this §3.3, in each case specifying the
proposed date of payment of Loans and the principal amount of the Loans to be
prepaid.  Notice of prepayment, once given, shall be irrevocable, and such
amount shall become due and payable on the specified prepayment date.
 
§3.4 Partial Prepayments.
 
Each partial prepayment of the Loans under §3.3 shall be in the minimum amount
of $500,000 or an integral multiple of $100,000 in excess thereof (unless the
Loan is being prepaid in full), and each partial prepayment of the Loans under
§3.2 and §3.3 shall be accompanied by the payment of accrued interest on the
principal prepaid to the date of payment and, after payment of such interest,
shall be applied, in the absence of instruction by Lead Borrower, first to the
principal of Loans that are Base Rate Loans, and then to the Loans that are
LIBOR Rate Loans; provided, however, that no such partial prepayment under §3.3
shall reduce the aggregate principal amount of the Loans to an amount that is
less than $5,000,000.  All partial prepayments shall be applied to the remaining
principal payments in the inverse order of their maturity.
 
§4.           CERTAIN GENERAL PROVISIONS
 
§4.1 Conversion Options; Number of LIBOR Contracts.
 
(a) Borrowers may elect from time to time to convert any of the outstanding
Loans to a Loan of another Type and such Loan shall thereafter bear interest as
a Base Rate Loan or a LIBOR Rate Loan, as applicable; provided that (i) with
respect to any such conversion of a LIBOR Rate Loan to a Base Rate Loan, Lead
Borrower shall give Agent at least one (1) Business Day’s prior written notice
of such election, and such conversion shall only be made on the last day of the
Interest Period with respect to such LIBOR Rate Loan; (ii) with respect to any
such conversion of a Base Rate Loan to a LIBOR Rate Loan, Lead Borrower shall
give Agent at least three (3) LIBOR Business Days’ prior written notice of such
election and the Interest
 

 
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Period requested for such Loan; the principal amount of the Loan so converted
shall be in a minimum aggregate amount (for all Lenders) of $1,000,000 or an
integral multiple of $100,000 in excess thereof; and (iii) no Loan may be
converted into a LIBOR Rate Loan when any Event of Default has occurred and is
continuing.  All or any part of the outstanding Loans of any Type may be
converted as provided herein, provided that no partial conversion shall result
in a Base Rate Loan in an aggregate principal amount (for all Lenders) of less
than $1,000,000 or a LIBOR Rate Loan in an aggregate principal amount (for all
Lenders) of less than $2,000,000 and that the aggregate principal amount (for
all Lenders) of each Loan shall be an integral multiple of $100,000.  On the
date on which such conversion is being made, each Lender shall take, to the
extent it deems it necessary to do so, such action as is necessary to transfer
its Commitment Percentage of such Loans to its Domestic Lending Office or its
LIBOR Lending Office, as the case may be.  Each Conversion Request relating to
the conversion of a Base Rate Loan to a LIBOR Rate Loan shall be irrevocable by
Borrowers.
 
(b) Any LIBOR Rate Loan may be continued as such Type upon the expiration of an
Interest Period with respect thereto by compliance by Borrowers with the terms
of §4.1; provided that no LIBOR Rate Loan may be continued as such when any
Event of Default has occurred and is continuing, but shall be automatically
converted to a Base Rate Loan on the last day of the Interest Period relating
thereto ending during the continuance of any Event of Default.
 
(c) In the event that Lead Borrower does not notify Agent of Borrowers’ election
hereunder with respect to any Loan, such Loan shall be automatically converted
to a Base Rate Loan at the end of the applicable Interest Period.
 
(d) There shall be no more than four (4) LIBOR Rate Loans outstanding at any one
time.
 
§4.2 Certain Fees.
 
Borrowers agree to pay to KeyBank certain fees for services rendered or to be
rendered in connection with the Loans as provided in the Agreement Regarding
Fees.  Unless otherwise provided therein, all such fees shall be fully earned
when due and non-refundable when paid.
 
§4.3 Funds for Payment.
 
All payments of principal, interest, Agent’s fees, closing fees and any other
amounts due hereunder or under any of the other Loan Documents shall be made to
Agent, for the respective accounts of Lenders and Agent, as the case may be, at
Agent’s Office, no later than 2:00 p.m. (Cleveland time) on the day when due, in
each case in lawful money of the United States in immediately available funds.
 
§4.4 Taxes.
 
(a) Any and all payments by or on account of any obligation of the Borrowers
under any Loan Document shall be made without deduction or withholding for any
Taxes, except as required by applicable law. If any applicable law (as
determined in the good faith discretion of an applicable Withholding Agent)
requires the deduction or withholding of any Tax from any
 

 
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such payment by a Withholding Agent, then the applicable Withholding Agent shall
be entitled to make such deduction or withholding and shall timely pay the full
amount deducted or withheld to the relevant Governmental Authority in accordance
with applicable law and, if such Tax is an Indemnified Tax, then the sum payable
by the Borrowers, as applicable, shall be increased as necessary so that after
such deduction or withholding has been made (including such deductions and
withholdings applicable to additional sums payable under this Section) the
applicable Recipient receives an amount equal to the sum it would have received
had no such deduction or withholding been made.
 
(b) The Borrowers shall timely pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law, or at the option of the Agent
timely reimburse it for the payment of, any Other Taxes.
 
(c) Each Lender shall severally indemnify Agent, within 10 days after demand
therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to
the extent that Borrower has not already indemnified Agent for such Indemnified
Taxes and without limiting the obligation of Borrower to do so), (ii) any Taxes
attributable to such Lender’s failure to comply with the provisions of §18
relating to the maintenance of the Register (as defined in §18.2) and (iii) any
Excluded Taxes attributable to such Lender, in each case, that are payable or
paid by the 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 Agent shall be conclusive absent manifest error. Each Lender
hereby authorizes Agent to set off and apply any and all amounts at any time
owing to such Lender under any Loan Document or otherwise payable Agent to the
Lender from any other source against any amount due to Agent under this
paragraph (c).
 
(d) If requested by Agent after any payment of Taxes by Borrowers to a
Governmental Authority pursuant to this Section 4.4, Lead Borrower shall deliver
to Agent the 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 Agent.
 
(e) (i) Any Lender that is entitled to an exemption from or reduction of
withholding Tax with respect to payments made under any Loan Document shall
deliver to Lead Borrower and Agent, at the time or times reasonably requested by
the Lead Borrower or Agent, such properly completed and executed documentation
reasonably requested by Lead Borrower or Agent as will permit such payments to
be made without withholding or at a reduced rate of withholding. In addition,
any Lender, if reasonably requested by Lead Borrower or Agent, shall deliver
such other documentation prescribed by applicable law or reasonably requested by
Lead Borrower or Agent as will enable Lead Borrower or Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements.  Notwithstanding anything to the contrary in the
preceding two sentences, the completion, execution and submission of such
documentation (other than such documentation set forth in § 4.4(f)A, B and D
below) shall not be required if in the Lender’s reasonable judgment such
completion, execution or submission would subject such Lender to any material
unreimbursed cost or expense or would materially prejudice the legal or
commercial position of such Lender.
 

 
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(f) Without limiting the generality of the foregoing,
 
(a) any Lender that is a U.S. Person shall deliver to Lead Borrower and 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 Lead Borrower
or Agent), executed originals of IRS Form W-9 certifying that such Lender is
exempt from U.S. federal backup withholding tax;
 
(b) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Lead Borrower and Agent (in such number of copies as shall be
requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the
reasonable request of Lead Borrower or Agent), whichever of the following is
applicable:
 
i. in the case of a Foreign Lender claiming the 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, executed originals of IRS Form W-8BEN 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, IRS Form W-8BEN 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;
 
ii. executed originals of IRS Form W-8ECI;
 
iii. in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit [J]-1 to the effect that such Foreign
Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a
“10 percent shareholder” of any Borrower within the meaning of Section
881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y)
executed originals of IRS Form W-8BEN; or
 
iv. to the extent a Foreign Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a
U.S. Tax Compliance Certificate substantially in the form of Exhibit [J]-2 or
Exhibit [J]-3, IRS Form W-9, and/or other certification documents from each
beneficial owner, as applicable; provided that if the Foreign Lender is a
partnership and one or more direct or indirect partners of such Foreign Lender
are claiming the portfolio interest exemption, such Foreign Lender may provide a
U.S. Tax Compliance Certificate substantially in the form of Exhibit [J]-4 on
behalf of each such direct and indirect partner;
 
(c) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Lead Borrower and Agent (in such number of copies as shall be
requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to
 

 
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time thereafter upon the reasonable request of Lead Borrower or Agent), executed
originals of any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in U.S. federal withholding Tax, duly completed,
together with such supplementary documentation as may be prescribed by
applicable law to permit Lead Borrower or Agent to determine the withholding or
deduction required to be made; and
 
(d) 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 Lead Borrower and Agent at the time or times prescribed by law
and at such time or times reasonably requested by Lead Borrower or 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 Borrower or Agent as may be necessary for Lead Borrower and Agent
to comply with their obligations under FATCA and to determine that such Lender
has complied with such Lender’s obligations under FATCA or to determine the
amount to deduct and withhold from such payment. Solely for purposes of this
clause (D), “FATCA” shall include any amendments made to FATCA after the date of
this Agreement.
 
Each Lender agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify Lead Borrower and Agent in writing of
its legal inability to do so.
 
(g) If any party has received a refund of any Taxes as to which it has been
indemnified pursuant to this Section 4.4 (including by the payment of additional
amounts pursuant to this Section 4.4), 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 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 indemnification payments or
additional amounts giving rise to such refund had never been paid. This
paragraph shall not be construed to 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) Each party’s obligations under this §4.4 shall survive the resignation or
replacement of 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.
 
§4.5 Computations.
 
All computations of interest on the Loans and of other fees to the extent
applicable shall be based on a 360-day year (or, in the case of interest on Base
Rate Loans, a 365/366-day year) and paid for the actual number of days elapsed
(excluding the day of repayment).  Except as otherwise provided in the
definition of the term “Interest Period” with respect to LIBOR Rate Loans,
whenever a payment hereunder or under any of the other Loan Documents becomes
due on a day that is not a Business Day, the due date for such payment shall be
extended to the next succeeding Business Day, and interest shall accrue during
such extension.  The outstanding amount of the Loans as reflected on the records
of Agent from time to time shall be considered prima facie evidence of such
amount.
 
§4.6 Inability to Determine LIBOR Rate.
 
In the event that at any time Agent shall determine in the exercise of its good
faith business judgment that adequate and reasonable methods do not exist for
ascertaining the LIBOR Rate, Agent shall forthwith give notice of such
determination (which shall be conclusive and binding on Borrower and Lenders) to
Lead Borrower and Lenders.  In such event (a) any Loan Request with respect to
LIBOR Rate Loans shall be automatically withdrawn and shall be deemed a request
for Base Rate Loans and (b) each LIBOR Rate Loan will automatically become a
Base Rate Loan at the end of the current Interest Period, and the obligations of
Lenders to make LIBOR Rate Loans shall be suspended until Agent determines that
the circumstances giving rise to such suspension no longer exist, whereupon
Agent shall so notify Lead Borrower and Lenders.
 
§4.7 Illegality.
 
Notwithstanding any other provisions herein, if any present or future law,
regulation, treaty or directive or the interpretation or application thereof
shall make it unlawful, or any central bank or other Governmental Authority
having jurisdiction over a Lender or its LIBOR Lending Office shall assert that
it is unlawful, for any Lender to make or maintain LIBOR Rate Loans, such Lender
shall forthwith give notice of such circumstances to Agent and Lead Borrower and
thereupon (a) until such conditions terminate, the obligation of such Lender to
make LIBOR Rate Loans or convert Loans of another type to LIBOR Rate Loans shall
forthwith be suspended, (b) until such conditions terminate, each request by
Lead Borrower to make a LIBOR Rate Loan shall be deemed, with respect to such
Lender, to be a request for a Base Rate Loan and (c) the LIBOR Rate Loans then
outstanding from such Lender shall be converted automatically to Base Rate
Loans.
 
§4.8 Additional Interest.
 
If any LIBOR Rate Loan or any portion thereof is repaid or is converted to a
Base Rate Loan for any reason on a date which is prior to the last day of the
Interest Period applicable to
 

 
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such LIBOR Rate Loan, or if repayment of the Loans has been accelerated as
provided in §12.1, Borrowers will pay to Agent upon demand for the account of
Lenders in accordance with their respective Commitment Percentages, in addition
to any amounts of interest otherwise payable hereunder, any amounts required to
compensate Lenders for any losses, costs or expenses (but not loss of profit)
which may reasonably be incurred as a result of such payment or conversion,
including, without limitation, an amount equal to daily interest for the
unexpired portion of such Interest Period on the LIBOR Rate Loan or portion
thereof so repaid or converted at a per annum rate equal to the excess, if any,
of (a) the interest rate calculated on the basis of the LIBOR Rate applicable to
such LIBOR Rate Loan (excluding any spread over such LIBOR Rate) minus (b) the
yield obtainable by Agent upon the purchase of debt securities customarily
issued by the Treasury of the United States of America which have a maturity
date most closely approximating the last day of such Interest Period (it being
understood that the purchase of such securities shall not be required in order
for such amounts to be payable and that a Lender shall not be obligated or
required to have actually obtained funds at the LIBOR Rate or to have actually
reinvested such amount as described above).
 
§4.9 Additional Costs, Capital Adequacy, Etc.
 
(a) If any Change in Law shall:
 
(1)           impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement reflected in the LIBOR Rate);
 
(2)           subject any Recipient to any Taxes (other than (A) Indemnified
Taxes, (B) Taxes described in clauses (b) through (d) of the definition of
Excluded Taxes and (C) Other Connection Taxes) on its loans, loan principal,
letters of credit, commitments, or other similar obligations, or its deposits,
reserves, other liabilities or capital attributable thereto; or
 
(3)           impose on any Lender or the London interbank market any other
condition, cost or expense (other than Taxes) affecting this Agreement or Loans
made by such Lender or participation therein;
 
and the result of any of the foregoing shall be to increase the cost to such
Lender, Agent or such other Recipient of making, converting to, continuing or
maintaining any Loan (or of maintaining its obligation to make any such Loan),
or to reduce the amount of any sum received or receivable by such Lender, Agent
or other Recipient hereunder (whether of principal, interest or any other
amount) then, upon request of such Lender or Agent, or other Recipient, the
Borrowers will pay to such Lender, Agent, or other Recipient, as the case may
be, such additional amount or amounts as will compensate such Lender, Agent, or
other Recipient, as the case may be, for such additional costs incurred or
reduction suffered.  Notwithstanding the foregoing, Borrowers shall have the
right, in lieu of making the payment referred to in this §4.9(a), to prepay the
Loans of the applicable Lender within fifteen (15) days of such demand and avoid
the payment of the amounts otherwise due under this §4.9(a) or to cause the
applicable Lender to assign its Loans and Commitments in accordance with §18.8,
provided, however, that Borrowers shall be
 

 
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required to pay together with such prepayment of the Loan all other costs,
damages and expenses otherwise due under this Agreement as a result of such
prepayment.
 
(b) If any Lender determines that any Change in Law affecting such Lender or any
lending office of such Lender or such Lender’s holding company, if any,
regarding capital or liquidity requirements, has or would have the effect of
reducing the rate of return on such Lender’s capital or on the capital of such
Lender’s holding company, if any, as a consequence of this Agreement, the
Commitments of such Lender or the Loans made by such Lender, to a level below
that which such Lender or such Lender’s holding company could have achieved but
for such Change in Law (taking into consideration such Lender’s policies and the
policies of such Lender’s holding company with respect to capital adequacy),
then from time to time the Borrowers will pay to such Lender, such additional
amount or amounts as will compensate such Lender or such Lender’s holding
company for any such reduction suffered. Notwithstanding the foregoing,
Borrowers shall have the right, in lieu of making the payment referred to in
this §4.9(b), to prepay the Loans of the applicable Lender within fifteen (15)
days of such demand and avoid the payment of the amounts otherwise due under
this §4.9(b) or to cause the applicable Lender to assign its Loans and
Commitments in accordance with §18.8, provided, however, that Borrowers shall be
required to pay together with such prepayment of the Loan all other fees, costs,
damages and expenses otherwise due under this Agreement as a result of such
prepayment.
 
(c) Failure or delay on the part of any Lender to demand compensation pursuant
to this Section shall not constitute a waiver of such Lender’s right to demand
such compensation; provided that the Borrowers shall not be required to
compensate a Lender or pursuant to this Section for any increased costs incurred
or reductions suffered more than nine months prior to the date that such Lender
notifies the Lead Borrower of the Change in Law giving rise to such increased
costs or reductions, and of such Lender’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 nine-month period referred to above shall
be extended to include the period of retroactive effect thereof).
 
§4.10 Mitigation Obligations.
 
If any Lender requests compensation under §4.9, or requires the Borrowers to pay
any Indemnified Taxes or additional amounts to any Lender or any Governmental
Authority for the account of any Lender pursuant to §4.4, then such Lender shall
(at the request of the Lead Borrower) 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 judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to §4.4 or §4.9, 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.  Borrowers hereby agree to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
 

 
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Indemnity by Borrowers.
 
Borrowers agree to indemnify each Lender and to hold each Lender harmless from
and against any loss, cost or expense that such Lender may sustain or incur as a
consequence of (a) default by Borrowers in payment of the principal amount of or
any interest on any LIBOR Rate Loans as and when due and payable, including any
such loss or expense arising from interest or fees payable by such Lender to
lenders of funds obtained by it in order to maintain its LIBOR Rate Loans, or
(b) default by Borrowers in making a borrowing or conversion after Lead Borrower
has given (or is deemed to have given) a Conversion Request.
 
§4.11 Interest on Overdue Amounts.
 
Following the occurrence and during the continuance of any Event of Default, and
regardless of whether or not Lenders shall have accelerated the maturity of the
Loans, at the election of the Required Lenders, all Loans shall bear interest
payable on demand at a rate per annum equal to three percent (3%) above the rate
that would otherwise be applicable at such time (the “Default Rate”), until such
amount shall be paid in full (after as well as before judgment), or if such rate
shall exceed the maximum rate permitted by law, then at the maximum rate
permitted by law.  In addition, Borrowers shall pay Agent, for the account of
the applicable Lenders, a late charge with respect to any amount of interest
and/or principal payable on the Loans or any other amounts payable hereunder or
under the Loan Documents (other than payments due on the Maturity Date), which
is not paid within ten (10) days of the date when due, equal to the greater of
(i) four percent (4%) of the amount which was not paid when due or (ii)
$25.00.  Such late charge is and shall be deemed to be a charge to compensate
Agent and Lenders for administrative services and costs incurred in connection
with the related delinquent payment and shall under no circumstances constitute
or be deemed to be a charge for the use of money.
 
§4.12 Certificate.
 
A certificate of a Lender setting forth the amount or amounts necessary to
compensate such Lender or its holding company, as the case may be, as specified
in §4.8, §4.9, §4.11 or §4.12 and delivered to the Lead Borrower, shall be
conclusive absent manifest error.  The Borrowers shall pay such Lender the
amount shown as due on any such certificate within 30 days after receipt
thereof.
 
§4.13 Limitation on Interest.
 
Notwithstanding anything in this Agreement to the contrary, all agreements
between Borrowers and Lenders and Agent, whether now existing or hereafter
arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of acceleration of the maturity of any of the
Obligations or otherwise, shall the interest contracted for, charged or received
by Lenders exceed the maximum amount permissible under applicable law.  If, from
any circumstance whatsoever, interest would otherwise be payable to Lenders in
excess of the maximum lawful amount, the interest payable to Lenders shall be
reduced to the maximum amount permitted under applicable law; and if from any
circumstance Lenders shall ever receive anything of value deemed interest by
applicable law in excess of the maximum lawful amount, an amount equal to any
excessive interest shall be applied to the reduction of the principal
 

 
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balance of the Obligations and to the payment of interest or, if such excessive
interest exceeds the unpaid balance of principal of the Obligations, such excess
shall be refunded to Borrowers.  All interest paid or agreed to be paid to
Lenders shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full period until payment in full
of the principal of the Obligations (including the period of any renewal or
extension thereof) so that the interest thereon for such full period shall not
exceed the maximum amount permitted by applicable law.  This section shall
control all agreements between Borrowers and Lenders and Agent.
 
§5.           COLLATERAL SECURITY
 
§5.1 Collateral.
 
The Obligations shall be secured by (i) a perfected security interest in favor
of Agent for the benefit of Lenders in the personal property assets of Borrowers
pursuant to the Security Agreement, (ii) a perfected security interest to be
held by Agent for the benefit of Lenders in the Pledged Deposit Accounts and all
monies, instruments and investments from time to time held therein, (iii) a
perfected pledge of and security interest in all issued and outstanding Equity
Interests held by Holdings in NOC pursuant to the Holdings Pledge Agreement, and
(iv) such additional collateral, if any, as the Loan Parties may agree to grant
to Agent for the benefit of Lenders from time to time may accept as security for
the Obligations.  All such liens or security titles shall be prior and superior
in right to any other Person except Permitted Liens.
 
§5.2 Operating Account; Collection Account.
 
Borrowers shall cause their main operating account (the “Operating Account”) to
be opened at KeyBank (or another Lender acceptable to Agent) and subject to a
Deposit Account Control Agreement reasonably acceptable to Agent among Agent,
Borrowers and KeyBank.  So long as no Event of Default exists, Borrower shall be
entitled to withdraw amounts from the Operating Account.  The parties
acknowledge that payments from Medicare currently are deposited in the
Collection Account.  Borrowers shall cause the Collection Account to be subject
to the Collection Account Agreement reasonably acceptable to Agent among Agent,
NOC and Regions Bank.  On a daily basis, all funds in the Collection Account
shall be transferred by wire transfer or automated clearing house transfer to
the Operating Account.  Upon the occurrence and during the continuation of any
Event of Default, Agent may direct the Deposit Account Bank where the Operating
Account is held to sweep all funds on deposit in the Operating Account to an
account designated by Agent on a daily basis pursuant to the terms of the
applicable Deposit Account Control Agreement.  NOC hereby grants to Agent a
security interest (prior and superior in right to any other Person except
Permitted Liens having priority by operation of law) in and to all funds now or
at any time hereafter held on deposit in the Operating Account to secure the
payment and performance of the Obligations, and Agent shall have all rights and
remedies available to a secured party under the Uniform Commercial Code with
respect to such funds.
 

 
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§6.   REPRESENTATIONS AND WARRANTIES AND COVENANTS
 
§6.1 Corporate Authority, Etc.
 
(a) Organization; Good Standing.  NOC is a Delaware corporation duly organized
pursuant to its certificate of incorporation filed with the Secretary of State
of Delaware and is validly existing under the laws of the State of
Delaware.  Each other Loan Party is a corporation or limited liability company
duly organized, validly existing, and in good standing under the laws of its
state of incorporation or formation.  Each Loan Party (i) has all requisite
power to own its respective properties and conduct its respective business as
now conducted and as presently contemplated, and (ii) is duly authorized to do
business in each other jurisdiction where a failure to be so authorized in such
other jurisdiction could reasonably be expected to have a Material Adverse
Effect.
 
(b) Subsidiaries.  As of the Closing Date, (i) the Borrowers are the only
Subsidiaries of Holdings; (ii) the only Subsidiaries of NOC are NOC-HC,
NOC-Broward, NOC-SF, Unity and NOC-Texas; and (iii) the Subsidiaries of ESC are
as set forth on Schedule 6.1(b) attached hereto.
 
(c) Authorization.  The execution, delivery and performance of this Agreement
and the other Loan Documents to which the Loan Parties, or any of them, are or
are to become a party and the transactions contemplated hereby and thereby (i)
are within the authority of such Person, (ii) have been duly authorized by all
necessary proceedings on the part of such Person, (including any required
stockholder or member approval), (iii) do not and will not conflict with or
result in any breach or contravention of any provision of law, statute, rule or
regulation to which such Person is subject or any judgment, order, writ,
injunction, license or permit applicable to such Person, (iv) do not and will
not conflict with or constitute a default (whether with the passage of time or
the giving of notice, or both) under any provision of the Organizational
Documents of, or any mortgage, indenture, agreement, contract or other
instrument binding upon, such Person or any of its properties or to which such
Person is subject, and (v) do not and will not result in or require the
imposition of any Lien or other encumbrance on any of the properties, assets or
rights of such Person except for the Liens and security title granted by the
Loan Documents.
 
(d) Enforceability.  The execution and delivery of this Agreement and the other
Loan Documents to which the Loan Parties, or any of them, are or are to become a
party are valid and legally binding obligations of such Person enforceable in
accordance with the respective terms and provisions hereof and thereof, except
as enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of
creditors’ rights and except to the extent that availability of the remedy of
specific performance or injunctive relief is subject to the discretion of the
court before which any proceeding therefor may be brought.
 
§6.2 Approvals.
 
The execution, delivery and performance by the Loan Parties, or any of them, of
this Agreement and the other Loan Documents to which they are or are to become a
party and the
 

 
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transactions contemplated hereby and thereby do not require the approval or
consent of, or filing with, any Person or the authorization, consent or approval
of, or any license or permit issued by, or any filing or registration with, or
the giving of any notice to, any court, department, board, commission or other
governmental agency or authority, in each case other than those already obtained
and the filing of the Security Documents in the appropriate records office with
respect thereto.
 
§6.3 Title to Properties; Leases.
 
The Loan Parties own all of their respective assets reflected on the
Consolidated balance sheet of ESC or NOC, as applicable, most recently delivered
to the Agent, subject to no liens or other encumbrances except Permitted
Liens.  Without limiting the foregoing, the Loan Parties have good and
marketable fee simple or leasehold title to all real and personal property
reasonably necessary for the operation of its business in whole, free from all
liens or encumbrances of any nature whatsoever, except for Permitted Liens.
 
§6.4 Financial Statements.
 
Lead Borrower has furnished or caused to be furnished to each of Lenders:  (a)
the audited financial statements filed by ESC with the Securities and Exchange
Commission for the fiscal year ended December 31, 2011, (b) the audited
financial statements of NOC and its Subsidiaries for the fiscal year ended
December 31, 2011, and (c) projected profit and loss statements and cash flow
statements of NOC and its Subsidiaries, prepared for the next five (5) calendar
years, ending December 31, 2017.  Such audited financial statements described in
clauses (a) and (b) have been prepared in accordance with GAAP and fairly
present in all material respects the financial condition of ESC and its
Subsidiaries or NOC and its Subsidiaries, as applicable, as of such date and the
results of the operations of such Persons, for such period.  As of the
respective dates of such financial statements, there were no liabilities,
contingent or otherwise, of such Persons involving material amounts not
disclosed in said financial statements and the related notes thereto.  All
projections and estimates have been prepared in good faith on the basis of
reasonable assumptions and represent the best estimate of future performance by
the party supplying the same, it being agreed that projections are subject to
uncertainties and contingencies and that no assurance can be given that any
projection will be realized.
 
§6.5 No Material Changes.
 
As of the Closing Date there has occurred no materially adverse change in the
financial condition or business of (i) ESC and any of its Subsidiaries, taken as
a whole, as shown on or reflected in the balance sheet of ESC and its
Subsidiaries as of September 30, 2012, or its statement of income or cash flows
for the fiscal quarter then ended, or (ii) NOC and any of its Subsidiaries,
taken as a whole, as shown on or reflected in the balance sheet of NOC and its
Subsidiaries as of September 30, 2012, or its statement of income or cash flow
for the fiscal quarter then ended, other than, in either case, changes in the
ordinary course of business that have not had a Material Adverse Effect.
 

 
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§6.6 Franchises, Patents, Copyrights, Licences, Etc.
 
Each Loan Party and its Subsidiaries possesses all franchises, patents,
copyrights, trademarks, trade names, service marks, licenses and permits, and
rights in respect of the foregoing (including, without limitation in the case of
Borrowers, all permits and licenses required by Federal and applicable state and
local laws and regulations in order to carry on a home healthcare business),
adequate for the conduct of their business substantially as now conducted
without known conflict with any rights of others, each of which is in full force
and effect and with which each such Loan Party is in compliance, except where
failure to be in compliance could not reasonably be expected to have a Material
Adverse Effect.
 
§6.7 Litigation.
 
As of the Closing Date, except as described on Schedule 6.7 hereto, there are no
actions, suits, proceedings or investigations of any kind pending or threatened,
against any Loan Party before any court, tribunal, administrative agency or
board, mediator or arbitrator that, if adversely determined, individually or in
the aggregate could reasonably be expected to have a Material Adverse
Effect.  As of the Closing Date, there are no judgments outstanding against or
affecting any Loan Party or any of the Collateral in an amount in excess of
$500,000.
 
§6.8 No Materially Adverse Contracts, Etc.
 
No Loan Party is a party to any mortgage, indenture, or other material contract
or agreement or other instrument that has had or is reasonably expected, in the
judgment of the members, partners or officers of such Person, to have a Material
Adverse Effect.
 
§6.9 Compliance with Organizational Documents, Other Instruments, Laws, Etc.
 
No Loan Party is in violation of any provision of its Organizational Documents,
or any decree, order, judgment, statute, license, rule or regulation, in any of
the foregoing cases in a manner that could reasonably be expected to have a
Material Adverse Effect.
 
§6.10 Tax Status.
 
Each Loan Party (a) has made or filed all federal and all other material tax
returns, reports and declarations required by any jurisdiction to which it is
subject, except to the extent such Person has obtained a valid extension of the
deadline to file such return, (b) has paid all material taxes and other material
governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and by appropriate proceedings, and (c) has set aside on its books provisions
reasonably adequate for the payment of all material taxes for periods subsequent
to the periods to which such returns, reports or declarations apply, if
applicable or required.  There are no unpaid taxes or assessments in any
material amount claimed to be due by the taxing authority of any jurisdiction or
pursuant to any private agreement except for those that are being contested as
permitted by this Agreement.  The charges, accruals and reserves on the books of
the Loan Parties in respect of taxes are, in the reasonable good faith judgment
of the Loan Parties, adequate.  As of the Closing
 

 
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Date, except as set forth on Schedule 6.10 hereto, no Loan Party has been
audited, or has knowledge of any pending audit, by the Internal Revenue Service
or any other taxing authority.
 
§6.11 No Event of Default.
 
No Default or Event of Default has occurred and is continuing.
 
§6.12 Investment Company Act.
 
No Loan Party is an “investment company”, or an “affiliated company” or a
“principal underwriter” of an “investment company”, as such terms are defined in
the Investment Company Act of 1940.
 
§6.13 Reserved.
 
§6.14 Setoff, Etc.
 
Borrowers and Holdings are the owners of the Collateral free from any lien,
security interest, encumbrance or other claim or demand, except those
encumbrances permitted in the Security Documents or Permitted Liens.
 
§6.15 Certain Transactions.
 
Except as set forth in Schedule 6.15 hereto or as otherwise permitted pursuant
to §8.12, none of the partners, members, officers, trustees, directors, or
employees of any Loan Party is a party to any transaction with any of their
Affiliates or their members, employees, officers, trustees and directors (other
than employment and severance agreements relating to services as partners,
members, employees, officers, trustees and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any Affiliate, partner, member, officer, trustee,
director or such employee or any limited liability company, corporation,
partnership, trust or other entity in which any Affiliate, partner, member,
officer, trustee, director, or any such employee has a substantial interest or
is an officer, director, trustee, partner or member.
 
§6.16 Employee Benefit Plans.
 
NOC and each ERISA Affiliate has fulfilled its obligations under the minimum
funding standards of ERISA and the Code with respect to each Guaranteed Pension
Plan and, except as could not be reasonably expected to have a Material Adverse
Effect, NOC is in compliance in all material respects with the presently
applicable provisions of ERISA and the Code with respect to each Employee
Benefit Plan.  Neither NOC nor any ERISA Affiliate has (a) sought a waiver of
the minimum funding standard under Section 412 of the Code in respect of any
Employee Benefit Plan, (b) failed to make any contribution or payment to any
Guaranteed Pension Plan, or made any amendment to any Guaranteed Pension Plan,
which has resulted in the imposition of a Lien or the posting of a bond or other
security under ERISA or the Code, or (c) except as could not reasonably be
expected to have a Material Adverse Effect, incurred any liability under Title
 

 
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IV of ERISA other than a liability to the PBGC for premiums under Section 4007
of ERISA.  None of the assets of NOC constitute a Plan Asset.
 
§6.17 Regulations T, U and X.
 
No portion of any Loan is to be used for the purpose of purchasing or carrying
any “margin security” or “margin stock” as such terms are used in Regulations T,
U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts
220, 221 and 224.  The Loan Parties and their Subsidiaries are not engaged, and
will not engage, principally or as one of their important activities in the
business of extending credit for the purpose of purchasing or carrying any
“margin security” or “margin stock” as such terms are used in Regulations T, U
and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts
220, 221 and 224.
 
§6.18 Environmental Compliance.
 
The Loan Parties make the following representations and warranties:
 
(a) Except as disclosed in ESC’s Annual, Quarterly or Current Reports, each as
filed with the Securities and Exchange Commission prior to December 31, 2012, no
Loan Party is in material violation, or alleged material violation of any
applicable judgment, decree, code, order, law, rule of common law, license, rule
or regulation pertaining to environmental matters, including without limitation,
those arising under the Resource Conservation and Recovery Act (“RCRA”), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 as
amended (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986
(“SARA”), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances Control Act, or any applicable state or local statute, regulation,
ordinance, order or decree relating to the environment (hereinafter
“Environmental Laws”), in any such case, the result of which violation could
reasonably be expected to have a Material Adverse Effect.
 
(b) Except as disclosed in ESC’s Annual, Quarterly or Current Reports, each as
filed with the Securities and Exchange Commission prior to December 31, 2012, no
Loan Party has received written notice from any third party including, without
limitation, any Governmental Authority, (i) that it has been identified by the
United States Environmental Protection Agency (“EPA”) as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that any hazardous
waste, as defined by 42 U.S.C. §9601(5), any hazardous substances as defined by
42 U.S.C. §9601(14), any pollutant or contaminant as defined by 42 U.S.C.
§9601(33) or any toxic substances or hazardous materials or other chemicals or
substances regulated by any Environmental Laws (“Hazardous Substances”) which it
has generated, transported or disposed of have been found at any site at, on or
under the real estate for which a federal, state or local agency or other third
party has conducted or has ordered that any Loan Party conduct a remedial
investigation, removal or other response action pursuant to any Environmental
Law; or (iii) that it is or shall be a named party to any claim, action, cause
of action, complaint, or legal or administrative proceeding (in each case,
contingent or otherwise) arising out of any third party’s incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with the
 

 
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release of Hazardous Substances, in any such case, that could reasonably be
expected to have a Material Adverse Effect.
 
(c) Except as disclosed in ESC’s Annual, Quarterly or Current Reports, each as
filed with the Securities and Exchange Commission prior to December 31, 2012,
(i) no portion of any Loan Party’s real property has been used as a landfill or
for dumping or for the handling, processing, storage or disposal of Hazardous
Substances except in material compliance with applicable Environmental Laws,
(ii) no underground tank for Hazardous Substances has been operated by any Loan
Party in material compliance with applicable Environmental Laws; (iii) in the
course of any activities conducted by any Loan Party, no Hazardous Substances
have been generated or are being used on any real property of such Loan Party,
except in the ordinary course of business and in material compliance with
applicable Environmental Laws; (iv) there has been no past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, disposing or dumping (a “Release”) of Hazardous Substances on, upon,
into or from any real property of such Loan Party, which Release could
reasonably be expected to have a Material Adverse Effect; and (v) any Hazardous
Substances that have been generated on any real property of such Loan Party have
been transported off-site, treated and disposed of in material compliance with
applicable Environmental Laws, in any such case, except to the extent that such
condition, event or occurrence could not reasonably be expected to have a
Material Adverse Effect.
 
(d) Except as disclosed in ESC’s Annual, Quarterly or Current Reports, each as
filed with the Securities and Exchange Commission prior to December 31, 2012,
and except to the extent that any such condition, event or occurrence could not
reasonably be expected to have a Material Adverse Effect, no Loan Party is
subject to any applicable Environmental Law requiring the giving of notice to
any governmental agency or the recording or delivery to other Persons of an
environmental disclosure document or statement by virtue of the transactions set
forth herein and contemplated hereby, or to the effectiveness of any other
transactions contemplated hereby.
 
(e) This §6.18 shall set forth the sole and exclusive representations and
warranties made by the Loan Parties with regard to Environmental Laws, Hazardous
Substances, or any other environmental, health or safety matter.
 
§6.19 Loan Documents.
 
All of the representations and warranties of the Loan Parties made in this
Agreement and the other Loan Documents or any document or instrument delivered
by any Loan Party to Agent or Lenders pursuant to or in connection with any of
such Loan Documents are true and correct in all material respects, and no Loan
Party has failed to disclose such information as is necessary to make such
representations and warranties not misleading.  The information, reports,
financial statements, exhibits and schedules (excluding projections which have
been proposed in good faith) furnished by the Loan Parties to Agent and Lenders
in connection with the negotiation, preparation or delivery of this Agreement
and the other Loan Documents or included herein or therein or delivered pursuant
hereto or thereto, do not contain any untrue statement of material fact or omit
to state any material fact necessary to make the statements herein or therein
not misleading. All written information furnished after the date hereof by the
Loan Parties to Agent
 

 
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or Lenders in connection with this Agreement and the other Loan Documents and
the transactions contemplated hereby and thereby will be true, correct and
accurate in every material respect and shall not omit to state any material fact
necessary to make the statements herein or therein not misleading, or (in the
case of projections) based on reasonable estimates, on the date as of which such
information is stated or certified; it being recognized by Agent and Lenders
that any projections and forecasts provided by Loan Parties are subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Loan Parties.
 
§6.20 Reserved.
 
§6.21 Brokers.
 
No Loan Party has engaged or otherwise dealt with any broker, finder or similar
entity in connection with this Agreement or the Loans contemplated hereunder.
 
§6.22 Ownership.
 
As of the Closing Date, the Equity Interests owned by the Loan Parties in
Borrowers are as set forth in Schedule 6.22.  Except as set forth on Schedule
6.22, as of the Closing Date there are no (a) outstanding rights to purchase,
options, warrants or similar rights pursuant to which ESC, NOC or any of their
respective Subsidiaries may be required to issue, sell, repurchase or redeem any
of its Equity Interests or (b) voting rights agreements with respect to such
Equity Interests.
 
§6.23 OFAC.
 
No Loan Party is (or will be) a person with whom Agent is restricted from doing
business under OFAC (including, those Persons named on OFAC’s Specially
Designated and Blocked Persons list) or under any statute, executive order
(including, the September 24, 2001 Executive Order Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism), or other governmental action and is not and shall not engage in any
dealings or transactions or otherwise be associated with such persons.  In
addition, the Loan Parties hereby agree to provide Agent with any additional
information that Agent deems necessary from time to time in order to ensure
compliance with all applicable laws concerning money laundering and similar
activities.
 
§6.24 No Fraudulent Intent.
 
Neither the execution and delivery of this Agreement or any of the other Loan
Documents nor the performance of any actions required hereunder or thereunder is
being undertaken by Borrowers or any other Loan Party with or as a result of any
actual intent by any of such Persons to hinder, delay or defraud any entity to
which any of such Persons is now or will hereafter become indebted.
 
§6.25 Transaction in Best Interests of  Loan Parties; Consideration.
 
The transactions evidenced by this Agreement and the other Loan Documents are in
the best interests of the Loan Parties.  Each Loan Party expects to derive
benefit (and its board of
 

 
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directors or other governing body has determined that it may reasonably be
expected to derive benefit), directly or indirectly, from (a) successful
operations of each of the other Loan Parties and (b) the credit extended by the
Lenders to Borrowers hereunder, both in each Loan Party’s separate capacity and
as a member of an affiliated group of companies.  The direct and indirect
benefits to inure to the Loan Parties pursuant to this Agreement and the other
Loan Documents constitute substantially more than “reasonably equivalent value”
(as such term is used in Section 548 of the Bankruptcy Code) and “valuable
consideration,” “fair value,” and “fair consideration,” (as such terms are used
in any applicable state fraudulent conveyance law), in exchange for the
Obligations of the Loan Parties pursuant to this Agreement and the other Loan
Documents.
 
§6.26 Solvency.
 
As of the Closing Date and after giving affect to the transactions contemplated
by this Agreement and the other Loan Documents, including all of the Loans made
or to be made hereunder, with respect to the Loan Parties taken as a whole,
(a) the fair value of their assets on a going concern basis is greater than the
amount of their liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated, (b) the
present fair saleable value of their assets is not less than the amount that
will be required to pay the probable liability on their debts as they become
absolute and matured, (c) they will be able to pay their debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as
they mature in the normal course of business (taking into account all available
financing options), (d) they do not intend to, and do not believe that they
will, incur debts or liabilities beyond their ability to pay as such debts and
liabilities mature and (e) they are not engaged in business or a transaction,
and are not about to engage in business or a transaction, for which their
property would constitute unreasonably small capital.
 
§6.27 No Bankruptcy Filing.
 
No Loan Party is contemplating either the filing of a petition by it under any
state or federal bankruptcy or insolvency laws or the liquidation of its assets
or property, and to Borrower’s Knowledge, no Person is contemplating the filing
of any such petition against any Loan Party.
 
§6.28 Other Debt.
 
No Loan Party is in default (after giving effect to applicable grace periods) in
the payment of any Indebtedness or the terms of any agreement, mortgage, deed of
trust, security agreement, financing agreement, indenture or other lease to
which any of them is a party which default, either singly or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.  No Loan Party
is a party to or bound by any agreement, instrument or indenture that may
require the subordination in right or time of payment of any of the Obligations
to any other Indebtedness or obligation of Borrowers or any other Loan
Party.  Prior to the Closing Date, Lead Borrower has provided to Agent Schedule
6.28 containing a description of the Permitted Existing Indebtedness, which
Agent has approved.  Nothing in this §6.28 shall alter or affect the provisions
of §8.1.
 

 
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§7.    AFFIRMATIVE COVENANTS OF LOAN PARTIES   
 
Borrowers and the other Loan Parties (as applicable) covenant and agree that, so
long as any Loan, Note, or other Obligation (other than contingent
indemnification obligations for which no claim has been asserted) is
Outstanding:
 
§7.1 Punctual Payment.
 
Borrowers will duly and punctually pay or cause to be paid the principal and
interest on the Loans and all interest and fees provided for in this Agreement,
all in accordance with the terms of this Agreement and the Notes as well as all
other sums owing pursuant to the Loan Documents.
 
§7.2 Maintenance of Office.
 
Each Borrower will maintain its chief executive office at 1926 10th Avenue N,
Suite 400, Lake Worth, Florida 33461, and each Guarantor shall maintain its
chief executive office at 3131 Elliott Avenue #500, Seattle, Washington 98121,
or at such other place in the United States of America as applicable Loan Party
shall designate upon at least thirty (30) days (or such lesser number of days as
is acceptable to Agent) prior written notice to Agent, where notices,
presentations and demands to or upon the Loan Parties in respect of the Loan
Documents may be given or made.  The Loan Parties agree that, in the event of
any such change, they will execute and deliver such amendments and other
documents as Agent may request to maintain Agent’s perfected Lien on the
Collateral.
 
§7.3 Records and Accounts.
 
Each Loan Party will keep true and accurate records and books of account in
which full, true and correct entries will be made in accordance with GAAP, as
revised from time to time.  No Loan Party shall, without the prior written
consent of Agent, make any material change to the accounting procedures used by
them in preparing the financial statements and other information described in
§6.4 except as required by law or as required by GAAP.  No Loan Party shall
change its fiscal year without the prior written consent of Agent.
 
§7.4 Financial Statements, Certificates and Information.
 
ESC and Lead Borrower will deliver to Agent:
 
(a) not later than one hundred twenty (120) days after the end of each fiscal
year of ESC, the audited Consolidated  balance sheet of ESC and its Subsidiaries
as of the end of such year, and the related statements of income, changes in
capital and cash flows for such year, each setting forth in comparative form the
figures for the previous fiscal year and all such statements to be in reasonable
detail, prepared in accordance with GAAP, and accompanied by an auditor’s report
prepared without qualification by ESC’s current accounting firm or other
nationally recognized accounting firm reasonably acceptable to Agent, and any
other information Agent or Lenders may reasonably require to complete a
financial analysis of ESC and its Subsidiaries; provided that so long as ESC is
required to file its audited financial statements with
 

 
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the Securities and Exchange Commission, the delivery of such filed financial
statements shall satisfy the foregoing requirements of this clause (a);
 
(b) not later than sixty (60) days after the end of each fiscal quarter of ESC
and its Subsidiaries (excluding the fourth fiscal quarter in each year), copies
of the balance sheet of ESC and its Subsidiaries as of the end of such quarter,
and the related statements of income, changes in capital and cash flows for the
portion of ESC’s fiscal year then elapsed, all in reasonable detail and prepared
on a Consolidated basis in accordance with GAAP (other than the inclusion of
footnotes); provided that so long as ESC is required to file its quarterly
financial statements with the Securities and Exchange Commission, the delivery
of such filed financial statements shall satisfy the foregoing requirements;
together with a certification by the Principal Financial Officer of ESC that the
information contained in such financial statements fairly presents, in all
material respects, the financial position of ESC and its Subsidiaries on the
date thereof (subject to year-end adjustments);
 
(c) not later than one hundred twenty (120) days after the end of each fiscal
year of NOC, the audited Consolidated balance sheet of NOC and its Subsidiaries
as of the end of such year, and the related statements of income, changes in
capital and cash flows for such year, each setting forth in comparative form the
figures for the previous fiscal year and all such statements to be in reasonable
detail, prepared in accordance with GAAP, and accompanied by an auditor’s report
prepared without qualification by NOC’s current accounting firm or a nationally
recognized accounting firm reasonably acceptable to Agent, and any other
information Agent or Lenders may require to complete a financial analysis of NOC
and its Subsidiaries.
 
(d) not later than sixty (60) days after the end of each fiscal quarter of NOC
and its Subsidiaries (excluding the fourth fiscal quarter in each year), copies
of the balance sheet of NOC and its Subsidiaries as of the end of such quarter,
and the related statements of income, changes in capital and cash flows for the
portion of NOC’s fiscal year then elapsed, all in reasonable detail and prepared
on a Consolidated basis in accordance with GAAP (other than the inclusion of
footnotes); together with a certification by the Principal Financial Officer of
NOC that the information contained in such financial statements fairly presents,
in all material respects, the financial position of NOC and its Subsidiaries on
the date thereof (subject to year-end adjustments);
 
(e) simultaneously with the delivery of the financial statements referred to in
subsections (a), (b), (c) and (d) of this §7.4, a statement (a “Compliance
Certificate”) certified by the Principal Financial Officer of NOC and the
Principal Financial Officer of ESC in the form of Exhibit B hereto (or in such
other form as Agent may approve from time to time) setting forth in reasonable
detail computations evidencing compliance with the covenants contained in §9 and
the other covenants described therein, and (if applicable) reconciliations to
reflect changes in GAAP since the Closing Date;
 
(f) concurrently with the delivery of the financial statements described in
subsections (a), (b), (c) and (d) of this §7.4, a certificate signed by the
Principal Financial Officer of NOC to the effect that, having read this
Agreement, and based upon an examination which such officer deems sufficient to
enable such officer to make an informed statement, such officer
 

 
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is not aware of any Default or Event of Default, or if such Default or Event of
Default has occurred, specifying the facts with respect thereto;
 
(g) simultaneously with the delivery of the Compliance Certificate referred to
in subsection (e) of this §7.4, a statement, certified as true and correct by
the Principal Financial Officer of NOC, of all Indebtedness of NOC and its
Subsidiaries as the end of such fiscal quarter, including, with respect to each
such Indebtedness, the original principal amount thereof and outstanding
principal amount as of the end of such fiscal quarter, the amount remaining
undisbursed, if any, the maturity date and any extension options, the required
monthly payments of principal and interest, the identity of the lender, the
interest rate, the collateral for such Indebtedness, and whether any default or
event of default exists with respect to such Indebtedness;
 
(h) if requested by Agent, copies of all annual federal income tax returns and
amendments thereto of ESC and its Subsidiaries;
 
(i) not later than March 1 of each year during the term of the Loan, the Budget
for NOC and its Subsidiaries for such calendar year.  Such Budget shall be in
form reasonably satisfactory to Agent and shall be submitted to Agent together
with a narrative description of the assumptions upon which the Budget is based
and such other information as Agent may request;
 
(j) not later than March 1 of each year during the term of the Loan, projected
statements of profit and loss and cash flows for NOC and its Subsidiaries,
prepared on a quarterly basis, for the current calendar year and next succeeding
calendar year.  Such projections shall be in form reasonably satisfactory to
Agent and shall be submitted to Agent together with a narrative description of
the assumptions upon which such projections are based and such other information
as Agent may request; and
 
(k) from time to time upon the request of Agent or any Lender, copies of surveys
prepared by each state agency with primary responsibility for regulating any
Borrower’s operations in any such state.
 
(l) from time to time such other financial data and information pertaining to
ESC and its Subsidiaries, NOC and its Subsidiaries, and the Collateral, as Agent
or any Lender may reasonably request from time to time.
 
§7.5 Notices.
 
(a) Defaults.  Lead Borrower will promptly after Lead Borrower obtains Knowledge
thereof notify Agent in writing of the occurrence of any Default or Event of
Default.  If any Person shall give any notice or take any other action in
respect of a claimed default (whether or not constituting an Event of Default)
under this Agreement or under any note, obligation or other evidence of
Indebtedness in an outstanding principal amount of at least $500,000, to which
or with respect to which any Borrower is a party or obligor, whether as
principal or surety, and such event of default would permit the holder of such
note or obligation or other evidence of Indebtedness to accelerate the maturity
thereof or the existence of which claimed default might become an Event of
Default under §12.1(g), Lead Borrower shall
 

 
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forthwith give written notice thereof to Agent after Lead Borrower obtains
Knowledge thereof, describing the notice or action and the nature of the claimed
default.  Lead Borrower shall also promptly notify Agent after Lead Borrower
obtains Knowledge thereof in writing of any exercise of remedies by the holder
of such note, obligation or other evidence of Indebtedness (or any agent or
representative thereof) with respect to such event of default.
 
(b) Environmental Events.  Lead Borrower or ESC will promptly give notice to
Agent (i) upon Lead Borrower or ESC obtaining Knowledge of any potential or
known Release, or threat of Release, of any Hazardous Substances at or from any
real estate of the Loan Parties that, either singly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect; (ii) of any violation
of any Environmental Law that any Loan Party reports in writing or is reportable
by any Loan Party in writing (or for which any written report supplemental to
any oral report is made) to any federal, state or local environmental agency
that, either singly or in the aggregate, could reasonably be expected to have a
Material Adverse Effect and (iii) upon obtaining Knowledge thereof, of any
inquiry, proceeding, investigation, or other action, including a notice from any
agency of potential environmental liability, of any federal, state or local
environmental agency or board, that in either case could reasonably be expected
to have a Material Adverse Effect.
 
(c) Notification of Claims Against Collateral.  Lead Borrower or Holdings will,
promptly upon obtaining Knowledge thereof, notify Agent in writing of any claims
pertaining to the Collateral or other property of the Borrowers which, either
singly or in the aggregate, could reasonably be expected to exceed $500,000, as
well as any setoff, withholdings or other defenses to which any of the
Collateral, or the rights of Agent or Lenders with respect to the Collateral,
are subject, in each case, other than related to Permitted Liens.
 
(d) Notice of Litigation and Judgments.  Lead Borrower or ESC will give notice
to Agent in writing, within thirty (30) days if the matter involves any Borrower
or forty-five (45) days if the matter involves ESC or any of its Subsidiaries
other than Borrowers after Lead Borrower obtains Knowledge thereof any
litigation or proceedings threatened in writing or any pending litigation and
proceedings affecting any of such Loan Parties or their Subsidiaries or to which
any of such Persons is or is to become a party involving an uninsured claim
against any of such Persons that could reasonably be expected to have a Material
Adverse Effect and stating the nature and status of such litigation or
proceedings.  Lead Borrower or ESC will give notice to Agent, in writing, in
form and detail satisfactory to Agent and each of Lenders, within ten (10) days
of any judgment not covered by insurance, whether final or otherwise, against
any of the Loan Parties in an amount, whether singly or in the aggregate, in
excess of $1,000,000.
 
(e) ERISA.  Lead Borrower will give notice to Agent within five (5) Business
Days after Borrower’s Knowledge that NOC or any ERISA Affiliate (i) gives or is
required to give notice to the PBGC of any ERISA Reportable Event with respect
to any Guaranteed Pension Plan, or that the plan administrator of any such plan
has given or is required to give notice to the PGBC of any such ERISA Reportable
Event; (ii) has received a copy of any notice of withdrawal liability under
Title IV of ERISA with respect to a Multiemployer Plan; or (iii) has received
any notice from the PBGC under Title IV of ERISA of an intent to terminate or
appoint a trustee to administer any Guaranteed Pension Plan.
 

 
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(f) Notice of Material Adverse Effect.  Lead Borrower or ESC will give notice to
Agent in writing within (i) thirty (30) days if the matter involves any Borrower
or (ii) forty-five (45) days if the mater involves ESC, in each case, after Lead
Borrower obtains Knowledge of the occurrence of any event or circumstance which
could reasonably be expected to have a Material Adverse Effect.
 
§7.6 Existence; Maintenance of Properties.
 
Except as permitted under §8.4, the Loan Parties will do or cause to be done all
things necessary to preserve and keep in full force and effect their respective
legal existences and good standing in their respective jurisdictions of
incorporation, organization or formation (as the case may be).  Except as
permitted under §8.4 or where the failure to do so could not reasonably be
expected to have a Material Adverse Effect, the Loan Parties will do or cause to
be done all things necessary to preserve or establish their respective good
standing as a foreign entity and due authorization to do business in the
jurisdictions described in §6.1(a).  Except as permitted under §8.4, each Loan
Party will do or cause to be done all things necessary to preserve and keep in
full force all of its rights and franchises, except where the failure to
preserve such rights and franchises would not reasonably be expected to have a
Material Adverse Effect.
 
§7.7 Insurance.
 
(a) Maintenance of Insurance.  Each Loan Party will maintain with financially
sound and reputable insurers not Affiliates of any Loan Party that are licensed
to do business in the State where the policy is issued and, with respect to any
property and casualty insurance, insurance with respect to its properties and
business against such casualties and contingencies, as shall be in accordance
with the general practices of businesses engaged in similar activities in
similar geographic areas, and in amounts, containing such terms, in such forms
and for such periods as may be reasonable and prudent in accordance with sound
business practices and the reasonable determination of management of the Loan
Parties.  On or before the Closing Date, Lead Borrower shall furnish to Agent a
certificate setting forth in reasonable detail the nature and extent of all
insurance maintained by Borrowers, and shall cause each issuer of an insurance
policy to provide Agent with an endorsement (i) showing Agent as a loss payee
with respect to each policy of property or casualty insurance and naming Agent
as an additional insured with respect to each policy of liability insurance,
(ii) providing that 30 days’ notice will be given to Agent prior to any
cancellation of, or material reduction or change in coverage provided by or
other material modification to such policy, and also a cross
liability/severability endorsement.  The Loan Parties shall be responsible for
all premiums on insurance policies.  Upon Agent’s request, Lead Borrower shall
deliver certified copies of all such policies to Agent, and shall promptly
furnish to Agent all renewal notices and evidence that all premiums or portions
thereof then due and payable have been paid.  At least fifteen (15) days prior
to the expiration date of the policies, Lead Borrower shall deliver to Agent
evidence of continued coverage, including a certificate of insurance, as may be
reasonably satisfactory to Agent.
 
(b) Blanket Policies.  Such insurance may be provided under blanket policies of
insurance obtained by ESC or NOC.  Such blanket policies may cover additional
locations and property of the Loan Parties and other Persons, provided that such
blanket policies comply with all of the terms and provisions of this §7.7 and
contain endorsements or clauses assuring that any
 

 
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claim recovery will not be less than that which a separate policy would provide,
including, without limitation, a priority claim provision with respect to
property insurance and an aggregate limits of insurance endorsement in the case
of liability insurance.  Upon request by Lead Borrower, Agent and Lead Borrower
may approve variations in the foregoing requirements from time to time.
 
(c) No Separate Insurance.  Borrowers shall not carry separate insurance,
concurrent in kind or form or contributing in the event of loss, with any
insurance required under this Agreement unless such insurance complies with the
terms and provisions of this §7.7.
 
§7.8 Taxes.
 
Each Loan Party will duly pay and discharge, or cause to be paid and discharged,
before the same shall become delinquent, all material taxes, assessments and
other governmental charges imposed upon it and the Collateral owned by it,
including, without limitation, any payments in lieu of taxes, sales and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials or supplies that if unpaid might by law
become a lien or charge upon any of its property or the property of any other
Loan Party; provided that any such tax, assessment, charge, levy or claim need
not be paid if (a) the validity or amount thereof shall currently be contested
in good faith by appropriate proceedings, (b) no Collateral nor any interest
therein would be in any danger of sale, forfeiture or loss by reason of such
proceeding and (c) the Loan Party shall have set aside on its books adequate
reserves in accordance with GAAP with respect thereto; and provided further that
the Loan Parties will pay, or cause to be paid, all such taxes, assessments,
charges, levies or claims forthwith upon the commencement of proceedings to
foreclose any lien that may have attached as security therefor.
 
§7.9 Inspection of the Loan Parties’ Books.
 
ESC and NOC shall permit or cause the other Loan Parties and their respective
Subsidiaries to permit, Lenders, through Agent or any representative designated
by Agent, at the Loan Parties’ expense if an Event of Default is then in
existence, and upon reasonable prior notice to visit and inspect any place of
business of any Loan Party, to examine the books of account of Borrowers and the
other Loan Parties (and to make copies thereof and extracts therefrom) and to
discuss the affairs, finances and accounts of Borrowers and the other Loan
Parties with, and to be advised as to the same by, its officers, all at such
reasonable times and intervals as Agent or any Lender may reasonably
request.  Notwithstanding the foregoing, any such inspection may be limited to
the extent necessary to maintain the confidentiality of resident and patient
information in accordance with applicable law.
 
§7.10 Compliance with Laws, Contracts, Licenses, and Permits.
 
ESC and NOC will comply and cause each of the other Loan Parties and their
respective Subsidiaries to comply, in all respects with (i) all applicable laws,
ordinances, regulations and requirements now or hereafter in effect wherever its
business is conducted, including all Environmental Laws, (ii) the provisions of
its Organizational Documents, (iii) all mortgages, indentures, contracts,
agreements and instruments to which it is a party or by which it or any of its
properties may be bound, (iv) all applicable decrees, orders, and judgments, and
(v) all
 

 
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licenses and permits required by applicable laws and regulations for the conduct
of its business or the ownership, use or operation of its properties, except in
each case where the failure to so comply would not reasonably be expected to
have a Material Adverse Effect.  If at any time while any Loan or Note is
outstanding, any authorization, consent, approval, permit or license from any
officer, agency or instrumentality of any government shall become necessary or
required in order that any Borrower or any other Loan Party may fulfill any of
their obligations hereunder or under the other Loan Documents, the Loan Parties
will promptly take or cause to be taken all steps necessary to obtain such
authorization, consent, approval, permit or license and furnish Agent and
Lenders with evidence thereof.
 
§7.11 Further Assurances.
 
Each Loan Party will cooperate, and cause the other Loan Parties to cooperate,
with Agent and Lenders and execute such further instruments and documents as
Lenders or Agent shall reasonably request to carry out to their satisfaction the
transactions contemplated by this Agreement and the other Loan Documents.
 
§7.12 Plan Assets.
 
Borrowers will do, or cause to be done, all things necessary to ensure that none
of the Collateral will be deemed to be Plan Assets at any time.
 
§7.13 Business Operations.
 
Each Loan Party shall operate its respective business generally in substantially
the same manner as has been previously conducted and businesses reasonably
related thereto (including, for the avoidance of doubt, the provision of
outpatient therapy, the sale of medical devices and geographic expansion) and
the Loan Parties shall not materially change the nature of such business or
engage in any other material unrelated businesses or activities.  Each Loan
Party shall further operate their respective businesses in compliance with the
terms and conditions of the Loan Documents relating to such business.
 
§7.14 Transfer of Collection Account.
 
Borrowers shall make all reasonable efforts to cause all payments from Medicare
to be made to a collection account maintained at KeyBank or such other Lender
acceptable to Agent ("Agent Collection Account"), but in any case, such
transition of payments from Medicare shall occur on or before the earlier of (a)
the first anniversary of the Closing Date, (b) prior to exercising any Change of
Control or (c) prior to exercising any sale of the assets of ESC and its
Subsidiaries in a single transaction or series of transactions which, in the
aggregate, exceed twenty percent (20%) of the total book value of such
properties.  In addition to the foregoing, Borrowers agree that the Agent
Collection Account shall be subject to a collection account agreement
substantially similar to the Collection Account Agreement among NOC, Agent and
Regions Bank executed on the Closing Date.
 

 
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§7.15 Additional Subsidiaries; Additional Borrowers.
 
Within thirty (30) days (or such longer period of time as Agent may approve) of
any Person becoming a wholly owned, direct or indirect Subsidiary of NOC
organized in the United States after the Closing Date, NOC will provide Agent
with written notice thereof setting forth information in reasonable detail
describing the scope and approximate amount of all assets of such Subsidiary and
shall, subject to compliance with the terms of § 6.23, (a) cause such Subsidiary
to execute and deliver to Agent a Subsidiary Joinder Agreement, (b) cause the
Equity Interests in such Subsidiary to be pledged by amendment to the Security
Agreement, and (c) cause such Subsidiary and each required Loan Party to deliver
such additional documents and certificates as Agent or any Lender reasonably
shall request (including, without limitation, if requested by any Lender, a new
Note payable to such Lender executed by all Borrowers), in addition to certified
resolutions and other Organizational Documents and authorizing documents of such
Subsidiary and favorable opinions of counsel to such Subsidiary, all in form and
substance reasonably acceptable to Agent.  Any document (other than opinions) or
certificate delivered in connection with this §7.15 shall constitute a Loan
Document.
 
§8.           CERTAIN NEGATIVE COVENANTS OF LOAN PARTIES
 
Borrowers and the other Loan Parties (as applicable) covenant and agree that, so
long as any Loan, Note, or other Obligation (other than contingent
indemnification obligations for which no claim has been asserted) is
outstanding:
 
§8.1 Restrictions on Indebtedness.
 
Subject to the further restrictions of §9.1, the Borrowers will not create,
incur, assume, guarantee or be or remain liable, contingently or otherwise, with
respect to any Indebtedness other than:
 
(i) the Obligations;
 
(ii) the Permitted Existing Indebtedness and any refinancing thereof;
 
(iii) Indebtedness of any Borrower to any other Loan Party or Affiliate of a
Loan Party so long as such Indebtedness is subordinated to the Obligations on
terms reasonably satisfactory to Agent, which subordination terms shall include,
among other things, an agreement that no principal or interest shall be paid on
such subordinated Indebtedness at any time that a Default or an Event of Default
exists;
 
(iv) to the extent constituting Indebtedness, liabilities in respect of taxes,
assessments, governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time be required
to be made in accordance with the provisions of §7.8;
 
(v) Indebtedness in respect of judgments or awards that would not constitute an
Event of Default;
 

 
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(vi) obligations under any Hedge Agreement incurred in the ordinary course of
business for bona fide hedging purposes;
 
(vii) Indebtedness owing to insurance carriers or finance companies and incurred
to finance insurance premiums of any Borrower in the ordinary course of business
in a principal amount not to exceed at any time the amount of such insurance
premiums to be paid by such Borrower;
 
(viii) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently drawn against
insufficient funds in the ordinary course of business, or pursuant to netting
services or otherwise in connection with deposit accounts, treasury, depositary
and cash management services or ACH transfers of funds, commercial credit card,
purchase card and merchant card services;
 
(ix) endorsements for collection, deposit or negotiation and warranties of
products or services, in each case incurred in the ordinary course of business;
 
(x) Indebtedness in connection with surety or performance (or similar) bonds,
letters of credit and performance bonds obtained in the ordinary course of
business in connection with workers’ compensation obligations of the Borrowers
and in connection with other surety and performance bonds in the ordinary course
of business;
 
(xi) Indebtedness in respect of Capitalized Leases or purchase money
obligations, and refinancings and renewals thereof, not to exceed $2,500,000 in
aggregate (for all Borrowers) principal amount at any time outstanding;
 
(xii) other unsecured Indebtedness of Borrowers not otherwise permitted under
this §8.1 in an aggregate (for all Borrowers) principal amount not to exceed
$1,000,000 at any time outstanding; and
 
(xiii) guarantees of any of the Indebtedness permitted under this §8.1.
 
§8.2 Restrictions on Liens, Etc.
 
The Borrowers will not (a) create or incur or suffer to be created or incurred
or to exist any lien, encumbrance, mortgage, pledge, negative pledge that would
preclude Liens in favor of the Agent and Lenders to secure the Obligations,
charge or other security interest of any kind upon any of its property or assets
of any character whether now owned or hereafter acquired, or upon the income or
profits therefrom; (b) transfer any of its property or assets or the income or
profits therefrom for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to payment of
its general creditors; (c) acquire, or agree or have an option to acquire, any
property or assets upon conditional sale or other title retention or purchase
money security agreement, device or arrangement; or (d) sell, assign, pledge or
otherwise encumber any accounts, contract rights, general intangibles, chattel
paper or instruments, with or without recourse (collectively the “Liens”);
provided that the Borrowers may create or incur or suffer to be created or
incurred or to exist any of the following (the “Permitted Liens”):
 

 
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(i) Liens for taxes, assessments and other governmental charges or claims for
labor, material or supplies in respect of obligations not overdue or being
contested in good faith;
 
(ii) Liens in favor of Agent and Lenders under the Loan Documents;
 
(iii) Liens on properties of any Borrower (including the rents, issues and
profits therefrom) in respect of Indebtedness which is permitted by §8.1(ii) or
8.1(xi);
 
(iv) Liens arising in the ordinary course of business, including (A) Liens of
carriers, warehousemen, mechanics, landlords, operators and materialmen and
other similar Liens imposed by law, (B) Liens incurred in connection with
worker’s compensation, unemployment compensation and other types of social
security (excluding Liens arising under ERISA), (C) Liens in connection with
letters of credit, surety bonds, bids, performance bonds and similar
obligations, if applicable for sums not overdue or being diligently contested in
good faith by appropriate proceedings and not involving any advances or borrowed
money or the deferred purchase price of property or services and, in each case,
for which it maintains adequate reserves in accordance with GAAP and the
execution or other enforcement of which is effectively stayed, or (D) Liens in
connection with other letters of credit issued in the ordinary course of any
Borrower’s business;
 
(v) Liens described on the Perfection Certificate as of the Closing Date;
 
(vi) attachments, appeal bonds, judgments and other similar Liens, with respect
to judgments that do not otherwise result in or cause an Event of Default;
 
(vii) pledges or deposits in the ordinary course of business required to secure
performance bids, tenders, trade contracts, performance bonds, statutory
obligations, leases, government contracts, surety, indemnity, performance or
similar bonds in connection with judicial or administrative proceedings and
other obligations of a like nature;
 
(viii) easements, rights of way, servitudes, covenants, exceptions,
reservations, zoning ordinances, entitlements, minor defects or irregularities
in title or survey, building codes and other land use laws and environmental
restrictions, regulations and ordinances, and other similar Liens regulating the
use or occupancy of real property or the activities conducted thereon which are
imposed by a Governmental Authority having jurisdiction over such real property,
in each case which are not violated in any material respect by the current use
or occupancy of such real property and do not interfere in any material respect
with the ordinary operation of the business of any Borrower;
 
(ix) licenses or sublicenses of intellectual property granted in the ordinary
course of business;
 
(x) Liens arising under Article 2 or Article 4 of the Uniform Commercial Code
and customary banker’s liens and rights of set-off, revocation, refund or
chargeback in favor of banks or other financial institutions where the Borrowers
maintain deposits in the ordinary course of business;
 

 
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(xi) Liens arising from precautionary Uniform Commercial Code financing
statements regarding operating leases or consignments;
 
(xii) Liens deemed to exist in connection with repurchase agreements and other
similar investments to the extent such Investments are permitted under this
Agreement;
 
(xiii) the replacement, extension or renewal of any Lien permitted by clauses
(iii) hereof upon or in the same property subject thereto arising out of the
extension, renewal or replacement of the Indebtedness secured thereby; and
 
(xiv) Liens existing on any asset of a Person at the time such Person becomes a
Subsidiary of NOC and not created in contemplation of such event.
 
§8.3 Restrictions on Investments.
 
The Borrowers will not make or permit to exist or to remain outstanding any
Investment except Investments in:
 
(a) marketable direct or guaranteed obligations of the United States of America
that mature within one (1) year from the date of purchase by any Borrower;
 
(b) marketable direct obligations of any of the following: Federal Home Loan
Mortgage Corporation, Student Loan Marketing Association, Federal Home Loan
Banks, Federal National Mortgage Association, Government National Mortgage
Association, Bank for Cooperatives, Federal Intermediate Credit Banks, Federal
Financing Banks, Export-Import Bank of the United States, Federal Land Banks, or
any other agency or instrumentality of the United States of America;
 
(c) demand deposits, certificates of deposit, bankers acceptances and time
deposits of United States banks having total assets in excess of $100,000,000;
provided, however, that the aggregate amount at the time of such Investment so
invested with any single bank having total assets of less than $1,000,000,000
will not exceed $250,000;
 
(d) securities commonly known as “commercial paper” issued by a corporation
organized and existing under the laws of the United States of America or any
State which at the time of purchase are rated by Moody’s or by S&P at not less
than “P-1” if then rated by Moody’s, and not less than “A-1”, if then rated by
S&P;
 
(e) mortgage-backed securities guaranteed by the Government National Mortgage
Association, the Federal National Mortgage Association or the Federal Home Loan
Mortgage Corporation and other mortgage-backed bonds which at the time of
purchase are rated by Moody’s or by S&P at not less than “Aa” if then rated by
Moody’s and not less than “AA” if then rated by S&P;
 
(f) shares of so-called “money market funds” registered with the SEC under the
Investment Company Act of 1940 which maintain a level per-share value, invest
principally in investments described in the foregoing subsections (a) through
(e) and have total assets in excess of $50,000,000;
 

 
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(g) Investments by NOC in its current Subsidiaries and in other wholly owned
Subsidiaries of NOC that are or become a Borrower substantially
contemporaneously therewith pursuant to §7.15;
 
(h) extensions of trade credit in the ordinary course of business;
 
(i) Investments of any Person existing at the time such Person becomes a
Borrower or consolidates or merges with a Borrower so long as such Investments
were not made in contemplation of such Person becoming a Borrower or of such
consolidation or merger;
 
(j) Investments (including Indebtedness and other obligations) received in
connection with the bankruptcy or reorganization of customers and in settlement
of delinquent obligations of, and other disputes with, customers and suppliers
in the ordinary course of business;
 
(k) Investments listed on Schedule 8.3 as of the Closing Date;
 
(l) indemnities made and surety and performance bonds and letters of credit
issued in the ordinary course of business;
 
(m) Investments in connection with Hedge Agreements permitted under this
Agreement;
 
(n) the purchase or other acquisition of property and assets or businesses of
any Person or of assets constituting a business unit, a line of business or
division of such Person, or Equity Interests in a Person that, upon the
consummation thereof, will be a Subsidiary of NOC and a Borrower (including as a
result of a merger or consolidation); provided, that with respect to each
purchase or other acquisition made pursuant to this §8.3(n) (each, a “Permitted
Acquisition”):
 
(1)           to the extent required by this Agreement, the Equity Interest of
such Subsidiary shall constitute Collateral and each such newly created or
acquired Subsidiary shall be a Borrower and shall become a grantor under the
Security Agreement; and
 
(2)           (A) immediately before and after giving pro forma effect to any
such purchase or other acquisition, no Default or Event of Default shall exist
and be continuing and (B) in connection with acquisitions for consideration in
excess of $2,000,000, Borrower has delivered to Agent a pro forma Compliance
Certificate showing that after giving effect to such Investment, Loan Parties
remain in compliance with the financial covenants in §9.1; and
 
(3)           the amount of the Investment made by Borrowers with respect to
such acquisition, when combined with the amount paid in other Permitted
Acquisitions and the amount expended for capital expenditures during the
immediately preceding twelve (12) month period, exclusive of amounts derived
from additional equity investment in NOC, does not exceed thirty percent (30%)
of the EBITDA of NOC and its Subsidiaries for the most recently completed twelve
(12) month period;
 

 
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                              (o) additional Investments so long as no Default
or Event of Default shall exist immediately prior thereto or after giving effect
thereto and so long as the aggregate amount invested, loaned or advanced
pursuant to this §8.3(o) does not exceed $1,000,000 in the aggregate at any
time; and
 
(p) Investments in the form of loans permitted by §8.1(iii).
 
§8.4 Merger, Consolidation.
 
(a) The Borrowers will not become a party to any dissolution, liquidation,
merger, reorganization, consolidation or other business combination, or agree to
or effect any asset acquisition or stock acquisition or other acquisition which
may have a similar effect as any of the foregoing without the prior written
consent of the Required Lenders, except that:
 
(i) any Subsidiary of NOC may be merged or consolidated with or into NOC
(provided that NOC shall be the continuing or surviving corporation) or with or
into any Subsidiary of NOC that is a Borrower (provided that such Borrower shall
be the continuing or surviving corporation);
 
(ii) any Subsidiary of NOC may dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to NOC or any Subsidiary of NOC that is a
Borrower; and
 
(iii) any Borrower may consummate any Investment otherwise permitted by §8.3(n)
by merger or consolidation, provided that such Borrower is the continuing or
surviving corporation.
 
(b) ESC and its Subsidiaries will not become a party to any merger,
reorganization, consolidation or other business combination or agree to or
effect any asset acquisition or stock acquisition or other acquisition which may
have a similar effect of any Person that primarily carries on a home healthcare
business that operates in the same market areas as NOC and its Subsidiaries, or
form any new Subsidiary to carry on a home healthcare business, unless such
Person is, upon the consummation of such transaction or formation, a wholly
owned direct Subsidiary of NOC.
 
§8.5 Sale and Leaseback.
 
The Borrowers will not enter into any arrangement, directly or indirectly,
whereby such Person shall sell or transfer any real property or personal
property in order that then or thereafter such Person shall lease back such
property.
 
§8.6 Compliance with Environmental Laws.
 
The Loan Parties will not do any of the following if to do so could reasonably
be expected to result in a Material Adverse Effect:  (a) use any real property
as a facility for the handling, processing, storage or disposal of Hazardous
Substances, except for quantities of Hazardous Substances used in the ordinary
course of business and in material compliance with all applicable Environmental
Laws, (b) cause or permit to be located on any real property any
 

 
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underground tank or other underground storage receptacle for Hazardous
Substances except in material compliance with Environmental Laws, (c) generate
any Hazardous Substances on any real property owned by a Loan Party except as
generated in the ordinary course of business and in material compliance with
Environmental Laws, (d) cause a Release of Hazardous Substances on, upon or into
the real property owned by a Loan Party which give rise to liability under
CERCLA or any other Environmental Law, or (e)  transport or arrange for the
transport of any Hazardous Substances (except as required in the ordinary course
of business and in material compliance with all Environmental Laws).
 
If any Loan Party causes any Release of Hazardous Substances in violation of
Environmental Laws to occur and that could reasonably be expected to have a
Material Adverse Effect, such Loan Party shall cause the prompt containment and
removal of such Hazardous Substances and remediation of the real property in
material compliance with all applicable Environmental Laws.
 
§8.7 Distributions.
 
No Distributions shall be made by the Borrowers, or any of them, except as
permitted in this §8.7.  Distributions are permitted as follows: (a) Borrowers
may make a Distribution within five (5) days of the Closing Date in an amount up
to the net proceeds of the Loans received, (b) NOC’s Subsidiaries may make
Distributions to NOC, and (c) so long as no Default or Event of Default shall
have occurred and be continuing, and after giving pro forma effect to the
proposed Distribution, Borrowers shall be in compliance with §9.1, NOC may make
(i) quarterly Distributions to Holdings of seventy percent (70%) of NOC Net Cash
Flow for the immediately preceding fiscal quarter of NOC, and (ii) Distributions
required by the Tax Sharing Agreement.
 
§8.8 Asset Sales.
 
(a) The Borrowers shall not, in any single transaction or series of related
transactions, directly or indirectly, hypothecate, sell, assign, transfer,
mortgage, pledge, encumber or otherwise dispose of any Collateral, any Equity
Interests held by NOC in any other Borrower, or permit the same to be sold,
assigned, transferred, conveyed, contracted for or encumbered, or otherwise
disposed of, or otherwise incur, create, assume or permit to exist any mortgage,
pledge, security interest, encumbrance, Lien or charge of any kind upon such
assets (other than to Agent or in respect of Permitted Liens), nor shall the
Borrowers, or any of them, whether in a single transaction or a series of
related transactions, convey, lease with option to purchase, enter into a
contract for sale, or grant an option to purchase all or any portion of such
assets, except as follows:
 
(i) transfers, conveyances or other dispositions of any real property resulting
from any condemnation;
 
(ii) transfers, conveyances or other dispositions of any property resulting from
the granting of Permitted Liens;
 
(iii) sales, leases, subleases and other dispositions of assets that are
obsolete, worn out or no longer used or useful in the applicable Borrower’s
business;
 

 
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(iv) dispositions or liquidations of cash and other Investments in the ordinary
course of business;
 
(v) the termination, surrender or sublease of leases (as lessee), licenses (as
licensee), subleases (as sublessee) and sublicenses (as sublicensee) in the
ordinary course of business;
 
(vi) the settlement or write-off of accounts receivable in the ordinary course
of business;
 
(vii) sales, transfers and other dispositions between or among Borrowers;
 
(viii) dispositions of assets not otherwise described in this §8.4(a) for an
aggregate consideration less than or equal to $5,000,000 in any fiscal year,
subject to the following conditions:
 
(a) the sale is made for fair value and at least seventy-five percent (75%) of
the consideration received therefor shall be cash;
 
(b) the Net Cash Proceeds shall be used to prepay the Loans as provided in §3.2;
 
(c) the sale may include the sale of all of the assets of or Equity Interest in
any Borrower other than NOC, and in such case such Borrower shall be released as
a Borrower from liability for the Obligations as provided in §14.11; or
 
(ix) dispositions of assets in connection with transactions permitted by §8.4.
 
(b) ESC and its Subsidiaries shall not, in any single transaction or series of
transactions, directly or indirectly sell, transfer or otherwise dispose of
their “owned” portfolio of properties having an aggregate book value of more
than twenty percent (20%) of the total book value of such properties during any
consecutive twelve (12) month period; provided, however, that the foregoing
restriction shall not apply if the Threshold Covenants are satisfied after
giving effect to any such disposition.
 
§8.9 Reserved.
 
§8.10 Negative Pledges, Restrictive Agreements, Etc.
 
The Borrowers will not enter into any agreement (excluding this Agreement and
any other Loan Document) prohibiting or restricting:
 
(i) the creation or assumption of any Lien in favor of Agent or Lenders upon its
properties, revenues or assets, whether now owned or hereafter acquired, except
for Liens expressly permitted pursuant to §8.2;
 

 
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(ii) the ability of Borrowers to amend or otherwise modify this Agreement or any
other Loan Document; or
 
(iii) the ability of any Subsidiary of NOC to make any payments, directly or
indirectly, to NOC by way of dividends, distributions, return on equity,
advances, repayments of loans or advances, reimbursements of management and
other intercompany charges, expenses and accruals or other returns on
investments, or any other agreement or arrangement which restricts the ability
of any such Subsidiary to make any payment or transfer any property or asset,
directly or indirectly, to NOC,
 
in each case other than (A) customary restrictions and conditions contained in
agreements relating to the sale of all or any part of the Equity Interests or
assets of any Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary or assets to be sold and such sale is
permitted hereunder, (B) restrictions or conditions imposed by any agreement
relating to Indebtedness permitted under this Agreement if such restrictions or
conditions apply only to the property or assets securing such Indebtedness,
(C) customary provisions in leases, licenses and other contracts restricting the
assignment thereof, (D) provisions relating to the transfer, assignment or
sublet of any lease or other agreement entered into in the ordinary course of
business, or (E) restrictions or conditions on a Subsidiary existing prior to
such Subsidiary becoming a Subsidiary of NOC, so long as such restriction or
condition only applies to such Subsidiary.
 
§8.11 Organizational Documents.
 
Neither Borrowers nor any other Loan Party shall modify, amend, cancel, release,
surrender, terminate or permit the modification, amendment, cancellation,
release, surrender or termination of, any of its Organizational Documents if
such action could reasonably be expected to materially and adversely affect the
Agent and Lenders.
 
§8.12 Affiliate Transactions.
 
Except for the Loan Documents and the other agreements listed on Schedule 6.15,
the Borrowers will not enter into, or cause, suffer or permit to exist any
arrangement or contract with, any of their respective Affiliates unless such
arrangement or contract:
 
(i)  
is not otherwise prohibited by this Agreement or the other Loan Documents;

 
(ii)  
(i) is in the ordinary course of business of the Borrowers and (ii) which is on
terms which are not materially less favorable to any such Borrower than are
obtainable from any Person which is not one of its Affiliates.

 
The foregoing provisions of this §8.12 shall not prohibit any Borrower from
engaging in any of the following transactions:  (i) any transaction by and
between or among the Borrowers, (ii) entering into or complying with any
employment agreement or equity incentive arrangements, with any employee,
officer, director, member or consultant of any Borrower, in each case, in the
ordinary course of business, (iii) any Distributions or other payments permitted
under this Agreement, and (iv) the payment of fees and compensation to, and
customary
 

 
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indemnities and reimbursements provided on behalf of, officers, directors,
employees and agents of any Borrower to the extent not prohibited by this
Agreement.
 
§8.13 Management Fees, Expenses, Etc.
 
The Borrowers will not pay management, advisory, consulting, director or other
similar fees, other than:
 
 
1.
fees payable to Agent, Lenders or any of their Affiliates as in effect on the
date hereof;

 
 
2.
fees payable to non-Affiliates engaged on an arm’s-length basis;

 
 
3.
director fees and reimbursement of out-of-pocket expenses; or

 
 
4.
fees payable to any Loan Party in the ordinary course of business so long as
contemplated in the Budgets provided pursuant to §7.4(i) and so long as the
amount of any such fee is comparable to the fee that would be charged for
similar services by a non-affiliated third party.

 
§9.           FINANCIAL COVENANTS
 
The Loan Parties covenant and agree that, so long as any Loan, Note or other
Obligation is outstanding:
 
§9.1 NOC Financial Covenants.
 
(a) Debt Service Coverage Ratio.  Commencing with the fiscal quarter ending June
30, 2013, Borrowers will not, as of the end of any fiscal quarter of Borrowers,
permit the Debt Service Coverage Ratio for the fiscal quarter then ended and the
immediately preceding three (3) fiscal quarters (treated as a single accounting
period) (the “Test Period”), to be less than 1.5 to 1.0; provided that for the
Test Periods ending June 30, 2013 and September 30, 2013, the Debt Service
Coverage Ratio shall be determined by annualizing the amounts for the 6 (six) or
9 (nine) month periods, as applicable, beginning January 1, 2013.
 
(b) Total Leverage Ratio.  Borrowers will not, as of the end of any fiscal
quarter of Borrowers, permit the Total Leverage Ratio for the Test Period to
exceed the following (it being agreed that for the Test Periods ending June 30,
2013 and September 30, 2013, EBITDA shall be determined by annualizing the
amounts for the 6 (six) or 9 (nine) month periods, as applicable, beginning
January 1, 2013):
 
Test Period Ending
Total Leverage Ratio
6/30/13, 9/30/13, 12/31/13
3.25 to 1.0
3/31/14, 6/30/14, 9/30/14, 12/31/14
2.75 to 1.0
3/31/15, 6/30/15, 9/30/15, 12/31/15
2.0 to 1.0
3/31/16 and thereafter
1.25 to 1.0

 
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(c) Net Worth.  Commencing June 30, 2013, Borrowers will not, as of the last day
of any fiscal quarter, permit the Consolidated Net Worth of NOC and its
Subsidiaries to be less than the beginning Net Worth (after giving effect to the
Distribution within five (5) days of the Closing Date) determined by NOC as of
March 31, 2013 and approved by Agent, plus thirty percent (30%) of Net Income of
NOC and its Subsidiaries earned after the Closing Date, plus eighty percent
(80%) of any additional equity Investment made in NOC after the Closing Date.
(d) Liquidity.  Borrowers will not, as of the end of any fiscal quarter, permit
Available Liquidity of NOC and its Subsidiaries to be less than $1,000,000.
 
§9.2 ESC Financial Covenants.
 
(a) Fixed Charge Coverage Ratio.  ESC will not, as of the end of any fiscal
quarter of ESC, permit the Fixed Charge Coverage Ratio for the Test Period to be
less than (i) 1.05 to 1.0 for all Test Periods before the Test Period ending
June 30, 2014, and (ii) 1.1 to 1.0 thereafter.
 
(b) Liquid Assets.  ESC will not, as of the end of any fiscal quarter, permit
Liquid Assets of ESC and its Subsidiaries to be less than $25,000,000, provided
that such minimum shall be reduced to $20,000,000 from and after the first
measurement date that the Fixed Charge Coverage Ratio is greater than or equal
to 1.1 to 1.0.
 
§10.           CLOSING CONDITIONS
 
The obligations of Agent and Lenders to make the Loans shall be subject to the
satisfaction of the following conditions precedent on or prior to the Closing
Date:
 
§10.1 Loan Documents.
 
Each of the Loan Documents shall have been duly executed and delivered by the
respective parties thereto, shall be in full force and effect and shall be in
form and substance satisfactory to the Required Lenders.  Agent shall have
received a fully executed copy of each such document, except that each Lender
shall have received a fully executed counterpart of its Note or Notes.
 
§10.2 Certified Copies of Organizational Documents.
 
Agent shall have received from each Loan Party a copy, certified as of a recent
date by the appropriate officer of each State in which each such Loan Party is
organized and in which such Loan Party is qualified to do business and by a duly
authorized member, manager, partner or officer of such Loan Party, as
applicable, to be true and complete, of the Organizational Documents of such
Loan Party, or its qualification to do business, as applicable, as in effect on
such date of certification.
 
§10.3 Resolutions.
 
All action on the part of each Loan Party necessary for the valid execution,
delivery and performance by such Loan Party of this Agreement and the other Loan
Documents (as applicable) to which such Person is or is to become a party shall
have been duly and effectively
 

 
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taken, and evidence thereof satisfactory to Agent shall have been provided to
Agent.  Agent shall have received from each Loan Party, true copies of their
respective resolutions adopted by their respective board of directors or other
governing body authorizing the transactions described herein, each certified by
its secretary, assistant secretary or other appropriate representative as of a
recent date to be true and complete.
 
§10.4 Incumbency Certificate; Authorized Signers.
 
Agent shall have received from each Loan Party, an incumbency certificate, dated
as of the Closing Date, signed by a duly authorized officer of such Loan Party
and giving the name and bearing a specimen signature of each individual who
shall be authorized to sign, in the name and on behalf of such Loan Party, each
of the Loan Documents to which such Person is or is to become a party.  Agent
shall have also received from Lead Borrower a certificate, dated as of the
Closing Date, signed by a duly authorized officer of Lead Borrower and giving
the name and specimen signature of each individual who shall be authorized to
make Loan Requests and Conversion Requests, and to give notices and to take
other action on behalf of Borrowers under the Loan Documents.
 
§10.5 Opinion of Counsel.
 
Agent shall have received a favorable opinion addressed to Lenders and Agent and
dated as of the Closing Date, in form and substance reasonably satisfactory to
Agent, from counsel of Loan Parties, and counsel in such other states as may be
requested by Agent, as to such matters as Agent shall reasonably request.
 
§10.6 Payment of Fees.
 
Borrower shall have paid to Agent the fees payable pursuant to §4.2.
 
§10.7 Insurance.
 
Agent shall have received evidence reasonably satisfactory to it that the
insurance coverages required by this Agreement or the other Loan Documents are
in effect.
 
§10.8 Performance; No Default.
 
The Loan Parties shall have performed and complied with all terms and conditions
herein required to be performed or complied with by them on or prior to the
Closing Date, and on the Closing Date there shall exist no Default or Event of
Default.
 
 

 
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§10.9 Representations and Warranties.
 
The representations and warranties made by the Loan Parties in the Loan
Documents or otherwise made by or on behalf of the Loan Parties in connection
therewith on the date thereof shall have been true and correct in all material
respects when made and shall also be true and correct in all material respects
on the Closing Date, and Agent shall have received written confirmation thereof
from Lead Borrower.
 
 
               §10.10 Proceedings and Documents.
 
No proceeding challenging or seeking to enjoin any of the transactions
contemplated by the Loan Documents, or which could reasonably be expected to
have a Material Adverse Effect shall be pending or shall have been threatened.
 
§10.11 Security Documents.
 
The Security Documents shall have been delivered to Agent at Borrower’s expense,
granting Agent a first-priority Lien on the Collateral, subject only to
Permitted Liens.  Borrowers shall have executed and delivered to Agent the
Perfection Certificate.
 
§10.12 Other Documents.
 
Agent shall have received executed copies of all other material agreements as
Agent may have reasonably requested.
 
§10.13 No Litigation.
 
Agent shall have received reasonably satisfactory evidence that there are no
actions, suits, investigations or proceedings pending or threatened, in any
court or before any arbitrator or other Governmental Authority that purports to
adversely affect any Loan Party, or any transaction contemplated hereby, that
could reasonably be expected to have a Material Adverse Effect.
 
§10.14 Other.
 
Agent shall have reviewed such other documents, instruments, certificates,
opinions, assurances, consents and approvals as Agent or Agent’s Special Counsel
may reasonably have requested.
 
§11.           CONDITIONS TO ALL BORROWINGS
 
The obligations of Lenders to advance funds, whether on or after the Closing
Date, shall also be subject to the satisfaction of the following conditions
precedent:
 
§11.1 Representations True; No Default.
 
Each of the representations and warranties made by the Loan Parties contained in
this Agreement, the other Loan Documents or in any document or instrument
delivered pursuant to or in connection with this Agreement shall be true in all
material respects both as of the date as of
 
 
 
.
 

 
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which they were made and shall also be true in all material respects as of the
time of the making of such Loan, with the same effect as if made at and as of
that time, except to the extent of changes resulting from transactions permitted
by the Loan Documents (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified date),
and no Default or Event of Default shall have occurred and be continuing, or
shall result from the making of such Loan.
 

               §11.2 No Legal Impediment.
 
No change shall have occurred in any law or regulations thereunder or
interpretations thereof that in the reasonable opinion of any Lender would make
it illegal for such Lender to make such Loan.
 
§11.3 Borrowing Documents.
 
Agent shall have received a fully completed Loan Request for such Loan and the
other documents and information as required by §2.4.
 
§12.           EVENTS OF DEFAULT; ACCELERATION; ETC.
 
§12.1 Events of Default and Acceleration.
 
If any of the following events (“Events of Default”) shall occur:
 
(a) Borrowers shall fail to pay any principal of the Loans when the same shall
become due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment and such
failure shall continue for three (3) days;
 
(b) Borrowers shall fail to pay any interest on the Loans or any other sums due
hereunder or under any of the other Loan Documents when the same shall become
due and payable, whether at the stated date of maturity or any accelerated date
of maturity or at any other date fixed for payment, and such failure shall
continue for three (3) days (provided that such grace period will not apply to
interest due upon the maturity of the Obligations);
 
(c) The Loan Parties shall fail to comply with the covenants contained in §7.14
or any covenant contained in §8 or §9; notwithstanding the foregoing clause in
this Section 12.1(c), no Event of Default shall occur if the Loan Parties shall
fail to comply with covenants contained in §7.14(b) or §7.14(c) unless (x) such
failure shall continue for ninety (90) days, or (y) such failure shall continue
beyond the first anniversary of the Closing Date;
 
(d) The Loan Parties shall fail to comply with any covenant contained in §7.4
and such failure shall continue for ten (10) days;
 
(e) The Loan Parties shall fail to perform any other term, covenant or agreement
contained herein or in any of the other Loan Documents (other than those
specified in the other subclauses of this §12); and such failure shall continue
for thirty (30) days after written notice thereof shall have been given to Lead
Borrower by Agent;
 

 
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                              (f) Any representation or warranty made by any
Loan Party in this Agreement or by such Loan Party in any other Loan Document to
which it is a party, or in any report, certificate, financial statement, request
for a Loan, or in any other document or instrument delivered pursuant to or in
connection with this Agreement, any advance of a Loan, or any of the other Loan
Documents shall prove to have been false or misleading in any material respect
upon the date when made or deemed to have been made or repeated;

 
(g) Any Loan Party or any other Subsidiary of ESC shall fail to pay at maturity
or otherwise when due, or within any applicable period of grace, any obligation
for borrowed money or credit received or other Indebtedness having an aggregate
principal amount outstanding of at least $1,000,000 with respect to any
Borrower, or $2,000,000 with respect to any other Loan Party or any other
Subsidiary of ESC, or fail to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound, evidencing or
securing any such borrowed money or credit received or other Indebtedness for
such period of time as would permit (assuming the giving of appropriate notice
if required) the holder or holders thereof or of any obligations issued
thereunder to accelerate the maturity thereof;
 
(h) Any Loan Party (1) shall make an assignment for the benefit of creditors, or
admit in writing its general inability to pay or generally fail to pay its debts
as they mature or become due, or shall petition or apply for the appointment of
a trustee or other custodian, liquidator or receiver of such Loan Party or of
any substantial part of the assets of any thereof, (2) shall commence any case
or other proceeding relating to such Loan Party under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, now or hereafter in effect, or
(3) shall take any action to authorize or in furtherance of any of the
foregoing;
 
(i) A petition or application shall be filed for the appointment of a trustee or
other custodian, liquidator or receiver of any Loan Party, or any substantial
part of the assets of any thereof, or a case or other proceeding shall be
commenced against any Loan Party under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law of any jurisdiction, now or hereafter in effect, and such Loan Party
shall indicate its approval thereof, consent thereto or acquiescence therein or
such petition, application, case or proceeding shall not have been dismissed
within ninety (90) days following the filing or commencement thereof;
 
(j) A decree or order is entered appointing any such trustee, custodian,
liquidator or receiver or adjudicating any Loan Party bankrupt or insolvent, or
approving a petition in any such case or other proceeding, or a decree or order
for relief is entered in respect of any Loan Party in an involuntary case under
federal bankruptcy laws as now or hereafter constituted;
 
(k) There shall remain in force, undischarged, unsatisfied and unstayed, for
more than thirty (30) days, whether or not consecutive, any final judgment
against any Loan Party, that, with other outstanding final judgments,
undischarged, against such Loan Party exceeds in the aggregate $1,000,000 in the
case of any Borrower or $2,000,000 in the case of any other Loan Party (to the
extent not paid or covered by insurance);
 
 

 
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(l) If any of the Loan Documents shall be canceled, terminated, revoked or
rescinded otherwise than in accordance with the terms thereof or with the
express prior written agreement, consent or approval of Lenders, or any action
at law, suit in equity or other legal proceeding to cancel, revoke or rescind
any of the Loan Documents shall be commenced by or on behalf of any Loan Party
or any of their respective stockholders, partners, members or beneficiaries, or
any court or any other governmental or regulatory authority or agency of
competent jurisdiction shall make a determination that, or issue a judgment,
order, decree or ruling to the effect that, any one or more of the Loan
Documents is illegal, invalid or unenforceable in accordance with the terms
thereof;
 
(m) Any dissolution, termination, partial or complete liquidation, merger or
consolidation of any Loan Party, or any sale, transfer or other disposition of
the assets of any Borrower, other than as permitted under the terms of this
Agreement or the other Loan Documents;
 
(n) Any Borrower shall be indicted for a federal crime, a punishment for which
could include the forfeiture of any assets of such Borrower included in the
Collateral;
 
(o) A Change of Control shall occur;
 
(p) NOC amends, waives, rescinds, revokes or terminates the instructions given
in the Transfers from Collection Account section of the Collection Account
Agreement;
 
(q) Any Event of Default, as defined in any of the other Loan Documents, shall
occur; or
 
(r) Any amendment to or termination of a financing statement naming any Borrower
as debtor and Agent as secured party relating to the Collateral, or any
correction statement with respect thereto, is filed in any jurisdiction by, or
caused by, or at the instance of any Borrower without the prior written consent
of Agent (except to the extent of a release of Collateral permitted by this
Agreement); or any amendment to or termination of a financing statement naming
any Borrower as debtor and Agent as secured party, or any correction statement
with respect thereto, is filed in any jurisdiction by any party other than Agent
or Agent’s counsel (or by such Borrower at Agent’s direction) without the prior
written consent of Agent and such Borrower fails to use its best efforts to
cause the effect of such filing to be completely nullified to the reasonable
satisfaction of Agent within ten (10) days after notice to Borrower thereof;
then, and in any such event, Agent may, and upon the request of the Required
Lenders shall, by notice in writing to Lead Borrower declare all amounts owing
with respect to this Agreement, the Notes and the other Loan Documents to be,
and they shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by Borrowers; provided that in the event of any Event of
Default specified in §12.1(h), §12.1(i) or §12.1(j), all such amounts shall
become immediately due and payable automatically and without any requirement of
notice from any of Lenders or Agent.
 
 
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§12.2 Limitation of Cure Periods.
 
Notwithstanding anything in this Agreement or any other Loan Document to the
contrary, any reference in this Agreement or any other Loan Document to “the
continuance of a default” or “the continuance of an Event of Default” or any
similar phrase shall not create or be deemed to create any right on the part of
any Loan Party or any other party to cure any default following the expiration
of any applicable grace or notice and cure period.
 
 
               §12.3 Remedies.
 
(a) In case any one or more of the Events of Default shall have occurred and be
continuing, and whether or not Lenders shall have accelerated the maturity of
the Loans and other Obligations pursuant to §12.1, Agent on behalf of Lenders
may, and upon direction of the Required Lenders shall, proceed to protect and
enforce their rights and remedies under this Agreement, the Notes or any of the
other Loan Documents by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Agreement and the other Loan Documents or any instrument
pursuant to which the Obligations are evidenced, including to the full extent
permitted by applicable law the obtaining of the ex parte appointment of a
receiver, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right.  No remedy herein conferred upon Agent or the holder of any
Note is intended to be exclusive of any other remedy and each and every remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or any
other provision of law.  In the event that all or any portion of the Obligations
is collected by or through an attorney-at-law, Borrowers shall pay all costs of
collection including, but not limited to, reasonable attorney’s
fees.  Notwithstanding the provisions of this Agreement providing that the Loans
may be evidenced by multiple Notes in favor of Lenders, Lenders acknowledge and
agree that only Agent may exercise any remedies arising by reason of a Default
or Event of Default, including without limitation, bringing any suit for
collection of any Note.
 
§12.4 Distribution of Collateral Proceeds.
 
In the event that, following the occurrence or during the continuance of any
Event of Default, any monies are received in connection with the enforcement of
any of the Loan Documents, or otherwise with respect to the realization upon any
of the assets of Borrowers or any other Person liable with respect to the
Obligations (including the Collateral), such monies shall be distributed for
application as follows:
 
(a) First, to the payment of, or (as the case may be) the reimbursement of,
Agent for or in respect of all reasonable costs, expenses, disbursements and
losses which shall have been incurred or sustained by Agent to protect or
preserve the Collateral or in connection with the collection of such monies by
Agent, for the exercise, protection or enforcement by Agent of all or any of the
rights, remedies, powers and privileges of Agent under this Agreement or any of
the other Loan Documents or in respect of the Collateral or in support of any
provision of adequate indemnity to Agent against any taxes or liens which by law
shall have, or may have, priority over the rights of Agent to such monies;
 
 

 
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(b) Second, to all other Obligations in the following order:  (i) first to the
payment of any fees or charges outstanding hereunder or under the other Loan
Documents (excluding any Hedge Agreements), (ii) next to any accrued and
outstanding Default Rate interest, (iii) next to any accrued and outstanding
interest on the Loans, (iv) next on a pari passu basis, to any Outstanding
principal on the Loans and Obligations under any Hedge Agreements in which the
counterparty is a Lender or a Person that was a Lender at the time such Hedge
Agreement was entered into, and (vii) last to any remaining Obligations in such
order as the Required Lenders may determine; provided, however, that (A) in the
event that any Lender shall have wrongfully failed or refused to make an advance
under §2.4 or §2.5 and such failure or refusal shall be continuing, advances
made by other Lenders during the pendency of such failure or refusal shall be
entitled to be repaid as to principal and accrued interest in priority to the
other Obligations described in this subsection (b), and (B) Obligations owing to
Lenders such as interest, principal, fees and expenses, shall be made among such
Lenders pro rata in accordance with their Commitment Percentages; and provided,
further, that the Required Lenders may in their discretion make proper allowance
to take into account any Obligations not then due and payable; and
 
(c) Third, the excess, if any, shall be returned to Borrowers or to such other
Persons as are entitled thereto.
 
§13.           SETOFF
 
Regardless of the adequacy of any Collateral, during the continuance of any
Event of Default, any deposits (general or specific, time or demand, provisional
or final, regardless of currency, maturity, or the branch of where such deposits
are held) or other sums credited by or due from Agent or any of Lenders to any
of the Loan Parties and any securities or other property of the Loan Parties in
the possession of Agent or any Lender may be applied to or set off against the
payment of Obligations and any and all other liabilities, direct, or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
of the Loan Parties, as applicable, to such Lender.  Upon the occurrence and
during the continuance of an Event Default, any Lender, including Agent, may,
but shall not be obligated to freeze withdrawals from any account of any Loan
Party held by such Lender.  Each Lender agrees with each other Lender that if
such Lender shall receive from any Loan Party, whether by voluntary payment,
exercise of the right of setoff, or otherwise, and shall retain and apply to the
payment of the Note or Notes held by such Lender any amount in excess of its
ratable portion of the payments received by all of Lenders with respect to the
Notes held by all of Lenders, such Lender will make such disposition and
arrangements with the other Lenders with respect to such excess, either by way
of distribution, pro tanto assignment of claims, subrogation or otherwise as
shall result in each Lender receiving in respect of the Notes held by it its
proportionate payment as contemplated by this Agreement; provided that if all or
any part of such excess payment is thereafter recovered from such Lender, such
disposition and arrangements shall be rescinded and the amount restored to the
extent of such recovery, but without interest.
 
§14.           THE AGENT

 
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                              §14.1 Authorization.
 
Each of the Lenders hereby irrevocably appoints KeyBank to act on its behalf as
Agent hereunder and under the other Loan Documents and authorizes Agent to take
such actions on its behalf and to exercise such powers as are delegated to Agent
by the terms hereof or thereof, together with such actions and powers as are
reasonably incident thereto, provided that no duties or responsibilities not
expressly assumed herein or therein shall be implied to have been assumed by
Agent.  The obligations of Agent hereunder are primarily administrative in
nature, and nothing contained in this Agreement or any of the other Loan
Documents shall be construed to constitute Agent as a trustee or fiduciary for
any Lender or to create any agency or fiduciary relationship.  Agent shall act
as the contractual representative of Lenders hereunder, and notwithstanding the
use of the term “Agent”, it is understood and agreed that Agent shall not have
any fiduciary duties or responsibilities to any Lender by reason of this
Agreement or any other Loan Document and is acting as an independent contractor,
the duties and responsibilities of which are limited to those expressly set
forth in this Agreement and the other Loan Documents.  Borrowers and any other
Person shall be entitled to conclusively rely on a statement from Agent that it
has the authority to act for and bind Lenders pursuant to this Agreement and the
other Loan Documents.
 
§14.2 Employees and Agents.
 
Agent may exercise its rights and powers and execute any and all of its duties
hereunder or under any other Loan Document by or through employees or agents and
shall be entitled to take, and to rely on, advice of counsel concerning all
matters pertaining to its rights and duties under this Agreement and the other
Loan Documents.  Agent and any such agent may perform any and all of its duties
and exercise its rights and powers by or through their respective Related
Parties.  The exculpatory provisions of this Section shall apply to any such
agent and to the Related Parties of Agent and any such agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.  Agent may
utilize the services of such Persons as Agent may reasonably determine, and all
reasonable fees and expenses of any such Persons shall be paid by Borrowers.
 
§14.3 No Liability.
 
Neither Agent nor any of its shareholders, directors, officers or employees nor
any other Person assisting them in their duties nor any agent, or employee
thereof, shall be liable to Lenders for any waiver, consent or approval given or
any action taken, or omitted to be taken, in good faith by it or them hereunder
or under any of the other Loan Documents, or in connection herewith or
therewith, or be responsible for the consequences of any oversight or error of
judgment whatsoever, except that Agent or such other Person, as the case may be,
shall be liable for losses due to its willful misconduct or gross
negligence.  Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution) reasonably
believed by it to be genuine and to have been signed, sent or otherwise
authenticated by the proper Person.  Agent also may rely upon any statement made
to it orally or by telephone and reasonably believed by it to have been made by
the proper Person, and shall not incur any liability for relying thereon.  In
determining
 

 
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compliance with any condition hereunder to the making of a Loan, that by its
terms must be fulfilled to the satisfaction of a Lender, Agent may presume that
such condition is satisfactory to such Lender unless Agent shall have received
notice to the contrary from such Lender prior to the making of such Loan.  Agent
may consult with legal counsel (who may be counsel for Borrowers), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
 
                            §14.4 No Representations.
 
Agent shall not have any duties or obligations except those expressly set forth
herein and in the other Loan Documents.  Without limiting the generality of the
foregoing, Agent:
 
(a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;
 
(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that Agent is required to
exercise as directed in writing by the Required Lenders (or such other number or
percentage of Lenders as shall be expressly provided for herein or in the other
Loan Documents), provided that Agent shall not be required to take any action
that, in its opinion or the opinion of its counsel, may expose Agent to
liability or that is contrary to any Loan Document or applicable law; and
 
(c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to any Loan Party or any of its Affiliates
that is communicated to or obtained by the Person serving as Agent or any of its
Affiliates in any capacity.
 
Agent shall not be liable for any action taken or not taken by it (i) with the
consent or at the request of the Required Lenders (or such other number or
percentage of Lenders as shall be necessary, or as Agent shall believe in good
faith shall be necessary, under the circumstances as provided in §27 and §12.4)
or (ii) in the absence of its own gross negligence or willful misconduct.  Agent
shall be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to Agent by Lead Borrower or any Lender.
 
Agent shall not be responsible for the execution or validity or enforceability
of this Agreement, the Notes, any of the other Loan Documents or any instrument
at any time constituting, or intended to constitute, collateral security for the
Notes, or for the value of any such collateral security or for the validity,
enforceability or collectability of any such amounts owing with respect to the
Notes, or for any recitals or statements, warranties or representations made
herein, or any agreement, instrument or certificate delivered in connection
therewith or in any of the other Loan Documents or in any certificate or
instrument hereafter furnished to it by or on behalf of the Loan Parties, or be
bound to ascertain or inquire as to the performance or observance of any of the
terms, conditions, covenants or agreements herein or in any other of the Loan
Documents.
 

 
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Agent shall not be bound to ascertain whether any notice, consent, waiver or
request delivered to it by any Loan Party or any holder of any of the Notes
shall have been duly authorized or is true, accurate and complete.  Agent has
not made nor does it now make any representations or warranties, express or
implied, nor does it assume any liability to Lenders, with respect to the
creditworthiness or financial condition of the Loan Parties or the value of the
Collateral or any other assets of such Persons.
 
Each Lender acknowledges that it has, independently and without reliance upon
Agent or any other Lender or any of their Related Parties, and based upon such
information and
 

documents as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement.  Each Lender also acknowledges that it
will, independently and without reliance upon Agent or any other Lender or any
of their Related Parties, based upon such information and documents as it deems
appropriate at the time, continue to make its own credit analysis and decisions
in taking or not taking action under or based upon this Agreement, any other
Loan Document or any related agreement or any document furnished hereunder or
thereunder.
 
§14.5 Payments.
 
(a) A payment by Borrower to Agent hereunder or under any of the other Loan
Documents for the account of any Lender shall constitute a payment to such
Lender.  Agent agrees to distribute to each Lender not later than one
(1) Business Day after Agent’s receipt of good funds, determined in accordance
with Agent’s customary practices, such Lender’s pro rata share of payments
received by Agent for the account of Lenders except as otherwise expressly
provided herein or in any of the other Loan Documents.
 
(b) If in the opinion of Agent the distribution of any amount received by it in
such capacity hereunder, under the Notes or under any of the other Loan
Documents might involve it in liability, it may refrain from making distribution
until its right to make distribution shall have been adjudicated by a court of
competent jurisdiction.  If a court of competent jurisdiction shall adjudge that
any amount received and distributed by Agent is to be repaid, each Person to
whom any such distribution shall have been made shall either repay to Agent its
proportionate share of the amount so adjudged to be repaid or shall pay over the
same in such manner and to such Persons as shall be determined by such court.
 
(c) No Defaulting Lender shall be entitled to receive any fees otherwise due
such Lender 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).  If Lead Borrower
and Agent agree in writing that a Lender is no longer a Defaulting Lender, 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, 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 Agent may determine to
be necessary to cause the Loans to be held pro rata by the Lenders in accordance
with the Commitments, 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 Loan Parties 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
 

 
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a waiver or release of any claim of any party hereunder arising from that
Lender’s having been a Defaulting Lender.
 
§14.6 Holders of Notes.
 
Subject to the terms of §18, Agent may deem and treat the payee of any Note as
the absolute owner or purchaser thereof for all purposes hereof until it shall
have been furnished in writing with a different name by such payee or by a
subsequent holder, assignee or transferee.
 
                             §14.7 Indemnity.
 
Lenders ratably agree hereby to indemnify and hold harmless Agent from and
against any and all claims, actions and suits (whether groundless or otherwise),
losses, damages, costs, expenses (to the extent of any losses, damages, costs
and expenses for which Agent has not been reimbursed by Borrowers as required by
§15 or §16), and liabilities of every nature and character arising out of or
related to this Agreement, the Notes or any of the other Loan Documents or the
transactions contemplated or evidenced hereby or thereby, or Agent’s actions
taken hereunder or thereunder, except to the extent that any of the same shall
be directly caused by Agent’s willful misconduct or gross negligence.
 
§14.8 Agent as Lender.
 
In its individual capacity, KeyBank shall have the same obligations and the same
rights, powers and privileges in respect to its Commitment and the Loans made by
it, and as the holder of any of the Notes as it would have were it not also
Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated or unless the context otherwise requires, include the Person serving
as Agent hereunder in its individual capacity.  Such Person and its Affiliates
may accept deposits from, lend money to, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with
any Loan Party or other Affiliate thereof as if such Person were not Agent
hereunder and without any duty to account therefor to Lenders.
 
§14.9 Resignation.
 
Agent may resign at any time by giving thirty (30) calendar days’ prior written
notice thereof to Lenders and Lead Borrower.  Upon any such resignation, the
Required Lenders, subject to the terms of §18.1, shall have the right to appoint
as a successor Agent any Lender or any other bank whose senior debt obligations
are rated not less than “A” or its equivalent by Moody’s or not less than “A” or
its equivalent by S&P and which has a net worth of not less than
$500,000,000.  Any such resignation shall be effective upon appointment and
acceptance of a successor agent selected by the Required Lenders.  If no
successor Agent shall have been so appointed and shall have accepted such
appointment within thirty (30) days after the retiring Agent’s giving of notice
of resignation, then the retiring Agent may, on behalf of Lenders, appoint a
successor Agent, which shall be a bank whose debt obligations are rated not less
than “A” or its equivalent by Moody’s or not less than “A” or its equivalent by
S&P Corporation and which has a net worth of not less than $500,000,000,
provided that if Agent shall notify Lead Borrower and Lenders that no qualifying
Person has accepted such appointment, then such resignation shall nonetheless
become effective in accordance with such notice and (1) the retiring
 

 
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Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents (except that in the case of any collateral security
held by Agent on behalf of Lenders under any of the Loan Documents, the retiring
Agent shall continue to hold such collateral security until such time as a
successor Agent is appointed) and (2) all payments, communications and
determinations provided to be made by, to or through Agent shall instead be made
by or to each Lender directly, until such time as the Required Lenders appoint a
successor Agent as provided for above in this paragraph.  Unless a Default or
Event of Default shall have occurred and be continuing, such successor Agent
shall be reasonably acceptable to Lead Borrower.  Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder as Agent.  The fees payable by
Borrowers to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between Borrowers and such successor.  After
any retiring Agent’s resignation, the provisions of this Agreement and the other
Loan Documents shall continue in effect for the benefit of such retiring Agent,
its agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by it while it was acting as Agent.
 
§14.10Duties in the Case of Enforcement.
 
In case one or more Events of Default have occurred and shall be continuing, and
whether or not acceleration of the Obligations shall have occurred, Agent may
and shall, if (a) so requested by the Required Lenders and (b) Lenders have
provided to Agent such additional indemnities and assurances against expenses
and liabilities as Agent may reasonably request, proceed to enforce the
provisions of the Security Documents authorizing the sale or other disposition
of all or any part of the Collateral and exercise all or any other legal and
equitable and other rights or remedies as it may have.  The Required Lenders may
direct Agent in writing as to the method and the extent of any such exercise,
Lenders hereby agreeing to indemnify and hold Agent harmless from all
liabilities incurred in respect of all actions taken or omitted in accordance
with such directions, provided that Agent need not comply with any such
direction to the extent that Agent reasonably believes Agent’s compliance with
such direction to be unlawful or commercially unreasonable in any applicable
jurisdiction.
 
§14.11Request for Agent Action.
 
Agent and Lenders acknowledge that in the ordinary course of business of
Borrowers, Borrowers will sell or otherwise dispose of Collateral.  In
connection with the foregoing, Lenders hereby expressly authorize and require
Agent to and Agent shall (a) execute releases of Liens of Collateral in
connection with dispositions permitted in this Agreement or in connection with
any condemnation or other taking, (b) execute releases of any Borrower (other
than NOC) all of the Assets of which, or Equity Interests in, are sold in
accordance with §8.8(a)(viii) or (c) execute consents, approvals, or other
agreements in form and substance reasonably satisfactory to Agent in connection
with such other actions or agreements as may be desirable by Agent necessary in
the ordinary course of each Borrower’s respective businesses.
 
§14.12 Removal of Agent.
 
The Required Lenders may remove Agent from its capacity as agent in the event of
Agent’s willful misconduct or gross negligence.  Such removal shall be effective
upon appointment and acceptance of a successor agent selected by the Required
Lenders.  Any successor Agent must satisfy the conditions set forth in
§14.9.  Upon the acceptance of any appointment as agent hereunder by a successor
agent, such successor agent shall thereupon succeed to and become vested with
all rights, powers, privileges and duties of the removed Agent, and the removed
Agent shall be discharged from all further duties and obligations as Agent under
this Agreement and the Loan Documents (subject to Agent’s right to be
indemnified
 

 
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as provided in the Loan Documents); provided that Agent shall remain liable to
the extent provided herein or in the Loan Documents for its acts or omissions
occurring prior to such removal or resignation.
 
§14.13 Bankruptcy.
 
In the event a bankruptcy or other insolvency proceeding is commenced by or
against any Loan Party, Agent shall have the sole and exclusive right and duty
to file and pursue a joint proof of claim on behalf of all Lenders.  Each Lender
irrevocably waives its right to file or pursue a separate proof of claim in any
such proceedings.
 
§15.           EXPENSES
 
Borrowers agree to pay (a) the reasonable and documented costs of producing and
reproducing this Agreement, the other Loan Documents and the other agreements
and instruments mentioned herein, (b) any taxes (including any interest and
penalties in respect thereto) payable by Agent or any of Lenders, including any
recording, documentary or intangibles taxes in connection with the Loan
Documents, or other taxes payable on or with respect to the transactions
contemplated by this Agreement (other than Excluded Taxes, except that Agent and
Lenders shall be entitled to indemnification for any and all amounts paid by
them in respect of taxes based on income or other taxes assessed by any State in
which the Collateral is located, such indemnification to be limited to taxes due
solely on account of the granting of Collateral under the Security Documents,
including any such taxes payable by Agent or any of Lenders after the Closing
Date (Borrowers hereby agreeing to indemnify Agent and each Lender with respect
thereto), (c) all appraisal fees, engineer’s fees, charges of Agent for
commercial finance exams and engineering and environmental reviews and the
reasonable and documented fees, expenses and disbursements of Agent, Agent’s
Special Counsel and any other counsel to Agent, counsel for KeyBank and any
local counsel to Agent incurred in connection with the performance of due
diligence and the preparation, negotiation, administration, or interpretation of
the Loan Documents and other instruments mentioned herein, the addition and
release of Collateral, each closing hereunder, and amendments, modifications,
approvals, consents, waivers or Collateral releases hereto or hereunder, (d) the
reasonable fees, expenses and disbursements of Agent incurred by Agent in
connection with the performance of due diligence, underwriting analysis, credit
reviews and the preparation, negotiation, administration, syndication or
interpretation of the Loan Documents and other instruments mentioned herein,
credit and collateral evaluations, the release, addition or substitution of
additional Collateral, (e) all reasonable and documented out-of-pocket expenses
(including reasonable attorneys’ fees and

 
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costs, which attorneys may be employees of any Lender or Agent and the fees and
costs of appraisers, engineers, investment bankers or other experts retained by
any Lender or Agent) incurred by any Lender or Agent in connection with (i) the
enforcement of or preservation of rights under any of the Loan Documents against
the Loan Parties or the administration thereof after the occurrence of a Default
or Event of Default (including, without limitation, the cost of all lien
searches and related costs and expenses in order specifically to identify the
Collateral and the state of any Borrower’s title thereto), (ii) the sale of,
collection from or other realization upon any of the Collateral, and (iii) the
failure of the Loan Parties to perform or observe any provision of the Loan
Documents, and (f) all reasonable fees, expenses and disbursements of Agent
incurred in connection with Uniform Commercial Code searches and Uniform
Commercial Code
 
filings.  The covenants of this §15 shall survive payment or satisfaction of
payment of amounts owing with respect to the Notes.
 
§16.           INDEMNIFICATION
 
Borrowers agree to indemnify and hold harmless Agent and Lenders and each
director, officer, employee, agent and Person who controls Agent or any Lender
(each such Person being called an “Indemnitee”) from and against any and all
claims, actions and suits, whether groundless or otherwise, and from and against
any and all liabilities, losses, damages and expenses of every nature and
character arising out of or relating to this Agreement or any of the other Loan
Documents or the transactions contemplated hereby and thereby including, without
limitation, (a) any leasing fees and any brokerage, finders or similar fees
asserted against any Indemnitee based upon any agreement, arrangement or action
made or taken, or alleged to have been made or taken, by any Loan Party, (b) any
condition, use, operation or occupancy of the Collateral other than with respect
to matters relating to the Collateral first occurring after Agent or its nominee
acquires title to the Collateral by the exercise of its remedies, (c) any actual
or proposed use by Borrowers of the proceeds of any of the Loans, (d) any actual
or alleged infringement of any patent, copyright, trademark, service mark or
similar right of any Borrower comprised in the Collateral, (e) the Loan Parties
entering into or performing this Agreement or any of the other Loan Documents,
(f) any actual or alleged violation by any Loan Party of any law, ordinance,
code, order, rule, regulation, approval, consent, permit or license relating to
the Collateral, or (g) with respect to any Loan Party and its assets, the
violation of any Environmental Law, the Release or threatened Release of any
Hazardous Substances or any action, suit, proceeding or investigation brought or
threatened with respect to any Hazardous Substances (including, but not limited
to claims with respect to wrongful death, personal injury or damage to
property), in each case including, without limitation, the reasonable fees and
disbursements of counsel and allocated costs of internal counsel incurred in
connection with any such investigation, litigation or other proceeding;
provided, however, such indemnity shall not, as to any Indemnitee, be available
to the extent that such losses, claims, damages, liabilities or related expenses
(x) are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee, (y) result from a claim brought by any Loan Party
against any Indemnitee for bad faith breach of such Indemnitee’s obligations
under this Agreement or the other Loan Documents, if such Loan Party has
obtained a final and nonappealable judgment in its favor on such claims as
determined by a court of competent jurisdiction or (z) result from violation by
any Indemnitee of any such Indemnitee’s internal policies or from a violation of
laws, rules or regulations applicable to such Indemnitee’s operations.  In
litigation, or the preparation therefor, the Indemnitees shall be
 

 
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entitled to select a single law firm as their own counsel and, in addition to
the foregoing indemnity, Borrowers agree to pay promptly all court costs and
other expenses of litigation incurred by the Indemnitees, including the
reasonable fees and expenses of such counsel.  If, and to the extent that the
obligations of Borrowers under this §16 are unenforceable for any reason,
Borrowers hereby agree to make the maximum contribution to the payment in
satisfaction of such obligations which is permissible under applicable
law.  There shall be specifically excluded from the foregoing indemnification
any claims, actions, suits, liabilities, losses, damages and expenses arising
from disputes among Lenders with respect to the Loans or the Loan Documents.  In
the event that any such claims, actions, suits, liabilities, losses, damages and
expenses involve both a dispute among Lenders and other matters covered by this
indemnification provision,
 

Agent shall make a reasonable good faith allocation of all losses, damages and
expenses incurred between Lenders’ dispute and the other matters covered by this
indemnification provision, which allocation by Agent shall, absent manifest
error, be final and binding upon the parties hereto.  All amounts payable by
Borrowers pursuant to this Section shall constitute Obligations until paid in
full by Borrowers.  The provisions of this §16 shall survive the repayment of
the Loans and the termination of the obligations of Lenders hereunder.
 
§17.           SURVIVAL OF COVENANTS, ETC.
 
All covenants, agreements, representations and warranties made herein, in the
Notes, in any of the other Loan Documents or in any documents or other papers
delivered by or on behalf of any Loan Party, pursuant hereto or thereto shall be
deemed to have been relied upon by Lenders and Agent, notwithstanding any
investigation heretofore or hereafter made by any of them, and shall survive the
making by Lenders of any of the Loans, as herein contemplated, and shall
continue in full force and effect so long as any amount due under this Agreement
or the Notes or any of the other Loan Documents remains outstanding or any
Lender has any obligation to make any Loans.  The indemnification obligations of
Borrowers provided herein and the other Loan Documents shall survive the full
repayment of amounts due and the termination of the obligations of Lenders
hereunder and thereunder to the extent provided herein and therein.
 
§18.           ASSIGNMENT AND PARTICIPATION
 
§18.1 Conditions to Assignment by Lenders.
 
(a) Each Lender shall have the right to assign, transfer, sell, negotiate,
pledge or otherwise hypothecate this Agreement and any of its rights and
security hereunder and under the other Loan Documents to any other Eligible
Assignee with the prior written consent of Agent and with the prior written
consent of Lead Borrower, which consents by Agent and Borrower shall not be
unreasonably withheld, conditioned or delayed (provided that no consent of Lead
Borrower shall be required if the Eligible Assignee is also a Lender or an
Affiliate thereof or if an Event of Default then exists) and no consent of Agent
shall be required if the Eligible Assignee is also a Lender or an Affiliate
thereof; provided, however, that (i) the parties to each such assignment shall
execute and deliver to Agent, for its approval and acceptance, an Assignment and
Assumption Agreement in the form of Exhibit C attached hereto and made a part
hereof (an “Assignment and Assumption Agreement”), (ii) each such assignment
shall be of a constant, and not a varying, percentage of the assigning Lender’s
rights and obligations under this Agreement, (iii) if the potential assignee is
not already a Lender hereunder, at least fifteen

 
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(15) Business Days prior to the settlement date of the assignment, the potential
assignee shall deliver to Agent (A) the fully completed Patriot Act and OFAC
forms attached as Exhibit D attached hereto and made a part hereof and such
other information as Agent shall require to successfully complete Agent’s
Patriot Act Customer Identification Process and OFAC Review Process, and (B)
such information as shall be required to enable Agent to determine if the
potential assignee is an Eligible Assignee, (iv) unless Agent and, so long as no
Event of Default exists, Lead Borrower otherwise consent, the aggregate amount
of the total Commitment of the assigning Lender being assigned pursuant to each
such assignment shall in no event be less than $2,000,000, (iv) Agent shall
receive from the assigning Lender a processing fee of $3,500, (vi) if the
assignment is less than the assigning Lender’s entire interest in the Loans, the
assigning Lender must retain at least a $3,000,000 Commitment.  Upon such
execution, delivery, approval and acceptance, and upon the effective date
specified in the applicable Assignment and Assumption Agreement, (a) the
Eligible Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Assumption Agreement, have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and Borrowers hereby agree that
all of the rights and remedies of Lenders in connection with the interest so
assigned shall be enforceable against Borrowers by an Eligible Assignee with the
same force and effect and to the same extent as the same would have been
enforceable but for such assignment provided that no assignment shall increase
the Borrowers’ obligations under §4.4 or §4.9, (b) the assigning Lender
thereunder shall, to the extent that rights and obligations hereunder and under
the other Loan Documents have been assigned by it pursuant to such Assignment
and Assumption Agreement, relinquish its rights and be released from its
obligations hereunder and thereunder, and (c) Agent may unilaterally amend
Schedule 1.1 to reflect such assignment.  For purposes of this paragraph, in
connection with any assignment or simultaneous, multiple assignments by any
Lender which is a fund to one or more of its Related Funds: (1) compliance with
the minimum amounts for assigned Commitments and Loans, and for retained
Commitments and Loans as hereinabove provided shall be determined in the
aggregate for such assigning fund and any of its Related Funds that are or are
to become Lenders as part of any assignment transaction or simultaneous,
multiple assignment transactions; (2) after giving effect to such assignment or
assignments, no such assignor or assignee fund in connection with a partial
assignment of the assigning fund’s Commitment shall hold a Commitment of less
than $3,000,000, and (3) only one processing fee shall be payable to Agent in
connection with simultaneous, multiple assignment transactions.
 
(b) By executing and delivering an Assignment and Assumption Agreement, the
assigning Lender thereunder and the Eligible Assignee thereunder confirm to and
agree with each other and the other parties hereto as follows:  (i) except as
provided in such Assignment and Assumption Agreement, such assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
this Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document or any other instrument or document furnished in connection
therewith; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the Loan
Parties or the performance or observance by the Loan Parties of any of their
obligations under any Loan Document or any other instrument or document
furnished in connection therewith; (iii) such Eligible Assignee confirms that it
has received a copy of this Agreement together with such financial statements,
Loan Documents and

 
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other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into the Assignment and Assumption
Agreement and to become a Lender hereunder; (iv) such Eligible Assignee will,
independently and without reliance upon Agent, the assigning Lender or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such Eligible Assignee appoints and authorizes
Agent to take such action as Agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to Agent by
the terms hereof and thereof, together with such powers as are reasonably
incidental thereto; (vi) such Eligible Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
 
§18.2 Register.
 
Agent shall maintain a copy of each assignment delivered to it and a register or
similar list (the “Register”) for the recordation of the names and addresses of
Lenders and the Commitment Percentages, of, and principal amount of (and
interest on) the Loans owing to Lenders from time to time.  The entries in the
Register shall be conclusive, in the absence of manifest error, and Borrowers,
Agent and Lenders may treat each Person whose name is recorded in the Register
as a Lender hereunder for all purposes of this Agreement.  The Register shall be
available for inspection by Borrowers and Lenders at any reasonable time and
from time to time upon reasonable prior notice.
 
§18.3 New Notes.
 
Upon its receipt of an assignment executed by the parties to such assignment,
together with each Note (if any) subject to such assignment, Agent shall (a)
record the information contained therein in the Register, and (b) give prompt
notice thereof to Lead Borrower and Lenders (other than the assigning
Lender).  Within five (5) Business Days after receipt of such notice, Borrowers,
upon Lender’s request and at Lender’s expense, shall execute and deliver to
Agent, in exchange for each surrendered Note, a new Note, to the order of such
assignee in an amount equal to the amount assumed by such assignee pursuant to
such assignment and, if the assigning Lender has retained some portion of its
obligations hereunder, a new Note, to the order of the assigning Lender in an
amount equal to the amount retained by it hereunder.  Such new Notes shall
provide that they are replacements for the surrendered Notes of the same
category, shall be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Notes, shall be dated the effective date of
such assignment and shall otherwise be in substantially the form of the assigned
Notes.  The surrendered Notes shall be canceled and returned to Borrowers.
 
§18.4 Participations.
 
Each Lender may sell participations to one or more banks or other entities in
all or a portion of such Lender’s rights and obligations under this Agreement
and the other Loan Documents; provided that (a) any such sale or participation
shall not affect the rights and duties of the selling Lender hereunder to
Borrowers, (b) such participation shall not entitle such participant to any
rights or privileges under this Agreement or the Loan Documents, including,
 

 
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without limitation, the right to approve waivers, amendments or modifications,
(c) such participant shall have no direct rights against the Loan Parties except
the rights granted to Lenders pursuant to §13, and (d) such sale is effected in
accordance with all applicable laws.
 
§18.5 Pledge by Lender.
 
Any Lender may at any time pledge all or any portion of its interest and rights
under this Agreement (including all or any portion of its Note) to secure
obligations of such Lender, including without limitation, (a) any pledge or
assignment to secure obligations to any of the twelve Federal Reserve Banks
organized under §4 of the Federal Reserve Act, 12 U.S.C. §341,to any Federal
Home Loan Bank or to any institution within the Farm Credit System, and (b) for
any Lender that is a fund, any pledge or assignment to any holders of
obligations owed, or securities issued, by such Lender including any trustee
for, or any other representative of, such holders.  In addition, any Lender may,
with the consent of Agent (which may be granted or withheld in Agent’s sole
discretion) pledge all or any portion of its interests and rights under the
Agreement (including all or any portion of its Note or Notes) to a Person
approved by Agent.  Notwithstanding anything to the contrary contained herein,
no pledge permitted pursuant to this Section or the enforcement thereof shall
release the pledgor Lender from its obligations hereunder or under any of the
other Loan Documents.
 
§18.6 No Assignment by Borrowers.
 
Borrowers shall not assign or transfer any of their rights or obligations under
any of the Loan Documents without the prior written consent of each of Lenders.
 
§18.7 Cooperation; Disclosure.
 
Borrowers agree to promptly cooperate with any Lender in connection with any
proposed assignment or participation of all or any portion of its
Commitment.  Borrowers agrees that in addition to disclosures made in accordance
with standard lending practices any Lender may disclose information obtained by
such Lender pursuant to this Agreement to assignees or participants and
potential assignees or participants hereunder, subject to the provisions of
§18.10.  Notwithstanding anything herein to the contrary, Agent and each Lender
may disclose to any and all Persons, without limitation of any kind, any
information with respect to the “tax treatment” and “tax structure” (in each
case, within the meaning of Treasury Regulation Section 1.6011-4) of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to Agent or any Lender
relating to such tax treatment and tax structure; provided that with respect to
any document or similar item that in either case contains information concerning
the tax treatment or tax structure of the transaction as well as other
information, this sentence shall only apply to such portions of the document or
similar item that relate to the tax treatment or tax structure of the Loans and
transactions contemplated hereby.  In order to facilitate assignments to
Eligible Assignees and sales to Eligible Assignees, Borrowers shall execute such
further documents, instruments or agreements as Lenders may reasonably
require.  In addition, Borrowers agree to cooperate fully with Lenders in the
exercise of Lenders’ rights pursuant to this Section, including providing such
information and documentation regarding the Loan Parties as any Lender or any
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participant may reasonably request and, upon reasonable request of any such
Lender, to meet with potential Eligible Assignees.
 
§18.8 Mandatory Assignment.
 
In the event (i) Borrowers request that certain amendments, modifications,
consents or waivers be made to or under this Agreement or any of the other Loan
Documents which request is approved by Agent or Required Lenders but is not
approved by one or more of Lenders (any such non-consenting Lender shall
hereafter be referred to as the “Non-Consenting Lender”), (ii) Borrowers become
obligated to pay additional amounts to any Lender pursuant to §4.4 or §4.9, or
any Lender gives notice of the occurrence of any circumstances described in §4.7
or §4.9, and
 

in each case, such Lender has declined or is unable to designate a different
lending office in accordance with §4.10, (iii) any Lender hereunder is a
Defaulting Lender (any such Lender described in the foregoing clauses (i), (ii)
or (iii) shall hereafter be referred to as an “Affected Lender”) then, within
thirty (30) days after Lead Borrower’s receipt of notice of such disapproval by
such Non-Consenting Lender, or, in the case of clause (ii) or (iii) above at any
time after the occurrence of such event, Borrowers shall have the right as to
such Affected Lender, to be exercised by delivery of written notice delivered to
Agent and the Affected Lender, to elect to cause the Affected Lender to transfer
its Loans and Commitments. Agent shall promptly notify the remaining Lenders
that each of such Lenders shall have the right, but not the obligation, to
acquire a portion of the Commitment, pro rata based upon their relevant
Commitment Percentages (not including the Commitment of the Affected Lender), of
the Affected Lender (or if any of such Lenders does not elect to purchase its
pro rata share, then to such remaining Lenders in such proportion as approved by
Agent).  In the event that Lenders do not elect to acquire all of the Affected
Lender’s Loans and Commitment, then Agent shall use commercially reasonable
efforts to find a new Lender or Lenders to acquire such remaining Loans and
Commitment.  Upon any such purchase of the Loans and Commitments of the Affected
Lender, the Affected Lender’s interests in the Obligations and its rights
hereunder and under the Loan Documents shall terminate at the date of purchase,
and the Affected Lender shall promptly execute and deliver any and all documents
reasonably requested by Agent to surrender and transfer such interest,
including, without limitation, an assignment and assumption agreement in the
form attached hereto as Exhibit C and such Affected Lender’s original Note.  The
purchase price for the Affected Lender’s Commitment shall equal any and all
amounts outstanding and owed by Borrowers to the Affected Lender, including
principal and all accrued and unpaid interest or fees, plus any applicable
prepayment fees which would be owed to such Affected Lender if the Loans were to
be repaid in full on the date of such purchase of the Affected Lender’s
Commitment.  A Lender shall not be required to make any such transfer and
assignment if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling Borrowers to require such transfer and
assignment cease to apply.
 
§18.9 Co-Agents.
 
Agent may designate any Lender to be a “Co-Agent”, an “Arranger” or similar
title, but such designation shall not confer on such Lender the rights or duties
of Agent.  Any such “Co-Agent” or “Arranger” shall not have any additional
rights or obligations under the Loan Documents, except for those rights and
obligations, if any, as a Lender.
 

 
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§18.10 Treatment of Certain Information; Confidentiality.
 
Each of Agent and Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, advisors and other representatives (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential and the Person disclosing such Information shall be
liable for the failure to keep such information confidential), (b) to the extent
requested by any regulatory authority purporting to have jurisdiction over it
(including any self-regulatory authority, such as the National Association of
Insurance Commissioners), (c) to the extent required by applicable laws or
 

regulations or by any subpoena or similar legal process, (d) to any other party
hereto, (e) in connection with the exercise of any remedies hereunder or under
any other Loan Document or any action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to (i) any assignee of or participant in, or, with Lead
Borrower’s consent, any prospective assignee of or participant in, any of its
rights or obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
Borrowers and their obligations, (g) with the consent of Borrowers or (h) to the
extent such Information (x) becomes publicly available other than as a result of
a breach of this Section or (y) becomes available to Agent, any Lender, or any
of their respective Affiliates on a nonconfidential basis from a source other
than Borrowers.
 
§19.           NOTICES
 
Each notice, demand, election or request provided for or permitted to be given
pursuant to this Agreement (hereinafter in this §19 referred to as “Notice”),
but specifically excluding to the maximum extent permitted by law any notices of
the institution or commencement of foreclosure proceedings, must be in writing
and shall be deemed to have been properly given or served by personal delivery
or by sending same by overnight courier or by depositing same in the United
States Mail, postpaid and registered or certified, return receipt requested, or
as expressly permitted herein, by telegraph, telecopy, telefax or telex, and, to
the extent permitted by §23, email addressed as follows:
 
If to any Lender other than KeyBank, at the address set forth on the signature
page for such Lender, and if to KeyBank or Agent:
 
KeyBank National Association
Healthcare Finance
WA 31-13-2313
1301 Fifth Avenue, 23rd Floor
P.O. Box 90
Seattle, WA 98111-0090
Attention:  Vice President and Manager
Facsimile:  (206) 343-6843
 
with a copy to:
 

 
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KeyBank National Association
Healthcare Finance
Mail Code: OH-01-51-0311
4910 Tiedeman Road
Brooklyn, Ohio 44144
Attention:  Healthcare Finance Servicing Manager
Facsimile:  (216) 357-6383
 
and:
 
KeyBank National Association
1200 Abernathy Road, Suite 1550
Atlanta, Georgia 30328
Attention:  Paul Di Vito
Facsimile:  (770) 510-2195
 
with a copy to:

 
Agent’s Special Counsel:

 
 
Bryan Cave LLP

 
1201 West Peachtree Street, NW

 
14th Floor

 
Atlanta, Georgia  30309-3488

 
Attention:  F. Donald Nelms, Jr.

 
Facsimile: (404) 572-6999

 
 
and

 
 
if to Borrowers:

 
 
Nurse on Call, Inc.

 
1926 10th Avenue North

 
Suite 400

 
Lake Worth, FL  33461

 
Attention:  President

 
 
with a copy to:

 
 
Perkins Coie LLP

 
1201 Third Avenue

 
Suite 4800

 
Seattle, WA  98101

 
Attention:  James D. Gradel

 
 
and

 

 
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if to Guarantors:

 
 
c/o Emeritus Corporation

 
3131 Elliott Avenue #500

 
Seattle, WA  98121

 
Attention:  Eric Mendelsohn

 

 
with a copy to:

 
 
Perkins Coie LLP

 
1201 Third Avenue

 
Suite 4800

 
Seattle, WA  98101

 
Attention:  James D. Gradel

 
and to each other Lender which may hereafter become a party to this Agreement at
such address as may be designated by such Lender.  Each Notice shall be
effective upon being personally delivered or upon being sent by overnight
courier or upon being deposited in the United States Mail as aforesaid.  The
time period in which a response to such Notice must be given or any action taken
with respect thereto (if any), however, shall commence to run from the date of
receipt if personally delivered or sent by overnight courier, or if so deposited
in the United States Mail, the earlier of three (3) Business Days following such
deposit or the date of receipt as disclosed on the return receipt.  Rejection or
other refusal to accept or the inability to deliver because of changed address
for which no notice was given shall be deemed to be receipt of the Notice
sent.  By giving at least fifteen (15) days prior Notice thereof, a Borrower, a
Guarantor, a Lender or Agent shall have the right from time to time and at any
time during the term of this Agreement to change their respective addresses and
each shall have the right to specify as its address any other address within the
United States of America.
 
§20.           RELATIONSHIP
 
Neither Agent nor any Lender has any fiduciary relationship with or fiduciary
duty to any Loan Party arising out of or in connection with the Agreement or the
other Loan Documents or the transactions contemplated hereunder and thereunder,
and the relationship between each Lender and Borrowers is solely that of a
lender and borrower, and between each Lender and any Guarantor is solely that of
a lender and guarantor, and nothing contained herein or in any of the other Loan
Documents shall in any manner be construed as making the parties hereto
partners, or any other relationship other than lender and borrower, or lender
and guarantor (as the case may be).  In addition, each of the Loan Parties
agrees that notwithstanding any other relationship that KeyBank or any affiliate
thereof may have with Borrowers or any other Loan Parties or their respective
Subsidiaries and Affiliates, in any proceeding relating to the Loan Parties,
under any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution, liquidation or similar proceeding, no Loan Party will
challenge Lenders’ right to receive payment of the Obligations as a creditor of
the Loan Parties on the grounds of the equitable subordination principles
contained in §510 of the United States Bankruptcy Code (11 U.S.C. §101 et seq.),
as from time to time amended, or any similar provision under any applicable
law.  The covenants
 

 
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contained in this §20 are a material consideration and inducement to Lenders to
enter into the Agreement.
 
§21.           GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE
 
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF OHIO
AND SHALL FOR ALL
 
PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH STATE
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW), AND ANY AND ALL
MATTERS IN DISPUTE BETWEEN THE PARTIES TO THIS AGREEMENT ARISING FROM OR
RELATING TO THE SUBJECT MATTER HEREOF SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF OHIO.  EACH OF THE LOAN
PARTIES AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF OHIO OR ANY
FEDERAL COURT SITTING IN THE CITY OF CLEVELAND, OHIO AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON BORROWERS AND THE OTHER LOAN PARTIES (IF ANY) BY MAIL AT
THE ADDRESS SPECIFIED IN §19.  EACH OF THE LOAN PARTIES HEREBY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
 
§22.           HEADINGS
 
The captions in this Agreement are for convenience of reference only and shall
not define or limit the provisions hereof.
 
§23.           COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION
 
(a) Counterparts; Integration; Effectiveness.  This Agreement and any amendment
hereof may be executed in several counterparts (and by different parties hereto
in different counterparts), each of which shall constitute an original, but all
of which when taken together shall constitute one instrument.  In proving this
Agreement it shall not be necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is sought.  This
Agreement and the other Loan Documents, any separate letter agreements with
respect to fees payable to Agent (including the Agreement Regarding Fees) and
any provisions of any commitment letter or similar letter relating to the
transactions contemplated by this Agreement that expressly survive the Closing
Date, constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof.  Except as provided in
§10, this Agreement shall become effective when it shall have been executed by
Agent and when Agent shall have received counterparts hereof that, when taken

 
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together, bear the signatures of each of the other parties hereto.  Delivery of
an executed counterpart of a signature page of this Agreement by telecopy shall
be effective as delivery of a manually executed counterpart of this Agreement.
 
(b) Electronic Execution of Assignments.  The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption Agreement
shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed
 

(c) signature or the use of a paper-based recordkeeping system, as the case may
be, to the extent and as provided for in any applicable law, including the
Federal Electronic Signatures in Global and National Commerce Act, the New York
State Electronic Signatures and Records Act, or any other similar state laws
based on the Uniform Electronic Transactions Act.
 
(d) Electronic Communication.  Notices and other communications to Agent and
Lenders hereunder may be delivered or furnished by electronic communication
(including e-mail and Internet or intranet websites) pursuant to procedures
approved by Agent, provided that the foregoing shall not apply to notices to any
Lender pursuant to Article 4 if such Lender has notified Agent that it is
incapable of receiving notices under such Article by electronic
communication.  Agent or any Loan Party 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.  Unless 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 acknowledgment from the
intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgment), 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.
 
§24.           ENTIRE AGREEMENT, ETC.
 
The Loan Documents and any other documents executed in connection herewith or
therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby.  Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated, except as provided in §27.
 
§25.           WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS
 
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER, EACH OF THE
OTHER LOAN PARTIES, AGENT AND EACH LENDER HEREBY WAIVES ITS RIGHT TO A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER
 

 
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OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.  EXCEPT TO THE EXTENT
EXPRESSLY PROHIBITED BY LAW, EACH LOAN PARTY HEREBY WAIVES ANY RIGHT IT MAY HAVE
TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.  EACH LOAN PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY LENDER OR AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH LENDER OR AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT AGENT AND THE LENDERS HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH THEY
ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED IN
THIS §25.  EACH LOAN PARTY ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO REVIEW
THIS §25 WITH ITS LEGAL COUNSEL AND THAT SUCH LOAN PARTY AGREES TO THE FOREGOING
AS ITS FREE, KNOWING AND VOLUNTARY ACT.
 
§26.           DEALINGS WITH THE BORROWERS
 
The Lenders and their affiliates may accept deposits from, extend credit to and
generally engage in any kind of banking, trust or other business with Borrowers,
or any of its Affiliates regardless of the capacity of the Lender hereunder.
 
§27.           CONSENTS, AMENDMENTS, WAIVERS, ETC.
 
Except as otherwise expressly provided in this Agreement, any consent or
approval required or permitted by this Agreement may be given, and any term of
this Agreement or of any other Loan Document may be amended, and the performance
or observance by Borrowers or any other Loan Party of any terms of this
Agreement or such other Loan Document or the continuance of any Default or Event
of Default may be waived (either generally or in a particular instance and
either retroactively or prospectively) with, but only with, the written consent
of the Required Lenders.  Notwithstanding the foregoing provisions of this
Section:
 
(a) none of the following may occur without the written consent of each affected
Lender:
 
(i) a decrease in the rate of interest on the Notes;
 
(ii) an increase in the amount of the Commitments of Lenders;
 
(iii) a forgiveness, reduction or waiver of the principal of any unpaid Loan or
any interest thereon or fee payable under the Loan Documents (other than in
connection with the imposition or rescission of the Default Rate);
 
(iv) a decrease in the amount of any fee payable to a Lender hereunder;
 
(v) the release of any Borrower, any Guarantor or any of the Collateral except
as otherwise provided herein;
 

 
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                                              (vi) a change to this §27;
 
(vii) any postponement of any date fixed for any payment of principal of or
interest on, or fees in respect of, the Loans;
 
(viii) any change in the manner of distribution of any payments to Lenders or
Agent;
 

(ix) an amendment of the definitions of Required Lenders or of any requirement
for consent by all of Lenders; or
 
(x) an amendment of any provision of this Agreement or the Loan Documents which
requires the approval of all of Lenders or the Required Lenders to require a
lesser number of Lenders to approve such action.
 
(b) Other Consents.  No amendment, modification, termination or waiver of any
provision of the Loan Documents, or consent to any departure by any Loan Party
therefrom, shall:
 
(i) increase the Commitment of any Lender over the amount thereof then in effect
without the consent of such Lender; provided, no amendment, modification or
waiver of any condition precedent, covenant, Default or Event of Default shall
constitute an increase in any Commitment of any Lender;
 
(ii) increase the aggregate Commitments over the amount thereof then in effect
without the consent of the Required Lenders;
 
(iii) waive any condition precedent to the initial Loans on the Closing Date,
for which it is expressly provided in such Section that satisfaction of such
condition is to be acceptable to or approved by Agent, without the consent of
Agent, and in any such event it shall not be necessary to obtain the consent of
any other Lender to such waiver; or
 
(iv) amend, modify, terminate or waive the amount or timing of payment of any
fee payable to Agent for its own account, any provision of §14 as the same
applies to Agent, or any other provision hereof as the same applies to the
rights or obligations of Agent, in each case without the consent of Agent.
 
No waiver shall extend to or affect any obligation not expressly waived or
impair any right consequent thereon.  No course of dealing or delay or omission
on the part of Agent or any Lender in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto.  No notice to or demand upon
Borrowers or any other Loan Party shall entitle Borrowers or any other Loan
Party to other or further notice or demand in similar or other circumstances. In
the event any Lender fails to expressly grant or deny any consent, amendment or
waiver sought under this Agreement within ten (10) days of a written request
therefor submitted by Agent or Agent’s Special Counsel, such Lender shall be
deemed to have granted to Agent an irrevocable proxy with respect to such
specific matter.  The right of any Lender to consent under subsections (a) and
(b) of this §27 shall not apply to a Defaulting Lender, except for purposes of
subsection (b)(i) of this §27.
 

 
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§28.           SEVERABILITY
 
The provisions of this Agreement are severable, and if any one clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.
 
§29. NO UNWRITTEN AGREEMENTS; NO STRICT CONSTRUCTION
 
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.  THE PARTIES HAVE PARTICIPATED JOINTLY IN THE
NEGOTIATION AND DRAFTING OF THE LOAN DOCUMENTS.  IN THE EVENT OF AN AMBIGUITY OR
QUESTION OF INTENT OR INTERPRETATION ARISES, THE LOAN DOCUMENTS SHALL BE
CONSTRUED AS IF DRAFTED JOINTLY BY THE PARTIES THERETO AND NO PRESUMPTION OR
BURDEN OF PROOF SHALL ARISE FAVORING OR DISFAVORING ANY PARTY BY VIRTUE OF THE
AUTHORSHIP OF ANY PROVISION THEREOF.
 
§30.           ACKNOWLEDGMENT OF INDEMNITY OBLIGATIONS
 
BORROWERS HEREBY ACKNOWLEDGE THAT THIS AGREEMENT CONTAINS INDEMNITY OBLIGATIONS
OF THE BORROWERS.
 
§31.           REPLACEMENT OF NOTES
 
Upon receipt of evidence reasonably satisfactory to Borrowers of the loss,
theft, destruction or mutilation of any Note, and in the case of any such loss,
theft or destruction, upon delivery of an indemnity agreement reasonably
satisfactory to Borrowers or, in the case of any such mutilation, upon surrender
and cancellation of the applicable Note, Borrowers will execute and deliver, in
lieu thereof, a replacement Note, identical in form and substance to the
applicable Note and dated as of the date of the applicable Note and upon such
execution and delivery all references in the Loan Documents to such Note shall
be deemed to refer to such replacement Note.
 
§32.           TIME IS OF THE ESSENCE
 
Time is of the essence with respect to each and every covenant, agreement and
obligation of the Loan Parties under this Agreement and the other Loan
Documents.
 
§33.           RIGHTS OF THIRD PARTIES
 
This Agreement and the other Loan Documents are made and entered into for the
sole protection and legal benefit of Borrowers, Guarantors, Lenders and Agent,
and their permitted successors and assigns, and no other Person shall be a
direct or indirect legal beneficiary of, or

 
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have any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents.  All conditions to the performance
of the obligations of Agent and Lenders under this Agreement, including the
obligation to make Loans, are imposed solely and exclusively for the benefit of
Agent and Lenders and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Agent and Lenders will refuse to make Loans in the absence of strict
compliance with any or all thereof and no other Person shall, under any
circumstances, be deemed to be a beneficiary of such conditions, any and all of
which may be freely waived in whole or in part by Agent and Lenders at any time
if in their sole discretion they deem it desirable to do so.
 
§34.           GUARANTY
 
§34.1 The Guaranty.
 
(a) Each of Guarantors hereby jointly and severally guarantees to Agent for the
benefit of the Lenders and each of the holders of the Obligations, as
hereinafter provided, as primary obligor and not as surety, the prompt payment
of the Obligations (the “Guaranteed Obligations”) in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) strictly in accordance with the terms
thereof.  Guarantors hereby further agree that if any of the Guaranteed
Obligations are not paid in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, as a mandatory cash collateralization or
otherwise), Guarantors will, jointly and severally, promptly pay the same,
without any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of any of the Guaranteed Obligations, the same
will be promptly paid in full when due (whether at extended maturity, as a
mandatory prepayment, by acceleration, as a mandatory cash collateralization or
otherwise) in accordance with the terms of such extension or renewal.
 
(b) Notwithstanding any provision to the contrary contained herein, in any other
of the Loan Documents or other documents relating to the Obligations, the
obligations of each Guarantor under this Agreement and the other Loan Documents
shall be limited to an aggregate amount equal to the largest amount that would
not render such obligations subject to avoidance under the United States
Bankruptcy Code and all other liquidation, conservatorship, bankruptcy,
assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization or similar debtor relief laws of the
United States from time to time in effect and affecting the rights of creditors
generally (collectively, “Debtor Relief Laws”) or any comparable provisions of
any applicable state law.
 
§34.2 Obligations Unconditional.
 
The obligations of Guarantors under §34.1 are joint and several, absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Loan Documents or other documents relating to the
Obligations, or any substitution, compromise, release, impairment or exchange of
any other guarantee of or security for any of the Guaranteed Obligations, and,
to the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this §34.2
that the obligations of

 
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Guarantors hereunder shall be absolute and unconditional under any and all
circumstances.  Each Guarantor agrees that such Guarantor shall have no right of
subrogation, indemnity, reimbursement or contribution against any Borrower or
any other Guarantor for amounts paid under this §34 until such time as the
Obligations have been irrevocably paid in full and the commitments relating
thereto have expired or been terminated.  Without limiting the generality of the
foregoing, it is agreed that, to the fullest extent permitted by law, the
occurrence of any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder, which shall remain absolute and
unconditional as described above:
 
(a) at any time or from time to time, without notice to any Guarantor, the time
for any performance of or compliance with any of the Guaranteed Obligations
shall be extended, or such performance or compliance shall be waived;
 
(b) any of the acts mentioned in any of the provisions of any of the Loan
Documents, or other documents relating to the Guaranteed Obligations or any
other agreement or instrument referred to therein shall be done or omitted;
 
(c) the maturity of any of the Guaranteed Obligations shall be accelerated, or
any of the Obligations shall be modified, supplemented or amended in any
respect, or any right under any of the Loan Documents or other documents
relating to the Guaranteed Obligations, or any other agreement or instrument
referred to therein shall be waived or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released, impaired or
exchanged in whole or in part or otherwise dealt with;
 
(d) any Lien granted to, or in favor of, Agent or any of the holders of the
Guaranteed Obligations as security for any of the Guaranteed Obligations shall
fail to attach or be perfected; or
 
(e) any of the Guaranteed Obligations shall be determined to be void or voidable
(including, without limitation, for the benefit of any creditor of any
Guarantor) or shall be subordinated to the claims of any Person (including,
without limitation, any creditor of any Guarantor).
 
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest notice of acceptance
of the guaranty given hereby and of Loans that may constitute obligations
guaranteed hereby, notices of amendments, waivers and supplements to the Loan
Documents and other documents relating to the Guaranteed Obligations, or the
compromise, release or exchange of collateral or security, and all notices
whatsoever, and any requirement that Agent or any holder of the Guaranteed
Obligations exhaust any right, power or remedy or proceed against any Person
under any of the Loan Documents or any other documents relating to the
Guaranteed Obligations or any other agreement or instrument referred to therein,
or against any other Person under any other guarantee of, or security for, any
of the Obligations.
 

 
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                              §34.3 Reinstatement.
 
Neither Guarantors’ obligations hereunder nor any remedy for the enforcement
thereof shall be impaired, modified, changed or released in any manner
whatsoever by an impairment, modification, change, release or limitation of the
liability of any Borrower or any other Guarantor, by reason of any Borrower’s or
any other Guarantor’s bankruptcy or insolvency or by reason of the invalidity or
unenforceability of all or any portion of the Guaranteed Obligations.  The
obligations of Guarantors under this §34 shall be automatically reinstated if
and to the extent that for any reason any payment by or on behalf of any Person
in respect of the Guaranteed
 

Obligations is rescinded or must be otherwise restored by any holder of any of
the Obligations, whether as a result of any proceedings pursuant to any Debtor
Relief Law or otherwise, and each Guarantor agrees that it will indemnify Agent
and each holder of Guaranteed Obligations on demand for all reasonable
out-of-pocket costs and expenses (including all reasonable fees, expenses and
disbursements of any law firm or other outside counsel incurred by the Agent)
incurred by Agent or such holder of Guaranteed Obligations in connection with
such rescission or restoration, including any such costs and expenses incurred
in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any Debtor Relief Law.
 
§34.4 Certain Waivers.
 
Each Guarantor acknowledges and agrees that (a) the guaranty given hereby may be
enforced without the necessity of resorting to or otherwise exhausting remedies
in respect of any other security or collateral interests, and without the
necessity at any time of having to take recourse against Borrower or any other
Guarantor hereunder or against any collateral securing the Guaranteed
Obligations or otherwise, (b) it will not assert any right to require the action
first be taken against Borrowers or any other Person (including any
co-guarantor) or pursuit of any other remedy or enforcement any other right, and
(c) nothing contained herein shall prevent or limit action being taken against
any Borrower or any other Guarantor hereunder, under the other Loan Documents or
the other documents and agreements relating to the Guaranteed Obligations or
from foreclosing on any security or collateral interests relating hereto or
thereto, or from exercising any other rights or remedies available in respect
thereof, if none of Borrowers nor Guarantors shall timely perform their
obligations, and the exercise of any such rights and completion of any such
foreclosure proceedings shall not constitute a discharge of Guarantors’
obligations hereunder unless as a result thereof, the Guaranteed Obligations
shall have been paid in full and the commitments relating thereto shall have
expired or been terminated, it being the purpose and intent that Guarantors’
obligations hereunder be absolute, irrevocable, independent and unconditional
under all circumstances.
 
§34.5 Remedies.
 
Guarantors agree that, to the fullest extent permitted by Law, as between
Guarantors, on the one hand, and Agent and the holders of the Guaranteed
Obligations, on the other hand, the Guaranteed Obligations may be declared to be
forthwith due and payable as provided in §12.1 (and shall be deemed to have
become automatically due and payable in the circumstances provided in §12.1) for
purposes of §34.1, notwithstanding any stay, injunction or other prohibition
preventing such declaration (or preventing the Guaranteed Obligations from
 

 
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becoming automatically due and payable) as against any other Person and that, in
the event of such declaration (or the Guaranteed Obligations being deemed to
have become automatically due and payable), the Guaranteed Obligations (whether
or not due and payable by any other Person) shall forthwith become due and
payable by Guarantors for purposes of §34.1.  Guarantors acknowledge and agree
that if the Guaranteed Obligations are secured pursuant to the terms of the
Security Documents, the holders of the Guaranteed Obligations may exercise their
remedies thereunder in accordance with the terms thereof.
 
                           §34.6 Rights of Contribution.
 
Guarantors hereby agree as among themselves that, in connection with payments
made hereunder, each Guarantor shall have a right of contribution from each
other Guarantor in accordance with applicable law.  Such contribution rights
shall be subordinate and subject in right of payment to the Guaranteed
Obligations until such time as the Guaranteed Obligations have been irrevocably
paid in full and the commitments relating thereto shall have expired or been
terminated, and none of Guarantors shall exercise any such contribution rights
until the Guaranteed Obligations have been irrevocably paid in full and the
commitments relating thereto shall have expired or been terminated.
 
                         §31.7 Guaranty of Payment; Continuing Guaranty.
 
The guarantee in this §34 is a guaranty of payment and not of collection, and is
a continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
 
[SIGNATURES BEGIN ON FOLLOWING PAGE]
 

 
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of the
date first set forth above.
 
BORROWERS:
NURSE ON CALL, INC., NURSE-ON-CALL OF SOUTH FLORIDA, INC., “NURSE-ON-CALL”
HOMECARE, INC., NURSE-ON-CALL OF BROWARD, INC., UNITY HOME HEALTH SERVICES, INC.
and NURSE ON CALL OF TEXAS, INC.
 
By:  /s/ Dale
Clift                                                                         
Name:  Dale
Clift                                                                         
Title:    President and Chief Executive Officer 
 
   

[SIGNATURES CONTINUED ON FOLLOWING PAGES]
 

Term Credit Agreement
 
 

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[Execution of Term Loan Credit Agreement Continued]
 
GUARANTORS:
 
HOME HEALTH CARE HOLDINGS, LLC
By: /s/ Mark A. Finkelstein 
Name:                      Mark A. Finkelstein 
Title:                      Manager 
 
     
EMERICARE NOC LLC
By: /s/ Mark A. Finkelstein 
Name:                      Mark A. Finkelstein 
Title:                      Executive Vice President-Corporate Development ,
General Counsel and Corporate Secretary 
 
     
EMERITUS PROPERTIES III, INC.
By: /s/ Mark A. Finkelstein 
Name:                      Mark A. Finkelstein 
Title:                      Executive Vice President-Corporate Development ,
General Counsel and Corporate Secretary 
 
 
     
EMERITUS CORPORATION
By: /s/ Mark A. Finkelstein 
Name:                      Mark A. Finkelstein 
Title:                      Executive Vice President-Corporate Development ,
General Counsel and Corporate Secretary 
 
   

 
[SIGNATURES CONTINUED ON FOLLOWING PAGES]
 

Term Credit Agreement
 
 

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[Execution of Term Loan Credit Agreement Continued]
 

KEYBANK NATIONAL ASSOCIATION, as a Lender and as Agent
 
 
By:/s/ Bellini
Lacey                                                              
Name:  Bellini
Lacey                                                              
Title:  Vice
President                                                              
 

 

 
[SIGNATURES CONTINUED ON FOLLOWING PAGES]
 

Term Credit Agreement

 
 

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[Execution of Term Loan Credit Agreement Continued]
 

Cadence Bank, N.A. as a Lender
 
 
By: /s/ William
Crawford                                                              
Name:   William
Crawford                                                              
Title:   Senior Vice
President                                                              
 

2100 3rd Ave. North
Suite 1100
Birmingham AL 35203
Attn:                      April Boswell
Fax:                                           

 

 
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
 

Term Credit Agreement

 
 

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ACKNOWLEDGEMENT AND CONSENT
REGARDING FINANCIAL COVENANTS
 
1.      Reference is hereby made to the following guaranties (the “Existing
Guaranties”):
 
(a)           Unconditional Payment Guaranty dated November 30, 2010 executed by
Emeritus Corporation for the benefit of KeyBank National Association with
respect to loans to Emerichenal LLC, Emericlear LLC and Emerimand LLC pursuant
to a Loan Agreement dated November 30, 2010.
 
(b)           Payment Guaranty dated October 27, 2011 executed by Emeritus
Corporation for the benefit of KeyBank National Association with respect to
loans to Emerihrt Bloomsburg LLC, Emerihrt Roanoke LLC, Emerihrt Creekview LLC,
Emerihrt Danville LLC, Emerichip Stockton LLC, Emerichip Walla Walla LLC,
Emerihrt Greensboro LLC, Emerihrt Harrisburg LLC, Emerihrt Harrisonburg LLC,
Emerichip Phoenix LLC, Emerihrt Ravenna LLC, PHNTUS LO Joliet SCU LLC, Emerihrt
Henderson LP, Emerihrt Medical Center LP, Emerihrt Oakwell Farms LP and Emerihrt
Stonebridge Ranch LP pursuant to a Loan Agreement dated October 27, 2011.
 
2.      The undersigned hereby acknowledge that the “ESC Financial Covenants”
set forth in §9.2 of the foregoing Term Credit Agreement with respect to Fixed
Charge Coverage Ratio and Liquid Assets (the “Liquidity and FCCR Covenants”)
conflict with similar covenants contained in the Existing Guaranties.
 
3.      The undersigned hereby consent and agree that the Existing Guaranties
are hereby modified to conform the Liquidity and FCCR Covenants set forth in the
Guaranties to the Liquidity and FCCR Covenants set forth in §9.2 of the
foregoing Term Credit Agreement.
 
4.      All other terms and provisions of the Existing Guaranties are and shall
remain in full force and effect.  Emeritus Corporation hereby restates, renews
and reaffirms its obligations under the Existing Guaranties.
 
[Execution on Following Pages]
 

 
 

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IN WITNESS WHEREOF, the undersigned have executed this Acknowledgement and
Consent as of the date of the foregoing Term Credit Agreement.
 

 
EMERITUS CORPORATION
 
 
By: /s/ Mark A.
Finkelstein                                                              
Name: Mark A.
Finkelstein                                                              
Title: Executive Vice President-Corporate development, General Counsel and
Corporate Secretary 
     
EMERICHENAL LLC
 
 
By: /s/ Mark A.
Finkelstein                                                              
Name: Mark A.
Finkelstein                                                              
Title: Executive Vice President-Corporate development, General Counsel and
Corporate Secretary 
         
EMERICLEAR LLC and EMERIMAND LLC
 
 
By:  Summerville Senior Living, Inc., sole member
 
 
By: /s/ Mark A.
Finkelstein                                                              
Name: Mark A.
Finkelstein                                                              
Title: Executive Vice President-Corporate development, General Counsel and
Corporate Secretary 
     
EMERIHRT BLOOMSBURG LLC,
EMERIHRT ROANOKE LLC,
EMERIHRT CREEKVIEW LLC,
EMERIHRT DANVILLE LLC,
EMERICHIP STOCKTON LLC,
EMERICHIP WALLA WALLA LLC,
EMERIHRT GREENSBORO LLC,
EMERIHRT HARRISBURG LLC,
EMERIHRT HARRISONBURG LLC,
EMERICHIP PHOENIX LLC,
EMERIHRT RAVENNA LLC, and
PHNTUS LO JOLIET SCU LLC
 
 
By:  Emeritus Corporation, sole member
 
 
By: /s/ Mark A.
Finkelstein                                                              
Name: Mark A.
Finkelstein                                                              
Title: Executive Vice President-Corporate development, General Counsel and
Corporate Secretary 
   

[Execution Continued on Following Page]
 

 
 

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EMERIHRT HENDERSON LP,
EMERIHRT MEDICAL CENTER LP,
EMERIHRT OAKWELL FARMS LP, and
EMERIHRT STONEBRIDGE RANCH, LP
 
 
By:  ESC G.P. II, Inc., general partner
 
 
By:/s/ Eric Mendelsohn                                                        
Name: Eric Mendelsohn                                                        
Title: Senior Vice President-Corporate
                 Development                                                              
     
KEYBANK NATIONAL ASSOCIATION
 
 
By:/s/ Bellini
Lacey                                                              
Name: Bellini
Lacey                                                              
Title: Vice
President                                                              

 
 

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