Exhibit 10.1

 

EXECUTION COPY

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LOGO [g88456image001.jpg]

 

$300,000,000 AMENDED AND RESTATED CREDIT AGREEMENT

 

dated as of

 

June 28, 2004

 

among

 

KINDRED HEALTHCARE, INC.

 

The Lenders Party Hereto

 

and

 

JPMORGAN CHASE BANK,

as Administrative Agent and Collateral Agent

 

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J.P. MORGAN SECURITIES INC.,

as Sole Bookrunner and Sole Lead Arranger

 

CITICORP USA, INC.,

as Syndication Agent

 

GENERAL ELECTRIC CAPITAL CORPORATION,

THE CIT GROUP/BUSINESS CREDIT, INC.

and

WELLS FARGO FOOTHILL,

as Co-Documentation Agents

 

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TABLE OF CONTENTS

 

     PAGE

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ARTICLE 1 DEFINITIONS

Section 1.01 .

  Defined Terms    2

Section 1.02 .

  Classification of Loans and Borrowings    41

Section 1.03 .

  Terms Generally    41

Section 1.04 .

  Accounting Terms; GAAP    41 ARTICLE 2 THE CREDITS

Section 2.01 .

  Commitments    42

Section 2.02 .

  Loans and Borrowings    42

Section 2.03 .

  Requests for Borrowings    42

Section 2.04 .

  Letters of Credit    43

Section 2.05 .

  Funding of Borrowings    48

Section 2.06 .

  Interest Elections    49

Section 2.07 .

  Termination and Reduction of Commitments    50

Section 2.08 .

  Repayment of Loans; Evidence of Indebtedness    50

Section 2.09 .

  Prepayment of Loans    51

Section 2.10 .

  Fees    52

Section 2.11 .

  Interest    53

Section 2.12 .

  Alternate Rate of Interest    54

Section 2.13 .

  Increased Costs    54

Section 2.14 .

  Break Funding Payments    56

Section 2.15 .

  Taxes    56

Section 2.16 .

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

Section 2.17 .

  Mitigation Obligations; Replacement of Lenders    59

Section 2.18 .

  Release of Security Interest in Assets being Sold    60 ARTICLE 3
REPRESENTATIONS AND WARRANTIES

Section 3.01 .

  Corporate Existence and Power    61

Section 3.02 .

  Corporate and Governmental Authorization; No Contravention    61

Section 3.03 .

  Binding Effect    61

Section 3.04 .

  Security Interests    61

Section 3.05 .

  Financial Information    62

 

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Section 3.06 .

  Litigation    62

Section 3.07 .

  Compliance with ERISA    62

Section 3.08 .

  Taxes    63

Section 3.09 .

  Compliance with Laws    63

Section 3.10 .

  No Regulatory Restrictions on Borrowing    63

Section 3.11 .

  Environmental Matters    63

Section 3.12 .

  Full Disclosure    64

Section 3.13 .

  Information as to Equity Interest and Instruments    64

Section 3.14 .

  Representations in Other Financing Documents    64

Section 3.15 .

  Margin Stock    64

Section 3.16 .

  Properties    65

Section 3.17 .

  Existing Indebtedness    65

Section 3.18.

  Solvency    65 ARTICLE 4

CONDITIONS

Section 4.01 .

  Effective Date    66

Section 4.02.

  Consents; Consequences Of Effectiveness    69

Section 4.03 .

  Each Credit Event    71 ARTICLE 5

AFFIRMATIVE COVENANTS

Section 5.01 .

  Information    72

Section 5.02 .

  Maintenance of Property    76

Section 5.03 .

  Insurance    76

Section 5.04 .

  Payment of Obligations; Compliance with Law and Contractual Obligations    76

Section 5.05 .

  Maintenance of Existence, Rights, etc    77

Section 5.06.

  Designation Of Restricted and Unrestricted Subsidiaries    77

Section 5.07 .

  Books and Records; Inspection Rights    79

Section 5.08 .

  Guarantees by Future Restricted Subsidiaries    80

Section 5.09 .

  Future Assets to be Added to Collateral    80

Section 5.10 .

  Condemnation Events    82

Section 5.11 .

  Use of Proceeds and Letters of Credit    82

Section 5.12 .

  Borrowing Base Reviews    82

Section 5.13 .

  Environmental Matters    83

Section 5.14 .

  Post-Closing    83 ARTICLE 6

FINANCIAL COVENANTS

Section 6.01 .

  Minimum Fixed Charge Coverage Ratio (EBITDAR)    85

 

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ARTICLE 7

NEGATIVE COVENANTS

Section 7.01 .

  Limitation on Indebtedness; Certain Equity Securities    86

Section 7.02 .

  Negative Pledge    88

Section 7.03 .

  Consolidations, Mergers and Asset Sales.    89

Section 7.04 .

  Limitations on Transactions with Affiliates    90

Section 7.05 .

  Limitation on Restrictions Affecting Subsidiaries    92

Section 7.06 .

  Limitation on Sale or Issuance of Equity Interests of Subsidiaries    93

Section 7.07 .

  Restricted Payments    93

Section 7.08 .

  Limitations on Acquisitions and Investments    95

Section 7.09 .

  No Change of Fiscal Periods    96

Section 7.10 .

  Limitation on Business.    96

Section 7.11 .

  Limitation on Sale and Leaseback Transactions    96

Section 7.12 .

  No Modification of Certain Documents without Consent    96

Section 7.13 .

  Limitation on Cash not held in Collateral Accounts    97

Section 7.14 .

  Limitation of Designated Interest Rate Agreements    97

Section 7.15 .

  Payments for Consents    97

Section 7.16 .

  Limitations on Capital Expenditures    97 ARTICLE 8

DEFAULTS

Section 8.01 .

  Events of Default    98

Section 8.02 .

  Notice of Default    102

Section 8.03 .

  Enforcement Notice    102 ARTICLE 9

THE AGENTS

ARTICLE 10

MISCELLANEOUS

Section 10.01 .

  Notices    105

Section 10.02 .

  Waivers; Amendments    106

Section 10.03 .

  Expenses; Indemnity; Damage Waiver    107

Section 10.04 .

  Successors And Assigns    109

Section 10.05 .

  Survival    112

Section 10.06 .

  Counterparts; Integration; Effectiveness    112

Section 10.07 .

  Severability    113

Section 10.08 .

  Right of Setoff    113

Section 10.09 .

  Governing Law; Jurisdiction; Consent to Service of Process    113

Section 10.10 .

  WAIVER OF JURY TRIAL    114

Section 10.11 .

  Headings    114

Section 10.12 .

  Confidentiality    114

 

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Section 10.13 .

  Interest Rate Limitation    115

Section 10.14.

  Margin Stock    115

 

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SCHEDULES:

    

Schedule 1.01A

  –    Discontinued Operations

Schedule 1.01B

  –    Restricted Subsidiaries, Unrestricted Subsidiaries and Excluded
Partnerships

Schedule 1.01C

  –    Existing Affiliate Agreements

Schedule 1.01D

  –    Initial Master Lease Properties; Other Leased Properties; Third-Party
Leases

Schedule 1.01E

  –    Management Contracts

Schedule 1.01F

  –    Initial Owned Properties

Schedule 1.01G

  –    Existing Investments

Schedule 1.01H

  –    Specified Properties

Schedule 1.01I

  –    Existing Letters of Credit

Schedule 1.01J

  –    HCPI Properties

Schedule 2.01

  –    Commitments

Schedule 3.13

  –    Existing Instruments

Schedule 3.16

  –    Real Property Information

Schedule 4.01

  –    Pre-Closing Deposit Account Control Agreements

Schedule 5.14

  –    Post-Closing Deposit Account Control Agreements

Schedule 7.01

  –    Existing Indebtedness

Schedule 7.02

  –    Existing Liens

EXHIBITS:

    

Exhibit A

  –    Form of Assignment and Assumption

Exhibit B.1

  –    Form of Opinion of the General Counsel of the Borrower

Exhibit B.2

  –    Form of Opinion of the Senior Vice President of Corporate Legal Affairs
of the Borrower

Exhibit B.3

  –    Form of Opinion of Cleary, Gottlieb, Steen & Hamilton, special counsel
for the Borrower

Exhibit B.4

  –    Form of Opinion of Morris, Nichols, Arsht & Tunnell, special Delaware
counsel for the Borrower

Exhibit C

  –    Form of Security Agreement

Exhibit D

  –    Form of Borrowing Base Certificate

 

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THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 28, 2004 among
KINDRED HEALTHCARE, INC., the LENDERS party hereto, JPMORGAN CHASE BANK, as
Administrative Agent and Collateral Agent, CITICORP USA, INC., as Syndication
Agent, and GENERAL ELECTRIC CAPITAL CORPORATION, THE CIT GROUP/BUSINESS CREDIT,
INC. and WELLS FARGO FOOTHILL, as Co-Documentation Agents.

 

WHEREAS, (a) Kindred Healthcare Operating (such term and other capitalized terms
used in these recitals without definition having the meanings set forth in
Sections 1.01 through 1.04 of this Agreement) is the borrower under the Exit
Facility and (b) the obligations of Kindred Healthcare Operating under the Exit
Facility are guaranteed by the Borrower, the parent company of Kindred
Healthcare Operating, pursuant to the Vencor Guaranty Agreement (as defined in
the Exit Facility);

 

WHEREAS, the lenders under the Exit Facility have made available to Kindred
Healthcare Operating a revolving credit facility (with a letter of credit
subfacility pursuant to which the Existing Letters of Credit were issued);

 

WHEREAS, (a) on the Effective Date, (i) the Borrower will assume all of the
obligations of Kindred Healthcare Operating in its capacity as borrower under
the Exit Facility and Kindred Healthcare Operating will be released from such
obligations, (ii) the Borrower will be released from its obligations under the
Vencor Guaranty Agreement and (iii) Kindred Healthcare Operating will guarantee
the obligations of the Borrower hereunder as further set forth below, and (b) on
and after the Effective Date, the rights and obligations of the Borrower and
Kindred Healthcare Operating will be governed by the provisions of the Financing
Documents;

 

WHEREAS, the Borrower has requested that the commitments under the revolving
credit facility provided pursuant to the Exit Facility be increased to
$300,000,000, that the Lenders participate in the Existing Letters of Credit and
that the Issuing Lender issue, and the Lenders participate in, the Additional
Letters of Credit;

 

WHEREAS, the Borrower proposes to use the proceeds of said revolving credit
facility to provide loans and letters of credit for working capital and other
general corporate purposes (including acquisitions) of the Borrower and its
Restricted Subsidiaries on and after the Effective Date, including to repay all
loans outstanding under the Exit Facility and to repay in full the Senior
Secured Notes Facility, in each case on the Effective Date;

 

WHEREAS, the obligations of the Borrower under the foregoing facility and
certain interest rate hedging arrangements are to be (a) secured by

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substantially all the Borrower’s assets and (b) guaranteed by the Borrower’s
Restricted Subsidiaries (including Kindred Healthcare Operating), and each of
such guarantees is to be secured by substantially all the assets of the relevant
guarantor; and

 

WHEREAS, the Lenders are willing to extend the foregoing revolving credit
facility to the Borrower and to participate in the Existing Letters of Credit,
and the Issuing Lender is willing to issue, and the Lenders are willing to
participate in, the Additional Letters of Credit, all on the terms and
conditions provided herein;

 

NOW, THEREFORE, the parties hereto agree that, on and as of the Effective Date,
the Exit Facility is hereby amended and restated in its entirety as follows:

 

ARTICLE 1

DEFINITIONS

 

Section 1.01. Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:

 

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

 

“Account” has the meaning set forth in Section 1 of the Security Agreement.

 

“Account Debtor” means any Person who is obligated to the Borrower or any
Restricted Subsidiary under, with respect to, or on account of, an Account.

 

“Acquisition” means (i) any Investment by the Borrower or any of its Restricted
Subsidiaries in a Person whereby such Person becomes a Restricted Subsidiary of
the Borrower or whereby such Person is merged with and into the Borrower or a
Restricted Subsidiary or (ii) an acquisition by the Borrower or any of its
Restricted Subsidiaries of the property and assets of any Person (other than any
then-existing Restricted Subsidiary) that constitutes substantially all of the
assets of such Person, or any division, line of business, Healthcare Facility or
other business unit of such Person.

 

“Additional Encumbrance Letter” means one or more letter agreements that may be
entered into after the Effective Date among the Borrower, JPMorgan Chase Bank,
as Agent, and First American Title Insurance Company.

 

“Additional Letter of Credit” means a letter of credit issued hereunder by the
Issuing Lender on or after the Effective Date.

 

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“Adjusted Consolidated Net Income” means, for any period, Consolidated Net
Income for such period, adjusted to exclude therefrom, without duplication, (i)
gains or losses from Asset Sales net of related tax effects and (ii) any net
income (or loss) of any Person (other than the Borrower or a Restricted
Subsidiary) in which the Borrower or any Restricted Subsidiary has an ownership
interest, except that such Person’s net income shall not be excluded if (and to
the extent that) such Person pays dividends or distributions in cash to the
Borrower or any of its Restricted Subsidiaries during such period.

 

“Adjusted Leverage Ratio” means, on any day, the ratio of (i) (A) Consolidated
Debt for Borrowed Money at such date plus (B) eight times the Consolidated
Rental Expense for the four consecutive Fiscal Quarters then most recently ended
minus (C) all cash (other than cash that has been allocated to or reserved for
any specific purpose other than the payment of Indebtedness hereunder) of the
Borrower and its Restricted Subsidiaries as at such date in excess of
$50,000,000 to (ii) Consolidated EBITDAR for the four consecutive Fiscal
Quarters then most recently ended; provided that, at any date prior to the end
of the fourth full Fiscal Quarter following the Effective Date, the Consolidated
Rental Expense to be multiplied by eight and the Consolidated EBITDAR shall each
be determined as of the end of the then most recently ended Fiscal Quarter on an
Annualized Basis.

 

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (i) the LIBO Rate for such Interest Period
multiplied by (ii) the Statutory Reserve Rate.

 

“Administrative Agent” means JPMorgan Chase Bank, in its capacity as
administrative agent for the Lenders under the Financing Documents.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

 

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

 

“Agent” means JPMorgan Chase Bank, in its capacity as administrative agent
and/or collateral agent for the Lenders under the Financing Documents, as the
context may require.

 

“Alternate Base Rate” means, for any day, a rate per annum equal to the greater
of (i) the Prime Rate in effect on such day and (ii) the Federal Funds Effective
Rate in effect on such day plus ½ of 1%. Any change in the Alternate Base Rate
due to a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime Rate
or the Federal Funds Effective Rate, respectively.

 

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“Annualized Basis” means that, when a provision hereof provides that
Consolidated EBITDAR, Consolidated Interest Expense, Consolidated Rental Expense
or Consolidated EBITDA is to be calculated as of a date (the “relevant date”)
prior to the end of the fourth full Fiscal Quarter following the Effective Date
for a period of four consecutive Fiscal Quarters ending on the relevant date,
(i) Consolidated EBITDAR, Consolidated Interest Expense, Consolidated Rental
Expense or Consolidated EBITDA, as the case may be, shall be calculated for the
period from the end of the month in which the Effective Date occurs to the
relevant date (a “short period”) and (ii) the amount so calculated shall be
multiplied by a fraction of which the numerator is 12 and the denominator is the
number of whole calendar months in such short period.

 

“Applicable Laws” means all applicable provisions of constitutions, statutes,
laws, rules, treaties, regulations and orders of all Governmental Authorities
and all applicable orders, rules and decrees of courts and arbitrators.

 

“Applicable Percentage” means, with respect to any Lender, the percentage of the
total Commitments represented by such Lender’s Commitment. If the Commitments
have terminated or expired, the Applicable Percentages shall be determined based
upon the Commitments most recently in effect, giving effect to any assignments.

 

“Applicable Rate” means, for any day, with respect to any ABR Loan, Eurodollar
Loan or with respect to the commitment fees payable hereunder, as the case may
be, the applicable rate per annum set forth below under the caption “ABR
Spread,” “Eurodollar Spread” or “Commitment Fee Rate,” as the case may be.

 

In each case, the “Applicable Rate” will be based on the Adjusted Leverage Ratio
as of the most recent determination date; provided that:

 

(i) until the date that is six months after the Effective Date, the “Applicable
Rate” will be the applicable rate per annum set forth below in Level III;

 

(ii) at any time when an Event of Default has occurred and is continuing, the
“Applicable Rate” will be that set forth in Level IV; and

 

(iii) at the option of the Agent (or at the request of the Required Lenders), if
the Borrower fails to deliver consolidated financial statements to the Agent as
and when required by Section 5.01(a) or 5.01(b), the “Applicable Rate” will be
that set forth in Level IV during the period from the expiration of the time
specified for such delivery until such financial statements are so delivered.

 

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Adjusted Leverage Ratio

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   ABR
Spread

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    Eurodollar
Spread

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Commitment

Fee

Rate

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Level I

   Less than or equal to 4.0 to 1.0    1.00 %   2.00 %   0.375 %

Level II

   Greater than 4.0 to 1.0 but less than or equal to 4.5 to 1.0    1.25 %   2.25
%   0.500 %

Level III

   Greater than 4.5 to 1.0 but less than or equal to 5.0 to 1.0    1.50 %   2.50
%   0.500 %

Level IV

   Greater than 5.0 to 1.0    1.75 %   2.75 %   0.500 %

 

For purposes of this definition, (x) the Adjusted Leverage Ratio shall be
determined as of the end of each Fiscal Quarter based on the Borrower’s
consolidated financial statements delivered pursuant to Section 5.01(a) or
5.01(b) and (y) each change in an Applicable Rate resulting from a change in the
Adjusted Leverage Ratio shall be effective during the period from and including
the day when the Agent receives the financial statements indicating such change
to but excluding the effective date of the next such change.

 

“Approved Fund” has the meaning assigned to such term in Section 10.04.

 

“Asset Sale” means any sale, lease or other transfer (including any such
transaction effected by way of merger or consolidation) of any asset by the
Borrower or any Restricted Subsidiary, including, without limitation, any Sale
and Leaseback Transaction, whether or not involving a capital lease, and any
sale or issuance of the Equity Interests of any Restricted Subsidiary, but
excluding (i) any sale of inventory, cash, cash equivalents and other cash
management investments and obsolete, unused or unnecessary equipment, in each
case in the ordinary course of business, (ii) any transfer of assets by the
Borrower to any Restricted Subsidiary or by any Restricted Subsidiary to the
Borrower or another Restricted Subsidiary, (iii) the sale or issuance by the
Borrower or any Restricted Subsidiary of any Equity Interests of any Restricted
Subsidiary to the Borrower or any Restricted Subsidiary, (iv) any transfer of
assets or related series of transfers of assets involving cash proceeds of less
than $500,000 and (v) with respect to a lease of any property (including any
Master Lease Property), surrender to or repossession by the lessor of such
property, or the termination of the lease relating to such property.

 

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 10.04), and accepted by the Agent, in the form of Exhibit A or any
other form approved by the Agent.

 

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“Attributable Indebtedness” means, in respect of a Sale and Leaseback
Transaction, the present value, discounted at the interest rate implicit in the
Sale and Leaseback Transaction, of the total obligations of the lessee for
rental payments during the remaining term of the lease in the Sale and Leaseback
Transaction.

 

“Availability Period” means the period from and including the Effective Date to
but excluding the earlier of the Maturity Date and the date of termination of
the Commitments.

 

“Board” means the Board of Governors of the Federal Reserve System of the United
States of America.

 

“Borrower” means Kindred Healthcare, Inc. (f/k/a Vencor, Inc.), a Delaware
corporation.

 

“Borrowing” means Loans of the same Type, made, converted or continued on the
same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect.

 

“Borrowing Base” means at any time, subject to adjustment as provided below, an
amount equal to the sum of, without duplication:

 

(a) 80% multiplied by the sum of (i) the book value of the Hospital and Health
Services Eligible Accounts, Pharmacy Eligible Accounts and Rehabilitation
Eligible Accounts less (ii) the PIP Reserve less (iii) if the Agent, in the
exercise of its reasonable discretion, has notified the Borrower that it
requires the Borrower to make deductions pursuant to this clause (iii), the
Dilution Reserve, plus

 

(b) 50% multiplied by the book value of the Eligible Aged Accounts, plus

 

(c) the Eligible Real Estate Borrowing Base Amount, less

 

(d) Established Reserves and, effective immediately upon notification thereof to
the Borrower by the Agent, any other reserves established from time to time by
the Agent in the exercise of its reasonable discretion;

 

provided that the amount determined pursuant to clause (c) above shall not
exceed 25% of the Borrowing Base as determined at any date; and provided further
that (i) the Agent may increase the percentages in clauses (a) or (b) above from
time to time with the consent of the Supermajority Lenders and (ii) the Agent
may, in the exercise of its reasonable discretion, reduce the percentages in
clauses (a) or (b) above from time to

 

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time. The Agent shall give prompt written notice to the Borrower and the Lenders
of any adjustments effected pursuant to this proviso.

 

The Borrowing Base at any time shall be determined by reference to the most
recent Borrowing Base Certificate theretofore delivered to the Agent (including
pursuant to Section 4.01(o) or Section 5.01(q), as applicable). Standards of
eligibility with respect to the Borrowing Base may be revised and adjusted from
time to time by the Agent in its reasonable discretion, with any changes in such
standards to be effective three (3) days after delivery of notice thereof to the
Borrower.

 

“Borrowing Base Certificate” means a certificate in the form of Exhibit D or any
other form approved by the Agent, executed and certified as accurate and
complete by a Financial Officer, together with appropriate exhibits, schedules,
supporting documentation and additional reports as (i) outlined in Schedule 1 to
Exhibit D, (ii) as provided for in Section 5.01(q), and (iii) as otherwise
reasonably requested by the Agent.

 

“Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

 

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

 

“Capital Expenditures” means, for any period, the gross additions to property,
plant and equipment and other capital expenditures of the Borrower and its
Restricted Subsidiaries for such period, as the same are or would be reflected
in a consolidated statement of cash flows of the Borrower and its Restricted
Subsidiaries for such period; provided that the amount paid by the Borrower or
any Restricted Subsidiary for any Acquisition and any amount of Casualty
Proceeds applied to restore, repair, replace or rebuild the asset in respect of
which such Casualty Proceeds were received shall not be included in the
calculation of the amount of Capital Expenditures.

 

“Capital Lease” means a lease that would be capitalized on a balance sheet of
the lessee prepared in accordance with GAAP. “Capital Lease Obligation” means
the obligation to pay rent under any Capital Lease.

 

“Casualty Event” means (i) any Condemnation Event with respect to any property
owned by or leased to the Borrower or any Restricted Subsidiary or (ii) any
damage to, or destruction of, any property owned by or leased to the Borrower or
any Restricted Subsidiary.

 

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“Casualty Proceeds” means (i) with respect to any Condemnation Event, all awards
or payments received by the Borrower, any Restricted Subsidiary or the Agent by
reason of such Condemnation Event, including all amounts received with respect
to any transfer in lieu or anticipation of such Condemnation Event or in
settlement of any proceeding relating to such Condemnation Event and (ii) with
respect to any other Casualty Event, all insurance proceeds or payments
(excluding payments with respect to business interruption) which the Borrower,
any Restricted Subsidiary or the Agent receives by reason of such other Casualty
Event, less, in either case, unreimbursed expenses or losses related to the
Casualty Event, including any payment with respect to taxes actually paid or to
become payable by the Borrower and its Restricted Subsidiaries (as reasonably
estimated by a Financial Officer) in respect of such Casualty Event.

 

“CHAMPUS” means, collectively, the Civilian Health and Medical Program of the
Uniformed Services, a program of medical benefits covering former and active
members of the uniformed services and certain of their dependents, financed and
administered by the United States Departments of Defense, Health and Human
Services and Transportation, and all laws, rules, regulations, manuals, orders,
guidelines or requirements pertaining to such program including (a) all federal
statutes (whether set forth in 10 U.S.C. §§ 1071-1106 or elsewhere) affecting
such program; and (b) all rules, regulations (including 32 C.F.R. § 199),
manuals, orders and administrative, reimbursement and other guidelines of all
governmental authorities promulgated in connection with such program (whether or
not having the force of law), in each case as the same may be amended,
supplemented or otherwise modified from time to time.

 

“CHAMPUS Receivable” means an Account payable pursuant to CHAMPUS.

 

“CHAMPVA” shall mean, collectively, the Civilian Health and Medical Program of
the Department of Veteran Affairs, a program of medical benefits covering
retirees and dependents of former members of the armed services administered by
the United States Department of Veteran Affairs, and all laws, rules,
regulations, manuals, orders, guidelines or requirements pertaining to such
program including (a) all federal statutes (whether set forth in 38 U.S.C. §
1713 or elsewhere) affecting such program or applicable to CHAMPVA; and (b) all
rules, regulations (including 38 C.F.R. § 17.54), manuals, orders and
administrative, reimbursement and other guidelines of all governmental
authorities promulgated in connection with such program (whether or not having
the force of law), in each case as the same may be amended, supplemented or
otherwise modified from time to time.

 

“Change in Law” means (i) the adoption of any law, rule or regulation after the
date of this Agreement, (ii) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (iii) compliance by any Lender or the Issuing Lender
(or, for purposes of Section 2.13(b), by any lending office of such Lender

 

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or by such Lender’s or the Issuing Lender’s holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

 

“Closing” means the closing hereunder on the Effective Date.

 

“Co-Documentation Agents” means each of General Electric Capital Corporation,
The CIT Group/Business Credit, Inc. and Wells Fargo Foothill.

 

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

 

“Collateral” means all property, real and personal, tangible and intangible,
with respect to which Liens are created or purportedly created pursuant to the
Collateral Documents.

 

“Collateral Accounts” has the meaning set forth in Section 1 of the Security
Agreement.

 

“Collateral Agent” means JPMorgan Chase Bank, in its capacity as collateral
agent for the holders of the Secured Obligations under the Financing Documents.

 

“Collateral Documents” means the Security Agreement, the Security Agreement
Supplements, the Mortgages, any deposit or other account control agreements and
all other supplemental or additional security agreements, mortgages or similar
instruments (other than any UCC financing statements) delivered pursuant hereto
or thereto.

 

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Loans and to acquire participations in Letters of Credit hereunder,
expressed as an amount representing the maximum aggregate amount of such
Lender’s Credit Exposure hereunder, as such commitment may be (i) reduced from
time to time pursuant to Section 2.07 and (ii) reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to Section 10.04. The
initial amount of each Lender’s Commitment is set forth on Schedule 2.01, or in
the Assignment and Assumption pursuant to which such Lender shall have assumed
its Commitment, as applicable. The initial aggregate amount of the Lenders’
Commitments is $300,000,000.

 

“Condemnation Event” means any condemnation or other taking or temporary or
permanent requisition of any property, any interest therein or right appurtenant
thereto, or any change of grade affecting any property, as the result of the
exercise of any right of condemnation or eminent domain. A transfer to a
governmental authority in lieu or anticipation of condemnation shall be deemed
to be a Condemnation Event.

 

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“Consolidated Debt for Borrowed Money” means at any date the sum, without
duplication, of (x) the aggregate amount of Indebtedness of the types described
in clauses (i), (ii) and (iv) of the definition of “Indebtedness” which is
Indebtedness of the Borrower and its Restricted Subsidiaries, (y) the aggregate
amount of Indebtedness of the type described in clause (vi) of the definition of
“Indebtedness” which is non-contingent Indebtedness of the Borrower and its
Restricted Subsidiaries and (z) the aggregate amount of Guarantees by the
Borrower and its Restricted Subsidiaries with respect to Indebtedness of others
of the types described in clauses (i), (ii) and (iv) of the definition of
“Indebtedness” and non-contingent Indebtedness of others of the type described
in clause (vi) of the definition of “Indebtedness”, all determined on a
consolidated basis as of such date after excluding accrued interest for the then
current period not yet due and payable.

 

“Consolidated EBITDA” means, for any period, Adjusted Consolidated Net Income
for such period plus, to the extent deducted in determining Adjusted
Consolidated Net Income for such period, the sum of (i) Consolidated Interest
Expense, (ii) income tax expense and (iii) depreciation, amortization and other
similar non-cash charges.

 

“Consolidated EBITDAR” means, for any period, Consolidated EBITDA for such
period plus, to the extent deducted in determining Consolidated EBITDA for such
period, the sum of (i) Consolidated Rental Expense and (ii) non-cash
compensation expense and minus (iii) any cash paid during such period in respect
of non-cash compensation expense accrued during any prior period; provided that
(x) Consolidated EBITDAR shall be calculated so as to exclude the effect of any
income or expense that (A) is classified as extraordinary, (B) is reported
separately as an unusual or non-recurring item, (C) is attributable to
discontinued operations described on Schedule 1.01A or (D) represents the effect
of an accounting change on prior periods, in each case in accordance with GAAP,
and (y) if any Restricted Subsidiary of the Borrower is subject to a limitation
(other than pursuant to the terms of the Financing Documents) in any period
binding on such Restricted Subsidiary which limits such Restricted Subsidiary’s
ability to pay dividends or make other distributions or pay any Indebtedness
owed to the Borrower or any other Restricted Subsidiary, or to make loans or
advances to the Borrower or any other Restricted Subsidiary or to create, incur,
assume or suffer to exist any Lien upon any of its property, assets or revenues
to secure the obligations of the Borrower or any other Restricted Subsidiary
under any Financing Document, Consolidated EBITDAR for such period shall be
adjusted to exclude any portion thereof that is attributable to such Restricted
Subsidiary and that, as a result of such limitation, it would be prohibited from
paying, directly or indirectly, to the Borrower or any other Restricted
Subsidiary at the end of such period.

 

“Consolidated Interest Expense” means, for any period, the interest expense of
the Borrower and its Restricted Subsidiaries, determined on a consolidated basis
for such period; provided that Consolidated Interest Expense

 

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shall not (i) include interest capitalized in accordance with GAAP or (ii) be
reduced by any interest income.

 

“Consolidated Net Income” means, for any period, the net income (or loss) of the
Borrower and its Restricted Subsidiaries, determined on a consolidated basis for
such period.

 

“Consolidated Rental Expense” means, for any period, the total rental expense
for operating leases of the Borrower and its Restricted Subsidiaries (other than
any such rental expense that is attributable to the HCPI Properties), determined
on a consolidated basis for such period; provided that Consolidated Rental
Expense shall not be reduced by any rental income.

 

“Consolidated Subsidiary” means, as to any Person at any date, any Subsidiary or
other entity the accounts of which would be consolidated with those of such
Person in its consolidated financial statements if such statements were prepared
as of such date. Unless otherwise specified, “Consolidated Subsidiary” means a
Consolidated Subsidiary of the Borrower.

 

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

 

“Cornerstone” means Cornerstone Insurance Company, a Cayman Islands corporation.

 

“Corporate Integrity Agreement” means the Corporate Integrity Agreement dated as
of July 25, 2000 between the Office of Inspector General of the Department of
Health and Human Services and the Borrower, as amended or supplemented from time
to time.

 

“Cost Report Liability Reserve” means, without duplication for any other reserve
hereunder, a reserve which shall reduce availability under the Borrowing Base by
the cost report liability of the Borrower and its Restricted Subsidiaries
(including for periods prior to the Effective Date), as determined by the Agent
in its reasonable discretion.

 

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

 

“Credit Parties” means the Borrower and the Subsidiary Guarantors, collectively.

 

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“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.

 

“Default Rate” means on any day the rate of interest that would be payable on
the Loans on such day pursuant to Section 2.11(c).

 

“Deposit Account Control Agreement” has the meaning set forth in Section 1 of
the Security Agreement.

 

“Designated Interest Rate Agreement” means any Interest Rate Agreement with a
Lender or an Affiliate of a Lender at the time such agreement is entered into
that is designated by the Borrower, in a notice to the Agent, as a Designated
Interest Rate Agreement for purposes of the Financing Documents.

 

“Dilution Factors” means, without duplication, with respect to any period, the
aggregate amount of all deductions, credit memos, returns, adjustments,
allowances, bad debt write-offs and other non-cash credits which are recorded to
reduce accounts receivable in a manner consistent with current and historical
accounting practices of the Borrower.

 

“Dilution Ratio” means, at any date, the amount (expressed as a percentage)
equal to (a) the aggregate amount of the applicable Dilution Factors with
respect to the Borrower and its Restricted Subsidiaries for the 12 most recently
ended fiscal months divided by (b) total gross sales of the Borrower and its
Restricted Subsidiaries for the 12 most recently ended fiscal months.

 

“Dilution Reserve” means, at any date, the applicable Dilution Ratio multiplied
by the book value of the Eligible Accounts on such date.

 

“Disqualified Equity Interests” means Equity Interests that (a) by their terms
or upon the happening of any event are (i) required to be redeemed or are
redeemable at the option of the holder on or prior to the day that is 91 days
after the Maturity Date for consideration other than Qualified Equity Interests
or (ii) convertible at the option of the holder into Disqualified Equity
Interests or exchangeable for Indebtedness or (b) require (or permit at the
option of the holder) the payment of any dividend, interest, sinking fund or
other similar payment (other than the accrual of such obligations) on or prior
to the day that is 91 days after the Maturity Date (other than payments made
solely in Qualified Equity Interests).

 

“dollars” or “$” refers to lawful money of the United States of America.

 

“EBITDA” means, when used with respect to any Healthcare Facility for any
period, the net income attributable to the operations of such Healthcare
Facility during such period, plus, to the extent deducted in determining such
net

 

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income, the sum of (i) interest expense, (ii) income tax expense and (iii)
depreciation, amortization and other similar non-cash charges.

 

“EBITDAR” means, when used with respect to any Healthcare Facility for any
period, the net income attributable to the operations of such Healthcare
Facility during such period, plus, to the extent deducted in determining such
net income, the sum of (i) interest expense, (ii) income tax expense, (iii)
rental expense and (iv) depreciation, amortization and other similar non-cash
charges; provided that EBITDAR shall be calculated so as to exclude the effect
of any income or expense that (A) is classified as extraordinary, (B) is
reported separately as an unusual or non-recurring item, (C) is attributable to
discontinued operations described in Schedule 1.01A or (D) represents the effect
of an accounting change on prior periods, in each case in accordance with GAAP,
as such amounts relate to such Healthcare Facility for such period.

 

“Effective Date” means the date on which the conditions specified in Section
4.01 are satisfied (or waived in accordance with Section 10.02).

 

“Eligible Accounts” means, at the time of determination thereof, all Accounts
that satisfy at the time of creation and continue to satisfy at the time of such
determination, the following criteria: such Account (i) arises from services
performed or goods sold by the Borrower or a Restricted Subsidiary, (ii) is
invoiced within 31 days (or in a timely manner in accordance with the normal
invoicing policies and timing procedures of the Borrower and its Restricted
Subsidiaries but in any event within 60 days) following the date such Account is
recognized as revenue by the Borrower or the applicable Restricted Subsidiary
and (iii) is not ineligible for inclusion in the calculation of the Borrowing
Base pursuant to any of the clauses (a) through (aa) below or otherwise deemed
by the Agent in its reasonable discretion to be ineligible for inclusion in the
calculation of the Borrowing Base as described below. Unless otherwise approved
from time to time in writing by the Agent, Eligible Accounts shall not include
any of the following Accounts:

 

(a) any Account that does not arise from the sale of goods or the performance of
services by the Borrower or any Restricted Subsidiary in the ordinary course of
its business;

 

(b) any Account that does not comply with all applicable legal requirements,
including, without limitation, all laws, rules, regulations and orders of any
governmental or judicial authority (including any Account due from an Account
Debtor located in the State of Indiana, New Jersey, Minnesota or West Virginia
(or any other state that requires a creditor to file a business activity report
or similar document in order to bring suit or otherwise enforce remedies against
such Account Debtor in the courts or through any judicial process of such
state), unless the Borrower or the applicable Restricted Subsidiary (at the time
the Account was created and at all times thereafter) (i) had qualified to do
business in Indiana, New Jersey, Minnesota or West Virginia or such other state,
as

 

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applicable, (ii) had filed and has maintained effective a current notice of
business activity report with the appropriate office or agency of the State of
Indiana, New Jersey, Minnesota or West Virginia or such other state, as
applicable, or (iii) was and has continued to be exempt from filing such report
and has provided the Agent with reasonably satisfactory evidence thereof);

 

(c) any Account that is subject to any adverse security deposit, progress
payment, retainage or other similar advance made by or for the benefit of the
applicable Account Debtor, in each case to the extent thereof;

 

(d) any Account (i) that is invoiced in advance of the related goods sold or
services provided, (ii) that is invoiced more than once, or (iii) with respect
to which the associated income has not been earned;

 

(e) any Account that is a non-trade Account or that relates to payments for
interest;

 

(f) any Account that is not paid in full and with respect to which the Borrower
or applicable Restricted Subsidiary creates a new receivable for the unpaid
portion of such Account, and other Accounts constituting chargebacks, debit
memos and other adjustments for unauthorized deductions;

 

(g) any Account that relates to goods sold or services provided through
discontinued operations or other assets and operations currently held for sale,
except to the extent that such operations or assets are subject to active
management by, and the normal Account collection procedures of, the Borrower or
the applicable Restricted Subsidiary;

 

(h) any Account (i) upon which the Borrower’s or the applicable Restricted
Subsidiary’s right to receive payment is not absolute or is contingent upon the
fulfillment of any condition whatsoever by the Borrower or such Restricted
Subsidiary or (ii) as to which the Borrower or the applicable Restricted
Subsidiary is not able to bring suit or otherwise enforce its remedies against
the Account Debtor through judicial or administrative process or (iii) if the
Account represents a progress billing consisting of an invoice for goods sold or
used or services rendered pursuant to a contract under which the Account
Debtor’s obligation to pay that invoice is subject to the Borrower’s or the
applicable Restricted Subsidiary’s completion of further performance under such
contract or is subject to the equitable lien of a surety bond issuer;

 

(i) to the extent that any defense, counterclaim, setoff or dispute is asserted
as to such Account;

 

(j) any Account that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;

 

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(k) any Account with respect to which an invoice, reasonably acceptable to the
Agent in form and substance, has not been sent on a timely basis as specified in
clause (ii) of the first paragraph of this definition;

 

(l) any Account (i) that is not owned by the Borrower or the applicable
Restricted Subsidiary or with respect to which the Borrower or applicable
Restricted Subsidiary does not have sole lawful and absolute title or (ii) that
is subject to any right, claim, security interest or other interest of any other
Person, other than Liens in favor of the Agent, on behalf of itself and the
Lenders;

 

(m) any Account that arises from a sale to any director, officer, other employee
or Affiliate of the Borrower or any Subsidiary;

 

(n) any Account due from an Account Debtor that is not domiciled in the United
States and (if not a natural person) organized under the laws of the United
States or any political subdivision thereof;

 

(o) to the extent the Borrower or any Restricted Subsidiary thereof is liable
for goods sold or services rendered by the applicable Account Debtor to the
Borrower or any Restricted Subsidiary thereof but only to the extent of the
potential offset;

 

(p) any Account that arises with respect to goods that are delivered on a
bill-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;

 

(q) any Account that is not payable by a Third Party Payor;

 

(r) any Account that is in default; provided that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:

 

(i) any Account not paid within 120 days following its original invoice date; or

 

(ii) the Account Debtor obligated upon such Account suspends business, makes a
general assignment for the benefit of creditors or fails to pay its debts
generally as they come due; or

 

(iii) a petition is filed by or against any Account Debtor obligated upon such
Account under any bankruptcy law or any other federal, state or foreign
(including any provincial) receivership, insolvency relief or other law or laws
for the relief of debtors;

 

(s) any Account that is the obligation of an Account Debtor if 50% or more of
the dollar amount of all Accounts owing by that Account Debtor are ineligible
under the other criteria set forth in this definition;

 

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(t) any Account as to which the Agent’s Lien thereon, on behalf of itself and
the Lenders, is not a first priority perfected Lien;

 

(u) any Account as to which any of the applicable representations or warranties
in the Financing Documents are untrue;

 

(v) to the extent such Account is evidenced by an instrument or chattel paper
(each as defined in the UCC) or a judgment;

 

(w) to the extent such Account exceeds any credit limit established by the Agent
in its reasonable discretion following prior notice of such limit by the Agent
to the Borrower;

 

(x) (i) that portion of any Account in respect of which there has been, or
should have been, in accordance with GAAP, established by the Borrower or a
Restricted Subsidiary a contra account whether in respect of contractual
allowances, audit adjustments, anticipated discounts or otherwise, or (ii) any
Account which is a Third Party Insurance Account and is due from an Account
Debtor to whom the Borrower or any Restricted Subsidiary owes a trade payable,
but only to the extent of such trade payable, or (iii) any Account which the
Borrower or any Restricted Subsidiary knows is subject to the exercise by an
Account Debtor of any right of recession, set-off, recoupment, counterclaim or
defense, whether arising out of transactions concerning the provision of medical
services or otherwise, provided that this clause (iii) shall not apply to
adjustments in the ordinary course with respect to Government Receivables;

 

(y) any Account due from any Third Party Payor (i) in respect of which a credit
loss has been recognized or reserved by the Borrower or any Restricted
Subsidiary, but only to the extent of such loss or reserve, or (ii) that, except
in the case of a Government Receivable, is the United States or any state
government or any department, agency or instrumentality thereof, unless the
Borrower or the applicable Restricted Subsidiary has complied in all respects
with the Federal Assignment of Claims Act of 1940 or the corresponding provision
of any applicable state law;

 

(z) any Account that is payable in any currency other than dollars; or

 

(aa) any Account that is otherwise unacceptable to the Agent, in its reasonable
discretion.

 

Notwithstanding the foregoing, all Accounts of any single Account Debtor (except
in the case of Government Receivables) owing to the Borrower or any Restricted
Subsidiary the book value of which, in the aggregate, exceeds 10% (or, in the
case of an Account Debtor whose senior, unsecured, long-term indebtedness for
borrowed money (which indebtedness is not guaranteed by any other Person or
subject to any other credit enhancement) is rated Investment Grade, 20%) of the
aggregate book value of all Eligible Accounts at the time of

 

16

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any determination (calculated without regard to this paragraph) shall be deemed
not to be Eligible Accounts to the extent of such excess. The aggregate book
value of Accounts of any single Account Debtor owing to the Borrower or any
Restricted Subsidiary for purposes of the immediately preceding sentence shall
be determined by the Borrower and, so long as the Borrower shall have used its
best efforts in making such determination, such determination shall be
conclusive absent manifest error. In determining the aggregate amount from the
same Account Debtor that is unpaid more than 120 days from the date of invoice
pursuant to clause (r) above there shall be excluded the amount of any net
credit balances relating to the Accounts due from an Account Debtor with invoice
dates more than 120 days from the date of invoice.

 

“Eligible Aged Account” means any Account that is not a Hospital and Health
Services Eligible Account, Pharmacy Eligible Account or Rehabilitation Eligible
Account solely because such Account was not paid within 120 days following its
original invoice date; provided that any such Account that is not paid within
150 days following its original invoice date shall not be an “Eligible Aged
Account”.

 

“Eligible Real Estate” means any Owned Property that meets the following
criteria at the time of determination:

 

(a) the Borrower or a Restricted Subsidiary is the record owner of and has good
fee title to such Owned Property;

 

(b) the Borrower or a Restricted Subsidiary, as applicable, has the right to
subject such Owned Property to a Lien in favor of the Agent; such Owned Property
is subject to a first priority Lien in favor of the Agent; and such Owned
Property is not subject to any other Lien whatsoever (other than Permitted
Liens);

 

(c) such Owned Property is not subject to any agreement which would by its terms
restrict the Agent’s ability to sell or otherwise dispose of such Owned
Property;

 

(d) if requested by the Agent with respect to such Owned Property, the Agent
shall have, within a reasonable period of time following such request (it being
understood that the reasonableness of the period of time shall be determined
based on the type of reports being requested), received environmental reports
reasonably satisfactory to the Agent with respect to such Owned Property, which
reports shall be prepared by environmental engineering firms reasonably
acceptable to the Agent;

 

(e) if requested by the Agent with respect to such Owned Property, the Agent
shall have, within a reasonable period of time (and in any event within 30 days)
following such request, received an appraisal report from an independent
appraiser reasonably satisfactory to the Agent;

 

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(f) if requested by the Agent with respect to such Owned Property, the Agent
shall have, within a reasonable period of time (and in any event within 30 days)
following such request, received evidence reasonably satisfactory to the Agent
that there are no outstanding taxes, water and sewer charges, levies,
assessments or impositions of any kind which are delinquent (other than any such
taxes, charges, levies, assessments or impositions that (i) are being contested
as set forth in Section 5.04(a) and (ii) do not exceed $750,000 in the aggregate
with respect to all Owned Properties);

 

(g) the Agent has received an opinion of local counsel to the Borrower or the
applicable Restricted Subsidiary in the jurisdiction in which such Owned
Property is located with respect to the validity and enforceability of the
Agent’s Lien on such Owned Property securing the Obligations, such opinion to be
in form and substance satisfactory to the Agent;

 

(h) the Agent has received evidence reasonably satisfactory to the Agent in the
form of coverage in the applicable title insurance policies or local counsel
opinions, at the option of the Borrower or the applicable Restricted Subsidiary,
that such Owned Property complies with the use limitations of all applicable
zoning ordinances and by-laws;

 

(i) the Borrower or the applicable Restricted Subsidiary, as the case may be,
has complied with all other requirements under the Financing Documents
applicable to such Owned Property;

 

(j) such Owned Property is accredited by the Joint Commission on Accreditation
of Healthcare Organizations (JCAHO);

 

(k) without limiting any other requirement set forth in this definition, if such
Owned Property is listed on Schedule 1.01F, the Borrower has caused each of the
conditions referred to in Section 5.14(c) and 5.14(d) applicable to such Owned
Property to have been satisfied within the time period specified therein; and

 

(l) the Owned Property is not otherwise unacceptable to the Agent, in its
reasonable discretion.

 

“Eligible Real Estate Borrowing Base Amount” means, on any day, an amount equal
to (x) the aggregate EBITDA of the Healthcare Facilities located on the premises
of Eligible Real Estate for the four Fiscal Quarters then most recently ended
times (y) five.

 

“Enforceable Judgment” means a judgment or order of a court or arbitral or
regulatory authority as to which the period, if any, during which the
enforcement of such judgment or order is stayed shall have expired. A judgment
or order which is under appeal or as to which the time in which to perfect an
appeal has not expired shall not be deemed an Enforceable Judgment so long as

 

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enforcement thereof is effectively stayed pending the outcome of such appeal or
the expiration of such period, as the case may be.

 

“Enforcement Notice” means a notice delivered by the Administrative Agent to the
Collateral Agent pursuant to Section 8.03 directing the Collateral Agent to
exercise one or more specific rights or remedies under the Collateral Documents.

 

“Environmental Laws” means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, codes, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and governmental restrictions relating to the
environment or to the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Materials or
wastes into the environment, including ambient air, surface water, ground water
or land, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants, Hazardous Materials or wastes or the clean-up or other remediation
thereof.

 

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties, natural resource damages or indemnities), of the Borrower or any
Restricted Subsidiary directly or indirectly resulting from or based upon (i)
any Environmental Law, (ii) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (iii) exposure to any
Hazardous Materials, (iv) the release or threatened release of any Hazardous
Materials into the environment or (v) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

 

“Equity Interest” means (i) in the case of a corporation, any shares of its
capital stock, (ii) in the case of a limited liability company, any membership
interest therein, (iii) in the case of a partnership, any partnership interest
(whether general or limited) therein, (iv) in the case of any other business
entity, any participation or other interest in the equity or profits thereof or
(v) any warrant, option or other right to acquire any Equity Interest described
in the foregoing clauses (i), (ii), (iii) and (iv).

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
or any successor statute.

 

“ERISA Group” means the Kindred Companies and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Kindred Company, are treated as a single
employer under Section 414 of the Code.

 

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“Escrow Agreement” means the Escrow Agreement dated as of April 20, 2001, among
the Borrower, Kindred Healthcare Operating, JP Morgan Chase Bank (as successor
in interest to Morgan Guaranty Trust Company of New York), as agent, and First
American Title Insurance Company, as escrow agent, as amended, modified or
amended and restated from time to time.

 

“Escrowed Mortgage Documents” means the mortgages, deeds to secure debt or deeds
of trust and related documents placed in escrow with First American Title
Insurance Company pursuant to the Escrow Agreement.

 

“Escrowed Properties” means Facility #640 (Kindred Hospital—Tampa, Florida),
Facility #199 (Kindred at Sellersburg, Indiana), Facility #248 (Liberty Care
Center Kentucky), Facility #307 (Lincoln Nursing Center North Carolina),
Facility #4602 (Kindred Hospital- Coral Gables Florida), Facility #592
(Greenbriar Terrace Healthcare), Facility #4664 (Kindred Hospital—Albuquerque)
and Facility #824 (Rehab and Healthcare Center of Mobile).

 

“Established Reserves” means, collectively, the Cost Report Liability Reserve
and the Interest Rate Agreement Reserve.

 

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

 

“Event of Default” has the meaning assigned to such term in Section 8.01.

 

“Excluded Partnership” means each of the general and limited partnerships and
each of the limited liability companies identified on Schedule 1.01B hereto as
an Excluded Partnership; provided that any such partnership or limited liability
company shall cease to be an Excluded Partnership at such time as (i) the grant
of a security interest in the partnership interests or limited liability company
interests thereof and a guaranty of the Obligations by such entity shall no
longer constitute a material violation of a valid and enforceable restriction in
favor of a third party or (ii) the required consents to such grant and such
guaranty shall have been obtained.

 

“Excluded Taxes” means, with respect to the Agent, any Lender, the Issuing
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (i) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (ii) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (iii) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.17(b)), any

 

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withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party to this Agreement (or designates a new
lending office) or is attributable to such Foreign Lender’s failure to comply
with Section 2.15(e), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from the Borrower with
respect to such withholding tax pursuant to Section 2.15(a).

 

“Executive Officer” means any “executive officer” (within the meaning of Rule
3b-7 under the Securities Exchange Act) of the Borrower.

 

“Existing Affiliate Agreements” means the agreements listed in Schedule 1.01C
hereto.

 

“Existing Credit Facilities” means (i) the $120,000,000 Credit Agreement, dated
as of April 20, 2001, among Kindred Healthcare Operating, the Borrower, the
lenders party thereto, the Swingline Bank party thereto, the LC Issuing Banks
party thereto, JPMorgan Chase Bank (as successor in interest to Morgan Guaranty
Trust Company of New York), as Administrative Agent and Collateral Agent, and
General Electric Capital Corporation, as Documentation Agent and Collateral
Monitoring Agent (the “Exit Facility”) and (ii) the Credit Agreement Providing
for the Issuance of $300,000,000 Senior Secured Notes Due 2008, dated as of
April 20, 2001, among Kindred Healthcare Operating, the Borrower, the lenders
party thereto, and JPMorgan Chase Bank (as successor in interest to Morgan
Guaranty Trust Company of New York), as Collateral Agent and Administrative
Agent (the “Senior Secured Notes Facility”), in each case as in effect
immediately prior to the Effective Date.

 

“Existing Encumbrance Letter” means the Borrower’s letter dated as of April 20,
2001 addressed to JPMorgan Chase Bank, as agent under the Exit Facility, and
First American Title Insurance Company.

 

“Existing Letters of Credit” means the letters of credit issued by the Issuing
Lender before the Effective Date and listed in Schedule 1.01I hereto.

 

“Exit Facility” has the meaning specified in the definition of “Existing Credit
Facilities”.

 

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding 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 (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Agent from three Federal funds brokers of recognized standing
selected by it.

 

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“Fee Mortgages” means fee mortgages in form and substance satisfactory to the
Agent relating to the Owned Properties.

 

“Financial Officer” means the principal financial officer, principal accounting
officer, treasurer or assistant treasurer of the Borrower.

 

“Financing Documents” means this Agreement (including the Schedules and Exhibits
hereto), any promissory notes issued hereunder, and the Collateral Documents.

 

“Fiscal Quarter” means a fiscal quarter of the Borrower.

 

“Fiscal Year” means a fiscal year of the Borrower.

 

“Fixed Charge Coverage Ratio (EBITDA)” means, on any date (the “transaction
date”), the ratio of (x) Consolidated EBITDA for the four consecutive Fiscal
Quarters ended immediately prior to the transaction date (the “reference
period”) to (y) Consolidated Interest Expense for the reference period; provided
that, at any transaction date prior to the end of the fourth full Fiscal Quarter
following the Effective Date, the foregoing amounts shall be determined as of
the end of the then most recently ended Fiscal Quarter on an Annualized Basis.
In making the foregoing calculation,

 

(a) pro forma effect will be given to any Indebtedness incurred during or after
the reference period to the extent the Indebtedness is outstanding or is to be
incurred on the transaction date as if the Indebtedness had been incurred on the
first day of the reference period;

 

(b) pro forma calculations of interest on Indebtedness bearing a floating
interest rate will be made as if the rate in effect on the transaction date
(taking into account any Interest Rate Agreement applicable to the Indebtedness
if the Interest Rate Agreement has a remaining term of at least 12 months) had
been the applicable rate for the entire reference period;

 

(c) Consolidated Interest Expense related to any Indebtedness no longer
outstanding or to be repaid or redeemed on the transaction date, except for
Consolidated Interest Expense accrued during the reference period under this
Agreement to the extent of the Commitments in effect on the transaction date,
will be excluded;

 

(d) pro forma effect will be given to

 

(i) the creation, designation or redesignation of Restricted and Unrestricted
Subsidiaries,

 

(ii) the acquisition or disposition of companies, divisions or lines of
businesses by the Borrower and its Restricted

 

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Subsidiaries, including any acquisition or disposition of a company, division or
line of business since the beginning of the reference period by a Person that
became a Restricted Subsidiary after the beginning of the reference period, and

 

(iii) the discontinuation of any discontinued operations, that have occurred
since the beginning of the reference period as if such events had occurred, and,
in the case of any disposition, the proceeds thereof applied, on the first day
of the reference period. To the extent that pro forma effect is to be given to
an acquisition or disposition of a company, division or line of business, the
pro forma calculation will be based upon the most recent four full fiscal
quarters for which the relevant financial information is available.

 

“Foothill Transaction” means the proposed acquisition by Kindred Nursing Centers
West, L.L.C. of the remaining 50% general partnership interest in Foothill
Nursing Company Partnership.

 

“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

 

“GAAP” means generally accepted accounting principles in the United States of
America.

 

“Government Receivables” shall mean collectively, any and all Accounts which are
(a) Medicare Receivables, (b) Medicaid Receivables, (c) TRICARE Receivables, (d)
CHAMPUS Receivables, (e) VA Receivables or (f) any other Accounts payable by a
Governmental Authority approved by the Agent, which approval shall not be
unreasonably withheld.

 

“Governmental Approvals” means all authorizations, consents, approvals, licenses
and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.

 

“Governmental Authority” means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.

 

“Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and

 

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including any obligation of the guarantor, direct or indirect, (i) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (ii) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (iv) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

 

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

 

“HCPI Properties” means the Healthcare Facilities listed on Schedule 1.01J.

 

“HCPI Transaction” means the proposed transaction pursuant to which a Credit
Party acquires the HCPI Property referred to as “MO# 860/861” from Health Care
Property Investors, Inc. (“HCPI”) and, substantially simultaneously therewith
and as sole consideration for which acquisition, enters into a Sale and
Leaseback Transaction with respect to the HCPI Property referred to as “TN# 274”
with HCPI.

 

“Health Services Division” means the Borrower’s health services division, which
provides long-term care services through the operation of nursing centers.

 

“Healthcare Facility” means (i) a hospital, outpatient clinic, nursing center,
assisted or independent living community, long-term care facility or any other
facility that is used or useful in the provision of healthcare or custodial care
services, (ii) any healthcare business affiliated or associated with a
Healthcare Facility (as defined in clause (i)) or (iii) any business related or
ancillary to the provision of healthcare services or the operation of a
Healthcare Facility (as defined in clause (i)) including, but not limited to,
pharmacy supply and services, contract therapy services, as well as hospice and
home care services.

 

“Hedging Agreement” means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest rate, currency exchange rate or commodity price hedging arrangement.

 

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“Hospital and Health Services Eligible Accounts” means Eligible Accounts of the
Borrower or a Restricted Subsidiary arising solely from the Health Services
Division or the Hospital Division; provided that Hospital and Health Services
Eligible Accounts shall not at any time include any Accounts arising from the
Borrower’s or a Restricted Subsidiary’s (i) rehabilitation therapy business,
(ii) Enteral services or (iii) pharmacy business, including but not limited to,
institutional, infusion, Mediclaim, urological, and POH services.

 

“Hospital Division” means the Borrower’s hospital division, which generally
provides long-term acute care to medically complex patients through the
operation of hospitals.

 

“Indebtedness” of any Person means, without duplication, (i) all obligations of
such Person for borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person to pay the deferred purchase price of property or services, (iv) all
Capital Lease Obligations of such Person, (v) all obligations of such Person to
purchase securities which arise out of or in connection with the sale of the
same or substantially similar securities, (vi) all obligations of such Person
(whether contingent or non-contingent) to reimburse any Lender or other Person
in respect of amounts paid under a letter of credit, banker’s acceptance or
similar instrument, (vii) all obligations secured by a Lien on any asset of such
Person, whether or not such Indebtedness is otherwise an obligation of such
Person, and (viii) all Guarantees by such Person of obligations of another
Person (each such Guarantee to constitute Indebtedness in an amount equal to the
maximum amount of such other Person’s obligations Guaranteed thereby); provided
that neither (a) trade accounts payable nor (b) amounts owed to patients or
residents arising in the ordinary course of business nor (c) obligations arising
in respect of insurance policies or performance or surety bonds which are not
themselves Guarantees of Indebtedness (nor drafts, acceptances or similar
instruments evidencing the same nor obligations in respect of letters of credit
supporting the payment of the same) nor (d) guarantees of any obligation of the
Borrower or a Restricted Subsidiary pursuant to an operating lease shall
constitute Indebtedness.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Information Memorandum” means the Confidential Information Memorandum dated May
2004 relating to the Borrower and the Transactions.

 

“Initial Master Lease Properties” means the Healthcare Facilities identified as
the “Initial Master Lease Properties” on Schedule 1.01D hereto.

 

“Insurance Subsidiary” means any insurance company that becomes a Subsidiary of
the Borrower on or after the Effective Date.

 

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“Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.06.

 

“Interest Hedge Counterparty” means the counterparty under any Designated
Interest Rate Agreement.

 

“Interest Payment Date” means (i) with respect to any ABR Loan, the last day of
each March, June, September and December and (ii) with respect to any Eurodollar
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months’ duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months’ duration after
the first day of such Interest Period.

 

“Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.

 

“Interest Rate Agreement” means any interest rate protection agreement, interest
rate future, interest rate option, interest rate swap, interest rate cap or
other interest rate hedge arrangement, to or under which the Borrower or any of
its Restricted Subsidiaries is a party or a beneficiary on the date hereof or
becomes a party or a beneficiary hereafter.

 

“Interest Rate Agreement Reserve” means a reserve which shall reduce
availability under the Borrowing Base by, as of any date of determination, an
amount equal to the aggregate amount that would be payable by the Credit Parties
to the Interest Hedge Counterparties in the event the Designated Interest Rate
Agreements were terminated as of such date, as determined by the Agent in its
reasonable discretion.

 

“Investment” means, with respect to any Person (the “Investor”), any investment
by the Investor in any other Person, whether by means of share purchase, capital
contribution, loan, advance, purchase of Indebtedness, payment in respect of a
Guarantee of Indebtedness, time deposit or otherwise.

 

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“Investment Grade” means, with respect to any indebtedness of any Person, that
such indebtedness is rated BBB- or better by S&P and Baa3 or better by Moody’s.

 

“Issuing Lender” means JPMorgan Chase Bank, in its capacity as the issuer of
Letters of Credit (including the Existing Letters of Credit) hereunder, and its
successors in such capacity as provided in Section 2.04(j). The Issuing Lender
may, in its discretion, arrange for one or more Letters of Credit to be issued
by Affiliates of the Issuing Lender, in which case the term “Issuing Lender”
shall include any such Affiliate with respect to Letters of Credit issued by
such Affiliate.

 

“Kindred Company” means the Borrower or any Subsidiary of the Borrower.

 

“Kindred Healthcare Operating” means Kindred Healthcare Operating, Inc. (f/k/a
Vencor Operating, Inc.), a Delaware corporation.

 

“LC Disbursement” means a payment made by the Issuing Lender pursuant to a
Letter of Credit.

 

“LC Exposure” means, at any time, the sum of (i) the aggregate undrawn amount of
all outstanding Letters of Credit at such time plus (ii) the aggregate amount of
all LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time. The LC Exposure of any Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time.

 

“Leasehold Mortgages” means leasehold mortgages in form and substance
satisfactory to the Agent relating to (i) the Initial Master Lease Properties
and the Other Leased Properties and (ii) leases of any other real properties
leased by the Borrower or any Subsidiary Guarantor which are required to be so
encumbered to secure the Obligations pursuant to Section 5.09.

 

“Lender Parties” means the Lenders, the Issuing Lender and the Agent.

 

“Lenders” means the Persons listed on Schedule 2.01 and any other Person that
shall have become a party hereto pursuant to an Assignment and Assumption, other
than any such Person that ceases to be a party hereto pursuant to an Assignment
and Assumption.

 

“Letter of Credit” means any Existing Letter of Credit or Additional Letter of
Credit.

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Page 3750 of the Dow Jones Market Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those

 

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currently provided on such page of such Service, as determined by the Agent from
time to time for purposes of providing quotations of interest rates applicable
to dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for
such Interest Period shall be the rate at which dollar deposits of $5,000,000
and for a maturity comparable to such Interest Period are offered by the
principal London office of the Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.

 

“Lien” means, with respect to any asset, (i) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset or any other arrangement (other than a right of set-off, recoupment,
counterclaim or similar right) the economic effect of which is to give a
creditor preferential access to such asset to satisfy its claim, (ii) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement (or any financing lease having substantially
the same economic effect as any of the foregoing) relating to such asset and
(iii) in the case of securities, any purchase option, call or similar right of a
third party with respect to such securities.

 

“Lien Grantor” means the Borrower or a Subsidiary Guarantor that grants a Lien
on any of its property pursuant to the Collateral Documents.

 

“Loans” means the loans made by the Lenders to the Borrower pursuant to this
Agreement.

 

“Management Contracts” means the management contracts pursuant to which the
Borrower and the Subsidiary Guarantors manage Healthcare Facilities as set forth
in Schedule 1.01E hereto.

 

“Margin Stock” has the meaning set forth in Regulation U.

 

“Master Lease Agreements” means the Master Lease Agreements demising to the
Borrower and Kindred Healthcare Operating the Initial Master Lease Properties
and any other lease agreement pursuant to which any real property is leased by
the Borrower or any Restricted Subsidiary from any Ventas Company, in each case
as amended from time to time after the Effective Date in accordance with the
terms hereof and thereof.

 

“Master Lease Property” means (i) the Initial Master Lease Properties and (ii)
any properties added after the Effective Date to the properties leased under a
Master Lease Agreement.

 

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“Material Adverse Effect” means a material adverse effect on (i) the business,
operations, assets, prospects, property or condition (financial or otherwise) of
the Borrower and its Restricted Subsidiaries, taken as a whole, (ii) the ability
of the Borrower, or the ability of the Restricted Subsidiaries taken as a whole,
to perform any of their respective obligations under any Financing Document,
(iii) the validity, binding effect or enforceability of any Financing Documents
or the rights of or benefits available under the Financing Documents to the
Agent, the Issuing Lender or the Lenders or (iv) the validity, perfection or
priority of the Liens on any material part of the Collateral created or
purportedly created under the Collateral Documents.

 

“Material Indebtedness” means Indebtedness (other than Indebtedness arising
under this Agreement), or obligations in respect of one or more Hedging
Agreements, of the Borrower or any one or more of the Subsidiary Guarantors,
arising in one or more related or unrelated transactions, in an aggregate
principal amount of $10,000,000 or more. For purposes of determining Material
Indebtedness, the “principal amount” of the obligations of the Borrower or a
Subsidiary Guarantor in respect of any Hedging Agreement at any time will be the
maximum aggregate amount (after giving effect to any netting agreements) that
the Borrower or such Subsidiary Guarantor, as the case may be, would be required
to pay if such Hedging Agreement were terminated at such time.

 

“Material Plan” means at any time a Plan or Plans having aggregate Unfunded
Liabilities in excess of $10,000,000.

 

“Material Real Property” means (i) any real property with a fair market value
exceeding, in the case of real property relating to a Healthcare Facility that
is a hospital, $6,000,000, or in the case of any other real property,
$3,000,000, in either case, which is acquired by the Borrower or a Subsidiary
Guarantor after the Effective Date and not sold to a Person (other than the
Borrower or a Subsidiary Guarantor) within 90 days after such acquisition or
(ii) any real property leased to the Borrower or a Subsidiary Guarantor for the
first time after the Effective Date if the projected EBITDA (as reasonably
estimated by a Financial Officer) for the Healthcare Facility to which such
lease relates for the twelve months following the date on which a leasehold
report is delivered to the Agent pursuant to Section 5.09(c) is equal to or
exceeds $1,000,000 with respect to any leased Healthcare Facility that is a
hospital and $500,000 with respect to any other leased Healthcare Facility.

 

“Maturity Date” means the fifth anniversary of the Effective Date, or if such
day is not a Business Day, the next preceding Business Day.

 

“Medicaid” means the medical assistance program established by Title XIX of the
Social Security Act (42 U.S.C. § 1396 et seq.) and any statutes succeeding
thereto.

 

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“Medicaid Receivable” has the meaning set forth in Section 1 of the Security
Agreement.

 

“Medicaid Regulations” means, collectively, (i) all federal statutes (whether
set forth in Title XIX of the Social Security Act or elsewhere) affecting
Medicaid, (ii) all applicable provisions of all federal rules, regulations,
manuals and orders of all Governmental Authorities promulgated pursuant to or in
connection with the statutes described in clause (i) above and all federal
administrative, reimbursement and other guidelines of all Governmental
Authorities having the force of law promulgated pursuant to or in connection
with the statutes described in clause (i) above, (iii) all state statutes and
plans for medical assistance enacted in connection with the statutes and
provisions described in clauses (i) and (ii) above, and (iv) all applicable
provisions of all rules, regulations, manuals and orders of all Governmental
Authorities promulgated pursuant to or in connection with the statutes described
in clause (iii) above and all state administrative, reimbursement and other
guidelines of all Governmental Authorities having the force of law promulgated
pursuant to or in connection with the statutes described in clause (iii) above,
in each case as may be amended or supplemented.

 

“Medicare” means the health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 U.S.C. § 1995 et seq.)
and any statutes succeeding thereto.

 

“Medicare Receivable” has the meaning set forth in Section 1 of the Security
Agreement.

 

“Medicare Regulations” means, collectively, all federal statutes (whether set
forth in Title XVIII of the Social Security Act or elsewhere) affecting
Medicare, together with all applicable provisions of all rules, regulations,
manuals and orders and administrative, reimbursement and other guidelines having
the force of law of all Governmental Authorities (including without limitation,
Health and Human Services (“HHS”), Centers for Medicare and Medicaid Services,
the Office of the Inspector General for HHS, or any Person succeeding to the
functions of any of the foregoing) promulgated pursuant to or in connection with
any of the foregoing having the force of law, as each may be amended or
supplemented.

 

“Minority-Owned Affiliate” means any Person (other than a Restricted Subsidiary)
in which (i) the Borrower and its Restricted Subsidiaries own 10% or more of any
class of capital stock or other Equity Interests or (ii) the Borrower or any
Restricted Subsidiary is a general partner.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Mortgages” means the Leasehold Mortgages and Fee Mortgages, collectively.

 

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“Most Recent Audited Financial Statements” means (i) at any time before audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries have been delivered pursuant to Section 5.01(a), the audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries as of December 31, 2003 and (ii) at any time after audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries have been delivered pursuant to Section 5.01(a), the most recent
audited consolidated financial statements of the Borrower and its Consolidated
Subsidiaries so delivered.

 

“Most Recent Financial Statements” means (i) at any time before consolidated
financial statements of the Borrower and its Consolidated Subsidiaries (whether
audited or unaudited) have been delivered pursuant to Section 5.01(a) or Section
5.01(b), the consolidated financial statements of the Borrower and its
Consolidated Subsidiaries as of March 31, 2004 and (ii) at any time after
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries have been delivered pursuant to Section 5.01(a) or Section 5.01(b),
the most recent consolidated financial statements of the Borrower and its
Consolidated Subsidiaries so delivered.

 

“Multiemployer Plan” means at any time an employee pension benefit plan within
the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA
Group is then making or accruing an obligation to make contributions or has
within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.

 

“Non-Recourse Debt” means Indebtedness as to which (i) neither the Borrower nor
any Restricted Subsidiary provides any Guarantee and as to which the lenders
have been notified in writing (including pursuant to the instrument evidencing
such Indebtedness) that they will not have any recourse to the stock or assets
of the Borrower or any Restricted Subsidiary and (ii) no default thereunder
would, as such, constitute a default under any Indebtedness of the Borrower or
any Restricted Subsidiary.

 

“Obligations” means all obligations of every nature of the Borrower or any
Subsidiary Guarantor under or in connection with the Financing Documents and the
Designated Interest Rate Agreements, including without limitation, any liability
of the Borrower on any claim, whether or not the right to payment in respect of
such claim is reduced to judgment, liquidated, unliquidated, fixed or
contingent, matured, disputed, undisputed, legal, equitable, secured or
unsecured, and whether or not such claim is discharged, stayed or otherwise
affected by any bankruptcy, insolvency, reorganization or other similar
proceeding. Without limiting the generality of the foregoing, the Obligations of
the Borrower and a Subsidiary Guarantor include (a) the obligation to pay
principal, interest, charges, expenses, fees, attorneys’ fees and disbursements,
indemnities and other amounts payable by the Borrower or such Subsidiary
Guarantor under any Financing

 

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Document or Designated Interest Rate Agreement, (b) the obligation to reimburse
all amounts drawn under a Letter of Credit and (c) the obligation to reimburse
any amount in respect of any of the foregoing that any Agent or any Lender, in
its sole discretion, may elect to pay or advance on behalf of the Borrower or
such Subsidiary Guarantor in accordance with the terms of any Financing
Document.

 

“Organizational Documents” means (i) with respect to any corporation, its
certificate or articles of incorporation, by-laws and other constitutional
documents, including the certificate of designation for any series of its
preferred stock, (ii) with respect to any limited liability company, its
articles of organization and operating agreement, or other comparable documents
however named, and (iii) with respect to any partnership, its partnership
agreement.

 

“Other Leased Properties” means the Healthcare Facilities identified as the
“Other Leased Properties” on Schedule 1.01D hereto.

 

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement.

 

“Owned Properties” means each of the Healthcare Facilities identified on
Schedule 1.01F hereto and any other real property owned in fee by the Borrower
or any Subsidiary Guarantor which is included in the Collateral pursuant to
Section 5.09 after the Effective Date.

 

“Participant” has the meaning set forth in Section 10.04.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.

 

“Permitted Delinquent Account Assignments” means assignments for collection from
time to time of Accounts (other than Eligible Accounts) in the ordinary course
of business of the Borrower and its Restricted Subsidiaries and consistent with
past practice.

 

“Permitted Encumbrances” means, with respect to any property (including any
leasehold interest) owned by the Borrower or any Restricted Subsidiary:

 

(a) Liens for taxes, assessments or other governmental charges not yet due or
which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of the
Borrower or such Restricted Subsidiary in accordance with GAAP;

 

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(b) carriers’, warehousemen’s, mechanics’, materialmens, repairmens’ or other
like Liens arising by operation of law in the ordinary course of business so
long as (A) the underlying obligations are not overdue for a period of more than
60 days or (B) such Liens are being contested in good faith and by appropriate
proceedings and adequate reserves with respect thereto are maintained on the
books of the Borrower or such Restricted Subsidiary in accordance with GAAP;

 

(c) Liens arising in the ordinary course of business and consistent with past
practice in connection with deposits with trade creditors, landlords, bonding
companies and other similar deposits;

 

(d) Liens arising in the ordinary course of business in connection with the
Borrower’s cash management system; provided that the aggregate principal amount
of Indebtedness secured by this clause (d) shall not at any time exceed
$10,000,000;

 

(e) judgment liens, and Liens securing appeal bonds (or letters of credit or
other similar instruments issued in support of or in lieu of appeal bonds), so
long as no Event of Default then exists under Section 8.01(j);

 

(f) other Liens or title defects in respect of real property (including matters
which an accurate survey might disclose and exceptions to title set forth in
title insurance with respect to the Mortgages) which (A) do not secure
Indebtedness and (B) do not materially detract from the value of such property
or materially impair the use thereof by the Borrower or such Restricted
Subsidiary in the operation of its business;

 

(g) other Liens and other title defects listed on the schedule to the Existing
Encumbrance Letter that were insured over by First American Title Insurance
Company in reliance on an indemnity provided to First American Title Insurance
Company by the Borrower; and

 

(h) other Liens and other title defects listed on the schedule to any Additional
Encumbrance Letter; provided that such Liens and title defects are paid,
discharged, removed, insured over by First American Title Insurance Company,
waived or reserved against in accordance with the provisions of, and within the
time periods (if any) specified in, such Additional Encumbrance Letter.

 

“Permitted Intercompany Indebtedness” means Indebtedness of the Borrower or any
Restricted Subsidiary owed to the Borrower or any other Restricted Subsidiary;
provided that such Indebtedness is either evidenced by a promissory note (which
note shall be subordinated to the Obligations in a manner reasonably
satisfactory to the Agent) or maintained in the form of open account balances in
which, in either case, the Agent has a first priority perfected security

 

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interest under the Security Agreement at all times until such security interest
is released pursuant to Section 25 thereof.

 

“Permitted Investment” means:

 

(a) Investments existing on the Effective Date and set forth in Schedule 1.01G
hereto;

 

(b) Temporary Cash Investments;

 

(c) any Investment in a then-existing Restricted Subsidiary;

 

(d) payroll, travel and other advances to directors, officers and employees, in
each case in the ordinary course of business, not in excess of $1,000,000
outstanding at any time; provided that taxes payable in connection with the
issuance of Equity Interests of the Borrower in the ordinary course of business
to such directors, officers and employees shall be excluded from the calculation
of the amount of Investments outstanding under this clause (d) so long as such
taxes are not owing for more than 30 days;

 

(e) working capital loans to, and other Investments in, Minority-Owned
Affiliates and any other Investment in any Person engaged in any business
related to or ancillary to the provision of healthcare services or the operation
of a Healthcare Facility, so long as the aggregate amount of all Investments
made after the Effective Date pursuant to this clause (e) outstanding at any
time shall not exceed $20,000,000;

 

(f) Investments received as non-cash consideration in an Asset Sale made
pursuant to and in compliance with Section 7.03(c); and

 

(g) Investments in Cornerstone of required amounts notified to the Borrower in
writing from time to time by (i) the insurance regulatory authorities in the
Cayman Islands or (ii) the Internal Revenue Service pursuant to applicable
treasury rules or regulations or interpretations thereof; provided that the
Borrower shall promptly upon receipt of any such notice forward a copy thereof
to the Agent.

 

“Permitted Liens” means Liens permitted to exist under Section 7.02.

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

“Pharmacy Division” means the Borrower’s pharmacy division, which provides
institutional, hospital, infusion, Mediclaim, urological and POH pharmacy
services.

 

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“Pharmacy Eligible Accounts” means Eligible Accounts of the Borrower or a
Restricted Subsidiary arising solely from the Pharmacy Division.

 

“PIP Liability” means, at any time, the liability of the Borrower and its
Restricted Subsidiaries based on periodic interim payment reviews for
overpayments of Medicare or Medicaid reimbursements or such other aggregate
periodic interim payments received by the Borrower or its Restricted
Subsidiaries that have not yet been applied to reduce the applicable Accounts.

 

“PIP Reserve” means, without duplication for any other reserve hereunder, a
reserve which shall reduce availability under the Borrowing Base by an amount
equal to the PIP Liability for the then current year, as determined by the Agent
in its reasonable discretion.

 

“Plan” means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and either (i) is
maintained, or contributed to, by any member of the ERISA Group for employees of
any member of the ERISA Group or (ii) has at any time within the preceding five
years been maintained, or contributed to, by any Person which was at such time a
member of the ERISA Group for employees of any Person which was at such time a
member of the ERISA Group.

 

“Prime Rate” means the rate of interest per annum publicly announced from time
to time by JPMorgan Chase Bank as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be effective from
and including the date such change is publicly announced as being effective.

 

“Qualification” means, with respect to any report of independent public
accountants covering financial statements, a qualification to such report (such
as a “subject to” or “except for” statement therein) (i) resulting from a
limitation on the scope of examination of such financial statements or the
underlying data, (ii) as to the capability of the Person whose financial
statements are being examined to continue operations as a going concern or (iii)
which could be eliminated by changes in financial statements or notes thereto
covered by such report (such as, by the creation of or increase in a reserve or
a decrease in the carrying value of assets); provided that neither of the
following shall constitute a Qualification: (a) a consistency exception relating
to a change in accounting principles with which the independent public
accountants for the Person whose financial statements are being examined have
concurred or (b) a qualification relating to the outcome or disposition of any
uncertainty, including but not limited to threatened litigation, pending
litigation being contested in good faith, pending or threatened claims or other
contingencies, the impact of which litigation, claims, contingencies or
uncertainties cannot be determined with sufficient certainty to permit
quantification in such financial statements.

 

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“Qualified Equity Interests” means all Equity Interests of a Person other than
Disqualified Equity Interests.

 

“Qualified Transaction” means (a) any sale or other transfer of, or any release
of Liens relating to, any Accounts or any books or records relating thereto, so
long as (i) the Borrower delivers to the Agent (A) at least five Business Days
prior to the proposed closing date of such transaction, a draft Borrowing Base
Certificate prepared on a pro forma basis after giving effect to such
transaction and (B) on the closing date of such transaction, a final Borrowing
Base Certificate prepared on a pro forma basis after giving effect to such
transaction and (ii) if the aggregate Credit Exposures of all Lenders exceeds
the Borrowing Base in effect on the closing date of such transaction after
giving effect thereto, the Borrower prepays Loans and pays cash to the Agent as
required by Section 2.09(c) or (b) any other sale or other transfer of, or any
other release of Liens relating to, any Accounts or any books or records
relating thereto, so long as (i) the aggregate consideration received with
respect to the transaction pursuant to which such Accounts are sold or otherwise
transferred does not exceed $10,000,000 and (ii) the aggregate book value of
Eligible Accounts sold or otherwise transferred pursuant to such transaction
does not exceed $1,000,000.

 

“Quarterly Measurement Date” means the last day of a Fiscal Quarter.

 

“Register” has the meaning set forth in Section 10.04.

 

“Regulation T” means Regulation T of the Board as from time to time in effect
and all official rulings and interpretations thereunder or thereof.

 

“Regulation U” means Regulation U of the Board as from time to time in effect
and all official rulings and interpretations thereunder or thereof.

 

“Regulation X” means Regulation X of the Board as from time to time in effect
and all official rulings and interpretations thereunder or thereof.

 

“Rehabilitation Division” means the Borrower’s rehabilitation division, which
provides rehabilitation therapy services.

 

“Rehabilitation Eligible Accounts” means Eligible Accounts of the Borrower or a
Restricted Subsidiary arising solely from the Rehabilitation Division.

 

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates.

 

“Required Lenders” means, at any time, Lenders having Credit Exposures and
unused Commitments representing more than 50% of the sum of the total Credit
Exposures and unused Commitments at such time.

 

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“Restricted Investment” means any Investment or Acquisition other than an
Investment or Acquisition made pursuant to Section 7.08(a).

 

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in the
Borrower or any Restricted Subsidiary (except dividends payable solely in Equity
Interests of the same class), or any payment (whether in cash, securities or
other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any such Equity Interests in the Borrower or any Restricted Subsidiary or any
option, warrant or other right to acquire any such Equity Interests in the
Borrower or any Restricted Subsidiary.

 

“Restricted Subsidiary” means any Subsidiary of the Borrower other than an
Unrestricted Subsidiary; the initial Restricted Subsidiaries as of the Effective
Date are identified on Schedule 1.01B hereto.

 

“S&P” means Standard & Poor’s.

 

“Sale and Leaseback Transaction” means, with respect to any Person, an
arrangement whereby such Person enters into a lease of property previously
transferred by such Person to the lessor.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Secured Obligations” has the meaning set forth in Section 1 of the Security
Agreement.

 

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time.

 

“Security Agreement” means the Amended and Restated Guarantee and Security
Agreement among the Credit Parties and the Agent, substantially in the form of
Exhibit C hereto, as amended or supplemented from time to time.

 

“Security Agreement Supplement” means a Security Agreement Supplement,
substantially in the form of Exhibit A to the Security Agreement, whereby the
Borrower or a Subsidiary Guarantor grants (or confirms its grant of) a security
interest in additional Collateral to the Agent and, if the grantor of such
security interest is a Subsidiary that is not already a party to the Security
Agreement, such Subsidiary becomes a party thereto.

 

“Security Interests” has the meaning set forth in Section 1 of the Security
Agreement.

 

“Senior Secured Notes Facility” has the meaning specified in the definition of
“Existing Credit Facilities”.

 

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“Specified Properties” means the Healthcare Facilities and other assets listed
on Schedule 1.01H.

 

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Agent is subject, for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to such
Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.

 

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

 

“Subsidiary Guarantor” means each Restricted Subsidiary listed on the signature
pages of the Security Agreement under the caption “Subsidiary Guarantors” and
each Subsidiary that shall, at any time after the date hereof, become a
Subsidiary Guarantor pursuant to Section 26 of the Security Agreement.

 

“Subsidiary Guaranty” means a guaranty by a Subsidiary Guarantor that the
Borrower will perform its obligations under the Financing Documents and the
Designated Interest Rate Agreements, such guaranty to be set forth in the
Security Agreement.

 

“Supermajority Lenders” means, at any time, Lenders having Credit Exposures and
unused Commitments representing 66 2/3% or more of the sum of the total Credit
Exposures and unused Commitments at such time.

 

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

 

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“Temporary Cash Investment” means any investment in (i) securities issued, or
directly and fully guaranteed or insured, by the United States or any agency or
instrumentality thereof; provided that the full faith and credit of the United
States or one of its agencies is pledged in support thereof, (ii) time deposit
accounts, bankers’ acceptances, certificates of deposit and money market
deposits maturing within 180 days of the date of acquisition thereof issued by
any office located in the United States of a bank or trust company which is
organized or licensed under the laws of the United States or any State thereof
and which bank or trust company has capital, surplus and undivided profits
aggregating more than $1,000,000,000 and has outstanding debt which is rated
“P-1” (or higher) by Moody’s or “A-1” (or higher) by S&P or any money-market
fund sponsored by a registered broker dealer or mutual fund distributor, (iii)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with an
office located in the United States of a bank or trust company meeting the
qualifications described in clause (ii) above, (iv) commercial paper, maturing
not more than 180 days after the date of acquisition, issued by a corporation
(other than any Ventas Company, any Kindred Company or any Affiliate thereof)
organized under the laws of the United States or any State thereof with a
rating, at the date of acquisition, of “P-1” (or higher) by Moody’s or “A-1” (or
higher) by S&P, (v) securities with maturities of six months or less from the
date of acquisition issued or fully and unconditionally guaranteed by any State,
commonwealth or territory of the United States, or by a political subdivision or
taxing authority thereof, and rated at least “P-1” (or higher) by Moody’s or
“A-1” (or higher) by S&P, (vi) money market funds which invest substantially all
of their assets in securities described in the preceding clauses (i) through
(v), and (vii) corporate bonds issued by a corporation (other than any Ventas
Company, any Kindred Company or any Affiliate thereof) organized under the laws
of the United States or any State thereof with a rating of “A2” (or higher) by
Moody’s or “A” (or higher) by S&P, maturing within 60 months from the date of
acquisition; provided that the aggregate market value of investments of the type
described in clauses (iv) and (vii) shall be limited at all times to no more
than 40% of the aggregate market value of all Temporary Cash Investments at such
time, and the aggregate market value of such investments in any one issuer shall
be limited at all times to no more than 5% of the aggregate market value of such
investments at such time.

 

“Third Party Insurance Accounts” means, collectively, any and all Accounts that
are not Government Receivables.

 

“Third Party Leases” means the leases by the Borrower or a Subsidiary Guarantor
listed and identified as “Third Party Leases” in Schedule 1.01D hereto.

 

“Third Party Payor” shall mean any governmental entity, insurance company,
health maintenance organization, professional provider organization or similar
entity that is obligated to make payments on any Account.

 

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“Transactions” means the execution, delivery and performance by the Borrower of
this Agreement, the borrowing of Loans, the use of the proceeds thereof and the
issuance of Letters of Credit hereunder.

 

“TRICARE” means, collectively, a program of medical benefits covering former and
active members of the uniformed services and certain of their dependents,
financed and administered by the United States Departments of Defense, Health
and Human Services and Transportation, which program was formerly known as the
Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), and all
laws, rules, regulations, manuals, orders and administrative, reimbursement and
other guidelines of all governmental authorities promulgated in connection with
such program (whether or not having the force of law), in each case as the same
may be amended, supplemented or otherwise modified from time to time.

 

“TRICARE Receivable” shall mean an Account payable pursuant to TRICARE.

 

“Type” refers to whether the rate of interest on any Loan, or on any Loans
comprising a Borrowing, is determined by reference to the Adjusted LIBO Rate or
the Alternate Base Rate.

 

“UCC” has the meaning set forth in Section 1 of the Security Agreement.

 

“Unfunded Liabilities” means, with respect to any Plan at any time, the amount
(if any) by which (i) the value of all benefit liabilities under such Plan,
determined on a plan termination basis using the assumptions prescribed by the
PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market value
of all Plan assets allocable to such liabilities under Title I of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.

 

“United States” means the United States of America, including the States and the
District of Columbia, but excluding its territories and possessions.

 

“Unrestricted Subsidiary” means Cornerstone, Transitional Hospitals Corporation
of Michigan, Inc., each Excluded Partnership, and any other Subsidiary of the
Borrower that at the time of determination has previously been designated, and
continues to be, an Unrestricted Subsidiary in accordance with Section 5.06.

 

“VA Receivable” has the meaning set forth in Section 1 of the Security
Agreement.

 

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

 

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“Ventas Company” means Ventas or any Subsidiary of Ventas.

 

“Warrants” means the warrants issued by the Borrower for the purchase of
14,000,000 shares of the Borrower’s common stock, which warrants were issued
pursuant to the Warrant Agreement dated as of April 21, 2001 between the
Borrower and Wells Fargo Bank of Minnesota, N.A., as Warrant Agent.

 

Section 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by their Type. Borrowings
also may be classified and referred to by Type.

 

Section 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.

 

Section 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Agent that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such provision
(or if the Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith.

 

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ARTICLE 2

 

THE CREDITS

 

Section 2.01. Commitments. Subject to the terms and conditions set forth herein,
each Lender agrees to make Loans to the Borrower from time to time during the
Availability Period in an aggregate principal amount that will not result in (a)
such Lender’s Credit Exposure exceeding such Lender’s Commitment, (b) the total
Credit Exposures exceeding the total Commitments or (c) the total Credit
Exposures exceeding the Borrowing Base then in effect. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Loans.

 

Section 2.02. Loans and Borrowings. (a) Each Loan shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective Commitments. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender’s failure to make Loans as
required.

 

(b) Subject to Section 2.12, each Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrower may request in accordance herewith.
Each Lender at its option may make any Eurodollar Loan by causing any domestic
or foreign branch or Affiliate of such Lender to make such Loan; provided that
any exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement.

 

(c) At the commencement of each Interest Period for any Eurodollar Borrowing,
such Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $5,000,000. At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $100,000 and not less than $1,000,000; provided that an ABR
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.04(f).
Borrowings of more than one Type may be outstanding at the same time; provided
that there shall not at any time be more than a total of eight Eurodollar
Borrowings outstanding.

 

(d) Notwithstanding any other provision of this Agreement, the Borrower shall
not be entitled to request, or to elect to convert or continue, any Borrowing if
the Interest Period requested with respect thereto would end after the Maturity
Date.

 

Section 2.03. Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the Agent of such request by telephone (a) in the case of a
Eurodollar Borrowing, not later than 12:00 noon, New York City time, three

 

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Business Days before the date of the proposed Borrowing or (b) in the case of an
ABR Borrowing, not later than 12:00 noon, New York City time, on the date of the
proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the Agent of a
written Borrowing Request in a form approved by the Agent and signed by the
Borrower. Each such telephonic and written Borrowing Request shall specify the
following information in compliance with Section 2.02:

 

(i) the aggregate amount of the requested Borrowing;

 

(ii) the date of such Borrowing, which shall be a Business Day;

 

(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;

 

(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”; and

 

(v) the location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.05.

 

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month’s duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the Agent shall
advise each Lender of the details thereof and of the amount of such Lender’s
Loan to be made as part of the requested Borrowing.

 

Section 2.04. Letters of Credit. (a) Existing Letters of Credit. On the
Effective Date, without further action by any party hereto, the Issuing Lender
shall be deemed to have granted to each Lender, and each Lender shall be deemed
to have acquired from the Issuing Lender, a participation in each Existing
Letter of Credit equal to such Lender’s Applicable Percentage of (i) the
aggregate amount available to be drawn thereunder and (ii) the aggregate unpaid
amount of any outstanding reimbursement obligations in respect thereof. Such
participations shall be on all the same terms and conditions as participations
granted in Additional Letters of Credit under Section 2.04(e). With respect to
each Existing Letter of Credit (i) if the Issuing Lender has heretofore sold a
participation therein to a Lender, such Lender and the Issuing Lender agree that
such participation shall be automatically canceled on the Effective Date and
(ii) if the Issuing Lender has heretofore sold a participation therein to any
bank or financial institution that is not a Lender, such participation shall be
cancelled upon the Agent receiving the written consent of such bank or financial
institution to the effectiveness of this Agreement as contemplated by Section
4.01(t).

 

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(b) Additional Letters of Credit. Subject to the terms and conditions set forth
herein, the Borrower may request the issuance of Additional Letters of Credit
for its own account (or for the account of any Restricted Subsidiary), in a form
reasonably acceptable to the Agent and the Issuing Lender, at any time and from
time to time during the Availability Period. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions
of any form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Lender relating
to any Letter of Credit, the terms and conditions of this Agreement shall
control.

 

(c) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of an Additional Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Lender) to the
Issuing Lender and the Agent (reasonably in advance of the requested date of
issuance, amendment, renewal or extension) a notice requesting the issuance of
an Additional Letter of Credit, or identifying the Letter of Credit to be
amended, renewed or extended, and specifying the account party, the date of
issuance, amendment, renewal or extension (which shall be a Business Day), the
date on which such Letter of Credit is to expire (which shall comply with
paragraph (d) of this Section), the amount of such Letter of Credit, the name
and address of the beneficiary thereof and such other information as shall be
necessary to prepare, amend, renew or extend such Letter of Credit, as
applicable. If requested by the Issuing Lender, the Borrower also shall submit a
letter of credit application on the Issuing Lender’s standard form in connection
with any request for a Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to represent and
warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the LC Exposure shall not exceed $50,000,000, (ii) the total
Credit Exposures shall not exceed the total Commitments and (iii) the total
Credit Exposures shall not exceed the Borrowing Base then in effect.

 

(d) Expiration Date. Each Letter of Credit shall expire at or prior to the close
of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Maturity Date.

 

(e) Participations. By the issuance of an Additional Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Lender or the Lenders, the Issuing
Lender hereby grants to each Lender, and each Lender hereby acquires from the
Issuing Lender, a participation in such Letter of Credit equal to such Lender’s
Applicable Percentage of the aggregate amount available to be drawn under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender

 

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hereby absolutely and unconditionally agrees to pay to the Agent, for the
account of the Issuing Lender, such Lender’s Applicable Percentage of each LC
Disbursement made by the Issuing Lender and not reimbursed by the Borrower on
the date due as provided in paragraph (f) of this Section, or of any
reimbursement payment required to be refunded to the Borrower for any reason.
Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

 

(f) Reimbursement. If the Issuing Lender shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Agent an amount equal to such LC Disbursement not later than
3:00 p.m., New York City time, on the date that such LC Disbursement is made, if
the Borrower shall have received notice of such LC Disbursement prior to 11:00
a.m., New York City time, on such date, or, if such notice has not been received
by the Borrower prior to such time on such date, then not later than 3:00 p.m.,
New York City time, on (i) the Business Day that the Borrower receives such
notice, if such notice is received prior to 11:00 a.m., New York City time, on
the day of receipt, or (ii) the Business Day immediately following the day that
the Borrower receives such notice, if such notice is not received prior to such
time on the day of receipt; provided that the Borrower may, subject to the
conditions to borrowing set forth herein, request in accordance with Section
2.03 that such payment be financed with an ABR Borrowing in an equivalent amount
and, to the extent so financed, the Borrower’s obligation to make such payment
shall be discharged and replaced by the resulting ABR Borrowing. If the Borrower
fails to make such payment when due, the Agent shall notify each Lender of the
applicable LC Disbursement, the payment then due from the Borrower in respect
thereof and such Lender’s Applicable Percentage thereof. Promptly following
receipt of such notice, each Lender shall pay to the Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as
provided in Section 2.05 with respect to Loans made by such Lender (and Section
2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders),
and the Agent shall promptly pay to the Issuing Lender the amounts so received
by it from the Lenders. Promptly following receipt by the Agent of any payment
from the Borrower pursuant to this paragraph, the Agent shall distribute such
payment to the Issuing Lender or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse the Issuing Lender, then to such Lenders
and the Issuing Lender as their interests may appear. Any payment made by a
Lender pursuant to this paragraph to reimburse the Issuing Lender for any LC
Disbursement (other than the funding of ABR Loans as contemplated above) shall
not constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.

 

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(g) Obligations Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in paragraph (f) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Lender under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower’s obligations hereunder. Neither
the Agent, the Lenders nor the Issuing Lender, nor any of their Related Parties,
shall have any liability or responsibility by reason of or in connection with
the issuance or transfer of any Letter of Credit or any payment or failure to
make any payment thereunder (irrespective of any of the circumstances referred
to in the preceding sentence), or any error, omission, interruption, loss or
delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), any error in interpretation of technical terms or
any consequence arising from causes beyond the control of the Issuing Lender;
provided that the foregoing shall not be construed to excuse the Issuing Lender
from liability to the Borrower to the extent of any direct damages (as opposed
to consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable law) suffered by the Borrower
that are caused by the Issuing Lender’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the
Issuing Lender (as finally determined by a court of competent jurisdiction), the
Issuing Lender shall be deemed to have exercised care in each such
determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in substantial compliance with the terms of a
Letter of Credit, the Issuing Lender may, in its sole discretion, either accept
and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.

 

(h) Disbursement Procedures. The Issuing Lender shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Lender shall promptly notify the
Agent and the Borrower by telephone (confirmed by telecopy) of such demand for
payment and whether the Issuing Lender has made or will make an

 

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LC Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Lender and the Lenders with respect to any such LC Disbursement.

 

(i) Interim Interest. If the Issuing Lender shall make any LC Disbursement,
then, unless the Borrower shall reimburse such LC Disbursement in full on the
date such LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that the Borrower reimburses such LC Disbursement, at
the rate per annum then applicable to ABR Loans; provided that, if the Borrower
fails to reimburse such LC Disbursement when due pursuant to paragraph (f) of
this Section, then Section 2.11(c) shall apply. Interest accrued pursuant to
this paragraph shall be for the account of the Issuing Lender, except that
interest accrued on and after the date of payment by any Lender pursuant to
paragraph (f) of this Section to reimburse the Issuing Lender shall be for the
account of such Lender to the extent of such payment.

 

(j) Replacement of the Issuing Lender. The Issuing Lender may be replaced at any
time by written agreement among the Borrower, the Agent, the replaced Issuing
Lender and the successor Issuing Lender. The Agent shall notify the Lenders of
any such replacement of the Issuing Lender. At the time any such replacement
shall become effective, the Borrower shall pay all unpaid fees accrued for the
account of the replaced Issuing Lender pursuant to Section 2.10(b). From and
after the effective date of any such replacement, (i) the successor Issuing
Lender shall have all the rights and obligations of the Issuing Lender under
this Agreement with respect to Letters of Credit to be issued thereafter and
(ii) references herein to the term “Issuing Lender” shall be deemed to refer to
such successor or to any previous Issuing Lender, or to such successor and all
previous Issuing Lenders, as the context shall require. After the replacement of
an Issuing Lender hereunder, the replaced Issuing Lender shall remain a party
hereto and shall continue to have all the rights and obligations of an Issuing
Lender under this Agreement with respect to Letters of Credit issued by it prior
to such replacement, but shall not be required to issue additional Letters of
Credit.

 

(k) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the Agent
or the Required Lenders (or, if the maturity of the Loans has been accelerated,
Lenders with LC Exposure representing greater than 50% of the total LC Exposure)
demanding the deposit of cash collateral pursuant to this paragraph, the
Borrower shall deposit in an account with the Agent, in the name of the Agent
and for the benefit of the Lenders, an amount in cash equal to the LC Exposure
as of such date plus any accrued and unpaid interest thereon; provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in clause (m) of Article 8. Such deposit shall
be held by

 

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the Agent as collateral for the payment and performance of the obligations of
the Borrower under this Agreement. The Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Other
than any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Agent and at the
Borrower’s risk and expense, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such account. Moneys in
such account shall be applied by the Agent to reimburse the Issuing Lender for
LC Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Lenders with LC Exposure
representing greater than 50% of the total LC Exposure), be applied to satisfy
other obligations of the Borrower under this Agreement. If the Borrower is
required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after
all Events of Default have been cured or waived.

 

Section 2.05. Funding of Borrowings. (a) Each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 2:00 p.m., New York City time, to the account of
the Agent most recently designated by it for such purpose by notice to the
Lenders. The Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to an account of the Borrower
maintained with the Agent in New York City and designated by the Borrower in the
applicable Borrowing Request; provided that ABR Loans made to finance the
reimbursement of an LC Disbursement as provided in Section 2.04(f) shall be
remitted by the Agent to the Issuing Lender.

 

(b) Unless the Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Agent such Lender’s share of such Borrowing, the Agent may assume that such
Lender has made such share available on such date in accordance with paragraph
(a) of this Section and may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Agent, then the
applicable Lender and the Borrower severally agree to pay to the Agent forthwith
on demand such corresponding amount with interest thereon, for each day from and
including the date such amount is made available to the Borrower to but
excluding the date of payment to the Agent, at (i) in the case of such Lender,
the greater of the Federal Funds Effective Rate and a rate determined by the
Agent in accordance with banking industry rules on interbank compensation or
(ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If
such Lender pays such amount to the Agent, then such amount shall constitute
such Lender’s Loan included in such Borrowing.

 

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Section 2.06. Interest Elections. (a) Each Borrowing initially shall be of the
Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing.

 

(b) To make an election pursuant to this Section, the Borrower shall notify the
Agent of such election by telephone by the time that a Borrowing Request would
be required under Section 2.03 if the Borrower were requesting a Borrowing of
the Type resulting from such election to be made on the effective date of such
election. Each such telephonic Interest Election Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the Agent of a
written Interest Election Request in a form approved by the Agent and signed by
the Borrower.

 

(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:

 

(i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);

 

(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;

 

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and

 

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period
to be applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.

 

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.

 

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(d) Promptly following receipt of an Interest Election Request, the Agent shall
advise each Lender of the details thereof and of such Lender’s portion of each
resulting Borrowing.

 

(e) If the Borrower fails to deliver a timely Interest Election Request with
respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Agent, at the request of the Required
Lenders, so notifies the Borrower, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.

 

Section 2.07. Termination and Reduction of Commitments. (a) Unless previously
terminated, the Commitments shall terminate on the Maturity Date.

 

(b) The Borrower may at any time terminate, or from time to time reduce, the
Commitments; provided that (i) each reduction of the Commitments shall be in an
amount that is an integral multiple of $1,000,000 and not less than $5,000,000
and (ii) the Borrower shall not terminate or reduce the Commitments if, after
giving effect to any concurrent prepayment of the Loans in accordance with
Section 2.09, the total Credit Exposures would exceed (x) the total Commitments
or (y) the Borrowing Base then in effect.

 

(c) The Borrower shall notify the Agent of any election to terminate or reduce
the Commitments under paragraph (b) of this Section at least three Business Days
prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. Promptly following receipt of any
notice, the Agent shall advise the Lenders of the contents thereof. Each notice
delivered by the Borrower pursuant to this Section shall be irrevocable;
provided that a notice of termination of the Commitments delivered by the
Borrower may state that such notice is conditioned upon the effectiveness of
other credit facilities, in which case such notice may be revoked by the
Borrower (by notice to the Agent on or prior to the specified effective date) if
such condition is not satisfied. Any termination or reduction of the Commitments
shall be permanent. Each reduction of the Commitments shall be made ratably
among the Lenders in accordance with their respective Commitments.

 

Section 2.08. Repayment of Loans; Evidence of Indebtedness. (a) The Borrower
hereby unconditionally promises to pay to the Agent for the account of each
Lender the then unpaid principal amount of each Loan on the Maturity Date.

 

(b) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the indebtedness of the Borrower to such Lender

 

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resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

 

(c) The Agent shall maintain accounts in which it shall record (i) the amount of
each Loan made hereunder, the Type thereof and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to each Lender hereunder and (iii) the
amount of any sum received by the Agent hereunder for the account of the Lenders
and each Lender’s share thereof.

 

(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c)
of this Section shall be prima facie evidence of the existence and amounts of
the obligations recorded therein; provided that the failure of any Lender or the
Agent to maintain such accounts or any error therein shall not in any manner
affect the obligation of the Borrower to repay the Loans in accordance with the
terms of this Agreement.

 

(e) Any Lender may request that Loans made by it be evidenced by a promissory
note. In such event, the Borrower shall prepare, execute and deliver to such
Lender a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) and in a form
approved by the Agent. Thereafter, the Loans evidenced by such promissory note
and interest thereon shall at all times (including after assignment pursuant to
Section 10.04) be represented by one or more promissory notes in such form
payable to the order of the payee named therein (or, if such promissory note is
a registered note, to such payee and its registered assigns).

 

Section 2.09. Prepayment of Loans. (a) The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, subject
to prior notice in accordance with paragraph (b) of this Section.

 

(b) The Borrower shall notify the Agent by telephone (confirmed by telecopy) of
any prepayment hereunder (i) in the case of prepayment of a Eurodollar
Borrowing, not later than 12:00 noon, New York City time, three Business Days
before the date of prepayment or (ii) in the case of prepayment of an ABR
Borrowing, not later than 12:00 noon, New York City time, on the date of
prepayment. In either case, such notice shall be irrevocable and shall specify
the prepayment date and the principal amount of each Borrowing or portion
thereof to be prepaid; provided that, if a notice of prepayment is given in
connection with a conditional notice of termination of the Commitments as
contemplated by Section 2.07, then such notice of prepayment may be revoked if
such notice of termination is revoked in accordance with Section 2.07. Promptly
following receipt of any such notice relating to a Borrowing, the Agent shall
advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.02. Each

 

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prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.11.

 

(c) If, at any time, the total Credit Exposures exceed the Borrowing Base then
in effect, the Borrower shall immediately (i) prepay Loans in an amount equal to
such excess and (ii) if such excess is greater than the outstanding principal
amount of the Loans at such time, the Borrower shall pay to the Agent an amount
in immediately available funds equal to the amount by which the Credit Exposures
exceed the Borrowing Base after giving effect to the payment made pursuant to
clause (i) above to be held for the benefit of the Lenders and the Issuing
Lender in accordance with the Collateral Documents to secure the payment of all
reimbursement obligations in respect of any LC Disbursements arising from
subsequent drawings under Letters of Credit issued hereunder. All or any portion
of any amount paid to the Agent pursuant to clause (ii) above will be returned
to the Borrower at its request accompanied by a certificate of a Financial
Officer stating that, after giving effect to such return, the Credit Exposures
will not exceed the Borrowing Base then in effect and no Default is continuing.

 

Section 2.10. Fees. (a) The Borrower agrees to pay to the Agent for the account
of each Lender a commitment fee, which shall accrue at the Applicable Rate on
the average daily unused amount of the Commitment of such Lender during the
period from and including the Effective Date to but excluding the date on which
such Commitment terminates. Accrued commitment fees shall be payable in arrears
on the last day of March, June, September and December of each year and the date
on which the Commitments terminate, commencing on the first such day to occur
after the date hereof. All commitment fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of computing
commitment fees, a Lender’s Commitment will be deemed to be used to the extent
of its outstanding Loans and LC Exposure.

 

(b) The Borrower agrees to pay (i) to the Agent for the account of each Lender a
participation fee with respect to its participations in Letters of Credit, which
shall accrue at the same Applicable Rate used to determine the interest rate
applicable to Eurodollar Loans on the average daily amount of such Lender’s LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date on which such Lender’s Commitment terminates and
the date on which such Lender ceases to have any LC Exposure, and (ii) to the
Issuing Lender a fronting fee, which shall accrue at the rate of 0.25% per annum
on the average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date of
termination of the Commitments and the date on which there ceases to be any LC
Exposure, as well as the Issuing Lender’s standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing

 

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of drawings thereunder. Participation fees and fronting fees accrued through and
including the last day of March, June, September and December of each year shall
be payable on the third Business Day following such last day, commencing on the
first such date to occur after the Effective Date; provided that all such fees
shall be payable on the date on which the Commitments terminate and any such
fees accruing after the date on which the Commitments terminate shall be payable
on demand. Any other fees payable to the Issuing Lender pursuant to this
paragraph shall be payable within 10 days after demand. All participation fees
and fronting fees shall be computed on the basis of a year of 360 days and shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day).

 

(c) The Borrower agrees to pay to the Agent, for its own account, fees payable
in the amounts and at the times separately agreed upon between the Borrower and
the Agent.

 

(d) All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Agent (or to the Issuing Lender, in the case of fees
payable to it) for distribution, in the case of commitment fees and
participation fees, to the Lenders. All fees payable hereunder, once paid, shall
not be refundable under any circumstances.

 

Section 2.11. Interest. (a) The Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate plus the Applicable Rate.

 

(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Rate.

 

(c) Notwithstanding the foregoing, if any Default has occurred and is
continuing, (i) all amounts outstanding hereunder shall bear interest, after as
well as before judgment, at a rate per annum equal to (A) in the case of
principal of any Loan, 2% plus the rate otherwise applicable to such Loan as
provided in the preceding paragraphs of this Section or (B) in the case of any
other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph
(a) of this Section and (ii) the participation fees referred to in Section
2.10(b)(i) shall be increased by 2% per annum.

 

(d) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan and upon termination of the Commitments; provided
that (i) interest accrued pursuant to paragraph (c) of this Section shall be
payable on demand, (ii) in the event of any repayment or prepayment of any Loan
(other than a prepayment of an ABR Loan prior to the end of the Availability
Period), accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment and (iii) in the event of
any conversion of any Eurodollar Loan prior to the end of the current Interest
Period

 

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therefor, accrued interest on such Loan shall be payable on the effective date
of such conversion.

 

(e) All interest hereunder shall be computed on the basis of a year of 360 days,
except that interest computed by reference to the Alternate Base Rate at times
when the Alternate Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in each case shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate
or LIBO Rate shall be determined by the Agent, and such determination shall be
conclusive absent manifest error.

 

Section 2.12. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:

 

(a) the Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining
the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest
Period; or

 

(b) the Agent is advised by the Required Lenders that the Adjusted LIBO Rate or
the LIBO Rate, as applicable, for such Interest Period will not adequately and
fairly reflect the cost to such Lenders of making or maintaining their Loans
included in such Borrowing for such Interest Period;

 

then the Agent shall give notice thereof to the Borrower and the Lenders by
telephone or telecopy as promptly as practicable thereafter and, until the Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist, (i) any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a
Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request
requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.

 

Section 2.13. Increased Costs. (a) If any Change in Law shall:

 

(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement reflected in the
Adjusted LIBO Rate) or the Issuing Lender; or

 

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

 

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and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Lender of participating in, issuing or maintaining any Letter of Credit
or to reduce the amount of any sum received or receivable by such Lender or the
Issuing Lender hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Lender, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing
Lender, as the case may be, for such additional costs incurred or reduction
suffered.

 

(b) If any Lender or the Issuing Lender determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s or the Issuing Lender’s capital or on the capital of
such Lender’s or the Issuing Lender’s holding company, if any, as a consequence
of this Agreement or the Loans made by, or participations in Letters of Credit
held by, such Lender, or the Letters of Credit issued by the Issuing Lender, to
a level below that which such Lender or the Issuing Lender or such Lender’s or
the Issuing Lender’s holding company could have achieved but for such Change in
Law (taking into consideration such Lender’s or the Issuing Lender’s policies
and the policies of such Lender’s or the Issuing Lender’s holding company with
respect to capital adequacy), then from time to time the Borrower will pay to
such Lender or the Issuing Lender, as the case may be, such additional amount or
amounts as will compensate such Lender or the Issuing Lender or such Lender’s or
the Issuing Lender’s holding company for any such reduction suffered.

 

(c) A certificate of a Lender or the Issuing Lender setting forth the amount or
amounts necessary to compensate such Lender or the Issuing Lender or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Lender, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.

 

(d) Failure or delay on the part of any Lender or the Issuing Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or the Issuing Lender’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or the Issuing
Lender pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender or the Issuing Lender, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or the Issuing Lender’s
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.

 

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Section 2.14. Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.09(b) and is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.17, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.

 

Section 2.15. Taxes. (a) Any and all payments by or on account of any obligation
of the Borrower hereunder shall be made free and clear of and without deduction
for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Agent, Lender or Issuing Lender (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.

 

(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

 

(c) The Borrower shall indemnify the Agent, each Lender and the Issuing Lender,
within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Agent, such Lender or the Issuing
Lender, as the case may be, on or with respect to any payment by or on

 

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account of any obligation of the Borrower hereunder (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or the Issuing Lender, or by the
Agent on its own behalf or on behalf of a Lender or the Issuing Lender, shall be
conclusive absent manifest error.

 

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by the Borrower to a Governmental Authority, the Borrower shall deliver to the
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 the Agent.

 

(e) Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or reasonably
requested by the Borrower as will permit such payments to be made without
withholding or at a reduced rate.

 

(f) If the Agent or a Lender determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.15, it shall pay over such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.15 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Agent or such Lender and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund); provided, that the Borrower, upon the request of the Agent or such
Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Agent or such Lender in the event the Agent or such Lender is
required to repay such refund to such Governmental Authority. This Section shall
not be construed to require the Agent or any Lender to make available its tax
returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

 

(g) For any period with respect to which a Foreign Lender has failed to provide
the Borrower and the Agent with the appropriate documentation pursuant to
Section 2.15(e) (unless such failure is due to a change in treaty, law or
regulation occurring subsequent to the date on which documentation originally

 

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was required to be provided), such Lender shall not be entitled to
indemnification under Section 2.15(a) with respect to Taxes imposed by the
United States; provided that should a Lender, which is otherwise exempt from or
subject to a reduced rate of withholding tax, become subject to Taxes because of
its failure to deliver any documentation required hereunder, the Borrower shall
take such steps as such Lender shall reasonably request to assist such Lender to
recover such Taxes.

 

Section 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs. (a)
The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Sections 2.13, 2.14 or 2.15, or otherwise) prior to
1:00 p.m., New York City time, on the date when due, in immediately available
funds, without set off or counterclaim. Any amounts received after such time on
any date may, in the discretion of the Agent, be deemed to have been received on
the next succeeding Business Day for purposes of calculating interest thereon.
All such payments shall be made to the Agent at its offices at 270 Park Avenue,
New York, New York, except payments to be made directly to the Issuing Lender as
expressly provided herein and except that payments pursuant to Sections 2.13,
2.14, 2.15 and 10.04 shall be made directly to the Persons entitled thereto. The
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof. If
any payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in dollars.

 

(b) If at any time insufficient funds are received by and available to the Agent
to pay fully all amounts of principal, unreimbursed LC Disbursements, interest
and fees then due hereunder, such funds shall be applied (i) first, towards
payment of interest and fees then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of interest and fees then due to
such parties, and (ii) second, towards payment of principal and unreimbursed LC
Disbursements then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC Disbursements then
due to such parties.

 

(c) If any Lender shall, by exercising any right of set off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans or participations in LC Disbursements resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its Loans
and participations in LC Disbursements and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
and participations in LC Disbursements of other Lenders to the extent necessary
so that the benefit of all such payments shall be shared by the Lenders

 

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ratably in accordance with the aggregate amount of principal of and accrued
interest on their respective Loans and participations in LC Disbursements;
provided that (i) if any such participations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such
recovery, without interest, and (ii) the provisions of this paragraph shall not
be construed to apply to any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any
of its Loans or participations in LC Disbursements to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.

 

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

 

(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Sections 2.04(e) or (f), 2.05(b) or 2.16(d), then the Agent may, in
its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Agent for the account of such Lender to
satisfy such Lender’s obligations under such Sections until all such unsatisfied
obligations are fully paid.

 

Section 2.17. Mitigation Obligations; Replacement of Lenders. (a) If any Lender
requests compensation under Section 2.13, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.15, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section

 

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2.13 or 2.15, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.

 

(b) If any Lender requests compensation under Section 2.13, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, or if any
Lender defaults in its obligation to fund Loans hereunder, then the Borrower
may, at its sole expense and effort, upon notice to such Lender and the Agent,
require such Lender to assign and delegate, without recourse (in accordance with
and subject to the restrictions contained in Section 10.04), all its interests,
rights and obligations under this Agreement to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written consent of the Agent, which consent shall not unreasonably be withheld,
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.13 or payments required to be made pursuant to
Section 2.15, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.

 

Section 2.18. Release of Security Interest in Assets being Sold. The Agent shall
release specific assets (but not all or substantially all the Collateral) from
the Security Interests pursuant to Section 25 of the Security Agreement if:

 

(i) the Agent shall have received a written request for such release signed by
any Executive Officer or a Financial Officer stating that (x) the assets to be
released are being sold or otherwise transferred and (y) the sale or transfer
thereof does not violate Section 7.03(c) hereof;

 

(ii) arrangements satisfactory to the Agent have been made so that such release
will become effective no earlier than the closing of such sale or transfer; and

 

(iii) no Default or Enforcement Notice is in effect when such instructions are
given.

 

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Lenders that:

 

Section 3.01. Corporate Existence and Power. The Borrower and each Subsidiary
Guarantor (a) is a corporation, limited liability company or partnership duly
incorporated or organized and validly existing under the laws of its
jurisdiction of incorporation or organization, (b) is in good standing under the
laws of its jurisdiction of incorporation or organization and (c) has all
corporate or other powers and all material Governmental Approvals (including
without limitation those required by Medicaid Regulations and Medicare
Regulations) required to carry on its business as now conducted and as proposed
to be conducted, except for such Governmental Approvals the failure of which to
have, in the aggregate, could not be reasonably expected to have a Material
Adverse Effect. The Borrower and each Subsidiary Guarantor is in compliance with
its Organizational Documents.

 

Section 3.02. Corporate and Governmental Authorization; No Contravention. The
execution and delivery by the Borrower and each Subsidiary Guarantor of the
Financing Documents to which it is a party, its performance of its obligations
thereunder and, with respect to the Borrower, its borrowings hereunder, are
within its corporate or other powers, have been duly authorized by all necessary
corporate or other action, require no action by or in respect of, or filing
with, any governmental body, agency or official (other than filings necessary to
perfect the Liens created by the Collateral Documents) and do not contravene, or
constitute a default under, any Applicable Laws or any provision of its
Organizational Documents, or of any agreement or other instrument binding upon
it or result in or require the imposition of any Lien (other than the Liens
created by the Collateral Documents) on any of its assets.

 

Section 3.03. Binding Effect. This Agreement constitutes a valid and binding
agreement of the Borrower, and the other Financing Documents, when executed and
delivered as contemplated by this Agreement, will constitute valid and binding
obligations of each Credit Party that is a party thereto, in each case
enforceable in accordance with its terms, except as limited by general
principles of equity and by bankruptcy, insolvency, fraudulent conveyance or
other similar laws affecting creditors’ rights generally.

 

Section 3.04. Security Interests. On the Effective Date, the Collateral
Documents will create valid Security Interests in the Collateral to the extent
set forth therein. At all times after the Closing, the Collateral Documents will
create valid and, when financing statements are filed in the offices specified
in the Perfection Certificates (as defined in the Security Agreement) delivered
pursuant to the Security Agreement, perfected Security Interests in the
Collateral from time to time covered or purportedly covered thereby to the
extent that a security interest in such Collateral may be perfected by filing
under the UCC. Such

 

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Security Interests will be prior to all other Liens (except Permitted Liens,
other than Permitted Liens referred to in Section 7.02(g) and any Permitted
Liens arising out of any refinancings of any Indebtedness secured by any
Permitted Lien referred to in Section 7.02(g)) on such Collateral until the
applicable Security Interest is released pursuant to Section 25 of the Security
Agreement.

 

Section 3.05. Financial Information. (a) The consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of December 31, 2003 and the
related consolidated statements of operations, cash flows and shareholders’
equity for the Fiscal Year then ended, reported on by PricewaterhouseCoopers
LLP, fairly present in all material respects, in conformity with GAAP, the
consolidated financial position of the Borrower and its Consolidated
Subsidiaries as of such date and their consolidated results of operations and
cash flows for such Fiscal Year.

 

(b) The consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of March 31, 2004 and the related consolidated statements of
operations, cash flows and shareholders’ equity for the Fiscal Quarter then
ended and for the portion of the Fiscal Year then ended, certified by a
Financial Officer, fairly present in all material respects, in conformity with
GAAP, the consolidated financial position of the Borrower and its Consolidated
Subsidiaries as of such date and their consolidated results of operations and
cash flows for such periods.

 

(c) Since December 31, 2003, no event has occurred and no condition has come
into existence which (i) has had a Material Adverse Effect (other than any such
event or condition the Material Adverse Effect of which has ceased) or (ii) is
reasonably likely to have a Material Adverse Effect.

 

Section 3.06. Litigation. There is no action, suit or proceeding pending
against, or to the knowledge of the Borrower threatened against or affecting,
the Borrower or any Subsidiary Guarantor before any court or arbitrator or any
governmental body, agency or official (i) in which there is a reasonable
possibility of an adverse decision that could reasonably be expected to have a
Material Adverse Effect or (ii) which in any manner questions the validity of
any Financing Document.

 

Section 3.07. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan and is in compliance in all material respects
with the presently applicable provisions of ERISA and the Code with respect to
each Plan. No member of the ERISA Group has (i) sought a waiver of the minimum
funding standard under Section 412 of the Code in respect of any Plan, (ii)
failed to make any contribution or payment to any Plan or Multiemployer Plan or
made any amendment to any Plan, which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security under ERISA or
the Code or (iii) incurred any liability under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA.

 

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Section 3.08. Taxes. The Borrower and the Subsidiary Guarantors have filed all
United States Federal income tax returns that are required to be filed by them
(or have filed appropriate extensions for filing such tax returns) and have paid
prior to delinquency all taxes due pursuant to such returns or pursuant to any
assessment received by any of them, except such taxes, if any, as are being
contested in good faith and as to which reserves have been provided. The
charges, accruals and reserves on the books of the Borrower and the Subsidiary
Guarantors in respect of taxes or other similar governmental charges are in the
aggregate, in the opinion of the Borrower, adequate.

 

Section 3.09. Compliance with Laws. The Borrower and the Subsidiary Guarantors
are in compliance in all material respects with all Applicable Laws (including
without limitation Medicaid Regulations and Medicare Regulations), other than
such laws, rules or regulations (i) the validity or applicability of which the
Borrower or the relevant Subsidiary Guarantor is contesting in good faith or
(ii) the failure to comply with which could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

Section 3.10. No Regulatory Restrictions on Borrowing. Neither the Borrower nor
any Subsidiary Guarantor is (i) an “investment company”, within the meaning of
the Investment Company Act of 1940, as amended, (ii) a “holding company”, or an
“affiliate” of a “holding company” or a “subsidiary company” of a “holding
company”, within the meaning of the Public Utility Holding Company Act of 1935,
as amended or (iii) otherwise subject to any regulatory scheme which restricts
its ability to incur Indebtedness hereunder.

 

Section 3.11. Environmental Matters. (a) From time to time, the Borrower reviews
the effect of Environmental Laws on the business, operations and properties of
the Borrower and the Subsidiary Guarantors, in the course of which reviews it
identifies and evaluates associated liabilities and costs, including
Environmental Liabilities. On the basis of such reviews, the Borrower has
reasonably concluded that the foregoing associated liabilities and costs are
unlikely to have a Material Adverse Effect.

 

(b) Except to the extent that the Environmental Liabilities of the Borrower and
the Subsidiary Guarantors that relate to or could result from the matters
referred to in this Section 3.11(b) would not exceed $2,000,000 for any one
occurrence, or $10,000,000 for any occurrences in the aggregate, no notice,
notification, demand, request for information, citation, summons, complaint or
order with respect to Hazardous Materials or any violation of or liability under
Environmental Laws is in existence or, to the knowledge of the Borrower,
proposed, threatened or anticipated with respect to or in connection with the
business conducted or to be conducted by, or in connection with the operation of
any properties owned, leased or operated by, the Borrower or any Subsidiary
Guarantor, and there are no facts, circumstances or events which could
reasonably be expected to result in any such notice, notification, demand,
request for information, citation, summons, complaint or order.

 

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Section 3.12. Full Disclosure. The information (other than projections)
heretofore furnished in writing by the Borrower or any Subsidiary Guarantor to
the Agent or any Lender, taken as a whole, for purposes of or in connection with
this Agreement or any transaction contemplated hereby did not at the time
furnished, and all such information hereafter furnished in writing by the
Borrower or any Subsidiary Guarantor to the Agent or Lender, taken as a whole,
will not at the time furnished, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were or will be made,
not misleading. Although any projections (and the underlying assumptions) by
necessity involve uncertainties and approximations, the Borrower believes as of
the date hereof that the projections set forth in the Information Memorandum are
reasonable (and the significant assumptions upon which they are based are stated
in summary form therein), and such projections provide reasonable estimations of
the future performance of the Borrower and its Restricted Subsidiaries, subject,
as stated above, to the uncertainties and approximations inherent in any
projections. The Borrower has disclosed to the Lenders in writing (including by
way of reports filed in accordance with Section 12 of the Securities Exchange
Act) any and all facts which are known to it and which have had or could
reasonably be expected to have a Material Adverse Effect.

 

Section 3.13. Information as to Equity Interest and Instruments. Schedule 1.01B
hereto sets forth a correct and complete list, as of the close of business on
the Effective Date, of each Subsidiary of the Borrower, its outstanding Equity
Interests, each owner thereof and the percentage thereof owned by such owner. As
of the close of business on the Effective Date, neither the Borrower nor any of
its Subsidiaries owns any interest in any Subsidiary which is not a Restricted
Subsidiary (other than Cornerstone, Transitional Hospitals Corporation of
Michigan, Inc. and the Excluded Partnerships). Except as set forth on Schedule
3.13 hereto, no Indebtedness owed to the Borrower or any Restricted Subsidiary
is evidenced by any instrument (as such term is defined in the UCC) that is not
held in a Collateral Account or pledged to the Agent as part of the Collateral.

 

Section 3.14. Representations in Other Financing Documents. The representations
of each Lien Grantor in the Security Agreement and in each Security Agreement
Supplement (if any) signed by it are true.

 

Section 3.15. Margin Stock. (a) The Borrower does not, as of the date hereof,
expect that the Borrower or any Subsidiary Guarantor will acquire any Margin
Stock in the future. Even if they do, Margin Stock will not at any time
represent more than 25% of the value (as determined by any reasonable method) of
the assets subject to any provision of the Financing Documents that restricts
the right or ability of the Borrower or any Subsidiary Guarantor to sell, pledge
or otherwise dispose of Margin Stock owned by them or requires a prepayment of
Loans upon the exercise of any such right.

 

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(b) No part of the proceeds of any Loan or Letter of Credit will be used for
“buying” or “carrying” any Margin Stock within the respective meanings of each
of the quoted terms under Regulation U or for any purpose which violates the
provisions of any regulation of the Board.

 

Section 3.16. Properties. (a) The Borrower and each Subsidiary Guarantor has
good title to, or valid leasehold interests in, all real and personal property
material to its business (including all its property subject to the Mortgages),
except for Permitted Liens and defects that in the aggregate could not
reasonably be expected to have a Material Adverse Effect.

 

(b) The Borrower and each Subsidiary Guarantor owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Borrower and the Subsidiary
Guarantors does not infringe upon the rights of any other Person, except for
infringements that, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

 

(c) Schedule 3.16 sets forth a brief description of each hospital and nursing
home and each other material real property that is owned or leased by the
Borrower or any Subsidiary Guarantor as of the Effective Date.

 

(d) As of the Effective Date, neither the Borrower nor any Subsidiary Guarantor
has received notice of, or has knowledge of, any pending or contemplated
condemnation proceeding affecting any property subject to a Mortgage or any sale
or disposition thereof in lieu of condemnation. No property subject to a Fee
Mortgage nor any interest therein is subject to any right of first refusal,
option or other contractual right to purchase such property or interest therein,
other than Permitted Liens.

 

Section 3.17. Existing Indebtedness. As of the Effective Date, the Borrower and
the Subsidiary Guarantors will have no Indebtedness outstanding other than (i)
Indebtedness evidenced by this Agreement, (ii) Indebtedness set forth on
Schedule 7.01 hereto and (iii) other Indebtedness in an aggregate principal
amount not exceeding $1,000,000.

 

Section 3.18. Solvency. Immediately after the Transactions to occur on the
Effective Date are consummated and after giving effect to the application of the
proceeds of each Loan made on the Effective Date, (a) the fair value of the
assets of the Borrower, and the fair value of the assets of the Restricted
Subsidiaries on a consolidated basis, at a fair valuation, will exceed the debts
and liabilities, subordinated, contingent or otherwise of the Borrower, and of
the Restricted Subsidiaries on a consolidated basis, respectively; (b) the
present fair saleable value of the property of the Borrower, and the present
fair saleable value of the property of the Restricted Subsidiaries on a
consolidated basis, will exceed the amount that will be required to pay the
probable liability of the debts and other liabilities, subordinated, contingent
or otherwise, as such debts and other

 

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liabilities become absolute and matured, of the Borrower, and of the Restricted
Subsidiaries on a consolidated basis, respectively; (c) the Borrower, and the
Restricted Subsidiaries on a consolidated basis, will be able to pay their
respective debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and (d) neither the Borrower,
nor the Restricted Subsidiaries on a consolidated basis, will have unreasonably
small capital with which to conduct the business in which they are engaged as
such business is now conducted and proposed to be conducted after the Effective
Date.

 

ARTICLE 4

CONDITIONS

 

Section 4.01. Effective Date. The obligations of the Lenders to make Loans and
of the Issuing Lender to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 10.02):

 

(a) The Agent shall have received from each party hereto either (i) a
counterpart of this Agreement signed by such party or (ii) facsimile or other
written confirmation satisfactory to the Agent that such party has signed a
counterpart hereof.

 

(b) The Agent shall have received a counterpart of the Security Agreement,
signed by the Borrower and each Subsidiary Guarantor, together with (to the
extent not already held by JPMorgan Chase Bank in its capacity as collateral
agent under the Existing Credit Facilities) certificates evidencing all the
certificated Equity Interests listed in Schedule 1.01B (other than Equity
Interests held in Cornerstone or any Excluded Partnership) and stock powers or
other appropriate instruments of transfer relating thereto, undated and endorsed
in blank.

 

(c) The Agent shall have received all UCC financing statements reasonably
requested by the Agent to perfect its security interests in the Collateral a
security interest in which is purported to be granted under the Security
Agreement and evidence satisfactory to the Agent that such UCC financing
statements will be filed on or promptly after the Effective Date, and any
related filing fees or similar charges or taxes will be paid by the Credit
Parties in connection with such filing.

 

(d) The Agent shall have received a copy of each Master Lease Agreement
(together with all amendments and modifications thereto) as in effect on the
Effective Date, together with evidence satisfactory to the Agent that
appropriate memoranda of lease have been recorded with respect to each of the
Initial Master Lease Properties, as required to protect the rights of the
relevant Credit Party as lessee thereof against third parties.

 

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(e) The Lenders, the Agent and JPMorgan Chase Bank, as lead arranger, shall have
received all fees required to be paid, and all reasonable expenses for which
invoices have been presented, on or before the Effective Date (including
reasonable fees, charges and disbursements of Davis Polk & Wardwell and of local
counsel to the Agent).

 

(f) All principal, interest and fees payable under the Senior Secured Notes
Facility shall have been paid (or shall be paid simultaneously with the Closing
hereunder); all Liens (other than fee and leasehold mortgages) securing the
Senior Secured Notes Facility shall have been discharged (or arrangements
satisfactory to the Agent shall have been made for the discharge of such Liens
promptly after the Effective Date); and the Agent shall have received evidence
satisfactory to it of the foregoing.

 

(g) The Agent shall have received a favorable written opinion (addressed to the
Agent and the Lenders and dated the Effective Date) of each of (i) the General
Counsel of the Borrower, substantially in the form of Exhibit B.1 hereto, (ii)
the Senior Vice President of Corporate Legal Affairs of the Borrower,
substantially in the form of Exhibit B.2 hereto, (iii) Cleary, Gottlieb, Steen &
Hamilton, special counsel for the Borrower, substantially in the form of Exhibit
B.3 hereto and (iv) Morris, Nichols, Arsht & Tunnell, special Delaware counsel
for the Borrower, substantially in the form of Exhibit B.4 hereto. The Borrower
requests such counsel to deliver such opinions.

 

(h) All governmental and third party consents and approvals necessary or, in the
reasonable discretion of the Agent, advisable in connection with the Financing
Documents and continuing operations of the Borrower and its Subsidiaries shall
have been obtained and be in full force and effect, and all requisite
governmental filings necessary in connection therewith have been made and all
applicable waiting periods shall have expired without in either case any action
being taken by any competent authority, except in any case or in all cases in
the aggregate such that the failure to have been obtained or made would not
reasonably be expected to have a Material Adverse Effect.

 

(i) No event or condition which has had or is reasonably likely to have a
Material Adverse Effect shall have occurred.

 

(j) There shall exist no action, suit, investigation, litigation or proceeding
pending or threatened in any court or before any arbitrator or governmental
instrumentality that, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect.

 

(k) The Agent shall have received a completed Perfection Certificate (as defined
in the Security Agreement) with respect to each Credit Party dated the Effective
Date and signed by an executive officer of such Credit Party, together with all
attachments contemplated thereby, including copies of personal property Lien and
tax and judgment Lien searches received by the Borrower prior to the

 

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Effective Date with respect to personal, real and mixed properties of the
Borrower and the Subsidiary Guarantors, which shall not reveal the existence of
any Liens on such properties other than (i) Permitted Liens or (ii) Liens as to
which the Agent has received evidence satisfactory to it that the obligations
secured by such Liens have been fully and finally discharged on or prior to the
Effective Date.

 

(l) The Agent shall have received evidence that all insurance required by
Section 5.03 is in effect.

 

(m) The Agent shall have received, in form and substance reasonably satisfactory
to the Agent, a certificate from an appropriate officer of each of the Credit
Parties (i) attaching copies of the Organizational Documents of such Credit
Party and copies of resolutions or consents of the board of directors of such
Credit Party or of its applicable partner or member authorizing the applicable
Financing Documents and the other transactions contemplated hereby, and (ii)
certifying (A) that such copies are true, correct and complete copies thereof
and that such resolutions and Organizational Documents are in full force and
effect as of the Effective Date and have been duly adopted in accordance with
the Organizational Documents of such Credit Party, and (B) as to the signatures
and incumbency of the Persons executing Financing Documents on behalf of such
Credit Party.

 

(n) The Agent or its designee shall have completed a review of the real estate
to be included in the Borrowing Base and a collateral review of the accounts
receivable and working capital and financial information of the Borrower and its
Restricted Subsidiaries related thereto, and of the data processing, controls
and other systems of the Borrower and its Restricted Subsidiaries related
thereto, and the Agent in its reasonable discretion shall be satisfied with the
scope and results of such reviews. The Borrower shall pay the reasonable fees
and out-of-pocket expenses relating to such reviews.

 

(o) The Agent shall have received a completed Borrowing Base Certificate dated
as of April 30, 2004 and signed by a Financial Officer.

 

(p) The Agent shall be satisfied with the cash management system of the Borrower
and the Subsidiary Guarantors, and the Borrower and the Subsidiary Guarantors
shall have caused each of the accounts listed on Schedule 4.01 to be subject to
a Deposit Account Control Agreement in favor of the Agent, each such Deposit
Account Control Agreement to be in form and substance satisfactory to the Agent.

 

(q) The Agent shall have received (i) audited consolidated financial statements
of the Borrower for the two most recent Fiscal Years ended prior to the
Effective Date as to which such financial statements are available and (ii)
unaudited interim consolidated financial statements of the Borrower for each
fiscal month and Fiscal Quarter ended subsequent to the date of the latest
financial statements delivered pursuant to clause (i) of this paragraph as to
which such financial statements are available.

 

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(r) The Agent shall have received a solvency certificate, in form and substance
reasonably satisfactory to the Agent, from a Financial Officer with respect to
the solvency of the Credit Parties after giving effect to the Transactions.

 

(s) All loans outstanding under the Exit Facility shall have been prepaid (or
shall be prepaid simultaneously with the Closing hereunder), together with
accrued interest thereon and accrued commitment and other fees thereunder, and
the Agent shall have received evidence satisfactory to it of the foregoing.

 

(t) The Agent shall have received written consent in form satisfactory to it to
the effectiveness of this Agreement from each party to the Exit Facility which
is not a party to this Agreement whose consent is required pursuant to Section
11.05 of the Exit Facility.

 

(u) The Agent shall have received evidence satisfactory to it that each
participation in an Existing Letter of Credit heretofore granted by the Issuing
Lender to a bank or financial institution that is not a Lender has been canceled
on or before the Effective Date as contemplated by Section 2.04(a).

 

(v) The Agent shall have received all other documents, instruments and legal
opinions that the Agent may reasonably request relating to the existence and
good standing of the Credit Parties, the corporate or other authority for and
the validity of the Financing Documents, the creation and perfection of the
Liens contemplated by the Collateral Documents and any other matters relevant to
the transactions contemplated by the Financing Documents, all in form and
substance satisfactory to the Agent.

 

(w) The Agent shall have received a certificate, dated the Effective Date and
signed by the President, a Vice President or a Financial Officer, confirming
compliance with the conditions set forth in paragraphs (a) and (b) of Section
4.03.

 

Promptly after the Closing occurs, the Agent shall notify the Borrower and the
Lenders thereof, and such notice shall be conclusive and binding on all parties
hereto. Notwithstanding the foregoing, this Agreement shall not become effective
unless each of the foregoing conditions is satisfied (or waived pursuant to
Section 10.02) before 5:00 pm., New York City time, on June 30, 2004 (and, if
any such condition is not so satisfied or waived, the Commitments shall
terminate at such time).

 

Section 4.02. Consents; Consequences Of Effectiveness. (a) The Lenders hereby
waive compliance by the Borrower and Kindred Healthcare Operating with the
provisions of Section 7.15 of the Exit Facility to the extent (but only to the
extent) necessary to permit the Borrower and Kindred Healthcare Operating to
prepay all loans outstanding under the Senior Secured Notes Facility as
contemplated by Section 4.01(f), together with accrued interest thereon and
accrued fees thereunder.

 

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(b) (i) Kindred Healthcare Operating hereby assigns and transfers to the
Borrower, and the Borrower hereby unconditionally and irrevocably assumes from
Kindred Healthcare Operating, all of Kindred Healthcare Operating’s rights and
obligations in its capacity as borrower under the Exit Facility and the
Financing Documents referred to therein, such assignment and assumption to be
effective as of the Effective Date simultaneously with the Closing hereunder.
The Borrower hereby assigns and transfers to Kindred Healthcare Operating, and
Kindred Healthcare Operating hereby unconditionally and irrevocably assumes from
the Borrower, all of the Borrower’s obligations under the Vencor Guaranty
Agreement (as defined in the Exit Facility), such assignment and assumption to
be effective as of the Effective Date simultaneously with the Closing hereunder.

 

(ii) The Lenders hereby consent (including for purposes of Sections 11.05(c) and
(d) of the Exit Facility) to each assignment and assumption referred to in
clause (i) above, to the amendment and restatement of the Security Agreement,
each Subsidiary Guaranty and the Vencor Guaranty Agreement (each as defined in
the Exit Facility) to read as set forth in the Security Agreement, and agree
that, effective from the Effective Date, (A) the Borrower shall be released from
its obligations under the Vencor Guaranty Agreement and Kindred Healthcare
Operating shall be released from its obligations as borrower under the Exit
Facility and the Financing Documents referred to therein and (B) the rights and
obligations of the Borrower and Kindred Healthcare Operating shall be governed
by the provisions of the Financing Documents.

 

(c) On the Effective Date (i) without further action by any of the parties
hereto, the Exit Facility will be automatically amended and restated in its
entirety to read as set forth in this Agreement, (ii) the Commitment of each
Lender party to this Agreement shall be as set forth in Schedule 2.01, (iii) the
commitment of each lender under the Exit Facility which is not a party to this
Agreement (each such lender, a “Departing Lender”) shall terminate, (iv) each
Note (as defined in the Exit Facility) issued by Kindred Healthcare Operating
under the Exit Facility shall be deemed to have been cancelled and shall be of
no force and effect and shall no longer constitute evidence of loans made
thereunder and (v) each party to the Exit Facility which is not a party to this
Agreement shall cease to be a party to this Agreement; provided that the
provisions of Sections 2.15, 10.03, 10.04 and 11.03 of the Exit Facility shall
continue to inure to the benefit of each Departing Lender. The parties hereto
acknowledge and agree that (i) this Agreement and the other Financing Documents,
whether executed and delivered in connection herewith or otherwise, do not
constitute a novation or termination of the “Obligations” (as defined in the
Exit Facility) under the Exit Facility as in effect prior to the Effective Date
and which remain outstanding, (ii) such “Obligations” are in all respects
continuing (as amended and restated hereby) and (iii) the Liens and security
interests as granted under the Collateral Documents securing payment of such
“Obligations” are in all respects continuing and in full force and effect.

 

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(d) On and after the Effective Date, the rights and obligations of the parties
hereto shall be governed by the provisions of the Financing Documents; provided
that the rights and obligations of the parties hereto with respect to the period
prior to the Effective Date shall continue to be governed by the provisions of
the Exit Facility as in effect prior to the Effective Date.

 

(e) The Lenders hereby authorize and direct the Agent to, promptly following the
Closing hereunder, return any cash held in any Collateral Account (as defined in
the Exit Facility) as of the Effective Date to the Borrower.

 

Section 4.03. Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing, and of the Issuing Lender to issue, amend, renew
or extend any Letter of Credit, are each subject to receipt of the Borrower’s
request therefor in accordance herewith and to the satisfaction of the following
conditions:

 

(a) The representations and warranties of each Credit Party set forth in the
Financing Documents shall be true and correct on and as of the date of such
Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable; provided that those representations and
warranties that speak only of a specific date shall only speak as of such date.

 

(b) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.

 

(c) Except in the case of Loans made on the Effective Date, the Agent shall have
received a Borrowing Base Certificate dated no more than 31 days prior to the
extension of such Borrowing or the issuance, amendment, renewal or extension of
such Letter of Credit, as applicable.

 

(d) The total Credit Exposures, after giving effect to such extension of such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, shall not exceed the Borrowing Base as most recently
certified.

 

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a), (b)
and (d) of this Section.

 

ARTICLE 5

AFFIRMATIVE COVENANTS

 

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full

 

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and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrower covenants and agrees with the Lenders
that:

 

Section 5.01. Information. The Borrower will deliver the following information
to the Agent (with copies thereof for each Lender if requested by the Agent)
and, promptly upon receipt thereof, the Agent will deliver a copy thereof to
each Lender:

 

(a) as soon as available and in any event within 90 days after the end of each
Fiscal Year of the Borrower, an audited consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such Fiscal Year,
and the related audited consolidated statements of operations, cash flows and
changes in stockholders’ equity for such Fiscal Year, setting forth in each case
in comparative form the figures for the previous Fiscal Year (to the extent
available), all such financial statements reported on in a manner acceptable to
the SEC by independent public accountants of nationally recognized standing,
which report (x) shall state that such financial statements present fairly, in
all material respects, the consolidated financial position of the Borrower and
its Consolidated Subsidiaries as of the date of such financial statements and
their consolidated results of operations and cash flows for the period covered
by such financial statements in conformity with GAAP and (y) shall not contain
any Qualification;

 

(b) as soon as available and in any event within 45 days after the end of each
of the first three Fiscal Quarters of each Fiscal Year, (i) an unaudited
condensed consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries together with the related condensed consolidated statements of
operations for such Fiscal Quarter and for the portion of the Fiscal Year ended
at the end of such Fiscal Quarter and of cash flows for the portion of the
Fiscal Year ended at the end of such Fiscal Quarter, setting forth in each case
in comparative form the unaudited consolidated statements of operations and cash
flows (to the extent available) for the corresponding Fiscal Quarter and the
corresponding portion of the previous Fiscal Year, all prepared in accordance
with Rule 10-01 of Regulation S-X of the General Rules and Regulations under the
Securities Act of 1933, or any successor rule that sets forth the manner in
which interim financial statements shall be prepared (subject to normal year-end
adjustments), and (ii) a certificate of a Financial Officer as to the fairness
of presentation and consistency of such financial statements;

 

(c) simultaneously with the delivery of each set of financial statements
referred to in Section 5.01(a) and within 15 days after the delivery of each set
of financial statements referred to in Section 5.01(b), a certificate of a
Financial Officer (i) setting forth in reasonable detail such calculations as
are required to establish whether the Borrower was in compliance with the
requirements of Article 6 on the date of such financial statements, (ii) stating
whether any Default exists on the date of such certificate and, if any Default
then exists, setting forth the details thereof and the action that the Borrower
is taking or proposes to take

 

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with respect thereto, (iii) stating whether, since the date of the Most Recent
Audited Financial Statements, an event has occurred or condition arisen which
has had a Material Adverse Effect which is not reflected in the financial
statements delivered simultaneously therewith and, if so, the nature of such
Material Adverse Effect, and (iv) stating whether, since the date of the Most
Recent Audited Financial Statements, there has been a change in the GAAP applied
in preparing the financial statements then being delivered from those applied in
preparing the Most Recent Audited Financial Statements which is material to the
financial statements then being delivered;

 

(d) simultaneously with the delivery of each set of annual financial statements
referred to in Section 5.01(a), a letter from the firm of independent public
accountants that reported on such statements stating (i) whether anything has
come to their attention in the course of their normal audit procedures to cause
them to believe that any Default existed on the date of such financial
statements and (ii) whether in their opinion the calculations of compliance with
the requirements of Article 6 set forth in the Financial Officer’s certificate
delivered simultaneously therewith pursuant to Section 5.01(c), to the extent
derived from data contained in the accounting records of the Borrower and its
Restricted Subsidiaries, have been determined in accordance with the relevant
provisions of this Agreement;

 

(e) within five Business Days after any Executive Officer or Financial Officer
obtains knowledge of any Default, if such Default is then continuing, a
certificate of a Financial Officer setting forth the details thereof and the
action that the Borrower is taking or proposes to take with respect thereto;

 

(f) within five Business Days after any Executive Officer or Financial Officer
obtains knowledge that a notice of default has been delivered under any Master
Lease Agreement, Third Party Lease or Management Contract and such default could
reasonably be expected to result in an Event of Default or Material Adverse
Effect and if such default is then continuing, a certificate of an Executive
Officer or Financial Officer setting forth the details thereof and the action
that the Borrower or Subsidiary Guarantor is taking or proposes to take with
respect thereto;

 

(g) to the extent not required to be provided pursuant to clause (f) above,
within five Business Days after any Executive Officer or Financial Officer
obtains knowledge that (i) a Facility Default (as defined in the applicable
Master Lease Agreement) has occurred or (ii) notice of termination has been
delivered, or has grounds to believe that a notice of termination is reasonably
likely to be delivered, to the Borrower or any Restricted Subsidiary by any
counterparty to any lease or management contract to which the Borrower or a
Restricted Subsidiary is a party, a certificate of an Executive Officer or
Financial Officer setting forth the details thereof and the action that the
Borrower or Subsidiary Guarantor is taking or proposes to take with respect
thereto;

 

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(h) promptly after the mailing thereof to the Borrower’s shareholders generally,
copies of all financial statements, reports and proxy statements so mailed;

 

(i) promptly upon the filing thereof, copies of all registration statements
(other than the exhibits thereto and any registration statements on Form S-8 or
its equivalent) and annual, quarterly or current reports that the Borrower shall
have filed with the SEC;

 

(j) promptly after any member of the ERISA Group (i) gives or is required to
give notice to the PBGC of any “reportable event” (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability under
Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate, impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or appoint a trustee to administer any Plan or notice that the PBGC is
commencing an administrative process to make a determination of whether to
terminate any Plan, a copy of such notice; (iv) applies for a waiver of the
minimum funding standard under Section 412 of the Code, a copy of such
application; (v) gives notice of intent to terminate any Plan under Section
4041(c) of ERISA, a copy of such notice and other information filed with the
PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of
ERISA, a copy of such notice; or (vii) fails to make any payment or contribution
to any Plan or Multiemployer Plan or makes any amendment to any Plan which has
resulted or could result in the imposition of a Lien or the posting of a bond or
other security, a certificate of a Financial Officer setting forth details as to
such occurrence and the action, if any, which the Borrower or the applicable
member of the ERISA Group is required or proposes to take;

 

(k) (i) as soon as reasonably practicable after any Executive Officer obtains
knowledge of the commencement of an action, suit or proceeding against the
Borrower or any Subsidiary Guarantor before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable possibility
of an adverse decision which could have a Material Adverse Effect or which in
any manner questions the validity of any Financing Document, a certificate of a
Financial Officer setting forth the nature of such action, suit or proceeding
and such additional information as may be reasonably requested by any Lender
through the Agent;

 

(ii) promptly after an Executive Officer obtains knowledge of one or more
judgments or orders of a court or arbitral or regulatory authority for the
payment of money aggregating in excess of $10,000,000

 

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rendered against the Borrower or one or more Subsidiary Guarantors, a
certificate of such Executive Officer setting forth the nature and amount of
such judgment and whether the Borrower or Subsidiary Guarantor intends to seek a
stay or appeal of such judgment and such additional information as may be
reasonably requested by any Lender through the Agent;

 

(l) promptly upon the Borrower’s receipt from its independent public accountants
of any management letter which indicates a material weakness in the reporting
practices of the Borrower or any Subsidiary Guarantor, a description of such
material weakness and any action being taken with respect thereto;

 

(m) promptly upon their becoming available, copies of all press releases and
other statements made available generally by the Borrower or any Subsidiary
Guarantor to the public concerning material developments in its business;

 

(n) as soon as available and in any event no later than March 31 of each Fiscal
Year, (i) cash flow, balance sheet and income statement forecasts in reasonable
detail for the Borrower and its Consolidated Subsidiaries prepared on a
quarterly basis for each Fiscal Year through the Maturity Date and, promptly
when available, any material revisions of such forecast and (ii) the Borrower’s
business and financial plans for such Fiscal Year, setting forth the assumptions
used in preparing such plans and, promptly when available, any material
revisions of such plans;

 

(o) within 15 business days of any Person becoming or ceasing to be a Restricted
Subsidiary or Insurance Subsidiary of the Borrower or an Excluded Partnership,
an update to Schedule 1.01B hereto setting forth the information described in
Section 3.13 with respect to each Restricted Subsidiary and Insurance Subsidiary
of the Borrower and each Excluded Partnership (it being understood that nothing
in this Section 5.01(o) shall be deemed to permit or authorize the creation,
dissolution, liquidation or acquisition of a Restricted Subsidiary or Insurance
Subsidiary of the Borrower or an Excluded Partnership not otherwise permitted
under this Agreement);

 

(p) promptly upon request of the Agent (which request may be made on no more
than one occasion in any calendar month), a report in reasonable detail showing
the amount of Temporary Cash Investments of the Borrower and its Restricted
Subsidiaries, the banks or financial institutions at which such Temporary Cash
Investments are maintained, the then yield on such Temporary Cash Investments
and such other information relating to Temporary Cash Investments of the
Borrower and its Restricted Subsidiaries as the Agent may reasonably request;

 

(q) within 30 days after the end of each calendar month (and if requested by the
Agent (any such request, a “Borrowing Base Request”) at any time when the Agent
reasonably believes that the Borrowing Base Certificate then most recently
certified is materially inaccurate, as soon as reasonably available

 

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but in no event later than five Business Days after such request), a completed
Borrowing Base Certificate calculating and certifying the Borrowing Base as of
the end of such calendar month (or in the case of a Borrowing Base Request, as
of the same date as of which the Borrowing Base Certificate with respect to
which such Borrowing Base Request relates was certified), signed on behalf of
the Borrower by a Financial Officer, in each case with supporting documentation
and additional reports with respect to the Borrowing Base as the Agent may
reasonably request; and

 

(r) from time to time such additional information regarding the position
(financial or otherwise), results of operations or business of the Borrower or
any Subsidiary Guarantor as any Lender may reasonably request in writing through
the Agent.

 

Information required to be delivered pursuant to Sections 5.01(a), 5.01(b),
5.01(h), 5.01(i) and 5.01(m) shall be deemed to have been delivered on the date
on which the Borrower provides notice to the Lenders that such information has
been posted on the Borrower’s website on the Internet at the website address
listed on the signature pages hereof, at sec.gov/edaux/searches.htm or at
another website identified in such notice and accessible by the Lenders without
charge; provided that (i) such notice may be included in a certificate delivered
pursuant to Section 5.01(c) and (ii) the Borrower shall deliver paper copies of
the information referred to in Sections 5.01(a), 5.01(b), 5.01(h) and 5.01(i) to
any Lender that requests such delivery.

 

Section 5.02. Maintenance of Property. The Borrower and each Subsidiary
Guarantor will keep all property useful and necessary in its business in good
working order and condition, ordinary wear and tear and casualty excepted.

 

Section 5.03. Insurance. (a) The Borrower and each Subsidiary Guarantor will
maintain insurance with responsible companies in such amounts and against such
risks as is usually carried by owners of similar businesses and properties in
the same general areas in which it operates.

 

(b) If the Borrower or any Subsidiary Guarantor fails to maintain any insurance
policy required to be maintained under this Section 5.03, the Agent shall have
the right to maintain such policy or obtain a comparable policy, and in either
case pay the premiums therefor. If the Agent maintains or obtains any such
policy and pays the premiums therefor, the Borrower will reimburse the Agent
upon demand for its expenses in connection therewith, including interest thereon
for each day at a rate per annum equal to the Default Rate.

 

Section 5.04. Payment of Obligations; Compliance with Law and Contractual
Obligations. (a) The Borrower and each Subsidiary Guarantor will pay its
Indebtedness and other obligations, including Tax liabilities, before the same
shall become delinquent or in default, except where (i) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (ii)

 

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the Borrower or the relevant Subsidiary Guarantor has set aside on its books
adequate reserves with respect thereto in accordance with GAAP, (iii) such
contest effectively suspends collection of the contested obligation and the
enforcement of any Lien securing such obligation and (iv) the failure to make
payment pending such contest could not reasonably be expected to result in a
Material Adverse Effect.

 

(b) The Borrower and each Subsidiary Guarantor will comply in all material
respects with all Applicable Laws (including Medicare Regulations, Medicaid
Regulations, Environmental Laws and ERISA and the rules and regulations
thereunder) and with the Corporate Integrity Agreement, except where (i) the
necessity of compliance therewith is contested in good faith by appropriate
measures or proceedings, in which case adequate and reasonable reserves will be
established in accordance with GAAP and notice of each such contest (other than
contests in the ordinary course of business) shall be given to the Agent, or
(ii) failures to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(c) The Borrower and each Subsidiary Guarantor will comply in all material
respects with all contractual obligations that are material to its business,
except where failures to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

Section 5.05. Maintenance of Existence, Rights, etc. The Borrower and each
Subsidiary Guarantor will preserve, renew and keep in full force and effect its
existence and its rights, privileges, licenses and franchises necessary or
desirable in the normal conduct of business; provided that nothing in this
Section shall prohibit (a) any transaction permitted by Section 7.03(a), (b) the
loss of any rights, privileges, licenses and franchises if the loss thereof, in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect or (c) the Borrower or any Subsidiary Guarantor from changing its name so
long as the Borrower or such Subsidiary Guarantor, as the case may be, complies
with the requirements of the Security Agreement in connection with such name
change.

 

Section 5.06. Designation Of Restricted and Unrestricted Subsidiaries. (a) The
Borrower may designate any Subsidiary, including a newly acquired or created
Subsidiary, to be an Unrestricted Subsidiary if the sum of the total assets of
such Subsidiary (or, if any such Subsidiary itself has Subsidiaries, the
consolidated total assets of such Subsidiary and its Consolidated Subsidiaries)
and every other Unrestricted Subsidiary (other than Cornerstone and the Excluded
Partnerships), in each case determined as of the date of the Most Recent
Financial Statements, does not exceed 5% of the consolidated total assets of the
Borrower and its Consolidated Subsidiaries (excluding, for purposes of such
calculation but only to the extent included therein, (x) the assets of
Cornerstone unless at such time the Equity Interests of Cornerstone are subject
to a pledge or other security interest in favor of the Agent for the benefit of
the Lenders as contemplated by

 

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Section 5.09(f) and (y) the assets of the Excluded Partnerships) and the
designation would not cause a Default; provided that:

 

(i) such Subsidiary does not own any capital stock of the Borrower or any
Restricted Subsidiary;

 

(ii) such Subsidiary does not hold any Indebtedness of, or any Lien on any
property of, the Borrower or any Restricted Subsidiary, in each case except to
the extent permitted by Section 7.01 or 7.02, respectively;

 

(iii) at the time of designation, the designation would be permitted under
Section 7.08;

 

(iv) to the extent the Indebtedness of the Subsidiary is not Non-Recourse Debt,
any Guarantee or other credit support thereof by the Borrower or any Restricted
Subsidiary is permitted under Sections 7.01 and 7.08;

 

(v) the Subsidiary is not party to any transaction or arrangement with the
Borrower or any Restricted Subsidiary that would not be permitted under Section
7.04; and

 

(vi) neither the Borrower nor any Restricted Subsidiary has any obligation to
subscribe for additional Equity Interests of the Subsidiary or to maintain or
preserve its financial condition or cause it to achieve specified levels of
operating results except to the extent permitted by Sections 7.01 and 7.08.

 

Once so designated the Subsidiary will remain an Unrestricted Subsidiary,
subject to paragraph (b).

 

(b) (i) If as of the date of the Most Recent Financial Statements, the
conditions specified in paragraph (a) are not satisfied, the Borrower shall
immediately designate one or more Unrestricted Subsidiaries as Restricted
Subsidiaries to the extent required to ensure that the conditions specified in
paragraph (a) would have been satisfied as of the date of the Most Recent
Financial Statements, subject to the consequences set forth in paragraph (d).

 

(ii) The Borrower may designate an Unrestricted Subsidiary to be a Restricted
Subsidiary if the designation would not cause a Default.

 

(c) Upon a Restricted Subsidiary becoming an Unrestricted Subsidiary,

 

(i) all existing Investments of the Borrower and the Restricted Subsidiaries
therein (valued at the Borrower’s proportional share of the fair market value of
its assets less liabilities) will be deemed made at that time;

 

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(ii) all existing capital stock or Indebtedness of the Borrower or a Restricted
Subsidiary held by it will be deemed incurred at that time, and all Liens on
property of the Borrower or a Restricted Subsidiary held by it will be deemed
incurred at that time;

 

(iii) all existing transactions between it and the Borrower or any Restricted
Subsidiary will be deemed entered into at that time;

 

(iv) it is released at that time from the Security Agreement; and

 

(v) it will cease to be subject to the provisions of this Agreement as a
Restricted Subsidiary.

 

(d) Upon an Unrestricted Subsidiary becoming a Restricted Subsidiary,

 

(i) all of its Indebtedness will be deemed incurred at that time for purposes of
Section 7.01, but will not be considered the sale or issuance of Equity
Interests for purposes of Sections 7.03(c) or 7.06;

 

(ii) Investments therein previously charged under Section 7.08 will be credited
thereunder;

 

(iii) it must issue a Guarantee of the Loans pursuant to Section 5.08 and
execute a Security Agreement Supplement pursuant to Section 5.09; and

 

(iv) it will thenceforward be subject to the provisions of this Agreement as a
Restricted Subsidiary.

 

(e) Any designation by the Borrower of a Subsidiary of the Borrower as a
Restricted Subsidiary or Unrestricted Subsidiary will be evidenced to the Agent
by promptly filing with the Agent a certificate of an Executive Officer and a
Financial Officer certifying that the designation complied with the foregoing
provisions.

 

Section 5.07. Books and Records; Inspection Rights. The Borrower will, and will
cause each of its Restricted Subsidiaries to, keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of its Restricted Subsidiaries to, permit any representatives
designated by the Agent or any Lender, upon reasonable prior notice, to visit
and inspect its properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with such officers
designated for such purposes by a Financial Officer, such other officers as may
be reasonably designated for such purposes by the Agent and independent
accountants, all at such reasonable times and as often as reasonably requested.

 

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Section 5.08. Guarantees by Future Restricted Subsidiaries. Within 30 Business
Days after any Person becomes or is deemed to have become a Restricted
Subsidiary or ceases to be an Excluded Partnership (provided that such Person
remains a Subsidiary), the Borrower shall (i) cause such Person to guarantee the
Borrower’s obligations hereunder pursuant to the Security Agreement and (ii)
deliver to the Agent such legal opinions and other documents as the Agent may
reasonably request relating to the existence of such Person, the corporate or
other authority for and validity of its guarantee pursuant to the Security
Agreement and any other matters relevant thereto, all in form and substance
satisfactory to the Agent. Without limiting the foregoing, the Borrower shall
cause each Restricted Subsidiary to at all times guarantee the Borrower’s
obligations hereunder pursuant to the Security Agreement.

 

Section 5.09. Future Assets to be Added to Collateral. (a) Within 30 Business
Days after any Person becomes or is deemed to have become a Restricted
Subsidiary, an Insurance Subsidiary or ceases to be an Excluded Partnership
(provided that such Person remains a Subsidiary) after the date hereof, the
Borrower shall cause all Equity Interests in such Person owned by the Borrower
or the Subsidiary Guarantors to be pledged under the Security Agreement;
provided that if regulatory consent is required to permit any such pledge of
Equity Interests in an insurance subsidiary, (i) such pledge shall not be
required unless such regulatory consent is reasonably obtainable and (ii) if
such regulatory consent is reasonably obtainable, the Borrower shall exercise
all reasonable efforts to obtain it and shall not be required to pledge such
Equity Interests until it is obtained.

 

(b) If at any time after the Effective Date the Borrower or a Subsidiary
Guarantor acquires a fee interest in a Material Real Property (other than any
Specified Property) that is not included in the Collateral, the Borrower shall,
within five Business Days after it or such Subsidiary Guarantor acquires such
Material Real Property, provide notice thereof to the Agent and, within 60 days
after it or such Subsidiary Guarantor acquires such Material Real Property,
cause such Material Real Property to be added to the Collateral by delivering to
the Agent a Fee Mortgage with respect thereto and the appropriate UCC form for
the related fixture filing, all in form and substance reasonably satisfactory to
the Agent.

 

(c) Within 45 days after the commencement of each Fiscal Year, the Borrower
shall deliver a leasehold report to the Agent setting forth a list of each
Material Real Property leased by it or any Subsidiary Guarantor under a lease
with respect to which its or such Subsidiary Guarantor’s leasehold interest is
not included in the Collateral. The Agent may (and if it is requested to do so
by the Required Lenders shall) request the Borrower to cause any such leasehold
interest not subject to a negative pledge to be added to the Collateral by
delivering to the Agent a Leasehold Mortgage with respect thereto and the
appropriate UCC form for the related fixture filing, all in form and substance
reasonably satisfactory to the Agent. The Borrower shall, and shall cause each
Subsidiary Guarantor to,

 

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attempt in good faith to cause any such lease of a Material Real Property to (i)
not contain a negative pledge (subject to prevailing market conditions) and (ii)
contain provisions for the benefit of a leasehold mortgagee comparable to those
contained in the Master Lease Agreements and to obtain a non-disturbance
agreement with respect to such lease on customary terms.

 

(d) Within 30 Business Days after any Person becomes a Restricted Subsidiary or
ceases to be an Excluded Partnership (provided that such Person remains a
Subsidiary), the Borrower will (i) cause such Person to sign and deliver a
Security Agreement Supplement granting a Lien or Liens on substantially all the
personal property included in its assets (with the exceptions set forth in the
first proviso at the end of Section 3 of the Security Agreement and such other
exceptions as the Agent shall approve in writing) to the Agent to secure its
Secured Obligations and (ii) cause such Person to comply with the provisions
thereof and of the Security Agreement.

 

(e) If any Specified Property (other than any Specified Property that is
included in the Collateral on the Effective Date) with a fair market value
exceeding $6,000,000 (in the case of a hospital) or $3,000,000 (in all other
cases) (or in the case of any leased Specified Property, with projected EBITDA
(as reasonably estimated by a Financial Officer) for the twelve months following
June 30, 2005 equal to or exceeding $1,000,000 (in the case of a hospital) or
$500,000 (in all other cases)) has not been sold on or prior to June 30, 2005
(other than to the Borrower or any Subsidiary of the Borrower), the Borrower
shall promptly (and in any event by no later than July 15, 2005) cause such
Specified Property to be added to the Collateral by delivering to the Agent a
Mortgage with respect thereto. If any Specified Property that is included in the
Collateral on the Effective Date is not sold on or prior to June 30, 2005 (other
than to the Borrower or any Subsidiary of the Borrower), the Borrower shall
promptly (and in any event by no later than July 15, 2005) deliver to the Agent
an amendment to the applicable mortgage pursuant to the Exit Facility in form
and substance satisfactory to the Agent, together with a “date down” endorsement
to the title insurance policy delivered to the Agent with respect thereto
pursuant to the Exit Facility. Prior to such time, the Borrower shall ensure
that no Lien (other than Permitted Encumbrances) over any Specified Property is
granted to any Person.

 

(f) If at any time the granting of a pledge or other security interest over the
Equity Interests in Cornerstone is not prohibited by Cayman Islands law, the
Borrower shall ensure that a pledge or such other security interest over such
Equity Interests is granted to the Agent for the benefit of the Lenders and that
stock certificates evidencing such Equity Interests are delivered as soon as
practicable to the Agent together with signed stock powers or other appropriate
instruments of transfer relating thereto. Prior to such time, the Borrower shall
ensure that no Lien over such Equity Interests is granted to any Person.

 

(g) Whenever any asset is added to the Collateral pursuant to this Section, the
Borrower shall (i) allow a review and other due diligence to be

 

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performed by the Agent on such asset, and (ii) deliver to the Agent such legal
opinions, title insurance and other documents as the Agent may reasonably
request relating to the existence of the relevant Lien Grantor, the corporate or
other authority for and validity of the Collateral Documents applicable thereto,
the creation and perfection (or due recordation) of the Lien purportedly created
thereby and any other matters relevant thereto, all in form and substance
satisfactory to the Agent.

 

Section 5.10. Condemnation Events. If any Condemnation Event occurs with respect
to property owned or leased by the Borrower or any of its Restricted
Subsidiaries, or if any negotiation or proceeding is commenced which might
result in such a Condemnation Event, or if any such Condemnation Event is
proposed or threatened, the Borrower or such Restricted Subsidiary (i) will,
promptly after receiving notice or obtaining knowledge thereof, do all things
deemed necessary or appropriate by it to preserve its interest in such property
and promptly make claim for awards payable with respect thereto and diligently
pursue to conclusion such claim and any suit, action or other proceeding
necessary or appropriate to obtain payment thereof and (ii) if such property is
included in the Borrowing Base, will not settle any such claim, negotiation or
proceeding without the consent of the Agent if an Enforcement Notice is in
effect.

 

Section 5.11. Use of Proceeds and Letters of Credit. (a) The proceeds of the
Loans shall be used by the Borrower (i) to repay in full the Senior Secured
Notes Facility, (ii) to finance the working capital needs of the Borrower and
its Restricted Subsidiaries in the ordinary course of business on and after the
Effective Date and (iii) for general corporate purposes of the Borrower and its
Restricted Subsidiaries on and after the Effective Date, including Acquisitions
and other Investments permitted pursuant to Section 7.08; provided that no part
of the proceeds of any Loan will be used, whether directly or indirectly, for
any purpose that entails a violation of any of the regulations of the Board,
including Regulations T, U and X.

 

(b) The Letters of Credit will be used for general corporate purposes of the
Borrower and its Restricted Subsidiaries.

 

Section 5.12. Borrowing Base Reviews. The Borrower shall, and shall cause each
of its Restricted Subsidiaries to, permit any representatives designated by the
Agent (including any consultants, accountants, lawyers and appraisers retained
by the Agent) to, upon reasonable notice to the Borrower, conduct evaluations
and appraisals (any such evaluation or appraisal, a “Borrowing Base Review”) of
the assets included in the Borrowing Base and the Borrower’s computation of the
Borrowing Base and such other assets and other financial information and
properties of the Borrower or its Restricted Subsidiaries as the Agent may
require. Borrowing Base Reviews shall be conducted during regular business
hours. The Borrower agrees to, and shall cause each of its Restricted
Subsidiaries to, modify or adjust the computation of the Borrowing Base (which
may include maintaining additional reserves or modifying the eligibility
criteria

 

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for the components of the Borrowing Base) to the extent reasonably required by
the Agent or the Required Lenders as a result of any such Borrowing Base Review.
The Borrower shall pay the fees (including internally allocated fees and
expenses of employees of the Agent) and expenses of any such representatives
retained by the Agent as to which invoices have been furnished to conduct any
such evaluation or appraisal, including the reasonable fees and expenses
associated with collateral monitoring services performed by the Collateral Agent
Services Group of the Agent.

 

Section 5.13. Environmental Matters. From time to time after the Closing, the
Borrower will review the effect of Environmental Laws on the business,
operations and properties of the Borrower and the Subsidiary Guarantors, in the
course of which reviews it will identify and evaluate associated liabilities and
costs, including all Environmental Liabilities. If, on the basis of such
reviews, the Borrower reasonably concludes that the foregoing associated
liabilities and costs are likely to have a Material Adverse Effect, the Borrower
shall promptly deliver a certificate to the Agent setting forth its conclusion
and the action that the Borrower proposes to take with respect thereto.

 

Section 5.14. Post-Closing. (a) No later than 45 days after the Effective Date,
the Borrower shall deliver to the Agent fully executed Deposit Account Control
Agreements with respect to the accounts listed on Schedule 5.14, each such
agreement to be in form and substance satisfactory to the Agent.

 

(b) (i) The Lenders hereby authorize the Agent, in its sole discretion and from
time to time, to enter into one or more Additional Encumbrance Letters pursuant
to which the Liens and other title defects referred to therein shall, to the
extent set forth therein, constitute Permitted Liens for purposes hereof. The
Lenders confirm and agree, without limiting the generality of the exculpatory
provisions of Article 9, that in the absence of gross negligence or willful
misconduct, the Agent shall not be liable to any Lender on account of entering
into any Additional Encumbrance Letter and any consequences thereof.

 

(ii) The Borrower shall comply with the provisions of each Additional
Encumbrance Letter.

 

(c) As soon as practicable but in no event later than 90 days after the
Effective Date, the Borrower shall deliver, or shall cause to be delivered, to
the Agent:

 

(i) with respect to each Owned Property, a signed counterpart of a Fee Mortgage
(or an amendment to the applicable fee mortgage delivered to the Agent with
respect thereto pursuant to the Exit Facility), in either case in proper form
for recording in the relevant jurisdiction, together with evidence satisfactory
to the Agent that such Fee Mortgage (or amendment) will be recorded promptly
thereafter and that any related

 

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intangibles, mortgage recording (if any) or similar taxes will be paid in
connection with such recording;

 

(ii) with respect to each Initial Master Lease Property and each Other Leased
Property, a signed counterpart of a Leasehold Mortgage (or an amendment to the
applicable leasehold mortgage delivered to the Agent with respect thereto
pursuant to the Exit Facility), in either case together with (except in the case
of the Escrowed Properties) evidence satisfactory to the Agent that such
Leasehold Mortgage (or amendment) will be recorded promptly thereafter and that
any related intangibles, mortgage recording (if any) or similar taxes will be
paid in connection with such recording;

 

(iii) with respect to each Owned Property, Initial Master Lease Property and
Other Leased Property (other than any Escrowed Property), a lender’s title
insurance policy insuring the Mortgage (or amendment) relating to such property
(or a “date-down” endorsement to the title insurance policy delivered to the
Agent with respect thereto pursuant to the Exit Facility), each such policy (or
endorsement) to be in form and substance reasonably satisfactory to the Agent;

 

(iv) with respect to each Owned Property, Initial Master Lease Property and
Other Leased Property (other than any Escrowed Property), any legal opinion or
other document (including any necessary Ventas or other third party consent
obtainable upon using commercially reasonable efforts) as the Agent may
reasonably request relating to the existence of the relevant Lien Grantor, the
corporate or other authority for and validity of the Collateral Documents
applicable thereto, the creation and perfection of the Lien purportedly created
thereby and any other matters relevant thereto, all in form and substance
satisfactory to the Agent;

 

(v) all UCC financing statements reasonably requested by the Agent to perfect
its security interests in the Collateral referred to above and evidence
satisfactory to the Agent that such UCC financing statements will be filed
promptly thereafter and that any related filing fees or similar charges or taxes
will be paid by the Credit Parties in connection with such filing; and

 

(vi) evidence in form and substance reasonably satisfactory to the Agent that
each fee and leasehold mortgage delivered pursuant to the Senior Secured Notes
Facility shall have been discharged.

 

(d) As soon as practicable but in no event later than 90 days after the
Effective Date, the Agent shall have received, with respect to each Owned
Property, an appraisal performed by a certified or licensed appraiser conforming
to the applicable requirements of Title XI of the Financial Institutions Reform,

 

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Recovery and Enforcement Act of 1989 and the regulations thereunder, the
Borrower to be responsible for the costs of each such appraisal.

 

(e) (i) The Lenders hereby authorize the Agent, in its sole discretion and from
time to time, to enter into one or more amendments to or amendments and
restatements of the Escrow Agreement to provide for escrow arrangements relating
to the Escrowed Properties. The Lenders confirm and agree, without limiting the
generality of the exculpatory provisions of Article 9, that in the absence of
gross negligence or willful misconduct, the Agent shall not be liable to any
Lender on account of entering into any such amendment or amendment and
restatement and any consequences thereof.

 

(ii) The Borrower will use its commercially reasonable efforts to obtain the
landlord consents, memoranda of leases, subordination and non-disturbance
agreements and other documents contemplated by the Escrow Agreement and provide
evidence to the Agent thereof.

 

ARTICLE 6

FINANCIAL COVENANTS

 

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated and all LC Disbursements shall
have been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

Section 6.01. Minimum Fixed Charge Coverage Ratio (EBITDAR). (a) At each
Quarterly Measurement Date on or after September 30, 2004, the ratio of (i)
Consolidated EBITDAR for the four consecutive Fiscal Quarters then ended to (ii)
the sum of Consolidated Interest Expense plus Consolidated Rental Expense, in
each case for the same four Fiscal Quarters, will not be less than the ratio set
forth below opposite such Quarterly Measurement Date (or any Quarterly
Measurement Date which falls during the periods set forth below):

 

Period

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

   Ratio

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

September 30, 2004 through March 31, 2005

   1.15 to 1

June 30, 2005 through March 31, 2006

   1.20 to 1

June 30, 2006 and thereafter

   1.25 to 1

 

; provided that at any Quarterly Measurement Date prior to the end of the fourth
full Fiscal Quarter after the Effective Date, the foregoing amounts shall be
calculated as of the end of the then most recently ended Fiscal Quarter on an
Annualized Basis.

 

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(b) For purposes of calculating the foregoing ratio, if any corporation or other
entity becomes or ceases to be a Restricted Subsidiary during the period for
which Consolidated EBITDAR is to be calculated, Consolidated EBITDAR shall be
calculated as if such corporation or other entity had been acquired or had
ceased to be a Restricted Subsidiary, as the case may be, at the beginning of
such period, to the extent that the relevant financial information with respect
to it for the portion of such period prior to such acquisition or cessation, as
the case may be, can be determined with reasonable accuracy.

 

ARTICLE 7

NEGATIVE COVENANTS

 

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated and all LC Disbursements shall
have been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

Section 7.01. Limitation on Indebtedness; Certain Equity Securities. (a) The
Borrower shall not, and shall not permit any Restricted Subsidiary to, incur or
be liable with respect to (i) any Indebtedness of a type described in clause
(i), (ii), (iii) or (iv) of the definition of “Indebtedness” in Section 1.01 or
(ii) any Guarantee of any such Indebtedness described in clause (i) above,
except:

 

(i) Indebtedness outstanding under the Financing Documents;

 

(ii) Indebtedness existing on the date hereof and set forth in Schedule 7.01,
but not any extensions, renewals or replacements of any such Indebtedness;

 

(iii) Capital Lease Obligations; provided that the aggregate outstanding
principal amount of Indebtedness permitted by this clause (iii) and by clause
(iv) shall not at any time exceed $50,000,000;

 

(iv) Indebtedness incurred or assumed after the Effective Date for the purpose
of financing all or any part of the cost of acquiring or constructing an asset
of the Borrower or a Restricted Subsidiary; provided that (A) such Indebtedness
is secured by a Lien on such asset that is permitted by Section 7.02(f) and (B)
the aggregate outstanding principal amount of all Indebtedness permitted by
clause (iii) and this clause (iv) shall not at any time exceed $50,000,000;

 

(v) Indebtedness of any Person that becomes a Restricted Subsidiary after the
Effective Date in connection with an Acquisition; provided that such
Indebtedness was outstanding before such Person

 

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became a Restricted Subsidiary and was not incurred in contemplation thereof;

 

(vi) Indebtedness incurred after the Effective Date and Guarantees of
Indebtedness entered into after the Effective Date; provided that (A) the
Indebtedness so incurred or Guaranteed is incurred in exchange for or to repay,
prepay, repurchase, redeem, defease, retire or refinance (“refinance”) any
outstanding Indebtedness of the Borrower or any Restricted Subsidiary otherwise
permitted by this Section and (B) the principal amount of the Indebtedness so
incurred or Guaranteed shall not exceed the unpaid principal amount of the
Indebtedness so exchanged or refinanced;

 

(vii) Permitted Intercompany Indebtedness;

 

(viii) Guarantees by the Borrower of any Indebtedness of any Restricted
Subsidiary and Guarantees by any Restricted Subsidiary of Indebtedness of the
Borrower or any other Restricted Subsidiary, in each case of Indebtedness
permitted hereunder;

 

(ix) Indebtedness consisting of (A) trade obligations or (B) accrued current
liabilities for services rendered to the Borrower or any Restricted Subsidiary,
in each case, arising in the ordinary course of business after the Effective
Date;

 

(x) Indebtedness under Interest Rate Agreements (including Designated Interest
Rate Agreements) of the Borrower or any Restricted Subsidiary relating to
Indebtedness permitted to be incurred and outstanding under this Section and
entered into in the ordinary course of business for the purpose of limiting
interest rate risks and not for speculation;

 

(xi) Indebtedness owed in respect of any overdrafts and related liabilities
arising from treasury, depository and cash management services or in connection
with any automated clearing-house transfers of funds;

 

(xii) other unsecured Indebtedness in an aggregate principal amount not
exceeding $10,000,000 at any time outstanding; provided that the aggregate
outstanding principal amount of Indebtedness of the Borrower’s Restricted
Subsidiaries permitted by this clause (xii) shall not at any time exceed
$5,000,000; and

 

(xiii) other secured Indebtedness in an aggregate principal amount not exceeding
$1,000,000 at any time outstanding.

 

(b) The Borrower shall not issue any preferred stock or other preferred Equity
Interests other than Qualified Equity Interests.

 

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(c) The Borrower shall not permit any Restricted Subsidiary to issue any
preferred stock or other preferred Equity Interests other than to the Borrower
or any other Restricted Subsidiary.

 

Section 7.02. Negative Pledge. The Borrower shall not, and shall not permit any
Restricted Subsidiary to, create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it (or any income therefrom or any
right to receive income therefrom), except:

 

(a) Liens created pursuant to the Collateral Documents;

 

(b) any Lien on any property or asset of the Borrower or any Restricted
Subsidiary existing on the date hereof and set forth in Schedule 7.02; provided
that (i) such Lien shall not apply to any other property or asset of the
Borrower or any Restricted Subsidiary and (ii) such Lien shall secure only those
obligations which it secures on the date hereof;

 

(c) any Lien existing on any asset prior to the acquisition thereof by the
Borrower or a Restricted Subsidiary; provided that such Lien was not created in
contemplation of such event and does not extend to any other property of the
Borrower or any Restricted Subsidiary;

 

(d) any Lien existing on any asset of any Person at the time such Person becomes
a Restricted Subsidiary or merges into the Borrower or any of its Restricted
Subsidiaries in connection with an Acquisition; provided that such Lien was not
created in contemplation of such event and does not extend to any other property
of the Borrower or any Restricted Subsidiary;

 

(e) Liens upon the assets of the Borrower and its Restricted Subsidiaries
subject to Capital Lease Obligations to the extent permitted by Section
7.01(a)(iii); provided that (i) such Liens only serve to secure the payment of
Indebtedness arising under such Capital Lease Obligation, (ii) the Lien
encumbering the asset giving rise to the Capital Lease Obligation does not
encumber any other asset of the Borrower or any Restricted Subsidiary and (iii)
the aggregate outstanding principal amount of all Indebtedness secured pursuant
to this clause (e) and clause (f) shall not exceed $50,000,000;

 

(f) any Lien on any asset securing Indebtedness incurred or assumed for the
purpose of financing all or any part of the cost of acquiring or constructing
such asset; provided that (i) such Lien attaches to such asset concurrently with
or within 180 days after the acquisition or completion of construction thereof
and attaches to no asset other than such asset so financed and (ii) the
aggregate outstanding principal amount of all Indebtedness secured pursuant to
clause (e) and this clause (f) shall not exceed $50,000,000;

 

(g) Liens securing Indebtedness of the Borrower or a Restricted Subsidiary to
the Borrower or any other Restricted Subsidiary;

 

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(h) any Lien arising out of the refinancing (as defined in Section 7.01(a)(vi))
of any Indebtedness secured by any Lien permitted by this Section, provided that
the principal amount of such Indebtedness is not increased and such refinanced
Indebtedness is not secured by any additional assets;

 

(i) Permitted Encumbrances;

 

(j) Liens on deposit account balances and Temporary Cash Investments in an
amount not exceeding $2,000,000 securing Interest Rate Agreements (other than
Designated Interest Rate Agreements); and

 

(k) other Liens securing Indebtedness or other obligations in an aggregate
amount not exceeding $1,000,000 at any time outstanding.

 

Section 7.03. Consolidations, Mergers and Asset Sales.

 

(a) The Borrower shall not, and shall not permit any Restricted Subsidiary to,
consolidate or merge with or into, or sell, lease or otherwise dispose of all or
substantially all of its assets to, any other Person, or liquidate or dissolve,
except that:

 

(i) the Borrower may merge with any Person if the Borrower is the surviving
corporation and, immediately after such merger (and giving effect thereto), no
Default shall have occurred and be continuing;

 

(ii) any Restricted Subsidiary may merge or consolidate with or into any Person
(other than the Borrower, except in a transaction permitted by clause (i) above)
and any Restricted Subsidiary may transfer all or substantially all of its
assets to any Person, in each case if, immediately after such transaction (and
giving effect thereto), no Default shall have occurred and be continuing and (A)
the surviving corporation or transferee is a Restricted Subsidiary, (B) such
merger, consolidation or transfer of all or substantially all assets is in
conjunction with a disposition by the Borrower and its Restricted Subsidiaries
of their entire investment in such Restricted Subsidiary and such disposition is
not prohibited by any provision of the Financing Documents (other than this
subsection (a)), (C) the Required Lenders shall have consented to such
transaction, (D) such transaction is permitted by Section 7.03(c) or (E) such
transaction is solely in respect of any Specified Property; and

 

(iii) any Restricted Subsidiary may liquidate or dissolve if the Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of the Borrower and is not adverse in any material respect to the
Lenders.

 

(b) If the Borrower and its Restricted Subsidiaries dispose of their entire
investment in any Restricted Subsidiary as permitted by subsection (a) above,
the

 

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Agent shall at the Borrower’s request, concurrently with or at any time after
such disposition, release all security interests in Equity Interests in such
Restricted Subsidiary granted by the Borrower and its Restricted Subsidiaries to
the Agent. In addition (i) such Restricted Subsidiary’s Subsidiary Guaranty
shall be automatically released and it shall cease to be a party to the Security
Agreement, in each case concurrently with such disposition, and (ii) the Agent
shall at the Borrower’s request, concurrently with or at any time after such
disposition, release all security interests granted by such Restricted
Subsidiary to secure its Subsidiary Guaranty and return to such Restricted
Subsidiary any of its assets held by the Agent under the Collateral Documents.

 

(c) The Borrower shall not, and shall not permit any Restricted Subsidiary to,
make any Asset Sale (other than the HCPI Transaction), unless:

 

(i) the consideration received from such Asset Sale shall be in an amount at
least equal to the fair market value thereof (as determined in good faith by the
Borrower or such Restricted Subsidiary (which determination, if the sale price
exceeds $5,000,000, shall be evidenced by a resolution of the Borrower’s or such
Restricted Subsidiary’s Board of Directors) as at the time of such Asset Sale);
and

 

(ii) except in the case of any Asset Sale in respect of any Specified Property,
immediately after such Asset Sale is consummated, (x) at least 80% of the
aggregate consideration received for all Asset Sales (other than Asset Sales in
respect of Specified Properties) consummated after the Effective Date shall be
in the form of cash received at closing and (y) the aggregate book value of all
assets sold pursuant to Asset Sales consummated after the Effective Date (other
than Asset Sales in respect of Specified Properties) would not exceed an amount
equal to 15% of the consolidated assets of the Borrower and its Restricted
Subsidiaries as shown on the Most Recent Financial Statements;

 

provided that except in the case of a Qualified Transaction, any sale or other
transfer of, or any release of Liens relating to, any Accounts or any books or
records relating thereto in connection with any Asset Sale will require the
prior written consent of the Required Lenders.

 

Notwithstanding anything in this Section 7.03 to the contrary, so long as no
Event of Default has occurred and is continuing, the Borrower and its
Subsidiaries may make Permitted Delinquent Account Assignments. For purposes of
Section 7.03(c)(ii)(y), the book value of the assets disposed of in each
transaction shall be the book value of such assets on the books of the Borrower
or the relevant Restricted Subsidiary, as applicable, immediately before such
disposition.

 

Section 7.04. Limitations on Transactions with Affiliates. The Borrower shall
not, and shall not permit any Restricted Subsidiary to, directly or indirectly,
pay any funds to or for the account of, make any Investment in, lease, sell,

 

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transfer or otherwise dispose of any assets, tangible or intangible, to, or
participate in, or effect any transaction in connection with any joint
enterprise or other joint arrangement with, any Affiliate; provided that the
foregoing shall not prohibit:

 

(i) the Borrower or any Restricted Subsidiary from performing its obligations
under the Existing Affiliate Agreements;

 

(ii) the Borrower or any Restricted Subsidiary from making any Investment in
Minority-Owned Affiliates permitted by Section 7.08;

 

(iii) the Borrower or any Restricted Subsidiary from making sales or leases to
or purchases or leases from any Affiliate and, in connection therewith,
extending credit or making payments, or from making payments for services
rendered by any Affiliate, if such sales, leases or purchases are made or such
services are rendered in the ordinary course of business and on terms and
conditions at least as favorable to the Borrower or such Restricted Subsidiary
as the terms and conditions which would apply in a similar transaction with a
Person not an Affiliate; provided that, so long as the other requirements of
this clause are met, the Foothill Transaction shall be permitted whether or not
such transaction is in the ordinary course of business;

 

(iv) transactions between or among the Credit Parties not involving any other
Affiliate;

 

(v) the Borrower or any Restricted Subsidiary from making payments of principal,
interest and premium on any of its Indebtedness held by an Affiliate if the
terms of such Indebtedness are substantially as favorable to the Borrower or
such Restricted Subsidiary as the terms which could have been obtained at the
time of the creation of such Indebtedness from a lender which was not an
Affiliate;

 

(vi) to the extent permitted by Section 7.08, the Borrower or any Restricted
Subsidiary from participating in, or effecting any transaction in connection
with, any joint enterprise or other joint arrangement with any Affiliate if the
Borrower or such Restricted Subsidiary participates in the ordinary course of
its business and on a basis no less advantageous than the basis on which such
Affiliate participates;

 

(vii) the Borrower or any Restricted Subsidiary from maintaining, entering into
or adopting any executive or employee incentive or compensation plan, contract
or other arrangement (including any loans or extensions of credit in connection
therewith to the extent permitted by Section 7.08), or any arrangement to
terminate any of the foregoing, if such plan, contract, or arrangement has been
or is approved either (x) at any time by the shareholders of the Borrower in
accordance

 

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with such voting requirements as may be applicable or (y) at any time by the
board of directors of the Borrower or such Restricted Subsidiary (or a duly
constituted committee of such board) at a meeting at which a quorum of
disinterested directors is present;

 

(viii) to the extent permitted by Section 7.08, the Borrower or any Restricted
Subsidiary from making any loan, guarantee or other accommodation in accordance
with the Borrower’s policies and practices concerning employee relocation in the
ordinary course of its business; or

 

(ix) any Restricted Payments permitted by Section 7.07.

 

Section 7.05. Limitation on Restrictions Affecting Subsidiaries. The Borrower
shall not, and shall not permit any Restricted Subsidiary to, enter into, or
suffer to exist, any agreement (other than the Financing Documents and, in the
case of clause (c), the Master Lease Agreements) which prohibits or limits the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions or pay any Indebtedness owed to the Borrower or any other
Restricted Subsidiary; (b) make loans or advances to the Borrower or any other
Restricted Subsidiary or (c) create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, to secure the obligations of the Borrower and the Subsidiary
Guarantors under the Financing Documents; provided that the foregoing shall not
prohibit any such prohibition or limitation contained in:

 

(i) any document relating to Indebtedness secured by a Lien permitted by Section
7.02, insofar as the provisions thereof limit grants of junior liens on the
assets securing such Indebtedness;

 

(ii) any operating lease or capital lease, insofar as the provisions thereof
limit grants of a security interest in, or other assignments of, the related
leasehold interest to any other Person; and

 

(iii) if a Person becomes a Restricted Subsidiary after the date hereof, any
agreement that is binding on such Person and was not entered into in
contemplation of its becoming a Restricted Subsidiary, insofar as such agreement
limits such Person’s ability to take any action described in clause (a), (b) or
(c) of this Section, provided that either:

 

(A) such limitation is terminated within 60 days after such Person becomes a
Restricted Subsidiary; or

 

(B) not more than 5% of Consolidated EBITDAR for any period of four consecutive
Fiscal Quarters is attributable, in the aggregate, to Persons that become
Restricted Subsidiaries after the date hereof and remain subject to such
limitations more than 60 days after becoming Restricted Subsidiaries.

 

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Section 7.06. Limitation on Sale or Issuance of Equity Interests of
Subsidiaries. The Borrower shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, sell or issue any Equity Interests of a
Restricted Subsidiary unless:

 

(a) the sale or issuance is to the Borrower or another Restricted Subsidiary; or

 

(b) (i) if, after giving effect to the sale or issuance, the Restricted
Subsidiary would no longer be a Restricted Subsidiary, all remaining Investments
of the Borrower and the Restricted Subsidiaries in such former Restricted
Subsidiary (valued at an amount equal to the Borrower’s remaining proportional
share of the fair market value of such former Restricted Subsidiary’s assets
less liabilities), if deemed made at that time, would be permitted under Section
7.08 and (ii) the Borrower complies with Section 7.03(c) with respect to the
sale or issuance.

 

Section 7.07. Restricted Payments. (a) The Borrower shall not, and shall not
permit any Restricted Subsidiary to, declare or make any Restricted Payment on
or after the Effective Date, except that:

 

(i) any Restricted Subsidiary may declare and make Restricted Payments to the
Borrower or any other Restricted Subsidiary;

 

(ii) the Borrower may purchase, redeem or otherwise acquire or retire for value
any of its Equity Interests held by officers, directors or employees or former
officers, directors or employees (or their estates or beneficiaries under their
estates), upon death, disability, retirement, severance or termination of
employment; provided that the aggregate amount expended pursuant to this clause
(ii) during the term of this Agreement does not exceed $1,000,000;

 

(iii) the Borrower may declare or make Restricted Payments if at the time of,
and after giving effect to, the Restricted Payment:

 

(A) the Borrower can demonstrate that if it were subject to an
Indebtedness-incurrence test that required it to demonstrate on a pro forma
basis that, after giving effect to the incurrence of additional Indebtedness, it
would meet a Fixed Charge Coverage Ratio (EBITDA) of at least 4.0:1, it could,
on the date of such declaration and of such payment, incur at least $1.00 of
additional Indebtedness pursuant to such test, and

 

(B) the aggregate amount expended for all Restricted Payments made pursuant to
this clause (iii) during any Fiscal Year would not exceed the sum of:

 

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(1) 50% of Consolidated Net Income calculated for the immediately preceding
Fiscal Year (such calculation to be based on financial statements for such
immediately preceding Fiscal Year that have been provided pursuant to this
Agreement); plus

 

(2) for each Fiscal Year ending after December 31, 2004, the amount (if any) by
which (x) the amount of Restricted Payments for the immediately preceding Fiscal
Year permitted to be made pursuant to clause (1) above (without including any
carryover amount from any prior Fiscal Year) exceeded (y) the amount of
Restricted Payments actually made during such immediately preceding Fiscal Year
pursuant to clause (1) above;

 

(iv) the Borrower may, in connection with the payment of a dividend on its
shares of common stock that is payable in additional shares of such common
stock, pay cash in lieu of delivering fractional shares of such common stock;
provided that the aggregate amount expended pursuant to this clause (iv) during
the term of this Agreement does not exceed $2,000,000;

 

(v) the Borrower may purchase, redeem or otherwise acquire or retire for value
shares of its common stock; provided that the aggregate amount expended pursuant
to this clause (v) shall not at any time exceed the aggregate amount of the net
cash proceeds received by the Borrower after the Effective Date from the
exercise of any of the Warrants; and

 

(vi) if at the time of, and after giving effect thereto, the Borrower can
demonstrate that it can meet the Indebtedness-incurrence test referred to in
clause (iii)(A) above, the Borrower may make additional Restricted Payments in
an aggregate amount expended for all such Restricted Payments made pursuant to
this clause (vi) during the term of this Agreement not to exceed $25,000,000;

 

provided that Restricted Payments may be declared and made pursuant to clauses
(ii), (iii), (iv), (v) or (vi) only if at the time of, and after giving effect
to, the Restricted Payment, no Default shall have occurred and be continuing.

 

(b) The Borrower will not, and will not permit any Restricted Subsidiary to,
furnish any funds to or make any Investment in an Unrestricted Subsidiary or
other Person for purposes of enabling it to make any Restricted Payment that
could not be made directly by the Borrower or a Restricted Subsidiary in
accordance with the provisions of this Section.

 

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Section 7.08. Limitations on Acquisitions and Investments. (a) The Borrower
shall not, and shall not permit any Restricted Subsidiary to, make any
Acquisitions or make, acquire or hold any other Investments, except:

 

(i) Permitted Investments;

 

(ii) Acquisitions involving Healthcare Facilities the sole consideration for
which consists of Qualified Equity Interests of the Borrower;

 

(iii) Acquisitions of the Specified Properties;

 

(iv) the Foothill Transaction; and

 

(v) Investments funded with Casualty Proceeds to the extent such Investments are
effected to replace or rebuild the asset in respect of which such Casualty
Proceeds were received.

 

(b) Notwithstanding the foregoing (but subject to the proviso below), the
Borrower and its Restricted Subsidiaries may make Restricted Investments
involving Healthcare Facilities and assets incidental thereto (including any
Restricted Investment referred to in clause (y) of the proviso below) if, at the
time of, and after giving effect to, each such Restricted Investment:

 

(i) no Default shall have occurred and be continuing; and

 

(ii) the aggregate amount of such Restricted Investment and all other Restricted
Investments made in reliance on this clause (net of, with respect to a
Restricted Investment in any particular Person made pursuant to this clause, the
after-tax cash return thereon received after the Effective Date as a result of
any sale for cash, repayment, redemption, liquidating distribution or other cash
realization (not included in Consolidated Net Income), but not to exceed the
amount of such Restricted Investment in such Person made after the Effective
Date in reliance on this clause) plus the aggregate principal amount of related
Indebtedness incurred pursuant to Section 7.01(a)(v) and still outstanding
(including any refinance thereof pursuant to Section 7.01(a)(vi)) does not
exceed $150,000,000;

 

provided that (x) this clause (b) shall not be used to make any Investment in
any Unrestricted Subsidiary and (y) for purposes of this clause (b), in the case
of a sale or issuance of Equity Interests of a Restricted Subsidiary as a result
of which such Restricted Subsidiary would no longer be a Subsidiary, all
remaining Investments of the Borrower and the Restricted Subsidiaries in such
former Restricted Subsidiary immediately after giving effect to such transaction
(valued at an amount equal to the Borrower’s remaining proportional share of the
fair market value of such former Restricted Subsidiary’s assets less
liabilities) shall be deemed made at the time such transaction is consummated.

 

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Section 7.09. No Change of Fiscal Periods. The Borrower shall not change the
date on which any of its Fiscal Years or Fiscal Quarters ends, unless the
Required Lenders shall have consented to such change (which consent may be
conditioned on the amendment of any covenant herein that would be affected by
such change to eliminate the effect thereof).

 

Section 7.10. Limitation on Business.

 

(a) The Borrower shall not engage in any activities other than owning Equity
Interests in Cornerstone and other Subsidiaries that own, operate or manage
Healthcare Facilities, and financing activities and other activities reasonably
related to such ownership.

 

(b) The Borrower shall not permit any of its Restricted Subsidiaries to engage
in any business, other than the business of owning, operating or managing
Healthcare Facilities and any business reasonably incidental thereto.

 

Section 7.11. Limitation on Sale and Leaseback Transactions. The Borrower shall
not, and shall not permit any Restricted Subsidiary to, enter into any Sale and
Leaseback Transaction with respect to any property or asset unless:

 

(1) the Borrower or the Restricted Subsidiary would be entitled to:

 

(A) incur Indebtedness in an amount equal to the Attributable Indebtedness with
respect to such Sale and Leaseback Transaction pursuant to Section 7.01(a), and

 

(B) create a Lien on such property or asset securing such Attributable
Indebtedness pursuant to Section 7.02,

 

in which case, the corresponding Indebtedness and Lien will be deemed incurred
pursuant to those provisions, and

 

(2) the Borrower complies with Section 7.03(c) in respect of such transaction.

 

Section 7.12. No Modification of Certain Documents without Consent. (a) The
Borrower shall not, and shall not permit any Restricted Subsidiary to, consent
to or solicit any amendment or supplement to, or any waiver or other
modification of, any Existing Affiliate Agreement if the effect thereof would be
to materially increase the amount, or materially accelerate the date of payment,
of any obligation of the Borrower or any Subsidiary Guarantor thereunder.

 

(b) The Borrower shall not, and shall not permit any Restricted Subsidiary to,
consent to or solicit any amendment or supplement to, or any waiver or other
modification of any Third Party Lease or Management Contract, if the effect
thereof could reasonably be expected to be adverse in any material

 

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respect to the Borrower and the Subsidiary Guarantors, taken as a whole, or to
the Lenders.

 

(c) The Borrower shall not, and shall not permit any Restricted Subsidiary to,
consent to or solicit any amendment or supplement to, or any waiver or other
modification of any Master Lease Agreement, if the effect thereof could
adversely affect the ability of the Borrower and the Subsidiary Guarantors to
repay the Obligations as and when due.

 

Section 7.13. Limitation on Cash not held in Collateral Accounts. The Borrower
will not permit the aggregate amount of all collected funds and Temporary Cash
Investments held by the Borrower and its Restricted Subsidiaries in accounts,
other than the Collateral Accounts, to exceed $2,000,000 at the close of
business on any two consecutive Business Days; provided that this Section shall
not apply to deposits with trade creditors, landlords, bonding companies and
other similar deposits made in the ordinary course of business and consistent
with past practice.

 

Section 7.14. Limitation of Designated Interest Rate Agreements. The Borrower
will not designate any Interest Rate Agreement as a Secured Obligation for
purposes of the Security Agreement if, immediately after giving effect to such
designation, the aggregate notional principal amount of all such agreements then
in effect which are Secured Obligations would exceed $300,000,000.

 

Section 7.15. Payments for Consents. The Borrower shall not, and shall not
permit any of its Subsidiaries or Affiliates to, directly or indirectly, pay or
cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Lender for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Agreement or the other
Financing Documents unless such consideration is offered to be paid or agreed to
be paid to all Lenders that consent, waive or agree to amend such term or
provision within the time period set forth in the solicitation documents
relating to the consent, waiver or amendment.

 

Section 7.16. Limitations on Capital Expenditures. The Borrower will not permit
the aggregate amount of Capital Expenditures made in any Fiscal Year set forth
below to exceed the amount set forth below opposite such Fiscal Year:

 

Fiscal Year

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

   Amount

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

2004

   $ 100,000,000

2005

   $ 115,000,000

2006

   $ 120,000,000

2007

   $ 130,000,000

2008

   $ 130,000,000

 

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2009

   $ 130,000,000

 

plus, for each Fiscal Year ending after December 31, 2004, the amount (if any)
by which (x) the amount of Capital Expenditures for the immediately preceding
Fiscal Year specified above (without including any carryover amount from any
prior Fiscal Year) exceeded (y) the amount of Capital Expenditures actually made
during such immediately preceding Fiscal Year.

 

ARTICLE 8

DEFAULTS

 

Section 8.01. Events of Default. If one or more of the following events (each,
an “Event of Default”) shall have occurred and be continuing:

 

(a) (i) any principal of any Loan or any reimbursement obligation in respect of
any LC Disbursement shall not be paid when due, or (ii) any interest thereon
shall not be paid within one Business Day after the due date thereof, or (iii)
any fee payable pursuant to Section 2.10 shall not be paid within three Business
Days after the due date thereof, or (iv) any other fee or other amount payable
hereunder to or for the account of any Agent or any Lender shall not be paid
within five Business Days after the due date thereof; or

 

(b) the Borrower shall fail to observe or perform any covenant contained in (i)
Section 5.01(q), and such failure shall continue unremedied for a period of
three Business Days, or (ii) Section 5.01(e), Section 5.01(f), Article 6 or
Article 7; or

 

(c) the Borrower or any Subsidiary Guarantor shall fail to observe or perform
any of its covenants or agreements contained in the Financing Documents (other
than those covered by clause (a) or (b) above) for 30 days after written notice
thereof has been given to the Borrower by the Agent at the request of any
Lender; provided that: (i) if such failure relates primarily to the operation
of, or to the use, maintenance, protection, preservation or status of property
used directly in the operation of, a particular Healthcare Facility that is a
Master Lease Property and there is a representation, covenant or agreement
dealing with substantially the same subject matter in the applicable Master
Lease Agreement, such failure shall not constitute an Event of Default pursuant
to this clause (c) and instead shall be governed solely by Sections 8.01(g) and
8.01(k) below; and (ii) if such failure relates primarily to the operation of,
or to the use, maintenance, protection, preservation or status of property used
directly in the operation of, one or more Healthcare Facilities that are subject
to one or more Third Party Leases and it would not be an Event of Default under
Section 8.01(h) if at such time all such Third Party Leases were terminated (or
the surrender or repossession of the property leased thereunder were required),
such failure shall not constitute an Event of Default pursuant to this Section
8.01(c); or

 

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(d) any representation, warranty, certification or statement made or deemed made
by the Borrower or any Subsidiary Guarantor in any Financing Document or in any
certificate, financial statement or other document delivered pursuant thereto
shall prove to have been incorrect in any material respect when made or deemed
made; or

 

(e) the Borrower or any Subsidiary Guarantor shall fail to make one or more
payments (whether of principal or interest) in respect of Material Indebtedness
when due or within any period of grace applicable to such payments; or

 

(f) any event or condition shall occur that (i) results in the acceleration of
the maturity of any Material Indebtedness or (ii) enables (or, with the giving
of notice or lapse of time or both, would enable) the holder or holders of
Material Indebtedness or any Person acting on behalf of such holder or holders
to accelerate the maturity thereof; provided that it shall not be an Event of
Default under this clause (f) if such event or condition is an event of default
under the instrument evidencing such Material Indebtedness and arises with
respect to an Event of Default (as defined in the applicable Master Lease
Agreement) and no other event of default shall have then occurred and be
continuing under such instrument;

 

(g) (x) the termination of the lease of one or more Healthcare Facilities under
a Master Lease Agreement, or the surrender or repossession of one or more
Healthcare Facilities leased thereunder, prior to the scheduled termination
thereof; provided that (i) this subsection (g)(x) shall not apply to (A) any
voluntary termination of a lease of a Healthcare Facility at a time when no
Event of Default (as defined in the Master Lease Agreement) exists thereunder or
is reasonably likely to occur or (B) any termination of a lease of a Healthcare
Facility pursuant to a purchase option exercised in accordance with the terms
thereof and (ii) no Event of Default shall exist under this subsection (g)(x) at
any time unless the EBITDAR attributable to all Healthcare Facilities covered by
this subsection (g)(x) then being terminated, surrendered or repossessed (the
Fiscal Quarter in which such termination, surrender or repossession occurs, the
“Current Fiscal Quarter”), and the EBITDAR attributable to all Healthcare
Facilities with respect to which such a termination, surrender or repossession
covered by this subsection (g)(x) occurred during the Current Fiscal Quarter and
the most recently ended period of four consecutive Fiscal Quarters exceed, in
the aggregate, 5% of Consolidated EBITDAR during such four consecutive Fiscal
Quarter period (the EBITDAR attributable to each such Healthcare Facility and
the Consolidated EBITDAR to be calculated, in each case, for the most recently
ended period of four consecutive Fiscal Quarters for which the necessary
information is available, in each case annualized if such fiscal information is
not available for a full four Fiscal Quarters following the Effective Date);

 

(y) any Event of Default (as defined in any Master Lease Agreement) occurs and
is continuing and such Event of Default remains

 

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uncured for a period of 10 days after written notice thereof has been given to
the Borrower by the Agent at the request of the Required Lenders; provided that
if the only such Events of Default that have occurred and are continuing are
Facility Defaults (as defined in any Master Lease Agreement) and the number of
Healthcare Facilities to which such Facility Defaults relate does not exceed 15,
such condition shall not constitute an Event of Default pursuant to this
subsection (g)(y); or

 

(h) one or more events or conditions shall occur that result in, or enable the
counter-party thereunder to require, (i) the termination of one or more Third
Party Leases, or the surrender or repossession of the property leased
thereunder, prior to the scheduled termination thereof or (ii) the termination
of one or more Management Contracts prior to the scheduled termination thereof;
provided that (x) this subsection (h) shall not apply to any voluntary
termination of a Third Party Lease or Management Contract by the Borrower or a
Subsidiary Guarantor at a time when no default by it thereunder exists or is
reasonably likely to occur and (y) no Event of Default shall exist under this
subsection (h) at any time, unless the EBITDA attributable to all Healthcare
Facilities then subject to a termination, surrender or repossession covered by
this subsection (h) and the EBITDA attributable to all Healthcare Facilities
with respect to which such a termination, surrender or repossession occurred
during the preceding 12 months exceed, in the aggregate, 12% of Consolidated
EBITDA (the EBITDA attributable to each such Healthcare Facility to be
calculated for the most recent 12 months of full operation thereof for which the
necessary financial information is available and Consolidated EBITDA to be
calculated for the most recently ended period of four consecutive Fiscal
Quarters for which the necessary financial information is available, in each
case annualized if such financial information is not available for a full 12
months or a full four Fiscal Quarters, as the case may be); or

 

(i) any member of the ERISA Group shall fail to pay when due an amount or
amounts aggregating in excess of $10,000,000 which it shall have become liable
to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan
shall be filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall occur a
complete or partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could cause one or more members of the ERISA Group to incur a current payment
obligation in excess of $10,000,000; or

 

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(j) one or more Enforceable Judgments for the payment of money aggregating in
excess of $10,000,000 shall be rendered against the Borrower or one or more of
the Subsidiary Guarantors and shall not have been satisfied; or

 

(k) any Lien created or purported to be created by any of the Collateral
Documents shall at any time fail to constitute a valid and perfected Lien on all
of the Collateral purported to be subject to such Lien, subject to no prior or
equal Lien (other than Permitted Liens), or the Borrower or any Subsidiary
Guarantor shall so assert in writing; provided that it shall not be an Event of
Default under this clause (k) if the Liens in question are not valid or not
perfected, or are subject to such other Liens, only in respect of Collateral (x)
with an aggregate fair market value not in excess of $5,000,000 during the term
of this Agreement or (y) used directly in the operation of one or more
particular Healthcare Facilities (i) that are Master Lease Properties and the
number of such facilities does not exceed 15 or (ii) that are subject to one or
more Third Party Leases and it would not be an Event of Default under Section
8.01(h) if at such time all such Third Party Leases were terminated (or the
surrender or repossession of the property leased thereunder were required); or

 

(l) any Subsidiary Guarantor’s Subsidiary Guaranty shall at any time fail to
constitute a valid and binding agreement of such Subsidiary Guarantor (except as
expressly permitted by any Financing Document), or any Subsidiary Guarantor, or
any Person acting on behalf of any Subsidiary Guarantor, shall so assert in
writing; or

 

(m) (i) the Borrower or any Subsidiary Guarantor shall commence a voluntary case
or other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; or (ii) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary Guarantor seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of 60 days; or an order for relief shall be entered against it under the
Federal bankruptcy laws as now or hereafter in effect; or

 

(n) any Person or group of Persons (within the meaning of Section 13 or 14 of
the Securities Exchange Act) shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 promulgated by the SEC under said Act) of

 

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more than 50% of the outstanding shares of common stock of the Borrower; or,
during any period of 24 consecutive calendar months, individuals who were
members of the board of directors of the Borrower on the first day of such
period (together with any new directors whose election or appointment by such
members or whose nomination for election by the shareholders of the Borrower was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) shall cease to constitute a majority of
the board of directors of the Borrower,

 

then, and in every such event the Agent or the Required Lenders may:

 

(i) by notice to the Borrower terminate the Commitments and they shall thereupon
terminate,

 

(ii) by notice to the Issuing Lender instruct the Issuing Lender not to extend
the expiry date of any outstanding Letter of Credit, and

 

(iii) by notice to the Borrower, declare the Loans and all other amounts in
respect of the Obligations (in each case together with accrued interest thereon)
to be, and they shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower;

 

provided that if any event specified above in Section 8.01(m) occurs, then
without notice to the Borrower or any other act by the Agent or any Lender, the
Commitments shall thereupon terminate and all the Loans and all other amounts in
respect of the Obligations (in each case together with accrued interest thereon)
shall become immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.

 

Section 8.02. Notice of Default. The Agent shall give notice to the Borrower
under Section 8.01 promptly upon being requested to do so by the Required
Lenders and shall thereupon notify all the Lenders thereof.

 

Section 8.03. Enforcement Notice. If the Agent is (i) instructed to do so by the
Required Lenders at any time after the Loans become immediately due and payable
pursuant to Section 8.01(m), or (ii) instructed to do so by the Required Lenders
at any time after the Loans have been declared due and payable pursuant to
Section 8.01, the Administrative Agent shall deliver to the Collateral Agent an
Enforcement Notice directing the Collateral Agent to exercise one or more
specific remedies under the Collateral Documents or any other right or remedy
available at law or in equity. Concurrently with the delivery of any such
Enforcement Notice to the Collateral Agent, all outstanding Loans and all other
amounts in respect of the Obligations not theretofore declared due and payable
shall automatically become immediately due and payable.

 

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ARTICLE 9

THE AGENTS

 

Each of the Lenders and the Issuing Lender hereby irrevocably appoints JPMorgan
Chase Bank as its agent and authorizes JPMorgan Chase Bank, in its capacity as
administrative agent and collateral agent, (i) to sign and deliver the
Collateral Documents and (ii) to take such actions on its behalf and to exercise
such powers as are delegated to the Agent by the terms of the Financing
Documents, together with such actions and powers as are reasonably incidental
thereto.

 

The bank serving as the Agent hereunder shall have the same rights and powers in
its capacity as a Lender as any other Lender and may exercise the same as though
it were not the Agent, and such bank and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of business with the
Borrower or any Subsidiary or other Affiliate thereof as if it were not the
Agent hereunder.

 

The Agent shall not have any duties or obligations except those expressly set
forth in the Financing Documents. Without limiting the generality of the
foregoing, (a) the Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing, (b) the
Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated by the Financing Documents that the Agent is required to exercise
in writing as directed by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02), and (c) except as expressly set forth in the
Financing Documents, the Agent shall not have any duty to disclose, and shall
not be liable for the failure to disclose, any information relating to the
Borrower or any of its Subsidiaries that is communicated to or obtained by the
bank serving as Agent or any of its Affiliates in any capacity. The Agent shall
not be liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
10.02) or in the absence of its own gross negligence or willful misconduct. The
Agent shall be deemed not to have knowledge of any Default unless and until
written notice thereof is given to the Agent by the Borrower or a Lender, and
the Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with
any Financing Document, (ii) the contents of any certificate, report or other
document delivered thereunder or in connection therewith, (iii) the performance
or observance of any of the covenants, agreements or other terms or conditions
set forth in any Financing Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Financing Document or any other agreement,
instrument or document, (v) the satisfaction of any condition set forth in
Article 4 or elsewhere in any Financing Document, other than to confirm receipt
of items expressly required to be delivered to the

 

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Agent, or (vi) the existence, genuineness or value of any of the Collateral or
the validity, perfection, recordation, priority or enforceability of any Lien on
any of the Collateral.

 

The 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 believed by it to be genuine and to have been signed
or sent by the proper Person. The Agent also may rely upon any statement made to
it orally or by telephone and believed by it to be made by the proper Person,
and shall not incur any liability for relying thereon. The Agent may consult
with legal counsel (who may be counsel for the Borrower), 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.

 

The Agent may perform any and all its duties and exercise its rights and powers
by or through any one or more sub-agents appointed by the Agent. The Agent and
any such sub-agent may perform any and all its duties and exercise its rights
and powers through their respective Related Parties. The exculpatory provisions
of the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Agent and any such sub-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.

 

Subject to the appointment and acceptance of a successor Agent as provided in
this paragraph, the Agent may resign at any time by notifying the Lenders, the
Issuing Lender and the Borrower. Upon any such resignation, the Required Lenders
shall have the right, in consultation with the Borrower, to appoint a successor.
If no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Agent gives
notice of its resignation, then the retiring Agent may, on behalf of the Lenders
and the Issuing Lender, appoint a successor Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Agent hereunder by a successor, such successor
shall 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. The fees payable by the Borrower to a
successor Agent shall be the same as those payable to its predecessor unless
otherwise agreed between the Borrower and such successor. After the Agent’s
resignation hereunder, the provisions of this Article and Section 10.03 shall
continue in effect for the benefit of such retiring Agent, its sub agents and
their respective Related Parties in respect of any actions taken or omitted to
be taken by any of them while it was acting as Agent.

 

Each Lender acknowledges that it has, independently and without reliance upon
the Agent or any other Lender and based on such documents and information as it
has deemed appropriate, made its own credit analysis and

 

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decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Financing Document, any related
agreement or any document furnished hereunder or thereunder.

 

Nothing in any Financing Document shall impose on Citicorp USA, Inc., in its
capacity as syndication agent, or on any of General Electric Capital
Corporation, The CIT Group/Business Credit, Inc. or Wells Fargo Foothill, in its
capacity as Co-Documentation Agent, any duty or responsibility whatsoever.

 

ARTICLE 10

MISCELLANEOUS

 

Section 10.01. Notices. (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:

 

(i) if to the Borrower, to it at 680 South Fourth Street, Louisville, KY 40202,
Attention of the Chief Financial Officer, Treasurer and General Counsel
(Telecopy Nos. (502) 596-4075 and (502) 596-4170);

 

(ii) if to the Agent (including in its capacity as a Lender or Issuing Lender),
to JPMorgan Agency Services, 1111 Fannin - 10th Floor, Houston, TX 77002,
Attention of Erin Merritt (Telephone No. (713) 750-2119; Telecopy No. (713)
750-2782), with a copy to JPMorgan Chase Bank - Corporate Banking Group, 270
Park Avenue - 4th Floor, New York, NY 10017, Attention of Dawn Lee Lum
(Telephone No. (212) 270-5100; Telecopy No. (212) 270-2472) and to JPMorgan
Chase Bank - Corporate Banking Group, 270 Park Avenue - 20th Floor, New York, NY
10017, Attention of Lisa Dee (Telephone No. (212) 270-6265; Telecopy No. (212)
270-7449); and

 

(iii) if to any other Lender, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire.

 

(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by electronic communications pursuant to procedures approved by the
Agent; provided that the foregoing shall not apply to notices pursuant to
Article 2 unless otherwise agreed by the Agent and the applicable Lender. The
Agent or the Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant

 

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to procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

 

(c) Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

 

Section 10.02. Waivers; Amendments. (a) No failure or delay by the Agent, the
Issuing Lender or any Lender in exercising any right or power hereunder or under
any other Financing Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Agent, the Issuing Lender and the Lenders under the
Financing Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of any
Financing Document or consent to any departure by the Borrower or any Restricted
Subsidiary therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Agent, any Lender or the Issuing Lender may
have had notice or knowledge of such Default at the time.

 

(b) No Financing Document or provision thereof may be waived, amended or
modified except, in the case of this Agreement, by an agreement or agreements in
writing entered into by the Borrower and the Required Lenders or, in the case of
any other Financing Document, by an agreement or agreements in writing entered
into by the parties thereto with the consent of the Required Lenders; provided
that no such agreement shall:

 

(i) increase the Commitment of any Lender without the written consent of such
Lender;

 

(ii) reduce the principal amount of any Loan or LC Disbursement or reduce the
rate of interest thereon, or reduce any fees payable hereunder, without the
written consent of each Lender affected thereby;

 

(iii) postpone the scheduled date of payment of the principal amount of any Loan
or LC Disbursement, or any interest thereon, or any fees payable hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any Commitment, without the written consent of
each Lender affected thereby;

 

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(iv) release all or substantially all of the Collateral from the Security
Interests or release all or substantially all of the Restricted Subsidiaries
from their obligations under the Subsidiary Guarantees (except in each case as
expressly provided in the Financing Documents) without the written consent of
each Lender;

 

(v) increase any advance rate or add any asset category to the Borrowing Base
without the written consent of the Supermajority Lenders;

 

(vi) change any of the provisions of this Section or the definition of “Required
Lenders” or “Supermajority Lenders” or any other provision of any Financing
Document specifying the number or percentage of Lenders required to waive, amend
or modify any rights thereunder or make any determination or grant any consent
thereunder without the written consent of each Lender; or

 

(vii) change Section 2.16(b) or (c) in a manner that would alter the pro rata
sharing of payments required thereby, without the written consent of each
Lender;

 

provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Agent or the Issuing Lender without the prior
written consent of the Agent or the Issuing Lender, as the case may be.

 

Section 10.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay
(i) all reasonable out of pocket expenses incurred by the Agent and its
Affiliates, including the reasonable fees, charges and disbursements of counsel
for the Agent, in connection with the syndication of the credit facilities
provided for herein, the preparation, execution, delivery and administration of
this Agreement and the other Financing Documents or any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Lender in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder, (iii) the fees and out-of pocket expenses of
the Agent’s initial and ongoing borrowing base and collateral examinations,
periodic field examinations and real estate appraisals, and the monthly and
other monitoring of assets performed by the Agent, subject to any limits on such
fees and expenses set forth in this Agreement and (iv) all reasonable
out-of-pocket expenses incurred by the Agent, the Issuing Lender or any Lender,
including the fees, charges and disbursements of any counsel for the Agent, the
Issuing Lender or any Lender, in connection with the enforcement or protection
of its rights in connection with this Agreement and the other Financing
Documents, including its rights under this Section, or in connection with the
Loans made or Letters of Credit issued hereunder, including all such out-of
pocket expenses incurred during any

 

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workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.

 

(b) The Borrower shall indemnify the Agent, the Issuing Lender and each Lender,
and each Related Party of any of the foregoing Persons (each such Person being
called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and
all losses, claims, damages, liabilities and related expenses, including the
fees, charges and disbursements of any counsel for any Indemnitee, incurred by
or asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of any Financing Document or any
agreement or instrument contemplated thereby, the performance by the parties to
the Financing Documents of their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated thereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Lender to honor a demand for payment under
a Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any property
owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
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.

 

(c) To the extent that the Borrower fails to pay any amount required to be paid
by it to the Agent or the Issuing Lender under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Agent or the Issuing Lender,
as the case may be, such Lender’s Applicable Percentage (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought) of
such unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Agent or the Issuing Lender in its capacity as such.

 

(d) To the extent permitted by applicable law, the Borrower shall not assert,
and hereby waives, any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.

 

(e) All amounts due under this Section shall be payable not later than five days
after written demand therefor.

 

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Section 10.04. Successors And Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Lender that issues any Letter of Credit), except that (i) the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Lender that issues any
Letter of Credit), Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Agent, the Issuing Lender and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

 

(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it) with the prior written consent (such
consent not to be unreasonably withheld) of:

 

(A) the Borrower, provided that no consent of the Borrower shall be required for
an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if a
Default has occurred and is continuing, any other assignee;

 

(B) the Agent, provided that no consent of the Agent shall be required for an
assignment of any Commitment to an assignee that is a Lender immediately prior
to giving effect to such assignment or an Affiliate of such a Lender; and

 

(C) the Issuing Lender.

 

(ii) Assignments shall be subject to the following additional conditions:

 

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender’s
Commitment or Loans, the amount of the Commitment or Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the Agent) shall
not be less than $5,000,000, and, immediately after giving effect to such
assignment, the assigning Lender shall have (determined as of the date the
Assignment and

 

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Assumption with respect to such assignment is delivered to the Agent)
Commitments and Loans aggregating at least $5,000,000, in each case unless each
of the Borrower and the Agent otherwise consent, provided that no such consent
of the Borrower shall be required if a Default has occurred and is continuing;

 

(B) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement;

 

(C) the parties to each assignment shall execute and deliver to the Agent an
Assignment and Assumption, together with a processing and recordation fee of
$3,500; and

 

(D) the assignee, if it shall not be a Lender, shall deliver to the Agent an
Administrative Questionnaire.

 

For the purposes of this Section 10.04(b), the term “Approved Fund” has the
following meaning:

 

“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.

 

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv)
of this Section, from and after the effective date specified in each Assignment
and Assumption the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.13, 2.14, 2.15, and 10.03). Any assignment or transfer by a Lender of rights
or obligations under this Agreement that does not comply with this Section 10.04
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.

 

(iv) The Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Commitment of, and

 

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principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive, and the Borrower, the Agent, the Issuing
Lender and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Lender and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

 

(v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.

 

(c) (i) Any Lender may, without the consent of the Borrower, the Agent or the
Issuing Lender, sell participations to one or more banks or other entities (a
“Participant”) in all or a portion of such Lender’s rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans owing
to it); provided that (A) such Lender’s obligations under this Agreement shall
remain unchanged, (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the Borrower, the
Agent, the Issuing Lender and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce the Financing Documents and to approve any amendment,
modification or waiver of any provision of the Financing Documents; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 10.02(b) that affects such
Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees
that each Participant shall be entitled to the benefits of Sections 2.13, 2.14
and 2.15 to the same extent as if it were a Lender and had acquired its interest
by assignment pursuant to paragraph (b) of this Section. To the extent permitted
by law, each Participant also shall be entitled to the benefits of Section 10.08
as though it were a Lender, provided such Participant agrees to be subject to
Section 2.16(c) as though it were a Lender.

 

(ii) A Participant shall not be entitled to receive any greater payment under
Section 2.13 or 2.15 than the applicable Lender would

 

111

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

have been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower’s prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 2.15
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with
Section 2.15(e) as though it were a Lender.

 

(d) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

 

Section 10.05. Survival. All covenants, agreements, representations and
warranties made by the Credit Parties in the Financing Documents and in the
certificates or other instruments delivered in connection with or pursuant to
the Financing Documents shall be considered to have been relied upon by the
other parties hereto and shall survive the execution and delivery of the
Financing Documents and the making of any Loans and issuance of any Letters of
Credit, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Agent, the Issuing Lender or any Lender may
have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated. The provisions of Sections 2.13, 2.14, 2.15 and
10.03 and Article 9 shall survive and remain in full force and effect regardless
of the consummation of the transactions contemplated hereby, the repayment of
the Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.

 

Section 10.06. Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Financing Documents and any separate letter agreements with respect to fees
payable to the Agent 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 Section 4.01, this Agreement shall become effective when it shall
have been executed by the Agent and when the Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the

 

112

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

other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
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.

 

Section 10.07. Severability. Any provision of any Financing Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

Section 10.08. Right of Setoff. If an Event of Default shall have occurred and
be continuing, each Lender and each of its Affiliates is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
against any of and all the obligations of the Borrower now or hereafter existing
under this Agreement held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.

 

Section 10.09. Governing Law; Jurisdiction; Consent to Service of Process. (a)
This Agreement shall be construed in accordance with and governed by the law of
the State of New York.

 

(b) The Borrower hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of the Supreme Court of the State
of New York sitting in New York County and of the United States District Court
of the Southern District of New York, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to any Financing
Document, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in any Financing
Document shall affect any right that the Agent, the Issuing Lender or any Lender
may otherwise have to bring any action or proceeding relating to any Financing
Document against any Credit Party or its properties in the courts of any
jurisdiction.

 

113

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

(c) The Borrower hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to any Financing Document in any court referred to in
paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

 

(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 10.01. Nothing in any Financing
Document will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

 

Section 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO ANY FINANCING DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 10.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

 

Section 10.12. Confidentiality. Each of the Agent, the Issuing Lender and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to any Financing Document or the
enforcement of rights thereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any assignee
of or

 

114

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

Participant in, or 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
the Borrower and its obligations, (g) with the consent of the Borrower or (h) to
the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes available to the Agent, the
Issuing Lender or any Lender on a nonconfidential basis from a source other than
the Borrower. For the purposes of this Section, “Information” means all
information received from the Borrower relating to the Borrower or its business,
other than any such information that is available to the Agent, the Issuing
Lender or any Lender on a nonconfidential basis prior to disclosure by the
Borrower; provided that, in the case of information received from the Borrower
after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information. Notwithstanding anything herein to
the contrary, any party hereto (and any employee, representative or other agent
of thereof) may disclose to any and all persons, without limitation of any kind,
the U.S. federal income tax treatment and the U.S. federal income tax structure
of the transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to it relating to such tax
treatment and tax structure. However, no disclosure of any information relating
to such tax treatment or tax structure may be made to the extent nondisclosure
is reasonably necessary in order to comply with applicable securities laws.

 

Section 10.13. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.

 

Section 10.14. Margin Stock. Each Lender represents to the Agent and each other
Lender that it in good faith is not relying upon any Margin Stock as

 

115

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

collateral in the extension or maintenance of the credit provided for in this
Agreement.

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

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

KINDRED HEALTHCARE, INC.

By:

 

/s/ Donald H. Robinson

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

Name:

  Donald H. Robinson

Title:

  Senior Vice President of Tax and Treasurer

 

123

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

Solely for purposes of Section 4.02:

KINDRED HEALTHCARE
OPERATING, INC.

By:

 

/s/ Donald H. Robinson

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

Name:

  Donald H. Robinson

Title:

  Senior Vice President of Tax and Treasurer

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

JPMORGAN CHASE BANK, as
Administrative Agent, Collateral
Agent, Issuing Lender, and a Lender

By:

 

/s/ John C. Riordan

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

Name:

 

John C. Riordan

Title:

 

Vice President

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

GENERAL ELECTRIC CAPITAL
CORPORATION, as Co-
Documentation Agent and a Lender

By:

 

/s/ Thomas A. Buckelew

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

Name:

  Thomas A. Buckelew

Title:

  Duly Authorized Signatory

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

WELLS FARGO FOOTHILL, as Co-
Documentation Agent and a Lender

By:

 

/s/ M.E. Stearns

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

Name:

  M.E. Stearns

Title:

  Sr. V. P.

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

CITICORP USA, INC., as Syndication
Agent and a Lender

By:

 

/s/ James J. McCarthy

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

Name:

  James J. McCarthy

Title:

  Director/Vice President

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

THE CIT GROUP/BUSINESS CREDIT, INC., as Co-Documentation Agent
and a Lender

By:

 

/s/ John J. McKenna

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

Name:

  John J. McKenna

Title:

  Senior Vice President

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

UBS AG, STAMFORD BRANCH, as a
Lender

By:

 

/s/ Wilfred V. Saint

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

Name:

  Wilfred V. Saint

Title:

  Director, Banking Products Services, US

By:

 

/s/ Juan Zuniga

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

Name:

  Juan Zuniga

Title:

  Associate Director, Banking Products Services, US

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

MERRILL LYNCH CAPITAL, as a
Lender

By:

 

/s/ David G. Moore

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

Name:

  David G. Moore

Title:

  Director

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

ALLIED IRISH BANKS, P.L.C., as a
Lender

By:

 

/s/ Martin S. Chin

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

Name:

  Martin S. Chin

Title:

  V. P.

By:

 

/s/ John Farrace

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

Name:

 

JOHN FARRACE

Title:

 

Senior Vice President

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

U.S. BANK NATIONAL ASSOCIATION, as a
Lender

By:

 

/s/ Toby B. Rau

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

Name:

  Toby B. Rau

Title:

  Vice President

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

SCHEDULE 1.01A

 

DISCONTINUED OPERATIONS

 

Facilities

 

Facility #:

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

  

Facility Name:

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

  

Facility Type:

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

0117    Sarasota FL (East Manor)    Nursing center 0181    Hudson FL – Windsor
Woods    Nursing center 0245    St Petersburg FL (Bay Pointe)    Nursing center
0268    Fort Meyers FL (Lee County)    Nursing center 0372    Tampa FL –
Carrollwood    Nursing center 0637    Spring Hill FL (Evergreen Woods)   
Nursing center 0836    Hillhaven rehab center    Nursing center 0837    Cape
Coral FL    Nursing center 0922    Hudson FL – Windsor Woods    Nursing center
1217    Brandenton FL – Casa Mora Rehab    Nursing center 1220    Clearwater FL
– Highland Pines    Nursing center 1233    St. Petersburg FL – Abbey Rehab   
Nursing center 0115    Rehab Center of Palm Beaches    Nursing center 0124   
Sandord FL    Nursing center 0125    Titusville FL    Nursing center 0246   
Oaks at Avon Nursing and Rehab    Nursing center 0610    Boca Raton Rehab Ctr   
Nursing center 1218    Pompano Beach FL – North Broward    Nursing center 1232
   Pompano Beach FL – Pompano Rehab    Nursing center 1230    Normandy Terrace
N. (CLSD 5/31/03)    Nursing center 1234    San Pedro    Nursing center 0523   
Brighton MA – W. Pk Alz & Nsg    Nursing center 0527    Needam MA – Briarwood   
Nursing center 0528    Marlborough MA – Westridge    Nursing center 0538    West
Roxbury MA    Nursing center 0565    Norwich CT – Hamilton Pavilion    Nursing
center 1226    Stamford CT – Homestead Health    Nursing center 0772   
Wisconsin Rapids WI – Family HC    Nursing center 0783    Lexington Centre for
Health    Nursing center 1223    Easton PA – Eastwood Nursing    Nursing center
1225    Owensboro KY – Hermitage Nursing    Nursing Center 0540    Brook Farm
Rehab and Nursing Center    Nursing center 0860/0861    The Greens at Creekside
   Nursing center and ALF
0197    Oshkosh Medical & Rehab Center    Nursing center 0786    Riverfront
Terrace Health Care Center    Nursing center 0434    Livingston Nursing Center,
MT    Nursing center 0227    Alcorn County Nursing Center, MS    Nursing center
4659    Kindred Hospital – Minnesota    Hospital

 

1

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

Facility #:

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

  

Facility Name:

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

  

Facility Type:

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

4677    Kindred Hospital – Metro Detroit    Hospital 4314    Kindred Pulmonary
Unit of Passaic    Hospital 4361    Kindred Pulmonary at the Meadowlands   
Hospital      Hospital Ancillary Services (Sleepcor)    Ancillary Services 2516
   VNA/CPS Pharmaceutical Services    Pharmacy 2519    Visiting Nurse Advanced
Infusion Systems - Anaheim    Pharmacy

 

2

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

SCHEDULE 1.01B

 

RESTRICTED SUBSIDIARIES, UNRESTRICTED SUBSIDIARIES AND EXCLUDED PARTNERSHIPS

 

I. CORPORATIONS AND L.L.C.S

 

No.

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

 

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding

Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

1.

  Advanced Infusion Systems, Inc.    CA    Kindred Pharmacy Services, Inc.   

1,000 shares

of common

stock, no par

value per

share

   100    RS

2.

  American X-Rays, Inc.    LA    Kindred Pharmacy Services, Inc.   

2,000 shares

of common

stock, no par

value per

share

   100    RS

3.

  Caribbean Behavioral Health Systems, Inc.    NV    Kindred Healthcare
Operating, Inc.   

1,000 shares

of common

stock, par

value $1.00

per share

   100    RS

4.

  Community Behavioral Health System, Inc.    LA    CPC Managed Care Health
Services, Inc.   

1,000 shares

of common

stock, par

value $1.00

per share

   100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

1

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

No.

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

  

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding

Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

5.

   Community Psychiatric Centers Properties of Texas, Inc.    TX    Kindred
Healthcare Operating, Inc.   

1,000 shares

of common

stock, par

value $1.00

per share

   100    RS

6.

   Community Psychiatric Centers Properties of Utah, Inc.    UT    Kindred
Healthcare Operating, Inc.   

1,000 shares

of common

stock, par

value $1.00

per share

   100    RS

7.

   Cornerstone Insurance Company    CI    Kindred Healthcare, Inc.   

1,000,000

shares of

common

stock, par

value $1.00

per share

   100    US

8.

   Courtland Gardens Health Center, Inc.    CT    PersonaCare of Connecticut,
Inc.   

1,000 shares

of common

stock, no par

value per

share

   100    RS

9.

   CPC Managed Care Health Services, Inc.    DE    Kindred Healthcare Operating,
Inc.   

1,000 shares

of common

stock, par

value $1.00

per share

   100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

2

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

No.

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

  

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding

Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

10.

   First Rehab, Inc.    DE    Kindred Pharmacy Services, Inc.   

1,000 shares

of common

stock, par

value $1.00

per share

   100    RS

11.

   Helian ASC of Northridge, Inc.    CA    Helian Health Group, Inc.   

100,000

shares of

common

stock, no par

value per

share

   100    RS

12.

   Helian Health Group, Inc.    DE    Kindred Healthcare Operating, Inc.   

1,000 shares

of common

stock, par

value $.001

per share

   100    RS

13.

   Helian Recovery Corporation    CA    Helian Health Group, Inc.   

100 shares of

common

stock, no par

value per

share

   100    RS

14.

   Homestead Health Center, Inc.    CT    PersonaCare of Connecticut, Inc.   

1,000 shares

of common

stock, no par

value per

share

   100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

3

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

No.

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

  

Name

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

   State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding

Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

15.

   Horizon Healthcare Services, Inc.    GA    Kindred Healthcare Operating, Inc.
  

1,000 shares

of common

stock, par

value

$10.00 per

share

   100    RS

16.

   J. B. Thomas Hospital, Inc.    MA    Kindred Healthcare Operating, Inc.   

1,000 shares

of common

stock, par

value $1.00

per share

   100    RS

17.

   KPS East, Inc.    DE    Kindred Hospitals East, L.L.C.   

100 shares

of common

stock, par

value $0.25

per share

   100    RS

18.

   KPS Midwest, Inc.    DE    Kindred Hospitals Limited Partnership   

100 shares

of common

stock, par

value $0.25

per share

   100    RS

19.

   KPS Mountain, Inc.    DE    Kindred Hospitals West, L.L.C.   

100 shares

of common

stock, par

value $0.25

per share

   100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

4

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

No.

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

  

Name

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

   State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding

Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

20.

   KPS Seattle, Inc.    DE    THC-Seattle, Inc.   

100 shares of

common

stock, par

value $0.25

per share

   100    RS

21.

   KPS Wisconsin, Inc.    DE    THC-Chicago, Inc.   

100 shares

of common

stock, par

value $0.25

per share

   100    RS

22.

   Kindred Acute Pulmonary East, Inc.    DE    Kindred Healthcare Operating,
Inc.   

100 shares

of common

stock, par

value $.25

per share

   100    RS

23.

   Kindred Acute Pulmonary West, Inc.    DE    Kindred Healthcare Operating,
Inc.   

100 shares

of common

stock, par

value $.25

per share

   100    RS

24.

   Kindred Facility Services, Inc.    DE    Kindred Healthcare Operating, Inc.
  

100 shares

of common

stock par

value $.25

per share

   100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

5

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

No.

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

  

Name

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

   State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding

Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

25.

   Kindred Healthcare Operating, Inc.    DE    Kindred Healthcare, Inc.   

100 shares

of common

stock, par

value $.25

per share

   100    RS

26.

   Kindred Healthcare Services, Inc.    DE    Kindred Healthcare Operating, Inc.
  

100 shares

of common

stock, par

value $.25

per share

   100    RS

27.

   Kindred Holdings, L.L.C.    DE    Kindred Healthcare Operating, Inc.   

100 Percent

of the

outstanding

membership

interests

   100    RS

28.

   Kindred Home Care Services, Inc.    DE    Kindred Healthcare Operating, Inc.
  

100 shares

of common

stock, par

value $.25

per share

   100    RS

29.

   Kindred Hospice, Inc.    KY    Kindred Healthcare Services, Inc.   

60 shares of

common

stock, no par

value per

share

   100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

6

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

No.

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

  

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding
Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

30.

   Kindred Hospital Pharmacy Services, Inc.    DE    Kindred Pharmacy Services,
Inc.   

100 shares

of common

stock, par

value $.25

per share

   100    RS

31.

   Kindred Hospitals East, L.L.C.    DE    Kindred Healthcare Operating, Inc.   

100 Percent

of the

outstanding

membership

interests

   100    RS

32.

   Kindred Hospitals West, L.L.C.    DE    Kindred Healthcare Operating, Inc.   

100 Percent

of the

outstanding

membership

interests

   100    RS

33.

   Kindred Institutional Pharmacy Services, Inc.    DE    Kindred Pharmacy
Services, Inc.   

100 shares

of common

stock, par

value $.25

per share

   100    RS

34.

   Kindred Insurance Holdings, Inc.    DE    Kindred Healthcare Operating, Inc.
  

100 shares

of common

stock, par

value $.25

per share

   100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

7

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

No.

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

  

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding
Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

35.

   Kindred Investment Company    DE    Kindred Healthcare Operating, Inc.   

100 shares

of common

stock, par

value $.25

per share

   100    RS

36.

   Kindred Nevada, L.L.C.    DE    Kindred Healthcare Operating, Inc.   

100 Percent

of the

outstanding

membership

interests

   100    RS

37.

   Kindred Nursing Centers East, L.L.C.    DE    Kindred Healthcare Operating,
Inc.   

100 Percent

of the

outstanding

membership

interests

   100    RS

38.

   Kindred Nursing Centers North, L.L.C.    DE    Kindred Healthcare Operating,
Inc.   

100 Percent

of the

outstanding

membership

interests

   100    RS

39.

   Kindred Nursing Centers South, L.L.C.    DE    Kindred Healthcare Operating,
Inc.   

100 Percent

of the

outstanding

membership

interests

   100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

8

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

No.

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

  

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding
Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

40.

   Kindred Nursing Centers West, L.L.C.    DE    Kindred Healthcare Operating,
Inc.   

100 Percent

of the

outstanding membership

interests

   100    RS

41.

   Kindred Pharmacy Services, Inc.    DE    Kindred Healthcare Operating, Inc.
  

10 shares of

common

stock, par

value

$100.00 per

share

   100    RS

42.

   Kindred Pulmonary Illinois, Inc.    IL    Kindred Healthcare Operating, Inc.
  

1,000 shares

of common

stock, par

value $1.00

per share

   100    RS

43.

   Kindred Rehab Services, Inc.    DE    Kindred Healthcare Operating, Inc.   

11,000

shares of

common

stock, par

value $.001

per share

   100    RS

44.

   Kindred Support Services, L.L.C.    DE    Kindred Healthcare Operating, Inc.
  

100 Percent

of the

outstanding

membership

interests

   100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

9

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

No.

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

  

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding
Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

45.

   Kindred Systems, Inc.    DE    Kindred Healthcare Operating, Inc.   

100 shares

of common

stock, par

value $.25

per share

   100    RS

46.

   Lafayette Health Care Center, Inc.    GA    Kindred Healthcare Operating,
Inc.   

1,000 shares

of common

stock, no par

value per

share

   100    RS

47.

   MedEquities, Inc.    CA    Helian ASC of Northridge, Inc.   

10,000

shares of

common

stock, no par

value per

share

   100    RS

48.

   Medisave of Tennessee, Inc.    DE    Kindred Pharmacy Services, Inc.   

1,000 shares

of common

stock, par

value $1.00

per share

   100    RS

49.

   Palo Alto Surgecenter Corporation    CA    Helian Health Group, Inc.   

100 shares

of common

stock, no par

value per

share

   100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

10

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

No.

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

  

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding
Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

50.

   PersonaCare Living Center of Clearwater, Inc.    DE   

Kindred Healthcare Operating, Inc.

   1,000 shares of common stock, par value $.001 per share    100    RS

51.

   PersonaCare of Bradenton, Inc.    DE   

Kindred Healthcare Operating, Inc.

   1,000 shares of common stock, par value $.001 per share    100    RS

52.

   PersonaCare of Clearwater, Inc.    DE   

Kindred Healthcare Operating, Inc.

   1,000 shares of common stock, par value $.001 per share    100    RS

53.

   PersonaCare of Connecticut, Inc.    CT   

Kindred Healthcare Operating, Inc.

   1,000 shares of common stock, no par value per share    100    RS

54.

   PersonaCare of Georgia, Inc.    DE   

Kindred Healthcare Operating, Inc.

   1,000 shares of common stock, par value $.001 per share    100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

11

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

No.

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

  

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding
Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

55.

   PersonaCare of Huntsville, Inc.    DE    Kindred Healthcare Operating, Inc.
  

1,000 shares

of common

stock, par

value $.001

per share

   100    RS

56.

   PersonaCare of Little Rock, Inc.    DE    Kindred Healthcare Operating, Inc.
  

100 shares

of common stock, par

value $.001

per share

   100    RS

57.

   PersonaCare of Ohio, Inc.    DE    Kindred Healthcare Operating, Inc.   

1,000 shares

of common

stock, par

value $.001

per share

   100    RS

58.

   PersonaCare of Owensboro, Inc.    DE    Kindred Healthcare Operating, Inc.   

1,000 shares

of common

stock, par

value $.001

per share

   100    RS

59.

   PersonaCare of Pennsylvania, Inc.    DE    Kindred Healthcare Operating, Inc.
  

1,000 shares

of common

stock, par

value $.001

per share

   100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

12

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

No.

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

  

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding
Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

60.

   PersonaCare of Pompano East, Inc.    DE    Kindred Healthcare Operating, Inc.
  

1,000 shares

of common

stock, par

value $.001

per share

   100    RS

61.

   PersonaCare of Pompano West, Inc.    DE    Kindred Healthcare Operating, Inc.
  

1,000 shares

of common

stock, par

value $.001

per share

   100    RS

62.

   PersonaCare of Reading, Inc.    DE    Kindred Healthcare Operating, Inc.   

1,000 shares

of common

stock, par

value $.001

per share

   100    RS

63.

   PersonaCare of San Antonio, Inc.    DE    Kindred Healthcare Operating, Inc.
  

1,000 shares

of common

stock, par

value $.001

per share

   100    RS

64.

   PersonaCare of San Pedro, Inc.    DE    Kindred Healthcare Operating, Inc.   

1,000 shares

of common

stock, par

value $.001

per share

   100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

13

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

No.

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

  

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership0 Interest

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

  

Outstanding

Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

65.

   PersonaCare of Shreveport, Inc.    DE    Kindred Healthcare Operating, Inc.
  

1,000 shares

of common

stock, par

value $.001

per share

   100    RS

66.

   PersonaCare of St. Petersburg, Inc.    DE    Kindred Healthcare Operating,
Inc.   

1,000 shares

of common

stock, par

value $.001

per share

   100    RS

67.

   PersonaCare of Warner Robins, Inc.    DE    Kindred Healthcare Operating,
Inc.   

1,000 shares

of common

stock, par

value $.001

per share

   100    RS

68.

   PersonaCare of Wisconsin, Inc.    DE    Kindred Healthcare Operating, Inc.   

1,000 shares

of common

stock, par

value $.001

per share

   100    RS

69.

   PersonaCare Properties, Inc.    GA    Kindred Healthcare Operating, Inc.   

1,000 shares

of common

stock, par

value $.01

per share

   100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

14

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

No.

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

  

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding

Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

70.

   ProData Systems, Inc.    AL   

Kindred Home Care and Hospice Indiana
Partnership

  

333.33

shares of

common

stock, par

value $1.00

per share

   100    RS

71.

   Recovery Inns of America, Inc.    CA    Helian Recovery Corporation   

2,500 shares

of common

stock, no par

value per

share

   100    RS

72.

   Respiratory Care Services, Inc.    DE    Kindred Healthcare Operating, Inc.
  

1,000 shares

of common

stock, par

value $.001

per share

   100    RS

73.

   Southern California Specialty Care, Inc.    CA    Specialty Healthcare
Services, Inc.   

100 shares

of common

stock, no par

value per

share

   100    RS

74.

   Specialty Healthcare Services, Inc.    DE    Kindred Healthcare Operating,
Inc.   

3000 shares

of common

stock, par

value $0.01

per share

   100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

15

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

No.

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

  

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding
Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

75.

   Specialty Hospital of Cleveland, Inc.    OH    Specialty Healthcare Services,
Inc.   

100 shares

of common stock, par value $.01 per share

   100    RS

76.

   Specialty Hospital of Dallas, Inc.    TX    Specialty Healthcare Services,
Inc.   

100 shares

of common stock, par value $.01 per share

   100    RS

77.

   Specialty Hospital of Philadelphia, Inc.    PA    Specialty Healthcare
Services, Inc.   

250 shares

of common stock, par value $.01 per share

   100    RS

78.

   Specialty Hospital of South Carolina, Inc.    SC    Specialty Healthcare
Services, Inc.   

250 shares

of common stock, par value $.01 per share

   100    RS

79.

   Stamford Health Facilities, Inc.    CT    PersonaCare of Connecticut, Inc.   
1,000 shares of common stock, no par value per share    100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

16

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

No.

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

  

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding
Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

80.

   THC – Chicago, Inc.    IL    Kindred Healthcare Operating, Inc.    1,000
shares of common stock, par value $1.00 per share    100    RS

81.

   THC – Hollywood, Inc.    FL    Kindred Healthcare Operating, Inc.    1,000
shares of common stock, par value $1.00 per share    100    RS

82.

   THC – Houston, Inc.    TX    Kindred Healthcare Operating, Inc.    1,000
shares of common stock, par value $1.00 per share    100    RS

83.

   THC – Minneapolis, Inc.    MN    Kindred Healthcare Operating, Inc.    1,000
shares of common stock, par value $1.00 per share    100    RS

84.

   THC – North Shore, Inc.    IL    THC – Chicago, Inc.    1,000 shares of
common stock, par value $1.00 per share    100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

17

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

No.

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

  

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding
Equity Interest

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

  Percentage
Interest

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

   Status(1)

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

85.

   THC – Orange County, Inc.    CA    Kindred Healthcare Operating, Inc.   
1,000 shares of common stock, par value $1.00 per share   100    RS

86.

   THC – San Diego, Inc.    CA    Kindred Healthcare Operating, Inc.    1,000
shares of common stock, par value $1.00 per share   100    RS

87.

   THC – Seattle, Inc.    WA    Kindred Healthcare Operating, Inc.    1,000
shares of common stock, par value $1.00 per share   100    RS

88.

   TheraTx Health Services, Inc.    DE    Kindred Healthcare Operating, Inc.   
1,000 shares of common stock, par value $.001 per share   100    RS

89.

   TheraTx Healthcare Management, Inc.    DE    Kindred Healthcare Operating,
Inc.    1,000 shares of common stock, par value $.001 per share   100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

18

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

No.

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

 

Name

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

 

State of
Organization

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

 

Holder of Stock/Ownership Interest

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

 

Outstanding
Equity
Interest

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

  Percentage
Interest

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

  Status(1)

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

90.

  TheraTx Management Services, Inc.   CA   Kindred Healthcare Operating, Inc.  
10,000 shares of common stock, par value $0.01 per share   100   RS

91.

  TheraTx Rehabilitation Services, Inc.   DE   TheraTx Health Services, Inc.  
1,000 shares of common stock, par value $.001 per share   100   RS

92.

  TheraTx Staffing, Inc.   IL   Kindred Rehab Services, Inc.   1,000 shares of
common stock, no par value per share   100   RS

93.

  Transitional Hospitals Corporation of Indiana, Inc.   IN   Kindred Healthcare
Operating, Inc.   1,000 shares of common stock, par value $1.00 per share   100
  RS

94.

 

Transitional Hospitals Corporation of Louisiana,
Inc.

  LA   Kindred Healthcare Operating, Inc.   1,000 shares of common stock, par
value $1.00 per share   100   RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

19

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

No.

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

 

Name

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

 

State of
Organization

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

 

Holder of Stock/Ownership Interest

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

 

Outstanding
Equity
Interest

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

 

Percentage
Interest

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

 

Status(1)

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

95.

 

Transitional Hospitals Corporation of Michigan,
Inc.

  MI   Kindred Healthcare Operating, Inc.   1,000 shares of common stock, par
value $1.00 per share   100   US

96.

 

Transitional Hospitals Corporation of Nevada,
Inc.

  NV   Kindred Healthcare Operating, Inc.   1,000 shares of common stock, par
value $1.00 per share   100   RS

97.

 

Transitional Hospitals Corporation of New
Mexico, Inc.

  NM   Kindred Healthcare Operating, Inc.   1,000 shares of common stock, par
value $1.00 per share   100   RS

98.

  Transitional Hospitals Corporation of Tampa, Inc.   FL   Kindred Healthcare
Operating, Inc.   1,000 shares of common stock, par value $1.00 per share   100
  RS

99.

  Transitional Hospitals Corporation of Texas, Inc.   TX   Kindred Healthcare
Operating, Inc.   1,000 shares of common stock, par value $1.00 per share   100
  RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

20

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

No.

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

  

Name

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

  

State of
Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding
Equity
Interest

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

   Percentage
Interest

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

   Status(1)

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

100.

  

Transitional Hospitals Corporation of Wisconsin,

Inc.

   WI    Kindred Healthcare Operating, Inc.    1,000 shares of common stock, par
value $1.00 per share    100    RS

101.

  

Tucker Nursing Center, Inc.

   GA    Kindred Healthcare Operating, Inc.    500 shares of common stock, par
value $1.00 per share    100    RS

102.

  

Tunstall Enterprises, Inc.

   GA    Horizon Healthcare Services, Inc.    100 shares of common stock, par
value $1.00 per share    100    RS

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

21

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

II. PARTNERSHIPS

 

No.

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

  

Name

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

   State of
Organization

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

  

Holder of Stock/Ownership Interest

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

   Outstanding
Equity
Interest

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

   Percentage
Interest

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

   Status(1)

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

103.

   California Respiratory Care Partnership    CA    Advanced Infusion Systems,
Inc.    Partnership
Interest    51(GP)    EP/US

104.

   Foothill Nursing Company Partnership    CA    Kindred Nursing Centers West,
L.L.C.    Partnership
Interest    50(GP)    EP/US

105.

   Fox Hill Village Partnership    MA    Kindred Healthcare Operating, Inc.   
Partnership
Interest    50(GP)    EP/US

106.

   Hillhaven–MSC Partnership    CA    Kindred Nursing Centers West, L.L.C.   
Partnership
Interest    50(GP)    RS                Kindred Hospitals West, L.L.C.   
Partnership
Interest    50(GP)     

107.

   Kindred Acute Pulmonary Limited Partnership    DE   
Kindred Hospitals Limited Partnership    Partnership
Interest    1(GP)    RS                Kindred Healthcare Operating, Inc.   
Partnership
Interest    1(GP),
98(LP)     

108.

  

Kindred Home Care and Hospice Indiana
Partnership

   IN    Kindred Home Care Services, Inc.    Partnership
Interest    50(GP)    RS                Kindred Hospice, Inc.    Partnership
Interest    50(GP)     

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

22

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

No.

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

  

Name

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

  

State of

Organization

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

  

Holder of Stock/Ownership Interest

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

  

Outstanding

Equity Interest

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

   Percentage
Interest

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

   Status(1)

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

109.

   Kindred Hospitals Limited Partnership    DE    Kindred Nursing Centers
Limited Partnership    Partnership
Interest    1(GP)    RS               

Kindred Hospitals West, L.L.C.

   Partnership
Interest    1(GP),
98(LP)     

110.

   Kindred Nursing Centers Central Limited Partnership    DE    Kindred Nursing
Centers Limited Partnership    Partnership
Interest    1(GP)    RS                Kindred Healthcare Operating, Inc.   
Partnership
Interest    1(GP),
98(LP)     

111.

   Kindred Nursing Centers Limited Partnership    DE   
Kindred Hospitals Limited Partnership    Partnership
Interest    1(GP)    RS                Kindred Nursing Centers East, L.L.C.   
Partnership
Interest    1(GP),
98(LP)     

112.

   Northridge Surgery Center Development, Ltd.    CA    MedEquities, Inc.   
Partnership
Interest    43(GP)    EP/US

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

23

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

No.

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

 

Name

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

 

State of
Organization

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

 

Holder of Stock/Ownership Interest

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

 

Outstanding
Equity Interest

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

  Percentage
Interest

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

  Status(1)

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

113.

  Northridge Surgery Center, Ltd.  

CA

  Northridge Surgery Center Development, Ltd.   Partnership Interest   38(GP)  
EP/US             Helian Health Group, Inc.  

Partnership Interest

  13.5(LP)                 Helian ASC of Northridge, Inc.  

Partnership Interest

  13(GP),
6(LP)    

114.

  Pharmaceutical Infusion Therapy  

CA

  Advanced Infusion Systems, Inc.   Partnership Interest   50.99(GP)   EP/US

115.

  Recovery Inn of Menlo Park, L.P.  

CA

  Recovery Inns of America, Inc.   Partnership Interest   12(LP)   RS          
  Helian Recovery Corporation   Partnership Interest   58(GP),
30(LP)    

116.

  Starr Farm Partnership  

VT

  Kindred Nursing Centers East, L.L.C.   Partnership Interest   50(GP)   EP/US

117.

  Visiting Nurse Advanced Infusion Systems – Newbury Park  

CA

  Advanced Infusion Systems, Inc.   Partnership Interest   51.01(GP)   EP/US

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

(1): EP= Excluded Partnership

RS= Restricted Subsidiary

US= Unrestricted Subsidiary

 

24

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

SCHEDULE 1.01C

 

EXISTING AFFILIATE AGREEMENTS

 

FACILITY

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

  

AGREEMENT

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

  

RELEVANT AFFILIATE

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

949

Ledgewood Rehab. & Nsg.

87 Herrick Street

Beverly, MA

   Management Agreement dated as of 1985, by and between The Hillhaven
Corporation (whose obligations have been assumed by Kindred Healthcare
Operating, Inc.), and Ledgewood Health Care Corporation, a Massachusetts
corporation   

Ledgewood Health Care

Corporation

981

Foothill Nsg. & Rehab Ctr.

401 West Ada Avenue

Glendora, CA

   Foothill Skilled Nursing Facility Management Agreement dated as of 1986 by
and between Hillhaven, Inc. (whose obligations have been assumed by Kindred
Nursing Centers West, LLC) and Foothill Nursing Company Partnership, a
California general partnership   

Foothill Nursing Company

Partnership

983

Clark House Nrsg. Ctr.

30 Longwood Drive

Westwood, MA

   Long Term Care Facility Management Agreement dated as of July 1, 1990, by and
between First Healthcare Corporation (whose obligations have been assumed by
Kindred Nursing Centers East, LLC), and Fox Hill Village Partnership, a
Massachusetts general partnership    Fox Hill Village Partnership

995

Starr Farm Nursing Center

98 Starr Farm Road

Burlington, VT

   Agreement to Provide Management Services to a Health Care Facility dated as
of December 30, 1986, by and between First Healthcare Corporation (whose
obligations have been assumed by Kindred Healthcare Operating, Inc.), and Starr
Farm Partnership, a Vermont general partnership    Starr Farm Partnership

 

1

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

SCHEDULE 1.01D

 

INITIAL MASTER LEASE PROPERTIES; OTHER LEASED PROPERTIES; THIRD PARTY LEASES

 

INITIAL MASTER LEASE PROPERTIES

 

Initial Master Lease #1:

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

AZ#436   Valley Healthcare & Rehab Center   Pima, Tucson, AZ   Nursing center  
ML#1-1 AZ#742   Sonoran Rehab & Care Center   Maricopa, Phoenix, AZ   Nursing
center   ML#1-2 AZ#4-656   Vencor Hospital – Phoenix   Maricopa, Phoenix, AZ  
Hospital   ML#1-3 CA#525   La Veta Healthcare Center   Orange, Orange, CA  
Nursing center   ML#1-4 CA#738   Bay View Nursing & Rehab Center   Alameda,
Alameda, CA   Nursing center   ML#1-5 CA#4622   Vencor Hospital – San Leandro  
Alameda, San Leandro, CA   Hospital   ML#1-6 CA#4642   Vencor Hospital – Orange
County   Orange, Westminster, CA   Hospital   ML#1-7 CA#4648   Vencor Hospital –
San Diego   San Diego, San Diego, CA   Hospital   ML#1-8 CA#4-693   Recovery Inn
of Menlo Park   San Mateo, Menlo Park, CA   Hospital   ML#1-9* CO#745   Aurora
Care Center   Arapahoe, Aurora, CO   Nursing center   ML#1-10 CT#562   Andrew
House Healthcare   Hartford, New Britain, CT   Nursing center   ML#1-11 CT#567  
Nutmeg Pavilion   New London, New London, CT   Nursing center   ML#1-12 FL#4-602
  Vencor Hospital – Coral Gables   Dade, Coral Gables, FL   Hospital   ML#1-13
FL#4-652   Vencor Hospital – North Florida   Clay, Green Cove Springs, FL  
Hospital   ML#1-14 ID#218   Cascade Care Center   Canyon, Caldwell, ID   Nursing
center   ML#1-15 ID#409   Mountain Valley Care and Rehab   Shoshone, Kellogg, ID
  Nursing center   ML#1-16 IL#4-637   Vencor Hospital – Chicago North   Cook,
Chicago, IL   Hospital   ML#1-17 IL#4-690   Vencor Hospital – Northlake   Cook,
Northlake, IL   Hospital   ML#1-18 IN#779   Westview Nursing & Rehab Center  
Lawrence, Bedford, IN   Nursing center   ML#1-19

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

* This property is also a Specified Property listed on Schedule 1.01H.

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

Initial Master Lease #1:

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

IN#4-620

  LaGrange Community Hospital   LaGrange, LaGrange, IN   Hospital   ML#1-20*

IN#4-638

  Vencor Hospital – Indianapolis   Marion, Indianapolis, IN   Hospital   ML#1-21

KY#784

  North Centre for Health & Rehab   Jefferson, Louisville, KY   Nursing center  
ML#1-22

KY#4-633

  Vencor Hospital – Louisville   Jefferson, Louisville, KY   Hospital   ML#1-23

ME#550

  Norway Rehabilitation & Living Center   Oxford, Norway, ME   Nursing center  
ML#1-24

ME#552

  Shore Village Rehab & Nursing Center   Knox, Rockland, ME   Nursing center  
ML#1-25

ME#555

  Brentwood Rehab & Nursing Center   Cumberland, Yarmouth, ME   Nursing center  
ML#1-26

ME#558

  Fieldcrest Manor Nursing Home   Lincoln, Waldoboro, ME   Nursing center  
ML#1-27

MA#327

  Laurel Ridge Rehab & Nursing Center   W. Roxbury, Jamaica Plain, MA   Nursing
center   ML#1-28

MA#507

  Country Manor Rehab & Nursing Center   Essex, Newburyport, MA   Nursing center
  ML#1-29

MA#516

  Hammersmith House Nursing & Care Center   Essex, Saugus, MA   Nursing center  
ML#1-30

MA#518

  Timberlyn Heights Nursing & Alzheimers Center   Bershire, Great Barrington, MA
  Nursing center   ML#1-31

MA#582

  Colony House Nursing & Rehab Center   Plymouth, Abington, MA   Nursing center
  ML#1-32

MA#985/198

  Harrington House Nursing & Rehab Center   Norfolk, Walpole, MA   Nursing
center   ML#1-33

MO#4-680

  Vencor Hospital – St. Louis   St. Louis, St. Louis, MO   Hospital   ML#1-34

MT#416

  Park Place Health Care Center   Cascade, Great Falls, MT   Nursing center  
ML#1-35

MT#433

  Parkview Acres Care & Rehab Center   Beaverhead, Dillon, MT   Nursing center  
ML#1-36

NV#640

  Las Vegas Healthcare & Rehab Center   Clark, Las Vegas, NV   Nursing center  
ML#1-37

NC#191

  Silas Creek Manor   Forsyth, Winston-Salem, NC   Nursing center   ML#1-38

NC#806

  Chapel Hill Rehab & Healthcare Center   Orange, Chapel Hill, NC   Nursing
center   ML#1-39

OH#577

  Minerva Park Nursing & Rehab Center  

Franklin, Columbus, OH

  Nursing center   ML#1-40

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

* This property is also a Specified Property listed on Schedule 1.01H.

 

2

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

Initial Master Lease #1:

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

OH#868   Lebanon Country Manor   Warren, Lebanon, OH   Nursing center   ML#1-41
OK#4-618   Vencor Hospital – Oklahoma City   Oklahoma, Oklahoma City, OK  
Hospital   ML#1-42 OR#452   Sunnyside Care Center   Marion, Salem, OR   Nursing
center   ML#1-43 PA#4-619   Vencor Hospital – Pittsburgh   Allegheny, Oakdale,
PA   Hospital   ML#1-44 TN#132   Madison Healthcare & Rehab Center   Davidson,
Madison, TN   Nursing center   ML#1-45 TN#4-628   Vencor Hospital – Chattanooga
  Hamilton, Chattanooga, TN   Hospital   ML#1-46 UT#140   Wasatch Care Center  
Weber, Ogden, UT   Nursing center   ML#1-47 WA#114  
Arden Rehabilitation & Healthcare Center   King, Seattle, WA   Nursing center  
ML#1-48 WA#127   Northwest Continuum Care Center   Cowlitz, Longview, WA  
Nursing center   ML#1-49 WA#185   Heritage Health & Rehab Center   Clark,
Vancouver, WA   Nursing center   ML#1-50 WA#462   Queen Anne Healthcare   King,
Seattle, WA   Nursing center   ML#1-51 WI#767   Colony Oaks Care Center  
Outagamie, Appleton, WI   Nursing center   ML#1-52 WI#769   North Ridge Medical
& Rehab Center   Manitowoc, Manitowoc, WI   Nursing center   ML#1-53 WY#441  
Mountain Towers Healthcare & Rehab   Laramie, Cheyenne, WY   Nursing center  
ML#1-54

 

3

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

Initial Master Lease #2:

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

AL#804

  Rehab & Healthcare Center of Birmingham   Jefferson, Birmingham, AL  
Nursing center   ML#2-1

AZ#743

  Desert Life Rehab & Care Center   Pima, Tucson, AZ   Nursing center   ML#2-2

CA#320

  Magnolia Gardens Care Center   San Mateo, Burlingame, CA   Nursing center  
ML#2-3

CA#420

  Maywood Acres Healthcare Center   Ventura, Oxnard, CA   Nursing center  
ML#2-4

CA#4607

  Vencor Hospital – Ontario   San Bernadino, Ontario, CA   Hospital   ML#2-5

CO#744

  Cherry Hills Health Care Center   Arapahoe, Englewood, CO   Nursing center  
ML#2-6

FL#4-611

  Vencor Hospital – St. Petersburg   Pinellas, St. Petersburg, FL   Hospital  
ML#2-7

FL#4-674

  Vencor Hospital – Central Tampa   Hillsborough, Tampa, FL   Hospital   ML#2-8

GA#1228

  Lafayette Nursing & Rehab Center   Fayette, Fayetteville, GA   Nursing center
  ML#2-9

ID#216

  Hillcrest Rehab/Care Center   Ada, Boise, ID   Nursing center   ML#2-10

ID#222

  Nampa Care Center   Boise, Nampa, ID   Nursing center   ML#2-11

ID#223

  Weiser Rehabilitation & Care   Washington, Weiser, ID   Nursing center  
ML#2-12

IL#4-615

  Vencor Hospital – Sycamore   De Kalb, Sycamore, IL   Hospital   ML#2-13

IN#111

  Rolling Hills Health Care Center   Floyd, New Albany, IN   Nursing center  
ML#2-14

IN#294

  Windsor Estates Health & Rehab Center   Howard, Kokomo, IN   Nursing center  
ML#2-15

IN#407

  Parkwood Health Care Center   Boone, Lebanon, IN   Nursing center   ML#2-16

IN#780

  Columbus Health & Rehab Center   Bartholomew, Columbus, IN   Nursing center  
ML#2-17

KY#278

  Oakview Nursing & Rehab Center   Marshall, Calvert City, KY   Nursing center  
ML#2-18

KY#282

  Maple Manor Healthcare Center   Muhlenberg, Greenville, KY   Nursing center  
ML#2-19

ME#545

  Eastside Rehab and Living Center   Penobscot, Bangor, ME   Nursing center  
ML#2-20

ME#549

  Kennebunk Nursing Center   York, Kennebunk, ME   Nursing center   ML#2-21

MA#508

  Crawford Skilled Nursing & Rehab Center   Bristol, Fall River, MA   Nursing
center   ML#2-22

MA#513

  Hallmark Nursing & Rehab Center   Bristol, New Bedford, MA   Nursing center  
ML#2-23

MA#532

  Hillcrest Nursing Home   Worcester, Fitchburg, MA   Nursing center   ML#2-24

 

4

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

Initial Master Lease #2:

 

State/ Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

MA#534

  Country Gardens Sk. Nursing & Rehab   Essex, Swansea, MA   Nursing center  
ML#2-25

MA#584

  Franklin Sk. Nursing & Rehab Center   Franklin, Franklin, MA   Nursing center
  ML#2-26

MO#4-612

  Vencor Hospital – Kansas City   Jackson, Kansas City, MO   Hospital   ML#2-27

NV#641

  Torrey Pines Care Center   Clark, Las Vegas, NV   Nursing center   ML#2-28

NH#592

  Greenbrier Terrace Healthcare   Hillsborough, Nashua, NH   Nursing center  
ML#2-29

NC#136

  LaSalle Healthcare Center   Durham, Durham, NC   Nursing center   ML#2-30

NC#706

  Guardian Care of Henderson   Vance, Henderson, NC   Nursing center   ML#2-31

NC#711

  Guardian Care of Kinston   Lenoir, Kinston, NC   Nursing center   ML#2-32

NC#726

  Guardian Care of Elizabeth City   Pasquotank, Elizabeth City, NC   Nursing
center   ML#2-33

OH#578

  West Lafayette Rehab & Nursing Center   Coshocton, West Lafayette, OH  
Nursing center   ML#2-34

OH#634

  Cambridge Health & Rehab Center   Guernsey, Cambridge, OH   Nursing center  
ML#2-35

RI#1-224

  Health Havens Nursing & Rehab Center   Providence, East Providence, RI  
Nursing center   ML#2-36

TN#822

  Primacy Healthcare & Rehab Center   Shelby, Memphis, TN   Nursing center  
ML#2-37

TX#4-653

  Vencor Hospital – Ft. Worth Southwest   Tarrant, Ft. Worth, TX   Hospital  
ML#2-38

TX#4-654

  Vencor Hospital – Houston Northwest   Harris, Houston, TX   Hospital   ML#2-39

TX#4-668

  Vencor Hospital – Ft. Worth West   Tarrant, Ft. Worth, TX   Hospital   ML#2-40

UT#690

  Wasatch Valley Rehabilitation   Salt Lake, Salt Lake City, UT   Nursing center
  ML#2-41

VA#826

  Harbour Pointe Medical & Rehab Center   Norfolk, VA   Nursing center   ML#2-42

VA#842

  Bay Pointe Medical & Rehab Centre   Princess Anne, Virginia Beach, VA  
Nursing center   ML#2-43

WA#168

  Lakewood Healthcare Center   Pierce, Lakewood, WA   Nursing center   ML#2-44

WI#289

  San Luis Medical & Rehab Center   Brown, Green Bay, WI   Nursing center  
ML#2-45

WI#766

  Colonial Manor Medical & Rehab Center   Marathon, Wausau, WI   Nursing center
  ML#2-46

 

5

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

Initial Master Lease #3:

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

AL#824

  Rehab & Healthcare Center of Mobile   Mobile, Mobile, AL   Nursing center  
ML#3-1

AZ#851

  Villa Campana Health Center   Pima, Tucson, AZ   Nursing center   ML#3-2

CA#210

  Californian Care Center   Kern, Bakersfield, CA   Nursing center   ML#3-3

CA#411

  Alta Vista Healthcare Center   Riverside, Riverside, CA   Nursing center  
ML#3-4

CA#4-644

  THC – Orange County   Orange, Brea, CA   Hospital   ML#3-5

CO#873

  Brighton Care Center   Adams, Brighton, CO   Nursing center   ML#3-6

CT#563

  Camelot Nursing & Rehab Center   New London, New London, CT   Nursing center  
ML#3-7

CT#568

  Parkway Pavilion Healthcare   Hartford, Enfield, CT   Nursing center   ML#3-8

FL#4676

  Vencor Hospital – Hollywood   Broward, Hollywood, FL   Hospital   ML#3-9

GA#155

  Savannah Rehab & Nursing Center   Chatham, Savannah, GA   Nursing center  
ML#3-10

GA#645

  Specialty Care of Marietta   Cobb, Marietta, GA   Nursing center   ML#3-11

ID#219

  Emmett Rehabilitation & Healthcare   Gem, Emmett, ID   Nursing center  
ML#3-12

IN#269

  Meadowvale Health & Rehab Center   Wells, Bluffton, IN   Nursing center  
ML#3-13

IN#694

  Wedgewood Healthcare Center   Clark, Clarksville, IN   Nursing center  
ML#3-14

KY#279

  Cedars of Lebanon Nursing Center   Marion, Lebanon, KY   Nursing center  
ML#3-15

KY#281

  Riverside Manor Healthcare   McLean, Calhoun, KY   Nursing center   ML#3-16

KY#782

  Danville Centre for Health & Rehab   Boyle, Danville, KY   Nursing center  
ML#3-17

ME#544

  Augusta Rehabilitation Center   Kennebec, Augusta, ME   Nursing center  
ML#3-18

ME#547

  Brewer Rehabilitation & Living Center   Penobscot, Brewer, ME   Nursing center
  ML#3-19

ME#554

  Westgate Manor   Penobscot, Bangor, ME   Nursing center   ML#3-20

MA#506

  Presentation Nursing & Rehab Center   Suffolk, Brighton, MA   Nursing center  
ML#3-21

MA#514

  Sachem Nursing & Rehab Center   Plymouth, East Bridgewater, MA   Nursing
center   ML#3-22

MA#539

  Newton & Wellesley Alzheimer Center   Norfolk, Wellesley, MA   Nursing center
  ML#3-23

MA#587

  River Terrace   Worcester, Lancaster, MA   Nursing center   ML#3-24

 

6

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

Initial Master Lease #3:

 

State/

Facility #:

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

 

Facility Name:

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

 

Country, City, State Location

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

 

Facility Type

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

 

Index #:

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

MA#4-673   Vencor Hospital –Boston Northshore   Essex, Peabody, MA   Hospital  
ML#3-25 MA#4-688   Vencor Hospital – Boston   Suffolk, Boston, MA   Hospital  
ML#3-26 MI#4-675   Vencor Hospital – Detroit   Wayne, Lincoln, MI   Hospital  
ML#3-27 NV#4-647   THC – Las Vegas Hospital   Clark, Las Vegas, NV   Nursing
center   ML#3-28 NC#116   Pettigrew Rehab & Healthcare Center   Durham, Durham,
NC   Nursing center   ML#3-29 NC#143   Raleigh Rehab & Healthcare Center   Wake,
Raleigh, NC   Nursing center   ML#3-30 NC#307   Lincoln Nursing Center  
Lincoln, Lincoln, NC   Nursing center   ML#3-31 NC#713   Guardian Care of
Zebulon   Wake, Zebulon, NC   Nursing center   ML#3-32 NC#4-662   Vencor
Hospital – Greensboro   Guilford, Greensboro, NC   Hospital   ML#3-33 OR#453  
Medford Rehab & Healthcare Center   Jackson, Medford, OR   Nursing center  
ML#3-34 PA#1-237   Wyomissing Nursing & Rehab Center   Berks, Reading, PA  
Nursing center   ML#3-35 TN#182   Cordova Rehab & Nursing Center   Shelby,
Cordova, TN   Nursing center   ML#3-36 TX#4-635   Vencor Hospital – San Antonio
  Bexar, San Antonio, TX   Hospital   ML#3-37 TX#4-660   Vencor Hospital –
Mansfield   Tarrant, Mansfield, TX   Hospital   ML#3-38 UT#230  
Crosslands Rehab & Health Care Center   Salt Lake, Salt Lake City, UT   Nursing
center   ML#3-39 WA#461   Edmonds Rehab & Healthcare Center   Snohomish,
Edmonds, WA   Nursing center   ML#3-40 WI#770   Vallhaven Care Center  
Winnebago, Neenah, WI   Nursing center   ML#3-41 WI#773   Mt. Carmel Medical &
Rehab Center   Racine, Burlington, WI   Nursing center   ML#3-42 WI#774   Mt.
Carmel Medical & Rehab Center   Milwaukee, Milwaukee, WI   Nursing center  
ML#3-43

 

7

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

Initial Master Lease #4:

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

AL#791

  Rehab & Healthcare Center of Huntsville   Madison, Huntsville, AL   Nursing
center   ML#4-1

AZ#853

  Kachina Point Health Care & Rehab   Yavapai, Sedona, AZ   Nursing center  
ML#4-2

AZ#4-658

  Vencor Hospital – Tucson   Pima, Tucson, AZ   Hospital   ML#4-3

CA#350

  Valley Gardens Health Care & Rehab   San Joaquin, Stockton, CA  
Nursing center   ML#4-4

CA#982/148

  Village Square Nursing & Rehab Center   San Diego, San Marcos, CA   Nursing
center   ML#4-5

CO#859

  Castle Garden Care Center   Adams, Northglenn, CO   Nursing center   ML#4-6

CO#4-665

  Vencor Hospital – Denver   Denver, Denver, CO   Hospital   ML#4-7

CT#566

  Windsor Rehab & Healthcare Center   Hartford, Windsor, CT   Nursing center  
ML#4-8

CT#1221

  Courtland Gardens Health Center, Inc.   Fairfield, Stamford, CT   Nursing
center   ML#4-9

FL#4-645/46

  Vencor Hospital – Ft. Lauderdale   Broward, Ft. Lauderdale, FL   Hospital  
ML#4-10

GA#1238

  Tucker Nursing Center   De Kalb, Tucker, GA   Nursing center   ML#4-11

ID#225

  Moscow Care Center   Latah, Moscow, ID   Nursing center   ML#4-12

IL#4671

  Vencor Hospital – Lake Shore   Cook, Chicago, IL   Hospital   ML#4-13

IN#131

  Vencor Corydon Nursing Care Center   Harrison, Corydon, IN   Nursing center  
ML#4-14

IN#209

  Valley View Health Care Center   Elkhart, Elkhart, IN   Nursing center  
ML#4-15

IN#213

  Wildwood Healthcare Center   Marion, Indianapolis, IN   Nursing center  
ML#4-16

IN#290

  Bremen Healthcare Center   Marshall, Bremen, IN   Nursing center   ML#4-17

KY#277

  Rosewood Health Care Center   Warren, Bowling Green, KY   Nursing center  
ML#4-18

KY#785

  Hillcrest Health Care Center   Davies, Owensboro, KY   Nursing center  
ML#4-19

KY#787

  Woodland Terrace Health Care Facility   Hardin, Elizabethtown, KY   Nursing
center   ML#4-20

KY#864

  Harrodsburg Health Care Center   Mercer, Harrodsburg, KY   Nursing center  
ML#4-21

LA#4-666

  Vencor Hospital – New Orleans   Orleans Parish, New Orleans, LA   Hospital  
ML#4-22

 

8

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

Initial Master Lease #4:

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

ME#546   Winship Green Nursing Center   Sagadahoc, Bath, ME   Nursing center  
ML#4-23 MA#503   Brigham Manor Nursing & Rehab Center   Suffolk, Newburyport, MA
  Nursing center   ML#4-24 MA#517   Oakwood Rehab & Nursing Center  
Worcester, Webster, MA   Nursing center   ML#4-25 MA#526   Brittany Healthcare
Center   Middlesex, Natick, MA   Nursing center   ML#4-26 MA#542   Den-Mar Rehab
& Nursing Center   Essex, Rockport, MA   Nursing center   ML#4-27 MA#583  
Embassy House Sk. Nursing & Rehab   Plymouth, Brockton, MA   Nursing center  
ML#4-28 MA#585   Great Barrington Rehab & Nursing Center   Berkshire, Gt.
Barrington, MA   Nursing center   ML#4-29 NE#746   Homestead Health Care & Rehab
Center   Lancaster, Lincoln, NE   Nursing center   ML#4-30 NM#4-664   Vencor
Hospital – Albuquerque   Bernalillo, Albuquerque, NM   Nursing center   ML#4-31
NC#146   Rose Manor Health Care Center   Durham, Durham, NC   Nursing center  
ML#4-32 NC#723   Guardian Care of Rocky Mount   Nash, Rocky Mount, NC   Nursing
center   ML#4-33 OH#569   Chillicothe Nursing & Rehab Center   Ross,
Chillicothe, OH   Nursing center   ML#4-34 OH#570   Pickerington Nursing & Rehab
Center   Fairfield, Pickerington, OH   Nursing center   ML#4-35 OH#571   Logan
Health Care Center   Hocking, Logan, OH   Nursing center   ML#4-36 OH#802  
Bridgepark Center for Rehab & Nursing Services   Summit, Akron, OH   Nursing
center   ML#4-37 PA#4-614   Vencor Hospital – Philadelphia   Philadelphia,
Philadelphia, PA   Hospital   ML#4-38 RI#1-231   Oak Hill Nursing & Rehab Center
  Providence, Pawtucket, RI   Nursing center   ML#4-39 TX#4-685   Vencor
Hospital – Houston   Harris, Houston, TX   Hospital   ML#4-40 VT#559   Birchwood
Terrace   Chittenden, Burlington, VT   Nursing center   ML#4-41 WA#158  
Bellingham Health Care & Rehab Svc.   Whatcom, Bellingham, WA   Nursing center  
ML#4-42 WI#765   Eastview Medical & Rehab Center   Langlade, Antigo, WI  
Nursing center   ML#4-43 WI#771   Kennedy Park Medical & Rehab Center  
Marathon, Schofield, WI   Nursing center   ML#4-44 WY#481   South Central
Wyoming Healthcare & Rehab   Carbon, Rawlins, WY   Nursing center   ML#4-45

 

9

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

CMBS Master Lease:

 

State/
Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

CA#150

  Nob Hill Healthcare Center   San Francisco, San Francisco, CA   Nursing center
  ML#5-1

CA#167

  Canyonwood Nursing & Rehab Center   Shasta, Redding, CA   Nursing center  
ML#5-2

CA#335

  Lawton Healthcare Center   San Francisco, San Francisco, CA   Nursing center  
ML#5-3

GA#660

  Savannah Specialty Care Center   Chatham, Savannah, GA   Nursing center  
ML#5-4

ID#221

  Lewiston Rehab & Care Center   Ney Perce, Lewiston, ID   Nursing center  
ML#5-5

IN#112

  Royal Oaks Healthcare & Rehab Center   Vigo, Terre Haute, IN   Nursing center
  ML#5-6

IN#113

  Southwood Health & Rehab Center   Vigo, Terre Haute, IN   Nursing center  
ML#5-7

IN#286

  Columbia Healthcare Facility   Vanderburgh, Evansville, IN   Nursing center  
ML#5-8

IN#406

  Muncie Health Care & Rehab   Delaware, Muncie, IN   Nursing center   ML#5-9

KY#280

  Winchester Center for Health/Rehab   Clark, Winchester, KY   Nursing center  
ML#5-10

MA#501

  Blue Hills Alzheimers Care Center   Stoughton, Stoughton, MA   Nursing center
  ML#5-11

MA#529

  Bolton Manor Nursing Home   Middlesex, Marlborough, MA   Nursing center  
ML#5-12

MA#537

  Quincy Rehab & Nursing Center   Norfolk, Quincy, MA   Nursing center   ML#5-13

MA#573

  Eagle Pond Rehab & Living Center   Barnstable, S. Dennis, MA   Nursing center
  ML#5-14

MA#581

  Blueberry Hill Healthcare   Essex, Beverly, MA   Nursing center   ML#5-15

MA#588

  Walden Rehab & Nursing Center   Middlesex, Concord, MA   Nursing center  
ML#5-16

NH#591

  Dover Rehab & Living Center   Strafford, Dover, NH   Nursing center   ML#5-17

NH#593

  Hanover Terrace Healthcare   Hanover, Hanover, NH   Nursing center   ML#5-18

NC#137

  Sunnybrook Alzheimers & Healthcare Spec.   Wake, Raleigh, NC   Nursing center
  ML#5-19

NC#138

  Blue Ridge Rehab & Healthcare Center   Buncombe, Asheville, NC   Nursing
center   ML#5-20

NC#188

  Cypress Pointe Rehab & Healthcare Center   New Hanover, Wilmington, NC  
Nursing center   ML#5-21

 

10

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

CMBS Master Lease:

 

State/
Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

NC#190

  Winston-Salem Rehab & Healthcare Center   Forsyth, Winston-Salem, NC  
Nursing center   ML#5-22

NC#704

  Guardian Care of Roanoke Rapids   Halifax, Roanoke Rapids, NC   Nursing center
  ML#5-23

NC#707

  Rehab & Nursing Center of Monroe   Union, Monroe, NC   Nursing center  
ML#5-24

NC#724

  Rehab & Health Center of Gastonia   Gaston, Gastonia, NC   Nursing center  
ML#5-25

OH#560

  Franklin Woods Health Care Center   Franklin, Columbus, OH   Nursing center  
ML#5-26

OH#572

  Winchester Place Nursing & Rehab Center   Franklin, Canal Winchester, OH  
Nursing center   ML#5-27

OH#635

  Coshocton Health & Rehab Center   Coshocton, Coshocton, OH   Nursing center  
ML#5-28

TN#884

  Masters Health Care Center   Putnam, Algood, TN   Nursing center   ML#5-29

UT#247

  St. George Care and Rehab Center   Washington, St. George, UT   Nursing center
  ML#5-30

UT#655

  Federal Heights Rehab & Nursing Center   Salt Lake, Salt Lake City, UT  
Nursing center   ML#5-31

VA#825

  Nansemond Pointe Rehab & Healthcare Center   Suffolk, Suffolk, VA   Nursing
center   ML#5-32

VA#829

  River Pointe Rehab & Healthcare Center   Princess Anne, Virginia Beach, VA  
Nursing center   ML#5-33

WA#165

  Rainier Vista Care Center   Pierce, Puyallup, WA   Nursing center   ML#5-34

WA#180

  Vencor of Vancouver Healthcare & Rehab   Clark, Vancouver, WA   Nursing center
  ML#5-35

WI#775

  Sheridan Medical Complex   Kenosha, Kenosha, WI   Nursing center   ML#5-36

WI#776

  Woodstock Health & Rehab Center   Kenosha, Kenosha, WI   Nursing center  
ML#5-37

WY#482

  Wind River Healthcare & Rehab Center   Fremont, Riverton, WY   Nursing center
  ML#5-38

WY#483

  Sage View Care Center   Sweetwater, Rock Springs, WY   Nursing center  
ML#5-39

 

11

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

OTHER LEASED PROPERTIES:

 

State/

Facility #:

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

  

Facility Name:

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

  

County, City, State Location:

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

  

Facility Type:

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

  

Status:

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

FL#4-640

   Vencor Hospital Tampa    Hillsborough, Tampa, FL    Hospital    Operating

IN#199

   Vencor at Sellersburg    Clark, Clark, IN    Nursing center    Operating

KY#248

   Liberty Care Center    Casey, Liberty, KY    Nursing center    Operating

KY#781

   Bashford East Health Care    Jefferson, Louisville, KY    Nursing center   
Operating

NC#722

   Guardian Care of Kenansville    Duplin, Kennansville, NC    Nursing center   
Operating

CA#4503

   Modesto Rehabilitation Hospital    Modesto, CA    Hospital    Operating

 

12

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

THIRD PARTY LEASES

 

Third Party Leases:

 

State/

Facility #:

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

    

Facility Name:

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

    

County, City, State Location:

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

    

Facility Type:

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

    

Status:

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

AL#1-227

     Big Spring Specialty Care Center      Madison, Huntsville, AL      Nursing
center      Operating

AZ#796

     Hacienda Rehabilitation and Care Center      Cochise, Sierra Vista, AZ     
Nursing center      Operating

AZ#4826

     Kindred Hospital of Scottsdale      Maricopa, Scottsdale, AZ      Hospital
     Operating

CA#205

     Hacienda Care Center      Alameda, Livermore, CA      Nursing center     
Operating

CA#368

     Santa Cruz Healthcare Center      Santa Cruz, Santa Cruz, CA      Nursing
center      Operating

CA#275

     Fifth Avenue Health Care Center      Marin, San Rafael, CA      Nursing
center      Operating

CA#4825

     Kindred Hospital of Santa Ana      Orange, Santa Ana, CA      Hospital     
Operating

CO#849

     Iliff Care Center      Denver, Denver, CO      Nursing center     
Operating

FL#246

     The Oaks at Avon      Highlands, Avon Park, FL      Nursing center     
Subleased

GA#4-670

     Vencor Hospital – Atlanta      Clayton, Atlanta, GA      Hospital     
Operating

GA#1-219

     PersonaCare of Clayton      Clayton, Lake City, GA      Nursing center     
Operating

IL#4-667

     Vencor Hospital – Chicago Central      Cook, Chicago, IL      Hospital     
Operating

IN#194

     Vencor at Eagle Creek      Marion, Indianapolis, IN      Nursing center
     Operating

IN#204

     Angel River Health and Rehabilitation      Warrick, Newburgh, IN     
Nursing center      Operating

IN#224

     Regency Place of Castleton      Marion, Indianapolis, IN      Nursing
center      Operating

IN#232

     Regency Place of Dyer      Lake, Dyer, IN      Nursing center     
Operating

IN#240

     Regency Place of Greenwood      Johnson, Greenwood, IN      Nursing center
     Operating

IN#287

     Crestview      Knox, Vincennes, IN      Nursing center      Operating

IN#288

     Indian Creek Health and Rehabilitation Center      Harrison, Corydon, IN
     Nursing center      Operating

IN#296

     Chalet Village Health and Rehabilitation Center      Adams, Berne, IN     
Nursing center      Operating

IN#402

     Regency Place of Fort Wayne      Allen, Ft. Wayne, IN      Nursing center
     Operating

IN#403

     Regency Place of Greenfield      Hancock, Greenfield, IN      Nursing
center      Operating

 

13

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

Third Party Leases:

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

  

Facility Type:

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

 

Status:

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

IN#404

  Regency Place of Lafayette   Tippecanoe, Lafayette, IN    Nursing center  
Operating

IN#405

  Regency Place of South Bend   St. Joseph, South Bend, IN    Nursing center  
Operating

IN#4-672

  Vencor Hospital – Indianapolis South   Johnson, Greenwood, IN    Hospital  
Operating

KY#271

  Heritage Manor Health Care Center   Graves, Mayfield, KY    Nursing center  
Operating

LA#1-235

  Irving Place Rehabilitation and Nursing
Center   Caddo, Shreveport, LA    Nursing center   Operating

MA#531

  Nichols House Nursing Home   Bristol, Fairhaven, MA    Nursing center  
Operating

MA#541

  Westborough Health Care Center   Worcester, Westborough, MA    Nursing center
  Operating

MO#263

  Ozark Mountain Regional Health   Stone, Crane, MO    Nursing center  
Operating

MO#265

  Table Rock Health Care Center   Stone, Kimberling City, MO    Nursing center  
Operating

MO#266

  Table Rock Residential Center   Stone, Kimberling City, MO    Nursing center  
Operating

NC#193

  Rehabilitation and Healthcare Center of
Alamance   Alamance, Graham, NC    Nursing center   Operating

NC#717

  Guardian Care of Scotland Neck   Halifax, Scotland Neck, NC    Nursing center
  Operating

NC#718

  Guardian Care of Ahoskie   Hertford, Ahoskie, NC    Nursing center   Operating

OH#237

  Newark Healthcare Center   Licking, Newark, OH    Nursing center   Operating

OH#295

  Whitehouse Country Manor   Lucas, Whitehouse, OH    Nursing center   Operating

OH#870

  Community Health Care Center   Marion, Marion, OH    Nursing center  
Operating

OH#1-229

  The LakeMed Nursing and Rehabilitation Center   Lake, Painesville, OH   
Nursing center   Operating

OH#4500

  Kindred Hospital of Dayton   Montgomery, Dayton, OH    Hospital   Non-
operating

TN#171

  Pine Meadows Healthcare and
Rehabilitation Center   Hardeman, Bolivar, TN    Nursing center   Operating

TN#174

  Camden Healthcare and
Rehabilitation Center   Benton, Camden, TN    Nursing center   Operating

TN#175

  Jefferson City Health and Rehabilitation   Jefferson, Jefferson City, TN   
Nursing center   Operating

 

14

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

Third Party Leases:

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Status:

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

    Center            

TN#177

  Louden Healthcare Center   Loudon, Loudon, TN   Nursing center   Operating

TN#178

  Shelby Pines Rehabilitation and Healthcare
Center   Shelby, Memphis TN   Nursing center   Operating

TN#179

  Huntingdon Health and Rehabilitation
Center   Carroll, Huntingdon, TN   Nursing center   Operating

TN#183

  Ripley Healthcare and Rehabilitation
Center   Landerdale, Ripley, TN   Nursing center   Operating

TN#184

  Greystone Health Care Center   Sullivan, Blountville, TN   Nursing center  
Operating

TN#187

  Maryville Healthcare and Rehabilitation
Center   Blount, Maryville, TN   Nursing center   Operating

TN#189

  Fairpark Healthcare Center   Blount, Maryville, TN   Nursing center  
Operating

TN#789

  Northhaven Health Care Center   Knox, Knoxville, TN   Nursing center  
Operating

TX#4-657

  Vencor Hospital – Bay Area-Houston   Harris, Pasadena, TX   Hospital  
Operating

TX#4803

  Kindred Hospital of Corpus Christi   Nueces, Corpus Christi, TX   Hospital  
Operating

WI#1-216

  Middleton Village Nursing and
Rehabilitation Center   Dane, Middleton, WI   Nursing center   Operating

KY#4502

  Kindred Hospital Louisville @ Jewish
Hospital   Jefferson, Louisville, KY  

Hospital-in-
Hospital

(“HIH”)

  Operating

NJ#4501

  Kindred Hospital Morris County   Morris, Dover, NJ   HIH  

Non-

operating

NM#4808

  Kindred Hospital Albuquerque Sandia   Bernalillo, Albuquerque, NM   HIH  
Operating

OH#4805

  Kindred Hospital Cleveland   Cuyahoga, Cleveland, OH   HIH   Operating

PA#4817

  Kindred Hospital @ Heritage Valley   Beaver, Beaver, PA   HIH   Operating

PA#4806

  Kindred Hospital Delaware County   Delaware, Darby, PA   HIH   Operating

PA#4802

  Kindred Hospital Wyoming Valley   Luzerne, Wilkes-Barre, PA   HIH   Operating

SC#4804

  Kindred Hospital Charleston   Charleston, Charleston, SC   HIH   Operating

 

15

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

Third Party Leases:

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

  

Status:

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

TX#4811

  Kindred Hospital Walnut Hill   Dallas, Dallas, TX   HIH    Operating

TX#4686

  Kindred Hospital White Rock   Dallas, Dallas, TX   HIH    Operating

*

      San Diego, Oceanside, CA   HIH   

Non-

operating

*

      Marion, Ocala, FL   HIH   

Non-

operating

*

      St. Louis, St. Louis, MO   HIH   

Non-

operating

*

      Clark, Las Vegas, NV   HIH   

Non-

operating

TN#4868

  Kindred Hospital Nashville   Davidson, Nashville, TN  

Hospital-in-

Nursing

Center

(“HINC”)

   Operating

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

* Leases for these facilities are under negotiation.

 

16

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

SCHEDULE 1.01E

 

MANAGEMENT CONTRACTS

 

FACILITY

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

 

AGREEMENT

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

 

MANAGER

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

949

Ledgewood Rehab. & Nsg.

87 Herrick Street

Beverly, MA

  Management Agreement dated as of 1985   Kindred Healthcare Operating, Inc.

975

Seacoast Nsg. & Rehab Ctr.

292 Washington Street

Gloucester, MA

  Management Agreement dated as of March 2, 2001   Kindred Nursing Centers East,
L.L.C.

977

North Shore Living Center

106 Medical Center Drive

Slidell, LA

  Management Agreement dated as of January 31, 1990   Kindred Nursing Centers
East, L.L.C.

981

Foothill Nsg. & Rehab Ctr.

401 West Ada Avenue

Glendora, CA

  Foothill Skilled Nursing Facility Management Agreement dated as of 1986  
Kindred Nursing Centers West, L.L.C.

983

Clark House Nrsg. Ctr.

30 Longwood Drive

Westwood, MA

  Long Term Care Facility Management Agreement dated as of July 1, 1990  
Kindred Nursing Centers East, L.L.C.

992

Holladay Healthcare Center

4782 South Holladay Blvd.

Salt Lake City, UT

  Agreement to Provide Management Services to a Health Care Facility dated as of
September 1, 1985   Kindred Nursing Centers West, L.L.C.

995

Starr Farm Nursing Center

98 Starr Farm Road

Burlington, VT

  Agreement to Provide Management Services to a Health Care Facility dated as of
December 30, 1986   Kindred Healthcare Operating, Inc.

4329

Kindred Pulmonary Unit Memphis

877 Jefferson Ave. 4B2

Memphis, TN

  Pulmonary Unit Management Agreement dated as of October 1, 2003   Kindred
Hospitals Limited Partnership

4363

Kindred Pulmonary Unit Rahway

865 Stone Street

Rahway, NJ

  Pulmonary Unit Management Agreement dated as of August 15, 2001   Kindred
Acute Pulmonary East, Inc.

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

SCHEDULE 1.01F

 

INITIAL OWNED PROPERTIES

 

State/
Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

CA#162

  Nineteenth Avenue Healthcare Center   San Francisco, San Francisco,
CA   Nursing center

CA#212

  Woodside Nursing Center   San Luis Obispo, San Luis
Obispo, CA   Nursing center

CA#909

  Golden Gate Healthcare Center   San Francisco, San Francisco,
CA   Nursing center

CA#911

  Victorian Healthcare Center   San Francisco, San Francisco,
CA   Nursing center

CA#4-809

  Kindred Hospital – Sacramento   Sacramento, Folsom, CA   Hospital

CA#4-895

  Kindred Hospital – Los Angeles   Los Angeles, Los Angeles, CA   Hospital

CA#4-823

  Kindred Hospital – La Mirada   Los Angeles, La Mirada, CA   Hospital

CA#4-824

  Kindred Hospital – San Gabriel Valley   Los Angeles, West Covina, CA  
Hospital

GA#1236

  Warner Robins Rehabilitation and Nursing
Center   Houston, Warner Robins, GA   Nursing center

ID#217

  Caldwell Care Center   Canyon, Caldwell, Idaho   Nursing center

KY#699

  Headquarters Building   Jefferson, Louisville, KY   Headquarters

NV#4-801

  Kindred Hospital – Las Vegas (Flamingo
Campus)   Clark, Las Vegas, NV   Hospital

TX#4-610

  Kindred Hospital – Dallas   Dallas, Dallas, TX   Hospital

TX#4-649

  Kindred Hospital – Tarrant County   Tarrant, Arlington, TX   Hospital

WA#160

  First Hill Care Center   King, Seattle, WA   Nursing center

WA#4-643

  Kindred Hospital – Seattle   King, Seattle, WA   Hospital

WI#4-663

  Kindred Hospital – Milwaukee   Milwaukee, Greenfield, WI   Hospital

 

1

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

SCHEDULE 1.01G

 

INVESTMENTS EXISTING ON THE EFFECTIVE DATE

 

HOLDER

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

 

INVESTMENT

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

Kindred Rehab Services, Inc.   $4,600,000 Promissory Note and $900,000
Promissory Note by Marie Swaim, Robert L. Hopkins and The Robert L. Hopkins
Trust relating to a lease for facility OH#1-229 (LakeMed Nursing and
Rehabilitation Center, Painesville, OH) Kindred Nursing Centers Limited
Partnership   $3,064,000 working capital and other loans to Paull Randle
Associates Kindred Healthcare Operating, Inc.   $3,690,000 Promissory Note,
$1,800,842 Promissory Note and $400,000 Promissory Note made by Foothill Nursing
Company Partnership Kindred Healthcare Operating, Inc.   $9,587,328 working
capital loans to Foothill Nursing Company Partnership. Kindred Healthcare
Operating, Inc.   7,500 shares in Ledgewood Health Care Corporation, a
Massachusetts corporation Kindred Healthcare Operating, Inc.   50,000 shares in
HealthEssentials Solutions, Inc., a Delaware corporation Kindred Healthcare
Operating, Inc.   50% general partnership interest in Fox Hill Village
Partnership, a Massachusetts general partnership Kindred Nursing Centers East,
LLC   50% general partnership interest in Starr Farm Partnership, a Vermont
partnership Advanced Infusion Systems, Inc.   51% general partnership interest
in California Respiratory Care Partnership, a California general partnership
Kindred Nursing Centers West, LLC   50% general partnership interest in Foothill
Nursing Company Partnership, a California general partnership Advanced Infusion
Systems, Inc.   Approximately 50.99% general partnership interest in
Pharmaceutical Infusion Therapy, a California general partnership Advanced
Infusion Systems, Inc.   51.01% general partnership interest in Visiting Nurse
Advanced Infusion Systems – Newbury Park, a California general partnership
Northridge Surgery Center Development, Ltd.   38% general partnership interest
in Northridge Surgery Center, Ltd., a California limited partnership Helian ASC
of Northridge, Inc.   13% general partnership interest in Northridge Surgery
Center, Ltd., a California limited partnership Helian Health Group, Inc.   13.5%
limited partnership interest in Northridge Surgery Center, Ltd., a California
limited partnership Helian ASC of Northridge, Inc.   6% limited partnership
interest in Northridge Surgery Center, Ltd., a California limited partnership
MedEquities, Inc.   43% general partnership interest in Northridge Surgery
Center Development, Ltd., a California limited partnership

 

1

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

SCHEDULE 1.01H

 

SPECIFIED PROPERTIES

 

Capital Stock

 

All of the issued and outstanding capital stock of Transitional Hospitals
Corporation of Michigan, Inc.

 

Facilities

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Status:

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

CA#4693

  Menlo Park Surgical Hospital   Menlo Park, CA   Hospital   Leased

CT#565

  Hamilton Rehabilitation and Health Care Center   New London, Norwich, CT  
Nursing center   Owned

CT#1226

  Homestead Health Center   Stamford, Stamford, CT   Nursing center   Owned

IN#4620

  LaGrange Community Hospital   LaGrange, IN   Hospital   Leased

KY#699

  OK Storage Building   Jefferson, Louisville, KY   Storage facility   Owned

KY#786

  Riverfront Terrace Health Care Center   McCracken, Paducah, KY   Nursing
center   Leased

MA#523

  West Park Alzheimer and Nursing Center   Boston, West Roxbury, MA   Nursing
center   Owned

MA#527

  Briarwood Healthcare Nursing Center   Needham, Needham, MA   Nursing center  
Owned

MA#528

  Westridge Healthcare Center   Natick, Marlborough, MA   Nursing center   Owned

MA#540

  Brook Farm Rehab and Nursing Center   West Roxbury, MA   Nursing center  
Leased

MI#4-677

  Kindred Hospital – Metro Detroit   Wayne, Detroit, MI   Hospital   Owned

MN#4-659

  Valley Hospital at Hidden Lakes   Hennepin, Golden Valley, MN   Hospital  
Owned

MO#

860/861

  The Greens at Creekside   Kansas City, MO   Nursing center
and ALF   Leased

TN#274

  Smith County Health Care Center   Smith, Carthage, TN   Nursing center   Owned

TX#4699

  Colony Plaza   Missouri City, TX   Vacant Land   Owned

WI#197

  Oshkosh Medical & Rehab Center   Oshkosh, WI   Nursing center   Leased

WI#772

  Family Heritage Medical and Rehabilitation
Center   Wood, Wisconsin Rapids, WI   Nursing center   Owned

 

1

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

SCHEDULE 1.01I

 

EXISTING LETTERS OF CREDIT

 

L/C Number

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

  

Beneficiary

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

  

Account Party

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

  

Expiration

Date

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

   Amount

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

P 010217

   National Union Fire c/o American International Group    Kindred Healthcare
Operating (CPC)    8/3/04      1,000,000.00

P 010218

   LaSalle National Bank    Kindred Healthcare    12/11/04      2,226,000.00

P 010219

   LaSalle National Bank    Kindred Healthcare    12/11/04      1,588,000.00

P 225841

   TIAA Realty, Inc.    Kindred Hospital East    5/23/05      95,000.00

P 238460

   Gelco Corp d/b/a GE Fleet    Kindred Healthcare    6/13/05      400,000.00  
                 

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

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

          TOTAL         $ 5,309,000.00                    

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

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

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

SCHEDULE 1.01J

 

HCPI PROPERTIES

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Status:

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

MA#540

  Brook Farm Rehab and Nursing Center   West Roxbury, MA   Nursing center  
Leased

MO# 860/861

  The Greens at Creekside   Kansas City, MO   Nursing center and ALF   Leased

TN#274

  Smith County Health Care Center   Smith, Carthage, TN   Nursing center  
Owned*

WI#197

  Oshkosh Medical & Rehab Center   Oshkosh, WI   Nursing center   Leased

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

* This property will be subject to a Sale and Leaseback Transaction with HCPI.

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

SCHEDULE 2.01

 

COMMITMENTS

 

Lender:

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

   Commitment:

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

JPMorgan Chase Bank

   $ 43,000,000

General Electric Capital Corporation

   $ 53,000,000

Wells Fargo Foothill

   $ 43,000,000

Citicorp USA, Inc.

   $ 43,000,000

The CIT Group/Business Credit, Inc.

   $ 43,000,000

UBS AG, Stamford Branch

   $ 30,000,000

Merrill Lynch Capital

   $ 15,000,000

Allied Irish Banks, p.l.c.

   $ 15,000,000

U.S. Bank National Association

   $ 15,000,000     

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

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

TOTAL

   $ 300,000,000     

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

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

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

SCHEDULE 3.13

 

EXISTING INSTRUMENTS

 

1. $4,600,000 Promissory Note and $900,000 Promissory Note by Marie Swaim,
Robert L. Hopkins and The Robert L. Hopkins Trust relating to a lease for
facility OH#1-229 (LakeMed Nursing and Rehabilitation Center, Painesville, OH).

 

2. $3,690,000 Promissory Note, $1,800,842 Promissory Note and $400,000
Promissory Note made by Foothill Nursing Company Partnership.

 

1

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

SCHEDULE 3.16

 

REAL PROPERTY INFORMATION

 

Owned Properties

 

State/
Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

CA#162

  Nineteenth Avenue Healthcare Center   San Francisco, San Francisco,
CA   Nursing center

CA#212

  Woodside Nursing Center   San Luis Obispo, San Luis
Obispo, CA   Nursing center

CA#909

  Golden Gate Healthcare Center   San Francisco, San Francisco,
CA   Nursing center

CA#911

  Victorian Healthcare Center   San Francisco, San Francisco,
CA   Nursing center

CA#4-809

  Kindred Hospital – Sacramento   Sacramento, Folsom, CA   Hospital

CA#4-895

  Kindred Hospital – Los Angeles   Los Angeles, Los Angeles, CA   Hospital

CA#4-823

  Kindred Hospital – La Mirada   Los Angeles, La Mirada, CA   Hospital

CA#4-824

  Kindred Hospital – San Gabriel Valley   Los Angeles, West Covina, CA  
Hospital

GA#1236

 

Warner Robins Rehabilitation and Nursing

Center

  Houston, Warner Robins, GA   Nursing center

ID#217

  Caldwell Care Center   Canyon, Caldwell, Idaho   Nursing center

KY#699

  Headquarters Building   Jefferson, Louisville, KY   Headquarters

NV#4-801

  Kindred Hospital – Las Vegas (Flamingo
Campus)   Clark, Las Vegas, NV   Hospital

TX#4-610

  Kindred Hospital – Dallas   Dallas, Dallas, TX   Hospital

TX#4-649

  Kindred Hospital – Tarrant County   Tarrant, Arlington, TX   Hospital

WA#160

  First Hill Care Center   King, Seattle, WA   Nursing center

WA#4-643

  Kindred Hospital – Seattle   King, Seattle, WA   Hospital

WI#4-663

  Kindred Hospital – Milwaukee   Milwaukee, Greenfield, WI   Hospital

 

Specified Properties

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

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

  

Facility Type:

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

  

Status:

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

CA#4693

  Menlo Park Surgical Hospital   Menlo Park, CA    Hospital    Leased

CT#565

  Hamilton Rehabilitation and Health Care Center   New London, Norwich, CT   
Nursing center    Owned

CT#1226

  Homestead Health Center   Stamford, Stamford, CT    Nursing center    Owned

IN#4620

  LaGrange Community Hospital   LaGrange, IN    Hospital    Leased

KY#699

  OK Storage Building   Jefferson, Louisville, KY    Storage facility    Owned

KY#786

  Riverfront Terrace Health Care Center   McCracken, Paducah, KY    Nursing
center    Leased

MA#523

  West Park Alzheimer and Nursing Center   Boston, West Roxbury, MA    Nursing
center    Owned

MA#527

  Briarwood Healthcare Nursing Center   Needham, Needham, MA    Nursing center
   Owned

MA#528

  Westridge Healthcare Center   Natick, Marlborough, MA    Nursing center   
Owned

MA#540

  Brook Farm Rehab and Nursing
Center   West Roxbury, MA    Nursing center    Leased

MI#4-677

  Kindred Hospital – Metro Detroit   Wayne, Detroit, MI    Hospital    Owned

MN#4-659

  Valley Hospital at Hidden Lakes   Hennepin, Golden Valley, MN    Hospital   
Owned

MO#

860/861

  The Greens at Creekside   Kansas City, MO    Nursing center
and ALF    Leased

TN#274

  Smith County Health Care Center   Smith, Carthage, TN    Nursing center   
Owned

TX#4699

  Colony Plaza   Missouri City, TX    Vacant Land    Owned

WI#197

  Oshkosh Medical & Rehab Center   Oshkosh, WI    Nursing center    Leased

WI#772

 

Family Heritage Medical and Rehabilitation

Center

  Wood, Wisconsin Rapids, WI    Nursing center    Owned

 

2

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

Initial Master Lease Properties

 

Initial Master Lease #1:

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

AZ#436

  Valley Healthcare & Rehab Center   Pima, Tucson, AZ   Nursing center   ML#1-1

AZ#742

  Sonoran Rehab & Care Center   Maricopa, Phoenix, AZ   Nursing center   ML#1-2

AZ#4-656

  Vencor Hospital – Phoenix   Maricopa, Phoenix, AZ   Hospital   ML#1-3

CA#525

  La Veta Healthcare Center   Orange, Orange, CA   Nursing center   ML#1-4

CA#738

  Bay View Nursing & Rehab Center   Alameda, Alameda, CA   Nursing center  
ML#1-5

CA#4622

  Vencor Hospital – San Leandro   Alameda, San Leandro, CA   Hospital   ML#1-6

CA#4642

  Vencor Hospital – Orange County   Orange, Westminster, CA   Hospital   ML#1-7

CA#4648

  Vencor Hospital – San Diego   San Diego, San Diego, CA   Hospital   ML#1-8

CO#745

  Aurora Care Center   Arapahoe, Aurora, CO   Nursing center   ML#1-10

CT#562

  Andrew House Healthcare   Hartford, New Britain, CT   Nursing center   ML#1-11

CT#567

  Nutmeg Pavilion   New London, New London, CT   Nursing center   ML#1-12

FL#4-602

  Vencor Hospital – Coral Gables   Dade, Coral Gables, FL   Hospital   ML#1-13

FL#4-652

  Vencor Hospital – North Florida   Clay, Green Cove Springs, FL   Hospital  
ML#1-14

ID#218

  Cascade Care Center   Canyon, Caldwell, ID   Nursing center   ML#1-15

ID#409

  Mountain Valley Care and Rehab   Shoshone, Kellogg, ID   Nursing center  
ML#1-16

IL#4-637

  Vencor Hospital – Chicago North   Cook, Chicago, IL   Hospital   ML#1-17

IL#4-690

  Vencor Hospital – Northlake   Cook, Northlake, IL   Hospital   ML#1-18

IN#779

  Westview Nursing & Rehab Center   Lawrence, Bedford, IN   Nursing center  
ML#1-19

IN#4-638

  Vencor Hospital – Indianapolis   Marion, Indianapolis, IN   Hospital   ML#1-21

KY#784

  North Centre for Health & Rehab   Jefferson, Louisville, KY   Nursing center  
ML#1-22

KY#4-633

  Vencor Hospital – Louisville   Jefferson, Louisville, KY   Hospital   ML#1-23

ME#550

  Norway Rehabilitation & Living Center   Oxford, Norway, ME   Nursing center  
ML#1-24

ME#552

  Shore Village Rehab & Nursing Center   Knox, Rockland, ME   Nursing center  
ML#1-25

 

3

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

Initial Master Lease #1:

 

State/

Facility #:

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

  Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

  Index #:

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

ME#555

  Brentwood Rehab & Nursing Center   Cumberland, Yarmouth, ME   Nursing center  
ML#1-26

ME#558

  Fieldcrest Manor Nursing Home   Lincoln, Waldoboro, ME   Nursing center  
ML#1-27

MA#327

  Laurel Ridge Rehab & Nursing Center   W. Roxbury, Jamaica Plain, MA   Nursing
center   ML#1-28

MA#507

  Country Manor Rehab & Nursing Center   Essex, Newburyport, MA   Nursing center
  ML#1-29

MA#516

  Hammersmith House Nursing & Care Center   Essex, Saugus, MA   Nursing center  
ML#1-30

MA#518

  Timberlyn Heights Nursing & Alzheimers Center   Bershire, Great Barrington, MA
  Nursing center   ML#1-31

MA#582

  Colony House Nursing & Rehab Center   Plymouth, Abington, MA   Nursing center
  ML#1-32

MA#985/198

  Harrington House Nursing & Rehab Center   Norfolk, Walpole, MA   Nursing
center   ML#1-33

MO#4-680

  Vencor Hospital – St. Louis   St. Louis, St. Louis, MO   Hospital   ML#1-34

MT#416

  Park Place Health Care Center   Cascade, Great Falls, MT   Nursing center  
ML#1-35

MT#433

  Parkview Acres Care & Rehab Center   Beaverhead, Dillon, MT   Nursing center  
ML#1-36

NV#640

  Las Vegas Healthcare & Rehab Center   Clark, Las Vegas, NV   Nursing center  
ML#1-37

NC#191

  Silas Creek Manor   Forsyth, Winston-Salem, NC   Nursing center   ML#1-38

NC#806

  Chapel Hill Rehab & Healthcare Center   Orange, Chapel Hill, NC   Nursing
center   ML#1-39

OH#577

  Minerva Park Nursing & Rehab Center   Franklin, Columbus, OH   Nursing center
  ML#1-40

OH#868

  Lebanon Country Manor   Warren, Lebanon, OH   Nursing center   ML#1-41

OK#4-618

  Vencor Hospital – Oklahoma City   Oklahoma, Oklahoma City, OK   Hospital  
ML#1-42

OR#452

  Sunnyside Care Center   Marion, Salem, OR   Nursing center   ML#1-43

PA#4-619

  Vencor Hospital – Pittsburgh   Allegheny, Oakdale, PA   Hospital   ML#1-44

TN#132

  Madison Healthcare & Rehab Center   Davidson, Madison, TN   Nursing center  
ML#1-45

TN#4-628

  Vencor Hospital – Chattanooga   Hamilton, Chattanooga, TN   Hospital   ML#1-46

UT#140

  Wasatch Care Center   Weber, Ogden, UT   Nursing center   ML#1-47

 

4

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

Initial Master Lease #1:

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

WA#114

  Arden Rehabilitation & Healthcare Center   King, Seattle, WA   Nursing center
  ML#1-48

WA#127

  Northwest Continuum Care Center   Cowlitz, Longview, WA   Nursing center  
ML#1-49

WA#185

  Heritage Health & Rehab Center   Clark, Vancouver, WA   Nursing center  
ML#1-50

WA#462

  Queen Anne Healthcare   King, Seattle, WA   Nursing center   ML#1-51

WI#767

  Colony Oaks Care Center   Outagamie, Appleton, WI   Nursing center   ML#1-52

WI#769

  North Ridge Medical & Rehab Center   Manitowoc, Manitowoc, WI   Nursing center
  ML#1-53

WY#441

  Mountain Towers Healthcare & Rehab   Laramie, Cheyenne, WY   Nursing center  
ML#1-54

 

5

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

Initial Master Lease #2:

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

AL#804

  Rehab & Healthcare Center of Birmingham   Jefferson, Birmingham, AL  
Nursing center   ML#2-1

AZ#743

  Desert Life Rehab & Care Center   Pima, Tucson, AZ   Nursing center   ML#2-2

CA#320

  Magnolia Gardens Care Center   San Mateo, Burlingame, CA   Nursing center  
ML#2-3

CA#420

  Maywood Acres Healthcare Center   Ventura, Oxnard, CA   Nursing center  
ML#2-4

CA#4607

  Vencor Hospital – Ontario   San Bernadino, Ontario, CA   Hospital   ML#2-5

CO#744

  Cherry Hills Health Care Center   Arapahoe, Englewood, CO   Nursing center  
ML#2-6

FL#4-611

  Vencor Hospital – St. Petersburg   Pinellas, St. Petersburg, FL   Hospital  
ML#2-7

FL#4-674

  Vencor Hospital – Central Tampa   Hillsborough, Tampa, FL   Hospital   ML#2-8

GA#1228

  Lafayette Nursing & Rehab Center   Fayette, Fayetteville, GA   Nursing center
  ML#2-9

ID#216

  Hillcrest Rehab/Care Center   Ada, Boise, ID   Nursing center   ML#2-10

ID#222

  Nampa Care Center   Boise, Nampa, ID   Nursing center   ML#2-11

ID#223

  Weiser Rehabilitation & Care   Washington, Weiser, ID   Nursing center  
ML#2-12

IL#4-615

  Vencor Hospital – Sycamore   De Kalb, Sycamore, IL   Hospital   ML#2-13

IN#111

  Rolling Hills Health Care Center   Floyd, New Albany, IN   Nursing center  
ML#2-14

IN#294

  Windsor Estates Health & Rehab Center   Howard, Kokomo, IN   Nursing center  
ML#2-15

IN#407

  Parkwood Health Care Center   Boone, Lebanon, IN   Nursing center   ML#2-16

IN#780

  Columbus Health & Rehab Center   Bartholomew, Columbus, IN   Nursing center  
ML#2-17

KY#278

  Oakview Nursing & Rehab Center   Marshall, Calvert City, KY   Nursing center  
ML#2-18

KY#282

  Maple Manor Healthcare Center   Muhlenberg, Greenville, KY   Nursing center  
ML#2-19

ME#545

  Eastside Rehab and Living Center   Penobscot, Bangor, ME   Nursing center  
ML#2-20

ME#549

  Kennebunk Nursing Center   York, Kennebunk, ME   Nursing center   ML#2-21

MA#508

  Crawford Skilled Nursing & Rehab Center   Bristol, Fall River, MA   Nursing
center   ML#2-22

MA#513

  Hallmark Nursing & Rehab Center   Bristol, New Bedford, MA   Nursing center  
ML#2-23

MA#532

  Hillcrest Nursing Home   Worcester, Fitchburg, MA   Nursing center   ML#2-24

 

6

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

Initial Master Lease #2:

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

MA#534

  Country Gardens Sk. Nursing & Rehab   Essex, Swansea, MA   Nursing center  
ML#2-25

MA#584

  Franklin Sk. Nursing & Rehab Center   Franklin, Franklin, MA   Nursing center
  ML#2-26

MO#4-612

  Vencor Hospital – Kansas City   Jackson, Kansas City, MO   Hospital   ML#2-27

NV#641

  Torrey Pines Care Center   Clark, Las Vegas, NV   Nursing center   ML#2-28

NH#592

  Greenbrier Terrace Healthcare   Hillsborough, Nashua, NH   Nursing center  
ML#2-29

NC#136

  LaSalle Healthcare Center   Durham, Durham, NC   Nursing center   ML#2-30

NC#706

  Guardian Care of Henderson   Vance, Henderson, NC   Nursing center   ML#2-31

NC#711

  Guardian Care of Kinston   Lenoir, Kinston, NC   Nursing center   ML#2-32

NC#726

  Guardian Care of Elizabeth City   Pasquotank, Elizabeth City, NC   Nursing
center   ML#2-33

OH#578

  West Lafayette Rehab & Nursing Center   Coshocton, West Lafayette, OH  
Nursing center   ML#2-34

OH#634

  Cambridge Health & Rehab Center   Guernsey, Cambridge, OH   Nursing center  
ML#2-35

RI#1-224

  Health Havens Nursing & Rehab Center   Providence, East Providence, RI  
Nursing center   ML#2-36

TN#822

  Primacy Healthcare & Rehab Center   Shelby, Memphis, TN   Nursing center  
ML#2-37

TX#4-653

  Vencor Hospital – Ft. Worth Southwest   Tarrant, Ft. Worth, TX   Hospital  
ML#2-38

TX#4-654

  Vencor Hospital – Houston Northwest   Harris, Houston, TX   Hospital   ML#2-39

TX#4-668

  Vencor Hospital – Ft. Worth West   Tarrant, Ft. Worth, TX   Hospital   ML#2-40

UT#690

  Wasatch Valley Rehabilitation   Salt Lake, Salt Lake City, UT   Nursing center
  ML#2-41

VA#826

  Harbour Pointe Medical & Rehab Center   Norfolk, VA   Nursing center   ML#2-42

VA#842

  Bay Pointe Medical & Rehab Centre   Princess Anne, Virginia Beach, VA  
Nursing center   ML#2-43

WA#168

  Lakewood Healthcare Center   Pierce, Lakewood, WA   Nursing center   ML#2-44

WI#289

  San Luis Medical & Rehab Center   Brown, Green Bay, WI   Nursing center  
ML#2-45

WI#766

  Colonial Manor Medical & Rehab Center   Marathon, Wausau, WI   Nursing center
  ML#2-46

 

7

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

Initial Master Lease #3:

 

State/
Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

AL#824

  Rehab & Healthcare Center of Mobile   Mobile, Mobile, AL   Nursing center  
ML#3-1

AZ#851

  Villa Campana Health Center   Pima, Tucson, AZ   Nursing center   ML#3-2

CA#210

  Californian Care Center   Kern, Bakersfield, CA   Nursing center   ML#3-3

CA#411

  Alta Vista Healthcare Center   Riverside, Riverside, CA   Nursing center  
ML#3-4

CA#4-644

  THC – Orange County   Orange, Brea, CA   Hospital   ML#3-5

CO#873

  Brighton Care Center   Adams, Brighton, CO   Nursing center   ML#3-6

CT#563

  Camelot Nursing & Rehab Center   New London, New London, CT   Nursing center  
ML#3-7

CT#568

  Parkway Pavilion Healthcare   Hartford, Enfield, CT   Nursing center   ML#3-8

FL#4676

  Vencor Hospital – Hollywood   Broward, Hollywood, FL   Hospital   ML#3-9

GA#155

  Savannah Rehab & Nursing Center   Chatham, Savannah, GA   Nursing center  
ML#3-10

GA#645

  Specialty Care of Marietta   Cobb, Marietta, GA   Nursing center   ML#3-11

ID#219

  Emmett Rehabilitation & Healthcare   Gem, Emmett, ID   Nursing center  
ML#3-12

IN#269

  Meadowvale Health & Rehab Center   Wells, Bluffton, IN   Nursing center  
ML#3-13

IN#694

  Wedgewood Healthcare Center   Clark, Clarksville, IN   Nursing center  
ML#3-14

KY#279

  Cedars of Lebanon Nursing Center   Marion, Lebanon, KY   Nursing center  
ML#3-15

KY#281

  Riverside Manor Healthcare   McLean, Calhoun, KY   Nursing center   ML#3-16

KY#782

  Danville Centre for Health & Rehab   Boyle, Danville, KY   Nursing center  
ML#3-17

ME#544

  Augusta Rehabilitation Center   Kennebec, Augusta, ME   Nursing center  
ML#3-18

ME#547

  Brewer Rehabilitation & Living Center   Penobscot, Brewer, ME   Nursing center
  ML#3-19

ME#554

  Westgate Manor   Penobscot, Bangor, ME   Nursing center   ML#3-20

MA#506

  Presentation Nursing & Rehab Center   Suffolk, Brighton, MA   Nursing center  
ML#3-21

MA#514

  Sachem Nursing & Rehab Center   Plymouth, East Bridgewater, MA   Nursing
center   ML#3-22

MA#539

  Newton & Wellesley Alzheimer Center   Norfolk, Wellesley, MA   Nursing center
  ML#3-23

MA#587

  River Terrace   Worcester, Lancaster, MA   Nursing center   ML#3-24

 

8

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

Initial Master Lease #3:

 

State/
Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

MA#4-673

  Vencor Hospital – Boston Northshore   Essex, Peabody, MA   Hospital   ML#3-25

MA#4-688

  Vencor Hospital – Boston   Suffolk, Boston, MA   Hospital   ML#3-26

MI#4-675

  Vencor Hospital – Detroit   Wayne, Lincoln, MI   Hospital   ML#3-27

NV#4-647

  THC – Las Vegas Hospital   Clark, Las Vegas, NV   Nursing center   ML#3-28

NC#116

  Pettigrew Rehab & Healthcare Center   Durham, Durham, NC   Nursing center  
ML#3-29

NC#143

  Raleigh Rehab & Healthcare Center   Wake, Raleigh, NC   Nursing center  
ML#3-30

NC#307

  Lincoln Nursing Center   Lincoln, Lincoln, NC   Nursing center   ML#3-31

NC#713

  Guardian Care of Zebulon   Wake, Zebulon, NC   Nursing center   ML#3-32

NC#4-662

  Vencor Hospital – Greensboro   Guilford, Greensboro, NC   Hospital   ML#3-33

OR#453

  Medford Rehab & Healthcare Center   Jackson, Medford, OR   Nursing center  
ML#3-34

PA#1-237

  Wyomissing Nursing & Rehab Center   Berks, Reading, PA   Nursing center  
ML#3-35

TN#182

  Cordova Rehab & Nursing Center   Shelby, Cordova, TN   Nursing center  
ML#3-36

TX#4-635

  Vencor Hospital – San Antonio   Bexar, San Antonio, TX   Hospital   ML#3-37

TX#4-660

  Vencor Hospital – Mansfield   Tarrant, Mansfield, TX   Hospital   ML#3-38

UT#230

  Crosslands Rehab & Health Care Center   Salt Lake, Salt Lake City, UT  
Nursing center   ML#3-39

WA#461

  Edmonds Rehab & Healthcare Center   Snohomish, Edmonds, WA   Nursing center  
ML#3-40

WI#770

  Vallhaven Care Center   Winnebago, Neenah, WI   Nursing center   ML#3-41

WI#773

  Mt. Carmel Medical & Rehab Center   Racine, Burlington, WI   Nursing center  
ML#3-42

WI#774

  Mt. Carmel Medical & Rehab Center   Milwaukee, Milwaukee, WI   Nursing center
  ML#3-43

 

9

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

Initial Master Lease #4:

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

AL#791

  Rehab & Healthcare Center of Huntsville   Madison, Huntsville, AL  
Nursing center   ML#4-1

AZ#853

  Kachina Point Health Care & Rehab   Yavapai, Sedona, AZ   Nursing center  
ML#4-2

AZ#4-658

  Vencor Hospital – Tucson   Pima, Tucson, AZ   Hospital   ML#4-3

CA#350

  Valley Gardens Health Care & Rehab   San Joaquin, Stockton, CA   Nursing
center   ML#4-4

CA#982/ 148

  Village Square Nursing & Rehab Center   San Diego, San Marcos, CA   Nursing
center   ML#4-5

CO#859

  Castle Garden Care Center   Adams, Northglenn, CO   Nursing center   ML#4-6

CO#4-665

  Vencor Hospital – Denver   Denver, Denver, CO   Hospital   ML#4-7

CT#566

  Windsor Rehab & Healthcare Center   Hartford, Windsor, CT   Nursing center  
ML#4-8

CT#1221

  Courtland Gardens Health Center, Inc.   Fairfield, Stamford, CT   Nursing
center   ML#4-9

FL#4-645/ 46

  Vencor Hospital – Ft. Lauderdale   Broward, Ft. Lauderdale, FL   Hospital  
ML#4-10

GA#1238

  Tucker Nursing Center   De Kalb, Tucker, GA   Nursing center   ML#4-11

ID#225

  Moscow Care Center   Latah, Moscow, ID   Nursing center   ML#4-12

IL#4671

  Vencor Hospital – Lake Shore   Cook, Chicago, IL   Hospital   ML#4-13

IN#131

  Vencor Corydon Nursing Care Center   Harrison, Corydon, IN   Nursing center  
ML#4-14

IN#209

  Valley View Health Care Center   Elkhart, Elkhart, IN   Nursing center  
ML#4-15

IN#213

  Wildwood Healthcare Center   Marion, Indianapolis, IN   Nursing center  
ML#4-16

IN#290

  Bremen Healthcare Center   Marshall, Bremen, IN   Nursing center   ML#4-17

KY#277

  Rosewood Health Care Center   Warren, Bowling Green, KY   Nursing center  
ML#4-18

KY#785

  Hillcrest Health Care Center   Davies, Owensboro, KY   Nursing center  
ML#4-19

KY#787

  Woodland Terrace Health Care Facility   Hardin, Elizabethtown, KY   Nursing
center   ML#4-20

KY#864

  Harrodsburg Health Care Center   Mercer, Harrodsburg, KY   Nursing center  
ML#4-21

LA#4-666

  Vencor Hospital – New Orleans   Orleans Parish, New Orleans, LA   Hospital  
ML#4-22

 

10

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

Initial Master Lease #4:

 

State/ Facility
#:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

ME#546

  Winship Green Nursing Center   Sagadahoc, Bath, ME   Nursing center   ML#4-23

MA#503

  Brigham Manor Nursing & Rehab Center   Suffolk, Newburyport, MA   Nursing
center   ML#4-24

MA#517

  Oakwood Rehab & Nursing Center   Worcester, Webster, MA   Nursing center  
ML#4-25

MA#526

  Brittany Healthcare Center   Middlesex, Natick, MA   Nursing center   ML#4-26

MA#542

  Den-Mar Rehab & Nursing Center   Essex, Rockport, MA   Nursing center  
ML#4-27

MA#583

  Embassy House Sk. Nursing & Rehab   Plymouth, Brockton, MA   Nursing center  
ML#4-28

MA#585

  Great Barrington Rehab & Nursing Center   Berkshire, Gt. Barrington, MA  
Nursing center   ML#4-29

NE#746

  Homestead Health Care & Rehab Center   Lancaster, Lincoln, NE   Nursing center
  ML#4-30

NM#4-664

  Vencor Hospital – Albuquerque   Bernalillo, Albuquerque, NM   Nursing center  
ML#4-31

NC#146

  Rose Manor Health Care Center   Durham, Durham, NC   Nursing center   ML#4-32

NC#723

  Guardian Care of Rocky Mount   Nash, Rocky Mount, NC   Nursing center  
ML#4-33

OH#569

  Chillicothe Nursing & Rehab Center   Ross, Chillicothe, OH   Nursing center  
ML#4-34

OH#570

  Pickerington Nursing & Rehab Center   Fairfield, Pickerington, OH   Nursing
center   ML#4-35

OH#571

  Logan Health Care Center   Hocking, Logan, OH   Nursing center   ML#4-36

OH#802

  Bridgepark Center for Rehab & Nursing
Services   Summit, Akron, OH   Nursing center   ML#4-37

PA#4-614

  Vencor Hospital – Philadelphia   Philadelphia, Philadelphia, PA   Hospital  
ML#4-38

RI#1-231

  Oak Hill Nursing & Rehab Center   Providence, Pawtucket, RI   Nursing center  
ML#4-39

TX#4-685

  Vencor Hospital – Houston   Harris, Houston, TX   Hospital   ML#4-40

VT#559

  Birchwood Terrace   Chittenden, Burlington, VT   Nursing center   ML#4-41

WA#158

  Bellingham Health Care & Rehab Svc.   Whatcom, Bellingham, WA   Nursing center
  ML#4-42

WI#765

  Eastview Medical & Rehab Center   Langlade, Antigo, WI   Nursing center  
ML#4-43

WI#771

  Kennedy Park Medical & Rehab Center   Marathon, Schofield, WI   Nursing center
  ML#4-44

WY#481

  South Central Wyoming Healthcare &
Rehab   Carbon, Rawlins, WY   Nursing center   ML#4-45

 

11

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

CMBS Master Lease:

 

State/
Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

CA#150

  Nob Hill Healthcare Center   San Francisco, San Francisco, CA   Nursing center
  ML#5-1

CA#167

  Canyonwood Nursing & Rehab Center   Shasta, Redding, CA   Nursing center  
ML#5-2

CA#335

  Lawton Healthcare Center   San Francisco, San Francisco, CA   Nursing center  
ML#5-3

GA#660

  Savannah Specialty Care Center   Chatham, Savannah, GA   Nursing center  
ML#5-4

ID#221

  Lewiston Rehab & Care Center   Ney Perce, Lewiston, ID   Nursing center  
ML#5-5

IN#112

  Royal Oaks Healthcare & Rehab Center   Vigo, Terre Haute, IN   Nursing center
  ML#5-6

IN#113

  Southwood Health & Rehab Center   Vigo, Terre Haute, IN   Nursing center  
ML#5-7

IN#286

  Columbia Healthcare Facility   Vanderburgh, Evansville, IN   Nursing center  
ML#5-8

IN#406

  Muncie Health Care & Rehab   Delaware, Muncie, IN   Nursing center   ML#5-9

KY#280

  Winchester Center for Health/Rehab   Clark, Winchester, KY   Nursing center  
ML#5-10

MA#501

  Blue Hills Alzheimers Care Center   Stoughton, Stoughton, MA   Nursing center
  ML#5-11

MA#529

  Bolton Manor Nursing Home   Middlesex, Marlborough, MA   Nursing center  
ML#5-12

MA#537

  Quincy Rehab & Nursing Center   Norfolk, Quincy, MA   Nursing center   ML#5-13

MA#573

  Eagle Pond Rehab & Living Center   Barnstable, S. Dennis, MA   Nursing center
  ML#5-14

MA#581

  Blueberry Hill Healthcare   Essex, Beverly, MA   Nursing center   ML#5-15

MA#588

  Walden Rehab & Nursing Center   Middlesex, Concord, MA   Nursing center  
ML#5-16

NH#591

  Dover Rehab & Living Center   Strafford, Dover, NH   Nursing center   ML#5-17

NH#593

  Hanover Terrace Healthcare   Hanover, Hanover, NH   Nursing center   ML#5-18

NC#137

  Sunnybrook Alzheimers & Healthcare Spec.   Wake, Raleigh, NC   Nursing center
  ML#5-19

NC#138

  Blue Ridge Rehab & Healthcare Center   Buncombe, Asheville, NC   Nursing
center   ML#5-20

NC#188

  Cypress Pointe Rehab & Healthcare Center   New Hanover, Wilmington, NC  
Nursing center   ML#5-21

 

12

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

CMBS Master Lease:

 

State/
Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Index #:

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

NC#190

  Winston-Salem Rehab & Healthcare Center   Forsyth, Winston-Salem, NC  
Nursing center   ML#5-22

NC#704

  Guardian Care of Roanoke Rapids   Halifax, Roanoke Rapids, NC   Nursing center
  ML#5-23

NC#707

  Rehab & Nursing Center of Monroe   Union, Monroe, NC   Nursing center  
ML#5-24

NC#724

  Rehab & Health Center of Gastonia   Gaston, Gastonia, NC   Nursing center  
ML#5-25

OH#560

  Franklin Woods Health Care Center   Franklin, Columbus, OH   Nursing center  
ML#5-26

OH#572

  Winchester Place Nursing & Rehab Center   Franklin, Canal Winchester, OH  
Nursing center   ML#5-27

OH#635

  Coshocton Health & Rehab Center   Coshocton, Coshocton, OH   Nursing center  
ML#5-28

TN#884

  Masters Health Care Center   Putnam, Algood, TN   Nursing center   ML#5-29

UT#247

  St. George Care and Rehab Center   Washington, St. George, UT   Nursing center
  ML#5-30

UT#655

  Federal Heights Rehab & Nursing Center   Salt Lake, Salt Lake City, UT  
Nursing center   ML#5-31

VA#825

  Nansemond Pointe Rehab & Healthcare Center   Suffolk, Suffolk, VA   Nursing
center   ML#5-32

VA#829

  River Pointe Rehab & Healthcare Center   Princess Anne, Virginia Beach, VA  
Nursing center   ML#5-33

WA#165

  Rainier Vista Care Center   Pierce, Puyallup, WA   Nursing center   ML#5-34

WA#180

  Vencor of Vancouver Healthcare & Rehab   Clark, Vancouver, WA   Nursing center
  ML#5-35

WI#775

  Sheridan Medical Complex   Kenosha, Kenosha, WI   Nursing center   ML#5-36

WI#776

  Woodstock Health & Rehab Center   Kenosha, Kenosha, WI   Nursing center  
ML#5-37

WY#482

  Wind River Healthcare & Rehab Center   Fremont, Riverton, WY   Nursing center
  ML#5-38

WY#483

  Sage View Care Center   Sweetwater, Rock Springs, WY   Nursing center  
ML#5-39

 

13

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

Other Leased Properties

 

State/
Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Status:

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

FL#4-640

  Vencor Hospital Tampa   Hillsborough, Tampa, FL   Hospital   Operating

IN#199

  Vencor at Sellersburg   Clark, Clark, IN   Nursing center   Operating

KY#248

  Liberty Care Center   Casey, Liberty, KY   Nursing center   Operating

KY#781

  Bashford East Health Care   Jefferson, Louisville, KY   Nursing center  
Operating

NC#722

  Guardian Care of Kenansville   Duplin, Kennansville, NC   Nursing center  
Operating

CA#4503

  Modesto Rehabilitation Hospital   Modesto, CA   Hospital   Operating

 

14

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

Third Party Leases

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Status:

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

AL#1-227

  Big Spring Specialty Care Center   Madison, Huntsville, AL   Nursing center  
Operating

AZ#796

  Hacienda Rehabilitation and Care Center   Cochise, Sierra Vista, AZ   Nursing
center   Operating

AZ#4826

  Kindred Hospital of Scottsdale   Maricopa, Scottsdale, AZ   Hospital  
Operating

CA#205

  Hacienda Care Center   Alameda, Livermore, CA   Nursing center   Operating

CA#368

  Santa Cruz Healthcare Center   Santa Cruz, Santa Cruz, CA   Nursing center  
Operating

CA#275

  Fifth Avenue Health Care Center   Marin, San Rafael, CA   Nursing center  
Operating

CA#4825

  Kindred Hospital of Santa Ana   Orange, Santa Ana, CA   Hospital   Operating

CO#849

  Iliff Care Center   Denver, Denver, CO   Nursing center   Operating

FL#246

  The Oaks at Avon   Highlands, Avon Park, FL   Nursing center   Subleased

GA#4-670

  Vencor Hospital – Atlanta   Clayton, Atlanta, GA   Hospital   Operating

GA#1-219

  PersonaCare of Clayton   Clayton, Lake City, GA   Nursing center   Operating

IL#4-667

  Vencor Hospital – Chicago Central   Cook, Chicago, IL   Hospital   Operating

IN#194

  Vencor at Eagle Creek   Marion, Indianapolis, IN   Nursing center   Operating

IN#204

  Angel River Health and Rehabilitation   Warrick, Newburgh, IN   Nursing center
  Operating

IN#224

  Regency Place of Castleton   Marion, Indianapolis, IN   Nursing center  
Operating

IN#232

  Regency Place of Dyer   Lake, Dyer, IN   Nursing center   Operating

IN#240

  Regency Place of Greenwood   Johnson, Greenwood, IN   Nursing center  
Operating

IN#287

  Crestview   Knox, Vincennes, IN   Nursing center   Operating

IN#288

  Indian Creek Health and Rehabilitation Center   Harrison, Corydon, IN  
Nursing center   Operating

IN#296

  Chalet Village Health and Rehabilitation Center   Adams, Berne, IN   Nursing
center   Operating

IN#402

  Regency Place of Fort Wayne   Allen, Ft. Wayne, IN   Nursing center  
Operating

IN#403

  Regency Place of Greenfield   Hancock, Greenfield, IN   Nursing center  
Operating

 

15

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

Third Party Leases

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

  

Facility Type:

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

  

Status:

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

IN#404

  Regency Place of Lafayette   Tippecanoe, Lafayette, IN    Nursing center   
Operating

IN#405

  Regency Place of South Bend   St. Joseph, South Bend, IN    Nursing center   
Operating

IN#4-672

  Vencor Hospital – Indianapolis South   Johnson, Greenwood, IN    Hospital   
Operating

KY#271

  Heritage Manor Health Care Center   Graves, Mayfield, KY    Nursing center   
Operating

LA#1-235

  Irving Place Rehabilitation and Nursing
Center   Caddo, Shreveport, LA    Nursing center    Operating

MA#531

  Nichols House Nursing Home   Bristol, Fairhaven, MA    Nursing center   
Operating

MA#541

  Westborough Health Care Center   Worcester, Westborough, MA    Nursing center
   Operating

MO#263

  Ozark Mountain Regional Health   Stone, Crane, MO    Nursing center   
Operating

MO#265

  Table Rock Health Care Center   Stone, Kimberling City, MO    Nursing center
   Operating

MO#266

  Table Rock Residential Center   Stone, Kimberling City, MO    Nursing center
   Operating

NC#193

  Rehabilitation and Healthcare Center of
Alamance   Alamance, Graham, NC    Nursing center    Operating

NC#717

  Guardian Care of Scotland Neck   Halifax, Scotland Neck, NC    Nursing center
   Operating

NC#718

  Guardian Care of Ahoskie   Hertford, Ahoskie, NC    Nursing center   
Operating

OH#237

  Newark Healthcare Center   Licking, Newark, OH    Nursing center    Operating

OH#295

  Whitehouse Country Manor   Lucas, Whitehouse, OH    Nursing center   
Operating

OH#870

  Community Health Care Center   Marion, Marion, OH    Nursing center   
Operating

OH#1-229

  The LakeMed Nursing and Rehabilitation
Center   Lake, Painesville, OH    Nursing center    Operating

OH#4500

  Kindred Hospital of Dayton   Montgomery, Dayton, OH    Hospital    Non-
operating

TN#171

  Pine Meadows Healthcare and
Rehabilitation Center   Hardeman, Bolivar, TN    Nursing center    Operating

TN#174

  Camden Healthcare and Rehabilitation
Center   Benton, Camden, TN    Nursing center    Operating

TN#175

  Jefferson City Health and Rehabilitation
  Jefferson, Jefferson City, TN    Nursing center    Operating

 

16

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

Third Party Leases

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Status:

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

    Center            

TN#177

  Louden Healthcare Center   Loudon, Loudon, TN   Nursing center   Operating

TN#178

  Shelby Pines Rehabilitation and Healthcare
Center   Shelby, Memphis TN   Nursing center   Operating

TN#179

  Huntingdon Health and Rehabilitation
Center   Carroll, Huntingdon, TN   Nursing center   Operating

TN#183

  Ripley Healthcare and Rehabilitation
Center   Landerdale, Ripley, TN   Nursing center   Operating

TN#184

  Greystone Health Care Center   Sullivan, Blountville, TN   Nursing center  
Operating

TN#187

  Maryville Healthcare and Rehabilitation
Center   Blount, Maryville, TN   Nursing center   Operating

TN#189

  Fairpark Healthcare Center   Blount, Maryville, TN   Nursing center  
Operating

TN#789

  Northhaven Health Care Center   Knox, Knoxville, TN   Nursing center  
Operating

TX#4-657

  Vencor Hospital – Bay Area-Houston   Harris, Pasadena, TX   Hospital  
Operating

TX#4803

  Kindred Hospital of Corpus Christi   Nueces, Corpus Christi, TX   Hospital  
Operating

WI#1-216

 

Middleton Village Nursing and

Rehabilitation Center

  Dane, Middleton, WI   Nursing center   Operating

KY#4502

 

Kindred Hospital Louisville @ Jewish

Hospital

  Jefferson, Louisville, KY   Hospital-in-
Hospital
(“HIH”)   Operating

NJ#4501

  Kindred Hospital Morris County   Morris, Dover, NJ   HIH  

Non-

operating

NM#4808

  Kindred Hospital Albuquerque Sandia   Bernalillo, Albuquerque, NM   HIH  
Operating

OH#4805

  Kindred Hospital Cleveland   Cuyahoga, Cleveland, OH   HIH   Operating

PA#4817

  Kindred Hospital @ Heritage Valley   Beaver, Beaver, PA   HIH   Operating

PA#4806

  Kindred Hospital Delaware County   Delaware, Darby, PA   HIH   Operating

PA#4802

  Kindred Hospital Wyoming Valley   Luzerne, Wilkes-Barre, PA   HIH   Operating

SC#4804

  Kindred Hospital Charleston   Charleston, Charleston, SC   HIH   Operating

 

17

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

Third Party Leases

 

State/

Facility #:

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

 

Facility Name:

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

 

County, City, State Location:

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

 

Facility Type:

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

 

Status:

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

TX#4811

  Kindred Hospital Walnut Hill   Dallas, Dallas, TX   HIH   Operating

TX#4686

  Kindred Hospital White Rock   Dallas, Dallas, TX   HIH   Operating

*

      San Diego, Oceanside, CA   HIH   Non-operating

*

      Marion, Ocala, FL   HIH   Non-operating

*

      St. Louis, St. Louis, MO   HIH   Non-operating

*

      Clark, Las Vegas, NV   HIH   Non-operating

TN#4868

  Kindred Hospital Nashville   Davidson, Nashville, TN   Hospital-in-Nursing
Center (“HINC”)   Operating

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

* Leases for these facilities are under negotiation.

 

18

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

SCHEDULE 4.01

 

PRE-CLOSING DEPOSIT ACCOUNT CONTROL AGREEMENTS

 

Kindred Healthcare Operating, Inc.

  323-272711

Kindred Healthcare Operating, Inc.

  323-368417

Kindred Healthcare Operating, Inc.

  323-272738

Kindred Healthcare Operating, Inc.

  323-272681

Kindred Healthcare Operating, Inc.

  323-272754

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

SCHEDULE 5.14

 

POST-CLOSING DEPOSIT ACCOUNT CONTROL AGREEMENTS

 

None

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

SCHEDULE 7.01

 

EXISTING INDEBTEDNESS

 

In addition to the Existing Credit Facilities (which will be paid on the
Effective Date), the Borrower and its Restricted Subsidiaries have incurred the
following Indebtedness.

 

CREDITOR

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

  

PRINCIPAL

BALANCE1

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

  DESCRIPTION

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

Middleton Village

   $1,137,431
(debt due
March 31, 2017)   mortgage on real and personal
property – Nursing Center by
PersonaCare of Wisconsin, Inc.

Banknorth, N.A.

   $1,316,056
(debt due
June 14, 2006)   Guarantee of indebtedness of
Starr Farm Partnership by
Kindred Healthcare Operating,
Inc.

Ventas, Inc.

   $40,899,891   FL & TX nursing center
acquisition

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

1 All balances as of March 31, 2004.

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

SCHEDULE 7.02

 

EXISTING LIENS

 

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

1. ADVANCED INFUSION SYSTEMS, INC.

Secretary of State, CA – UCCs

   05/02/2001    0112460190    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02750    Morgan Guaranty Trust, SCA    Blanket

2. AMERICAN X-RAYS, INC.

                   

LA UCC CENTRAL DATABASE [Orleans Parish]

   04/27/2001    36-157624    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02751    Morgan Guaranty Trust, SCA    Blanket

3. CARIBBEAN BEHAVIORAL HEALTH SYSTEMS, INC.

Secretary of State, NV – UCCs

   04/30/2001    0106131    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02752    Morgan Guaranty Trust, SCA    Blanket

Department of State, Puerto Rico – UCCs

   05/01/2001    2001037645    Morgan Guaranty Trust, SCA    Blanket

4. COMMUNITY BEHAVIORAL HEALTH SYSTEM, INC.

LA UCC CENTRAL DATABASE [Orleans Parish]

   04/27/2001    36-157626    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02754    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, NV – UCCs

   04/30/2001    0106133    Morgan Guaranty Trust, SCA    Blanket

5. COMMUNITY PSYCHIATRIC CENTERS PROPERTIES OF TEXAS, INC.

Secretary of State, TX – UCCs

   04/27/2001    01-081612    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02748    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, NV – UCCs

   04/30/2001    0106146    Morgan Guaranty Trust, SCA    Blanket

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

6. COMMUNITY PSYCHIATRIC CENTERS PROPERTIES OF UTAH, INC.

Secretary of State, UT – UCCs

   04/27/2001    01-713563    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02749    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, NV – UCCs

   04/30/2001    0106147    Morgan Guaranty Trust, SCA    Blanket

7. COURTLAND GARDENS HEALTH CENTER, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108069    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, CT – UCCs

   04/27/2001    2065375    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02836    Morgan Guaranty Trust, SCA    Blanket

8. CPC MANAGED CARE HEALTH SERVICES, INC.

Secretary of State, DE – UCCs

   04/27/2001    10390745    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02774    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, NV – UCCs

   04/30/2001    0106149    Morgan Guaranty Trust, SCA    Blanket

9. FIRST REHAB, INC.

Secretary of State, DE – UCCs

   04/27/2001    10389176    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02829    Morgan Guaranty Trust, SCA    Blanket

10. HELIAN ASC OF NORTHRIDGE, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108071    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, CA – UCCs

   05/02/2001    0112460153    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02831    Morgan Guaranty Trust, SCA    Blanket

11. HELIAN HEALTH GROUP, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108072    Morgan Guaranty Trust, SCA    Blanket

 

2

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Secretary of State, DE – UCCs

   04/27/2001    10389200    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02832    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, CA – UCCs

   05/02/2001    0112460144    Morgan Guaranty Trust, SCA    Blanket

12. HELIAN RECOVERY CORPORATION, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108073    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, CA – UCCs

   05/02/2001    0112460133    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02833    Morgan Guaranty Trust, SCA    Blanket

13. HILLHAVEN-MSC PARTNERSHIP

Secretary of State, CA – UCCs

   03/05/2002
03/11/2002    0207060245
0207160710    Morgan Guaranty Trust, SCA Morgan Guaranty Trust, SCA    Blanket
Blanket

Secretary of State, KY – UCCs

   03/08/2002
03/08/2002    2002-1817385-27
2002-1817390-93    Morgan Guaranty Trust, SCA Morgan Guaranty Trust, SCA   
Blanket
Blanket

14. HOMESTEAD HEALTH CENTER, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108074    Mogran Guaranty Trust, SCA    Blanket

Secretary of State, CT – UCCs

   04/27/2001    2065376    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02834    Morgan Guaranty Trust, SCA    Blanket

15. HORIZON HEALTHCARE SERVICES, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108075    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02840    Morgan Guaranty Trust, SCA    Blanket

16. J.B. THOMAS HOSPITAL, INC.

Secretary of Commonwealth, MA – UCCs

   04/27/2001    200101850850    Morgan Guaranty Trust, SCA    Blanket

Peabody City, MA – UCCs

   04/30/2001    37,582    Morgan Guaranty Trust, SCA    Blanket

 

3

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Jefferson County, KY – UCCs

   05/01/2001    01-02842    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, NV – UCCs

   04/30/2001    0106161    Morgan Guaranty Trust, SCA    Blanket

17. KINDRED ACUTE PULMONARY EAST, INC.

Secretary of State, DE – UCCs

   07/30/2001    10830252    Morgan Guaranty Trust, SCA    Blanket

18. KINDRED ACUTE PULMONARY LIMITED PARTNERSHIP

Secretary of State, DE – UCCs

   07/30/2001    10830419    Morgan Guaranty Trust, SCA    Blanket

19. KINDRED ACUTE PULMONARY WEST, INC.

Secretary of State, DE – UCCs

   07/30/2001    10830336    Morgan Guaranty Trust, SCA    Blanket

20. KINDRED FACILITY SERVICES, INC.

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001    10390802
1059774    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Jefferson County, KY – UCCs

   05/01/2001
06/29/2001    01-02791
01-02791A    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

 

4

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

21. KINDRED HEALTHCARE, INC.

Secretary of State, DE – UCCs

   04/27/2001
05/02/2002
07/16/2002
09/13/2002
12/11/2002
06/10/2003
10/08/2003
10/17/2003
04/28/2004
10/24/2003
10/30/2003
12/12/2003
12/31/2003
01/20/2004
01/20/2004
03/29/2004    10390711
21293160
21948581
22346157
23088014
31456170
32729492
32789223
41183898
32829284
32848383
33281964
40183352
40146680
40146847
40968158   

Morgan Guaranty Trust, SCA Marlin Leasing Corp.

Republic Bank

Republic Bank

CIT Technology Financing

Marlin Leasing Corp.

IOS Capital

Creekridge Capital LLC
    

Republic Bank

CCA Financial, LLC

Suntrust Bank

Republic Bank

Nextiraone LLC

Nextiraone LLC

Republic Bank

   Blanket
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Amends Debtor Name
Equipment
Equipment
Assignment
Equipment
Equipment
Equipment
Equipment

Jefferson County, KY – UCCs

   05/01/2001
05/02/2001    01-02764
01-02884   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Fixture

 

5

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

Credit Party/Office1

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

  

Filing

Date

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

  

Filing

Number

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

  

Secured Party

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

   Lien Description

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

22. KINDRED HEALTHCARE OPERATING, INC.

Secretary of State, DE – UCCs

   04/27/2001
09/21/2001
10/24/2001
10/24/2001
10/24/2001
10/24/2001
10/24/2001
11/29/2001
01/15/2002
01/22/2002
02/13/2002
02/21/2002
07/15/2002
12/20/2002
02/03/2003
03/23/2003
     
    
    
    
    
01/13/2004    10390737
11214746
11490502
11490510
11490536
11490767
11490858
20030118
20342034
20382501
20604649
20757181
21942394
30075336
30292493
30813736
    
     
    
    
    
40092892   

Morgan Guaranty Trust, SCA U.S. Bank Trust N.A.

U.S. Bank Trust N.A.

U.S. Bank Trust N.A.

U.S. Bank Trust N.A.

U.S. Bank Trust N.A.

U.S. Bank Trust N.A.

U.S. Bank Trust N.A.

U.S. Bank Trust N.A.

U.S. Bank Trust N.A.

Baxter Healthcare Corp

U.S. Bank Trust N.A.

U.S. Bank Trust N.A.

U.S. Bank Trust N.A.

Baxter Healthcare Corp

Fleet National Bank
    
    
    
    
    

IFC Credit Corporation

   Blanket
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
All personal property
related to premises
located at High Street,
Fieldstons Road and
Longwood Drive,
Westwood, Massachusetts
Equipment

 

6

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Jefferson County, KY – UCCs

   05/01/2001
05/02/2001    01-02765
01-02883   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Fixture

Secretary of State, CA – UCCs

   04/27/2001
05/02/2001
11/09/2001
12/05/2001    0112160293
0112460196
0131760707
01340C0164   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

Am. Express Business Finance

   Fixture
Blanket
Equipment
Amends Debtor Name

Secretary of State, ID – UCCs

   04/30/2001
04/30/2001    B898905
B898908   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Fixture

Secretary of State, NV – UCCs

   04/30/2001
05/04/2001
02/07/2003    0106130
0106575
2003003830-0   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

Baxter Healthcare Corporation

   Blanket
Fixture
Equipment

23. KINDRED HEALTHCARE SERVICES, INC.

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001
10/21/2002
03/18/2003
03/18/2003
05/11/2004    10390778
1059422
22646333
30666753
30666779
41308636   

Morgan Guaranty Trust, SCA

General Electric Capital Corp.

Baxter Healthcare Corporation

Baxter Healthcare Corporation

Sysco Food Services of Central CA

   Blanket
Amends Debtor Name
Equipment
Equipment
Equipment
[Copy of filing on
backorder]

Jefferson County, KY – UCCs

   05/01/2001
06/29/2001    01-02772
01-02772A    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, CA – UCCs

   08/14/2002    0222760543    Citicorp Vendor Finance, Inc.    Equipment

Secretary of State, ME – UCCs

   04/27/2001
06/27/2001    1408862
1418102    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

 

7

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Department of Financial Institutions, WI – UCCs

   04/30/2001
06/27/2001    02058948
02078339    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

24. KINDRED HOLDINGS, L.L.C.

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001    10390836
1059772    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Jefferson County, KY – UCCs

   05/01/2001
06/29/2001    01-02792
01-02792A    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

25. KINDRED HOME CARE AND HOSPICE INDIANA PARTNERSHIP

Jefferson County, KY – UCCs

   05/01/2001
06/29/2001    01-02760
01-02760A    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

26. KINDRED HOME CARE SERVICES, INC.

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001    10390844
1059765    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

27. KINDRED HOSPICE, INC.

Jefferson County, KY – UCCs

   05/02/2001    01-02887    Morgan Guaranty Trust, SCA    Blanket

28. KINDRED HOSPITALS LIMITED PARTNERSHIP

GA UCC CENTRAL DATABASE [Clayton County]

   04/30/2001
06/27/2001    3120011957
03120012979    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

 

8

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001
07/29/2002
11/04/2002
02/26/2003
03/21/2003
02/16/2004
03/21/2003
03/21/2003
04/14/2004    10390653
1059780
22001588
22776882
30478688
30717184
40418618
30717804
30721400
41055237   

Morgan Guaranty Trust, SCA
    

Baxter Healthcare Corp

Baxter Healthcare Corp

Baxter Healthcare Corp

Baxter Healthcare Corp
    

Baxter Healthcare Corp

Baxter Healthcare Corp

Centennial Bank, Inc

   Blanket
Amends Debtor Name
Equipment
Equipment
Equipment
Equipment
Amends Collateral Desc
Equipment
Equipment
Equipment

Jefferson County, KY – UCCs

   05/01/2001
06/29/2001    01-02761
01-02761A    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, TN – UCCs

   05/03/2001
06/27/2001    301-076218
301-084136    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, TX – UCCs

   04/27/2001
06/26/2001
05/29/2001
09/14/2001
03/21/2003    01-081618
01-675082
01-104569
02-0003127813
03-0021581191   

Morgan Guaranty Trust, SCA
    

Morgan Guaranty Trust, SCA

Baxter Healthcare Corporation

Baxter Healthcare Corporation

   Blanket
Amends Debtor Name
Fixture
Equipment
Equipment

29. KINDRED HOSPITALS EAST, L.L.C.

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001
12/31/2003
01/12/2004    10389762
1059810
40183352
40074833   

Morgan Guaranty Trust, SCA
    

Republic Bank

CIT Technology Financing

   Blanket
Amends Debtor Name
Equipment
Equipment

 

9

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Secretary of State, CT – UCCs

   04/27/2001
06/27/2001    2065382
2079724    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, FL – UCCs

   04/27/2001
06/27/2001    200100091910
200100141377    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of Commonwealth, MA – UCCs

   04/27/2001
06/27/2001    200101850940
200103582650    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Boston City, MA – UCCs

   04/30/2001
06/27/2001    433422
433422    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Norwood Town, MA – UCCs

   04/30/2001
06/27/2001    50108
50108    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Division of Corporations, ME – UCCs

   04/27/2001
06/27/2001    1408863
1418101    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, MI – UCCs

   04/27/2001
06/27/2001    24045C
D790740    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, MO – UCCs

   04/27/2001
06/27/2001    4159373
4180192    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Jackson County, MO – UCCs

   04/27/2001
06/28/2001    2001J0434003
2001J0435836    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

St. Louis County, MO – UCCs

   04/27/2001
06/27/2001    200105344
200108081    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Cole County, MO – UCCs

   04/30/2001
06/28/2001    20010227
20010227M    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, NC – UCCs

   04/30/2001
06/28/2001
08/15/2003
12/31/2003    20010041224
20010062171
20030082704H
20030131741C   

Morgan Guaranty Trust, SCA
    

Kings Dominion, LLC

Republic Bank

   Blanket
Amends Debtor Name
Equipment
Equipment

 

10

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Guilford County, NC – UCCs

   04/30/2001
06/27/2001    505556
506923    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Wake County, NC – UCCs

   04/30/2001
06/28/2001    01-002978
01-002978    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Mecklenburg County, NC – UCCs

   04/30/2001
06/28/2001    200115020
200115020    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, OH – UCCs

   04/27/2001
06/27/2001    AP330488
20011870016    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Franklin County, OH – UCCs

   04/30/2001
06/27/2001    200104300091206
200106270145568    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Oklahoma County, OK – UCCs

   04/27/2001
07/02/2001    0024007
2001003859836    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Allegheny County, PA – UCCs

   05/04/2001
06/28/2001    UCC-01-2723
UCC-01-2723    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Philadelphia County, PA – UCCs

   05/11/2001
06/27/2001    012311
012311    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

State Corporation Commission, VA – UCCs

   04/27/2001
06/27/2001
06/21/2002    010427-7066
010627-7056
020621-7293-6    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name
Partial Release

Arlington County, VA – UCCs

   05/01/2001
06/27/2001    64193
64193    Morgan Guaranty Trust, SCA    Blanket Amends
Debtor Name

Virginia Beach City, VA – UCCs

   04/27/2001
06/27/2001    01-1507
01-1507    Morgan Guaranty Trust, SCA    Blanket Amends
Debtor Name

30. KINDRED HOSPITALS WEST, L.L.C.

Secretary of State, DE – UCCs

   04/30/2001
06/27/2001
01/30/2003    10395967
1059807
30270432   

Morgan Guaranty Trust, SCA
    

Baxter Healthcare Corporation

   Blanket
Amends Debtor Name
Equipment

 

11

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Jefferson County, KY – UCCs

   05/02/2001
06/29/2001    01-02886
01-02886A    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, AZ – UCCs

   05/01/2001
06/27/2001    01171541
01171541    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, CO – UCCs

   04/30/2001
06/27/2001    20012033615
20012051092    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, MT – UCCs

   04/27/2001
06/27/2001    63760870
64487514    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, NV – UCCs

   04/30/2001
06/27/2001    0106126
0106126    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, UT – UCCs

   04/27/2001
06/27/2001    01-713564
01-713564    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

31. KINDRED INSURANCE HOLDINGS, INC.

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001    10389820
1059415    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Jefferson County, KY – UCCs

   05/01/2001
06/29/2001    01-02783
01-02783    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

32. KINDRED INVESTMENT COMPANY

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001    10389895
1059407    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Jefferson County, KY – UCCs

   05/01/2001
06/29/2001    01-02784
01-02784    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

33. KINDRED NEVADA, L.L.C.

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001    10389861
1059406    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

 

12

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Jefferson County, KY – UCCs

   05/01/2001
06/29/2001    01-02785
01-02785    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, NV – UCCs

   04/30/2001
06/27/2001    0106173
0106173    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

34. KINDRED NURSING CENTERS EAST, L.L.C.

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001
08/16/2002    10389911
1059382
22118507   

Morgan Guaranty Trust, SCA
    

Americorp Financial, Inc

   Blanket
Amends Debtor Name
Equipment                      

Jefferson County, KY – UCCs

   05/01/2001
06/29/2001    01-02787
01-02787A    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, AL – UCCs

   04/27/2001
09/17/2001    B2001-15492
2001-15492    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, CT – UCCs

   04/27/2001
06/27/2001    2065383
2079726    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, FL – UCCs

   04/27/2001
06/27/2001
05/03/2001    200100091911
200100141378
200100096861   

Morgan Guaranty Trust, SCA
    

Morgan Guaranty Trust, SCA

   Blanket
Amends Debtor Name
Fixture

Secretary of Commonwealth, MA – UCCs

   04/27/2001
06/27/2001    200101851000
200103582920    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Abington Town, MA – UCCs

   04/30/2001
06/27/2001    01-59
01-98    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Beverly City, MA – UCCs

   04/30/2001
06/27/2001    01-169
01-169A    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Boston City, MA – UCCs

   04/30/2001
06/27/2001    433421
433421    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

 

13

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Brockton City, MA – UCCs

   04/30/2001
06/27/2001    000199
000199    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Concord Town, MA – UCCs

   04/30/2001
06/27/2001    2001-81
2001-81/A062701    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Dennis Town, MA – UCCs

   04/30/2001
06/27/2001    1984
1984    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

East Brigdewater Town, MA – UCCs

   04/30/2001
06/27/2001    Bk62Pg48
Bk62Pg73    Morgan Guaranty Trust, SCA    Blanket
Amends Debtors Name

Fairhaven Town, MA – UCCs

   04/30/2001
06/27/2001    2001-53
2001-95    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Fall River City, MA – UCCs

   04/30/2001
06/27/2001    75629
75629    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Fitchburg City, MA – UCCs

   04/30/2001
06/27/2001    106-01
106-01    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Franklin Town, MA – UCCs

   04/30/2001
06/29/2001    142
222    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Great Barrington Town, MA – UCCs

   04/30/2001
06/27/2001    21-65
21-65    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Lancaster Town, MA – UCCs

   04/30/2001
06/27/2001    2001-20
2001-20    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Marlborough Town, MA – UCCs

   04/30/2001
06/27/2001    41220
41405    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Natick Town, MA – UCCs

   04/30/2001
06/27/2001    187
293    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Needham Town, MA – UCCs

   04/30/2001
06/27/2001    149
149    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

 

14

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

New Bedford City, MA – UCCs

   04/30/2001
06/27/2001    62419
62419    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Newburyport City, MA – UCCs

   04/30/2001
06/27/2001    150
239    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Quincy City, MA – UCCs

   04/30/2001
06/27/2001    020785
20785    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Rockport Town, MA – UCCs

   04/30/2001
06/27/2001    Bk19Pg802
Bk19 Pg810    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Saugus Town, MA – UCCs

   04/30/2001
06/27/2001    28141
28207    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Stoughton Town, MA – UCCs

   05/01/2001
06/28/2001    20150
20273    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Swansea Town, MA – UCCs

   05/04/2001
06/28/2001    103-01
172-01    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Walpole Town, MA – UCCs

   04/30/2001
07/09/2001    74
74    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Webster Town, MA – UCCs

   04/30/2001
06/28/2001    11516
11561    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Wellesley Town, MA – UCCs

   04/30/2001
06/27/2001    2001-149
2001-149    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Westborough Town, MA – UCCs

   05/02/2001
06/27/2001    01-418
01-722    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Westwood Town, MA – UCCs

   04/30/2001
06/27/2001    01-106
01-106A    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, MS – UCCs

   04/27/2001
06/27/2001    01519188
01536607    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

 

15

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Alcorn County, MS – UCCs

   04/27/2001
06/27/2001    01-0860
01-0860    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, NC – UCCs

   04/27/2001
06/28/2001
05/25/2001    20010040670
20010062172
20010050238   

Morgan Guaranty Trust, SCA
    

Morgan Guaranty Trust, SCA

   Blanket
Amends Debtor Name
Fixture

Alamance County, NC – UCCs

   04/30/2001
06/27/2001    00636
00636    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Duplin County, NC – UCCs

   04/30/2001
06/27/2001
05/25/2001    2001-0848
2001-1224
2001-1002   

Morgan Guaranty Trust, SCA
    

Morgan Guaranty Trust, SCA

   Blanket
Amends Debtor Name
Fixture

Durham County, NC – UCCs

   04/30/2001
06/29/2001    200100841
200100841    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Forsyth County, NC – UCCs

   04/30/3001
06/27/2001    238984
239523    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Gaston County, NC – UCCs

   04/30/2001
06/29/2001    2001-778
2001-778    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Halifax County, NC – UCCs

   04/30/2001
06/27/2001    01-371
01-579    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Hertford County, NC – UCCs

   04/30/2001
06/27/2001    225-01
332-01    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Lenoir County, NC – UCCs

   04/30/2001
06/27/2001    01-0578
01-578    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Lincoln County, NC – UCCs

   04/30/2001
06/27/2001    2001-366
2001-589    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Nash County, NC – UCCs

   04/30/2001
06/28/2001    01-913
01-1307    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

 

16

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

New Hanover County, NC – UCCs

   04/30/2001
06/27/2001    200101197
200101197    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Orange County, NC – UCCs

   04/30/2001
06/27/2001    Bk2001Pg527
Bk2001 Pg788    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Pasquotank County, NC – UCCs

   04/30/2001
06/27/2001    40312
40444    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Union County, NC – UCCs

   04/30/2001
06/27/2001    0101250
0101853    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Vance County, NC – UCCs

   04/30/2001
06/28/2001    0100318
0100485    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Wake County, NC – UCCs

   04/30/2001
06/28/2001    01-002979
01-002979    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Coshocton County, OH – UCCs

   04/30/2001
06/29/2001    200100000358
200100000577    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Franklin County, OH – UCCs

   04/30/2001
06/27/2001    200104300091202
200106270145553    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Guernsey County, OH – UCCs

   04/30/2001
06/27/2001    200100007322
200100007546    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Hocking County, OH – UCCs

   04/30/2001
06/27/2001    2331FS 259UCCR
200100000386    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Licking County, OH – UCCs

   04/30/2001
06/28/2001    200104300014065
200106280023175    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Lucas County, OH – UCCs

   04/30/2001
06/28/2001    511067
511067    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Marion County, OH – UCCs

   04/30/2001
06/29/2001    2001-0615
2001-0615    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

 

17

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Ross County, OH – UCCs

   04/30/2001
06/27/2001    200100000871
200100001296    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Summit County, OH – UCCs

   05/01/2001
06/27/2001    21053480
21055208    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Washington County, OH – UCCs

   04/30/2001
06/28/2001    200100000994
200100001623    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Warren County, OH – UCCs

   04/30/2001
06/28/2001    67609
67609    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, RI – UCCs

   04/27/2001
06/27/2001    727814
730248    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

State Corporation Commission, VA – UCCs

   04/27/2001
06/27/2001    010427-7067
010627-7057    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Richmond County, VA – UCCs

   04/27/2001
06/27/2001    01-1203
01-1203    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Suffolk City, VA – UCCs

   04/30/2001
06/29/2001    010034598
010034598    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Virginia Beach City, VA – UCCs

   04/27/2001
06/27/2001    01-1506
01-1506    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

35. KINDRED NURSING CENTERS LIMITED PARTNERSHIP

GA UCC CENTRAL DATABASE [Chatham County]

   04/30/2001
06/27/2001    0252001001979
0252001003221    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001    10390679
1059777    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, IN – UCCs

   05/29/2001    200100002911076    Morgan Guaranty Trust, SCA    Fixture

Boyle County, KY – UCCs

   04/30/2001
06/27/2001    0101203
0101203-01    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

 

18

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Casey County, KY – UCCs

   05/03/2001
06/27/2001    1199
1297    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Clark County, KY – UCCs

   04/30/2001
06/27/2001    101839
101839    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Daviess County, KY – UCCs

   04/30/2001
06/27/2001    084822
085138    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Fayette County, KY – UCCs

   04/30/2001
06/27/2001    200109436
200109436A    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Graves County, KY – UCCs

   04/30/2001
06/29/2001    77349
77349    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Hardin County, KY – UCCs

   04/30/2001
06/27/2001    0120534
0120534    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Marion County, KY – UCCs

   04/30/2001
06/27/2001    01D1049
01D1049    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Marshall County, KY – UCCs

   04/30/2001
06/27/2001    164075
164075    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

McCracken County, KY – UCCs

   04/30/2001
06/27/2001    U210417
U210417    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

McLean County, KY – UCCs

   04/30/2001
06/27/2001    210726
210726-01    Morgan Guaranty Trust, SPA    Blanket
Amends Debtor Name

Mercer County, KY – UCCs

   04/30/2001
06/28/2001    001102-01
001704-01    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Muhlenberg County, KY – UCCs

   05/02/2001
06/27/2001    8090
8090    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, TN – UCCs

   05/03/2001
06/27/2001    301-076219
301-084135    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

 

19

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Department of Financial Institutions, WI – UCCs

   04/30/2001
06/27/2001    02058950
02078341    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

36. KINDRED NURSING CENTERS CENTRAL LIMITED PARTNERSHIP

Secretary of State, DE – UCCs

   04/30/2001
06/27/2001    10396049
1059778    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Jefferson County, KY – UCCs

   05/02/2001
06/29/2001    01-02885
01-02885A    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

37. KINDRED NURSING CENTERS NORTH, L.L.C.

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001    10389929
1059561    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

38. KINDRED NURSING CENTERS SOUTH, L.L.C.

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001    10389937
1059557    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

39. KINDRED NURSING CENTERS WEST, L.L.C.

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001    10390695
1059788    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Jefferson County, KY – UCCs

   05/01/2001
06/29/2001    01-02763
01-02763A    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, AZ – UCCs

   04/27/2001
06/27/2001    01171235
01171235    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, CA – UCCs

   05/02/2001
06/27/2001
06/01/2001    0112460271
01179C0296
0115260568   

Morgan Guaranty Trust, SCA
    

Morgan Guaranty Trust, SCA

   Blanket
Amends Debtor Name
Fixture

Secretary of State, CO – UCCs

   04/30/2001
06/27/2001    20012033616
20012051093    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

 

20

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Secretary of State, ID – UCCs

   04/30/2001
06/28/2001
05/25/2001    B898906
B6368888
B901017   

Morgan Guaranty Trust, SCA
    

Morgan Guaranty Trust, SCA

   Blanket
Amends Debtor Name
Fixture

Division of Corporations, ME – UCCs

   04/27/2001
06/27/2001
05/03/2002    1408864
1418103
202000152493775    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name
Filing Officer Corr
Stmt.

Secretary of State, MT – UCCs

   04/27/2001
06/27/2001    63760759
64487493    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, NE – UCCs

   04/30/2001
06/27/2001    9901137425
9901152263    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, NH – UCCs

   04/27/2001
06/27/2001    579291
579291-01    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Dover City, NH – UCCs

   04/27/2001
06/27/2001    155
241    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Hanover Town, NH – UCCs

   04/27/2001
06/27/2001    7054
7068    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Nashua Town, NH – UCCs

   04/27/2001
06/27/2001    081175
81175    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Salem Town, NH – UCCs

   04/27/2001
06/27/2001    31657
31657    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, OR – UCCs

   05/01/2001
06/27/2001    550814
550814    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, UT – UCCs

   04/27/2001
06/27/2001    01-713565
01-713565    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Department of Licensing, WA – UCCs

   04/27/2001
06/27/2001
05/25/2001    2001-117-0224
2001-178-0175
2001-145-0222   

Morgan Guaranty Trust, SCA
    

Morgan Guaranty Trust, SCA

   Blanket
Amends Debtor Name
Fixture

 

21

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

Credit Party/Office

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Secretary of State, WY – UCCs

   04/27/2001
06/27/2001    2001-117161A01
2001-178131B03    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

40. KINDRED PHARMACY SERVICES, INC.

Secretary of State, DE – UCCs

   03/19/2003    30690696    Baxter Healthcare Corporation    Equipment

41. KINDRED REHAB SERVICES, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001
06/27/2001    060200108093
060200111953    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001
10/17/2003
04/28/2004    10390786
1059420
32789223
41183898   

Morgan Guaranty Trust, SCA
    

Creekridge Capital LLC

   Blanket
Amends Debtor Name
Equipment
Amends Debtor Name

Jefferson County, KY – UCCs

   05/01/2001
06/29/2001    01-02773
01-02773A    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

42. KINDRED SYSTEMS, INC.

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001    10389960
1059784    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Jefferson County, KY – UCCs

   05/01/2001
06/29/2001    01-02766
01-02766A    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

43. LAFAYETTE HEALTH CARE CENTER, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108077    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02843    Morgan Guaranty Trust, SCA    Blanket

44. MEDEQUITIES, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108078    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, CA – UCCs

   05/02/2001    0112460015    Morgan Guaranty Trust, SCA    Blanket

 

22

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien
Description

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

Jefferson County, KY – UCCs

   05/01/2001    01-02844    Morgan Guaranty Trust, SCA    Blanket

45. MEDISAVE OF TENNESSEE, INC.

Secretary of State, DE – UCCs

   05/01/2001    10398987    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/03/2001    01-03095    Morgan Guaranty Trust, SCA    Blanket

46. PALO ALTO SURGECENTER CORPORATION

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108079    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, CA – UCCs

   05/02/2001    0112460011    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02847    Morgan Guaranty Trust, SCA    Blanket

47. PERSONACARE LIVING CENTER OF CLEARWATER, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108082    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10389291    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02859    Morgan Guaranty Trust, SCA    Blanket

48. PERSONACARE OF BRADENTON, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108084    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10389275    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02860    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, FL – UCCs

   04/27/2001    200100091901    Morgan Guaranty Trust, SCA    Blanket

49. PERSONACARE OF CLEARWATER, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108083    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10389309    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02861    Morgan Guaranty Trust SCA    Blanket

 

23

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Secretary of State, FL—-UCCs

   04/27/2001    200100091903    Morgan Guaranty Trust, SCA    Blanket

50. PERSONACARE OF CONNECTICUT, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108085    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, CT – UCCs

   04/27/2001    2065379    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02862    Morgan Guaranty Trust, SCA    Blanket

51. PERSONACARE OF GEORGIA, INC.

GA UCC CENTRAL DATABASE

[Clayton County]

[Fulton County]

  
04/30/2001
04/30/2001   
3120011956
060200108086   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

  
Blanket
Blanket

Secretary of State, DE – UCCs

   04/27/2001    10389333    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02863    Morgan Guaranty Trust, SCA    Blanket

52. PERSONACARE OF HUNTSVILLE, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108087    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10389366    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02864    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, AL – UCCs

   04/27/2001    B2001-15491    Morgan Guaranty Trust, SCA    Blanket

53. PERSONACARE OF LITTLE ROCK, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108088    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10389390    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02865    Morgan Guaranty Trust, SCA    Blanket

 

24

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

54. PERSONACARE OF OHIO, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108089    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10389416    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02837    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, OH – UCCs

   04/27/2001    AP330487    Morgan Guaranty Trust, SCA    Blanket

Lake County, OH – UCCs

   04/30/2001    20011628    Morgan Guaranty Trust, SCA    Blanket

55. PERSONACARE OF OWENSBORO, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108090    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10389424    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02838    Morgan Guaranty Trust, SCA    Blanket

Daviess County, KY – UCCs

   04/30/2001    084821    Morgan Guaranty Trust, SCA    Blanket

56. PERSONACARE OF PENNSYLVANIA, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108091    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10389465    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02839    Morgan Guaranty Trust, SCA    Blanket

Secretary of Commonwealth, PA – UCCs

   04/30/2001    33880801    Morgan Guaranty Trust, SCA    Blanket

Northampton County, PA – UCCs

   04/30/2001    003343    Morgan Guaranty Trust, SCA    Blanket

57. PERSONACARE OF POMPANO EAST, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108117    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10389747    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02850    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, FL – UCCs

   04/27/2001    200100091904    Morgan Guaranty Trust, SCA    Blanket

 

25

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

58. PERSONACARE OF POMPANO WEST, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108116    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10390133    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02851    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, FL – UCCs

   04/27/2001    200100091905    Morgan Guaranty Trust, SCA    Blanket

59. PERSONACARE OF READING, INC.

Secretary of State, DE – UCCs

   04/27/2001    10390190    Morgan Guaranty Trust, SCA    Blanket

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108115    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02852    Morgan Guaranty Trust, SCA    Blanket

Secretary of Commonwealth, PA – UCCs

   04/30/2001    33880798    Morgan Guaranty Trust, SCA    Blanket

Berks County, PA – UCCs

   04/30/2001    01-985ST    Morgan Guaranty Trust, SCA    Blanket

60. PERSONACARE OF SAN ANTONIO, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108108    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10390224    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02853    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, TX – UCCs

   04/27/2001    01-081613    Morgan Guaranty Trust, SCA    Blanket

61. PERSONACARE OF SAN PEDRO, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108107    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10390885    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02854    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, TX – UCCs

   04/27/2001    01-081614    Morgan Guaranty Trust, SCA    Blanket

 

26

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

62. PERSONACARE OF SHREVEPORT, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108106    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10390893    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02855    Morgan Guaranty Trust, SCA    Blanket

LA UCC CENTRAL DATABASE [Caddo Parish]

   04/27/2001    09-997535    Morgan Guaranty Trust, SCA    Blanket

63. PERSONACARE OF ST. PETERSBURG, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108105    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10390901    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02856    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, FL – UCCs

   04/27/2001    200100091906    Morgan Guaranty Trust, SCA    Blanket

64. PERSONACARE OF WARNER ROBINS, INC.

GA UCC CENTRAL DATABASE

[Fulton County]

[Houston County]

   04/30/2001
04/30/2001    060200108104
07620011067   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

Secretary of State, DE – UCCs

   04/27/2001    10390943    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02857    Morgan Guaranty Trust, SCA    Blanket

65. PERSONACARE OF WISCONSIN, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108103    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10390976    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02858    Morgan Guaranty Trust, SCA    Blanket

Department of Financial Institutions, WI – UCCs

   04/30/2001    02058937    Morgan Guaranty Trust, SCA    Blanket

 

27

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

66. PERSONACARE PROPERTIES, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108102    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02814    Morgan Guaranty Trust, SCA    Blanket

67. PRODATA SYSTEMS, INC.

Secretary of State, AL – UCCs

   04/27/2001    B2001-15493    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02815    Morgan Guaranty Trust, SCA    Blanket

68. RECOVERY INNS OF AMERICA, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108101    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, CA – UCCs

   05/02/2001    0112460203    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02816    Morgan Guaranty Trust, SCA    Blanket

69. RESPIRATORY CARE SERVICES, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108100    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001
11/24/2003
11/24/2003
11/25/2003    10391008
33156679
33101436
33113308   

Morgan Guaranty Trust, SCA
    

JPMorgan Chase Bank, SCA

   Blanket

Blanket In Lieu
Partial Release

Jefferson County, KY – UCCs

   05/01/2001    01-02817    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, TN – UCCs

   05/03/2001    301-076220    Morgan Guaranty Trust, SCA    Blanket

LA UCC CENTRAL DATABASE [St. Tammany Parish]

   04/27/2001    52-23745    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, SC – UCCs

   04/27/2001    010427-093446A    Morgan Guaranty Trust, SCA    Blanket

Department of Licensing, WA – UCCs

   04/27/2001    2001-117-0221    Morgan Guaranty Trust, SCA    Blanket

 

28

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

70. SOUTHERN CALIFORNIA SPECIALTY CARE, INC.

Secretary of State, CA – UCCs

   08/03/2001
04/29/2002    0121860243
0211960554   

Olympus America Inc

JPMorgan Chase Bank, SCA

   Equipment
Blanket

71. SPECIALTY HEALTHCARE SERVICES, INC.

Secretary of State, DE – UCCs

   04/29/2002    21054257    JPMorgan Chase Bank, SCA    Blanket

72. SPECIALTY HOSPITAL OF CLEVELAND, INC.

Secretary of State, OH – UCCs

   04/29/2002    OH00048541466    JPMorgan Chase Bank, SCA    Blanket

73. SPECIALTY HOSPITAL OF DALLAS, INC.

Secretary of State, TX – UCCs

   04/29/2002    02-0027989633    JPMorgan Chase Bank, SCA    Blanket

74. SPECIALTY HOSPITAL OF PHILADELPHIA, INC.

Secretary of Commonwealth, PA – UCCs

   10/05/1999
11/29/1999
04/29/2002    30791417
30981618
36180923   

Med One Capital, Inc

Republic Bank

JPMorgan Chase Bank, SCA

   Equipment
Assignment
    

75. SPECIALTY HOSPITAL OF SOUTH CAROLINA, INC.

Secretary of State, SC – UCCs

   05/20/1999
07/02/1999
08/19/1999
08/23/1999
09/24/1999
04/29/2002    990520-110702A
990702-101416A
990819-152051A
990823-124028A
990924-143916A
020429-1157587   

McGaw, Inc

3CI Capital, Inc

Republic Bank

3CI Capital, Inc

Republic Bank

JPMorgan Chase Bank, SCA

   Equipment
Equipment
Assignment
Equipment
Assignment
Blanket

 

29

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

76. STAMFORD HEALTH FACILITIES, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108099    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, CT – UCCs

   04/27/2001    2065380    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02818    Morgan Guaranty Trust, SCA    Blanket

77. THC – CHICAGO, INC.

Secretary of State, IL – UCCs

   03/26/1996
10/04/2000
04/27/2001
04/27/2001
10/09/2001
12/10/2001
05/14/2003    3521527
4280774
4377411
4377412
4446859
4473128
7004982   

HarrisBank
    

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

Republic Bank

Baxter Healthcare Corporation

Baxter Healthcare Corporation

   Equipment
Continuation
Blanket
Blanket
Equipment
Equipment
Equipment

Jefferson County, KY – UCCs

   05/01/2001
05/01/2001    01-02819
01-02820   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

Department of Financial Institutions, WI – UCCs

   04/30/2001
04/30/2001    02058944
02058946   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

Secretary of State, NV – UCCs

   04/30/2001
04/30/2001    0106175
0106176   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

78. THC – HOLLYWOOD, INC.

Secretary of State, FL – UCCs

   04/27/2001
04/27/2001    200100091907
200100091908   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

 

30

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Jefferson County, KY – UCCs

   05/01/2001
05/01/2001    01-02821
01-02822   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

Secretary of State, NV – UCCs

   04/30/2001
04/30/2001    0106177
0106178   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

79. THC – HOUSTON, INC.

Secretary of State, TX – UCCs

   04/27/2001
04/27/2001
01/10/2002
02/19/2004
03/12/2004    01-081615
01-081616
02-0015317443
04-00578853
04-0060368714   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

Baxter Healthcare Corporation
    

Baxter Healthcare Corporation

   Blanket
Blanket
Equipment
Amends Collateral Desc
Equipment

Jefferson County, KY – UCCs

   05/01/2001
05/01/2001    01-02804
01-02823   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

Secretary of State, NV – UCCs

   04/30/2001
04/30/2001    0106179
0106180   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

80. THC – MINNEAPOLIS, INC.

Secretary of State, MN – UCCs

   04/30/2001
04/30/2001    2320545
2320546   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

Secretary of State, MN – STL

   04/13/1999    SL15502    MN Dept. of Revenue    STL $36, 003.64

Jefferson County, KY – UCCs

   05/01/2001
05/01/2001    01-02805
01-02806   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

Secretary of State, NV – UCCs

   04/30/2001
04/30/2001    0106181
0106182   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

 

31

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

81. THC – NORTH SHORE, INC.

Secretary of State, IL – UCCs

   04/27/2001
04/27/2001
12/19/2001
02/26/2003    4377409
4377410
4377392
6610315   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

Total Management Systems Inc

Baxter Healthcare Corporation

   Blanket
Blanket
Equipment
Equipment

Jefferson County, KY – UCCs

   05/01/2001
05/01/2001    01-03013
01-03014   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

Secretary of State, NV – UCCs

   04/30/2001
04/30/2001    0106183
0106184   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

82. THC – ORANGE COUNTY, INC.

Secretary of State, CA – UCCs

   05/02/2001
05/02/2001    0112460211
0112460217   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

Jefferson County, KY – UCCs

   05/01/2001
05/01/2001    01-02809
01-02810   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

Secretary of State, NV – UCCs

   04/30/2001
04/30/2001    0106185
0106186   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

83. THC – SAN DIEGO, INC.

Secretary of State, CA – UCCs

   05/02/2001
05/02/2001    0112460228
0112460237   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

Jefferson County, KY – UCCs

   05/01/2001
05/01/2001    01-02811
01-02812   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

 

32

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Secretary of State, NV – UCCs

   04/30/2001
04/30/2001    0106187
0106188   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

84. THC – SEATTLE, INC.

Department of Licensing, WA – UCCs

   04/27/2001
04/27/2001
05/03/2001    2001-117-0222
2001-117-0223
2001-123-0189   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket
Fixture

Jefferson County, KY – UCCs

   05/01/2001
05/01/2001    01-02794
01-02813   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

Secretary of State, NV – UCCs

   04/30/2001
04/30/2001    0106189
0106190   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

   Blanket
Blanket

85. THERATX HEALTH SERVICES, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108097    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10391016    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02795    Morgan Guaranty Trust, SCA    Blanket

86. THERATX HEALTHCARE MANAGEMENT, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108096    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10391057    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02796    Morgan Guaranty Trust, SCA    Blanket

87. THERATX MANAGEMENT SERVICES, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108095    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, CA – UCCs

   05/02/2001    0112460249    Morgan Guaranty Trust, SCA    Blanket

 

33

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Jefferson County, KY – UCCs

   05/01/2001    01-02797    Morgan Guaranty Trust, SCA    Blanket

88. THERATX REHABILITATION SERVICES, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   04/30/2001    060200108094    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, DE – UCCs

   04/27/2001    10391081    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02799    Morgan Guaranty Trust, SCA    Blanket

89. THERATX STAFFING, INC.

GA UCC CENTRAL DATABASE [Fulton County]

   05/02/2001    060200108341    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, IL – UCCs

   05/02/2001    4383191    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-03096    Morgan Guaranty Trust, SCA    Blanket

90. TRANSITIONAL HOSPITALS CORPORATION OF INDIANA, INC.

Secretary of State, IN – UCCs

   04/27/2001    200100001918446    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02849    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, NV – UCCs

   04/30/2001    0106127    Morgan Guaranty Trust, SCA    Blanket

91. TRANSITIONAL HOSPITALS CORPORATION OF LOUISIANA, INC.

LA UCC CENTRAL DATABASE [Orleans Parish]

   04/27/2001    36-157628    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02800    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, NV – UCCs

   04/30/2001    0106164    Morgan Guaranty Trust, SCA    Blanket

92. TRANSITIONAL HOSPITALS CORPORATION OF NEVADA, INC.

Secretary of State, NV – UCCs

   04/30/2001
02/07/2003    0106167
2003003885-5   

Morgan Guaranty Trust, SCA

Baxter Healthcare Corporation

   Blanket
Equipment

 

34

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Jefferson County, KY – UCCs

   05/01/2001    01-02803    Morgan Guaranty Trust, SCA    Blanket

93. TRANSITIONAL HOSPITALS CORPORATION OF NEW MEXICO, INC.

Secretary of State, NM – UCCs

   04/27/2001    010427031    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02802    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, NV – UCCs

   04/30/2001    0106166    Morgan Guaranty Trust, SCA    Blanket

94. TRANSITIONAL HOSPITALS CORPORATION OF TAMPA, INC.

Secretary of State, FL – UCCs

   04/27/2001    200100091909    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02767    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, NV – UCCs

   04/30/2001    0106168    Morgan Guaranty Trust, SCA    Blanket

95. TRANSITIONAL HOSPITALS CORPORATION OF TEXAS, INC.

Secretary of State, TX – UCCs

   04/27/2001
05/03/2001
08/29/2002
04/16/2004
01/17/2003
04/16/2004
03/14/2003
04/16/2004    01-081617
01-085470
02-0042440591
04-00642700
03-0014498130
04-00642864
03-0020580614
04-00642916   

Morgan Guaranty Trust, SCA

Morgan Guaranty Trust, SCA

Baxter Healthcare Corporation
    

Baxter Healthcare Corporation
    

Baxter Healthcare Corporation

   Blanket
Fixture
Equipment
Filing Officer Stmt
Equipment
Filing Officer Stmt
Equipment
Filing Officer Stmt

Jefferson County, KY – UCCs

   05/01/2001    01-02768    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, NV – UCCs

   04/30/2001    0106169    Morgan Guaranty Trust, SCA    Blanket

96. TRANSITIONAL HOSPITALS CORPORATION OF WISCONSIN, INC.

Department of Financial Institutions, WI – UCCs

   04/30/2001    02058939    Morgan Guaranty Trust, SCA    Blanket

 

35

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Jefferson County, KY – UCCs

   05/01/2001    01-02769    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, NV – UCCs

   04/30/2001    0106170    Morgan Guaranty Trust, SCA    Blanket

97. TUCKER NURSING CENTER, INC.

GA UCC CENTRAL DATABASE [De Kalb County]

   04/30/2001    442001003384    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02770    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, NV – UCCs

   04/30/2001    0106171    Morgan Guaranty Trust, SCA    Blanket

98. TUNSTALL ENTERPRISES, INC.

GA UCC CENTRAL DATABASE [Bibb County]

   04/30/2001    11-01-1893    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02771    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, NV – UCCs

   04/30/2001    0106172    Morgan Guaranty Trust, SCA    Blanket

PRIOR NAMES

99. KINDRED NURSING CENTERS CENTRAL, L.L.C. [N/K/A KINDRED SUPPORT SERVICES,
L.L.C.]

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001    10389887
1059393    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Jefferson County, KY – UCCs

   05/01/2001
06/29/2001    01-02786
01-02786    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

100. KINDRED PEDIATRIC CARE, INC. [N/K/A KINDRED INSTITUTIONAL PHARMACY
SERVICES, INC.]

Secretary of State, DE – UCCs

   04/27/2001
06/27/2001    10390315
1059789    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Jefferson County, KY – UCCs

   05/01/2001
06/29/2001    01-02790
01-02790A    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

 

36

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

101. KINDRED PROVIDER NETWORK, INC. [N/K/A KINDRED HOSPITAL PHARMACY SERVICES,
INC.]

Secretary of State, DE – UCCs

   05/01/2001
06/27/2001    10399001
1059795    Morgan Guaranty Trust, SCA    Blanket
Amends Debtor Name

Jefferson County, KY – UCCs

   06/29/2001    01-04735    Morgan Guaranty Trust, SCA    Blanket

102. MEDISAVE PHARMACIES, INC. [N/K/A KINDRED PHARMACY SERVICES, INC.]

Secretary of State, DE – UCCs

   04/27/2001    10389226    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02845    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, NC – UCCs

   04/27/2001    20010040669    Morgan Guaranty Trust, SCA    Blanket

Mecklenburg County, NC—  UCCs

   04/30/2001    200115021    Morgan Guaranty Trust, SCA    Blanket

103. VENCARE, INC. [N.K.A KINDRED HEALTHCARE SERVICES, INC.]

Secretary of State, CA – UCCs

   05/02/2001    0112460260    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, IN – UCCs

   04/27/2001    200100001919023    Morgan Guaranty Trust, SCA    Blanket

104. VENCOR HOME CARE SERVICES, INC. [N/K/A KINDRED HOME CARE SERVICES, INC.]

Jefferson County, KY – UCCs

   05/01/2001    01-02793    Morgan Guaranty Trust, SCA    Blanket

105. VENCOR HOSPITALS EAST, L.L.C. [N/K/A KINDRED HOSPITALS EAST, L.L.C.]

Jefferson County, KY – UCCs

   05/01/2001    01-02782    Morgan Guaranty Trust, SCA    Blanket

Secretary of Commonwealth, PA – UCCs

   04/30/2001    33880795    Morgan Guaranty Trust, SCA    Blanket

106. VENCOR NURSING CENTERS EAST, L.L.C. [N/K/A KINDRED NURSING CENTERS EAST,
L.L.C.]

LA UCC CENTRAL DATABASE [St. Tammany Parish]

   04/27/2001    52-23746    Morgan Guaranty Trust, SCA    Blanket

Buncombe County, NC – UCCs

   04/30/2001    01-1023    Morgan Guaranty Trust, SCA    Blanket

 

37

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Duplin County, NC – UCCs

   04/30/2001    2001-0850    Morgan Guaranty Trust, SCA    Fixture

Secretary of State, OH – UCCs

   10/19/2001    OH00040165622    Morgan Guaranty Trust, SCA    Blanket

Fairfield County, OH – UCCs

   04/30/2001    200100001059    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, VT – UCCs

   04/27/2001    01-137744    Morgan Guaranty Trust, SCA    Blanket

107. VENCOR NURSING CENTERS NORTH, L.L.C. [N/K/A KINDRED NURSING CENTERS NORTH,
L.L.C.]

Jefferson County, KY – UCCs

   05/01/2001    01-02788    Morgan Guaranty Trust, SCA    Blanket

108. VENCOR NURSING CENTERS SOUTH, L.L.C. [N/K/A KINDRED NURSING CENTERS SOUTH,
L.L.C.]

Jefferson County, KY – UCCs

   05/01/2001    01-02789    Morgan Guaranty Trust, SCA    Blanket

109. VENCOR NURSING CENTERS WEST, L.L.C. [N/K/A KINDRED NURSING CENTERS WEST,
L.L.C.]

Secretary of State, CA – UCCs

   05/10/2001    0113160704    Morgan Guaranty Trust, SCA    Fixture

Secretary of State, ID – UCCs

   05/03/2001    B899188    Morgan Guaranty Trust, SCA    Fixture

Department of Licensing, WA – UCCs

   05/03/2001    2001-123-0188    Morgan Guaranty Trust, SCA    Fixture

110. VENCOR OPERATING, INC. [N/K/A KINDRED HEALTHCARE OPERATING, INC.]

Secretary of State, DE – UCCs

   04/09/2003
04/14/2003
04/11/2003
07/15/2003
01/05/2004
02/23/2004    30926058
30968928
30955222
31784142
40015547
40491698   

Americorp Financial Group, Inc
    

Americorp Financial Group, Inc

US Bank, N.A.

Americorp Financial Group, Inc

Americorp Financial Group, Inc

   Equipment
Amends Collateral Desc
Equipment
Equipment
Equipment
Equipment

 

38

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Jefferson County, KY – UCCs

   07/12/1999
07/12/1999
08/17/1999
07/12/2000
07/19/2000
11/22/2000
11/22/2000
05/02/2001    99-04885
99-04886
99-06009
00-05800
00-05986
00-09485
00-094995
01-02882   

Comerica Leasing Corp

Comerica Leasing Corp

Americorp Financial

Americorp Financial

DVI Strategic Partner Group

DVI Strategic Partner Group

DVI Strategic Partner Group

Morgan Guaranty Trust, SCA

   Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Fixture

Secretary of State, CA – UCCs

   11/13/2000
04/27/2001    0033360560
0112160331   

DVI Strategic Partner Group

Morgan Guaranty Trust, SCA

   Equipment
Fixture

Secretary of State, ID – UCCs

   04/30/2001    B898910    Morgan Guaranty Trust, SCA    Fixture

Secretary of State, NV – UCCs

   11/13/2000
05/04/2001    0016819
0106573   

DVI Strategic Partner Group

Morgan Guaranty Trust, SCA

   Equipment
Fixture

111. VENCOR HOME CARE AND HOSPICE INDIANA PARTNERSHIP [N/K/A KINDRED HOME CARE
AND HOSPICE INDIANA PARTNERSHIP]

Secretary of State, IN – UCCs

   04/27/2001    200100001919356    Morgan Guaranty Trust, SCA    Blanket

112. VENCOR HOSPITALS LIMITED PARTNERSHIP [N/K/A KINDRED HOSPITALS LIMITED
PARTNERSHIP]

Secretary of State, IN – UCCs

   04/27/2001    200100001919801    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, TX – UCCs

   05/03/2001    01-085471    Morgan Guaranty Trust, SCA    Fixture

113. VENCOR NURSING CENTERS LIMITED PARTNERSHIP [N/K/A KINDRED NURSING CENTERS
LIMITED PARTNERSHIP]

Secretary of State, IN – UCCs

   04/27/2001    200100001920611    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02762    Morgan Guaranty Trust, SCA    Blanket

 

39

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

Credit Party/Office1

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

  

Filing

Date

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

   Filing Number

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

  

Secured Party

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

   Lien Description

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

Jefferson County, KY – STL

   12/10/2003    L00750 Pg0794    KY Dept. for Employment    Amount unknown

Warren County, KY – UCCs

   05/01/2001    129792    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, TX – UCCs

   04/27/2001    01-081619    Morgan Guaranty Trust, SCA    Blanket

114. VENCOR, INC. [N/K/A KINDRED HEALTHCARE, INC.]

Jefferson County, KY – UCCs

   05/13/1996
11/30/2000
01/11/2001
06/03/1996
11/30/2000
06/04/2001
05/02/2001    96-04100
96-04100
01-00214
96-04734
96-04734
01-03985
01-02881   

DVI Capital Company

U.S. Bank Trust N.A.
    

DVI Capital Company

U.S. Bank Trust N.A.
    

Morgan Guaranty Trust, SCA

   Equipment
Assignment
Continuation
Equipment
Assignment
Continuation
Fixture

115. CPC PROPERTIES OF ILLINOIS, INC. [N/K/A KINDRED PULMONARY ILLINOIS, INC.]

Secretary of State, IL – UCCs

   04/27/2001    4377407    Morgan Guaranty Trust, SCA    Blanket

Secretary of State, NV – UCCs

   04/30/2001    0106152    Morgan Guaranty Trust, SCA    Blanket

Jefferson County, KY – UCCs

   05/01/2001    01-02777    Morgan Guaranty Trust, SCA    Blanket

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

1 UCCs     =     Uniform Commercial Code Filings

     FTL        =     Federal Tax Liens

     STL        =     State Tax Liens

     JDG        =     Judgments

 

40

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

EXHIBIT A

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Agent as contemplated below (i) all of the Assignor’s rights and obligations in
its capacity as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and
obligations of the Assignor under the respective facilities identified below
(including any letters of credit and guarantees in such facilities) and (ii) to
the extent permitted to be assigned under applicable law, all claims, suits,
causes of action and any other right of the Assignor (in its capacity as a
Lender) against any Person, whether known or unknown, arising under or in
connection with the Credit Agreement, any other documents or instruments
delivered pursuant thereto or the loan transactions governed thereby or in any
way based on or related to any of the foregoing, including contract claims, tort
claims, malpractice claims, statutory claims and all other claims at law or in
equity related to the rights and obligations sold and assigned pursuant to
clause (i) above (the rights and obligations sold and assigned pursuant to
clauses (i) and (ii) above being referred to herein collectively as the
“Assigned Interest”). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by the Assignor.

 

1.

  

Assignor:

  

 

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

2.

  

Assignee:

  

 

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

         

[and is an Affiliate/Approved Fund of [identify Lender]1]

3.

  

Borrower:

  

Kindred Healthcare, Inc.

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

1 Select as applicable.

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

4.

   Agent:   JPMorgan Chase Bank, as the Agent under the Credit Agreement

5.

   Credit Agreement:   The $300,000,000 Amended and Restated Credit Agreement
dated as of June    , 2004 among Kindred Healthcare, Inc., the Lenders party
thereto, and JPMorgan Chase Bank, as Administrative Agent and Collateral Agent.

 

2

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

6. Assigned Interest:

 

Aggregate Amount of

Commitment/Loans

for all Lenders

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

  

Amount of

Commitment/Loans

Assigned

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

  

Percentage Assigned

of

Commitment/Loans 2

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

$    $    % $    $    % $    $    %

 

Effective Date:                  , 20     [TO BE INSERTED BY AGENT AND WHICH
SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR

[NAME OF ASSIGNOR]

By:

 

 

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

Title:

    ASSIGNEE

[NAME OF ASSIGNEE]

By:

 

 

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

Title:

   

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

2 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

 

3

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

[Consented to and]3 Accepted:

JPMORGAN CHASE BANK, as

      Administrative Agent

By:

 

 

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

Title:

   

[Consented to: ]4

KINDRED HEALTHCARE, INC., as

      Borrower

By:

 

 

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

Title:

   

Consented to:

JPMORGAN CHASE BANK, as

      Issuing Lender

By:

 

 

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

Title:

   

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

3 To be added only if the consent of the Agent is required by the terms of
Section 10.04 of the Credit Agreement.

4 To be added only if the consent of the Borrower is required by the terms of
Section 10.04 of the Credit Agreement.

 

4

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

ANNEX 1

 

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

 

1. Representations and Warranties.

 

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Financing Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Financing
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Financing Document or (iv) the performance or observance by the
Borrower, any of its Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Financing Document.

 

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the
requirements, if any, specified in the Credit Agreement that are required to be
satisfied by it in order to acquire the Assigned Interest and become a Lender,
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 5.01(a) or (b) thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Agent or any other Lender, and (v) if it is a Foreign Lender, attached to
the Assignment and Assumption is any documentation required to be delivered by
it pursuant to the terms of the Credit Agreement, duly completed and executed by
the Assignee; and (b) agrees that (i) it will, independently and without
reliance on the Agent, the Assignor 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 the Financing
Documents,

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

and (ii) it will perform in accordance with their terms all of the obligations
which by the terms of the Financing Documents are required to be performed by it
as a Lender.

 

2. Payments. From and after the Effective Date, the Agent shall make all
payments in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignor for amounts which have accrued
to but excluding the Effective Date and to the Assignee for amounts which have
accrued from and after the Effective Date.

 

3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be
construed in accordance with and governed by the law of the State of New York.

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

EXHIBIT B.1

 

[Kindred Logo appears here]

 

June 28, 2004

 

To each of the Lenders and the Agent referred to below

c/o JPMorgan Chase Bank

as Administrative Agent and Collateral Agent

270 Park Avenue

New York, NY 10017

 

Ladies and Gentlemen:

 

In my capacity as general counsel of Kindred Healthcare, Inc., a Delaware
corporation (“Kindred”), I have acted as general counsel of each of the Persons
listed on Annex A hereto (the “Covered Companies”) in connection with (i) the
Amended and Restated Credit Agreement dated as of June 28, 2004 (the “Credit
Agreement”) among Kindred, the Lenders party thereto (the “Lenders”), JPMorgan
Chase Bank, as Administrative Agent and Collateral Agent (the “Agent”), Citicorp
USA, Inc., as Syndication Agent and General Electric Capital Corporation, The
CIT Group/Business Credit, Inc. and Wells Fargo Foothill, as Co-Documentation
Agents, (ii) the other Financing Documents referred to therein and (iii) the
Master Lease Agreements referred to therein. This opinion is being rendered to
you pursuant to Section 4.01(g)(i) of the Credit Agreement.

 

Unless otherwise defined herein, capitalized terms defined in the Credit
Agreement or the Amended and Restated Guarantee and Security Agreement dated as
of June 28, 2004 (the “Security Agreement”) among Kindred, the Subsidiary
Guarantors party thereto and JPMorgan Chase Bank, as Collateral Agent, are used
herein as defined therein.

 

I, or attorneys in the legal department of Kindred under my direction, have
reviewed originals or copies certified or otherwise identified to my
satisfaction of each of the agreements listed on Annex B hereto (the “Covered
Financing Documents”), the Master Lease Agreements and such other corporate
records, documents, instruments and certificates of public officials, and have
conducted such other investigations of fact and law, as I have deemed necessary
or advisable for purposes of this opinion.

 

Upon the basis of the foregoing, and subject to the further assumptions and
qualifications set forth below, I am of the opinion that:

 

1. Each Covered Company is validly existing in good standing as a corporation,
limited liability company or partnership under the laws of its jurisdiction of
incorporation or

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

organization, with power and authority (corporate and other) to own its
properties and conduct its business.

 

2. Each Covered Company has been qualified as a foreign corporation, limited
liability company or partnership for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such qualification,
except where failures to be so qualified would not, in the aggregate, have a
Material Adverse Effect.

 

3. All of the outstanding shares of capital stock pledged under the Security
Agreement have been duly and validly issued, are fully paid and non-assessable,
and are owned directly or indirectly by the applicable Lien Grantor as set forth
in the Security Agreement, free and clear of all Liens, except the Liens in
favor of the Collateral Agent or otherwise permitted under the Credit Agreement
or the Security Agreement.

 

4. To the best of my knowledge after due inquiry, upon consummation by the
Covered Companies of the transactions contemplated under the Credit Agreement on
the Effective Date, no Covered Company is, or with the giving of notice or lapse
of time or both would be, in breach of any of the terms and provisions of, or in
default under, (a) its Organizational Documents, (b) any indenture, mortgage,
deed of trust or loan agreement, (c) any lease or other agreement or instrument
known to me after due inquiry to which any Covered Company is a party or by
which it or any of its properties is bound or (d) any judgment, decree or order,
except for violations and defaults which in the aggregate would not have a
Material Adverse Effect.

 

5. To the best of my knowledge after due inquiry, the execution and delivery by
each Covered Company of the Covered Financing Documents and the Master Lease
Agreements to which it is a party and the consummation of the transactions
contemplated therein do not, and the performance by each of its obligations
thereunder will not:

 

(a) conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument known to me after due inquiry
to which any Covered Company is a party or by which any Covered Company is bound
or result in the creation or imposition of any Lien upon any property or assets
of any Covered Company;

 

(b) result in any violation of the terms or provisions of the Organizational
Documents of any Covered Company or any applicable law or statute or any rule or
regulation or governmental agency or body or any judgment, decree or order of
any court having jurisdiction over any Covered Company or any of its properties;
or

 

(c) require any consent, approval, authorization, registration or qualification
of or with any governmental authority of the United States of America or the
State of New York that in my experience normally would be applicable to general
business entities with respect to such execution, delivery or performance,
except (i) filings of Uniform Commercial Code (as in effect in the

 

2

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State of New York, the “UCC”) financing statements delivered to the Collateral
Agent on or before the date hereof for filing promptly after the date hereof,
(ii) Intellectual Property Filings, (iii) any other filings required after the
date hereof pursuant to Section 5.09 of the Credit Agreement and (iv) filings of
UCC continuation statements when required;

 

except, in each case, for such conflicts, breaches, defaults, Liens and
violations which in the aggregate would not be material to the Covered
Companies, taken as a whole, and would not otherwise have a Material Adverse
Effect.

 

6. Each Covered Company owns, possesses or has obtained all licenses, permits,
certificates, consents, orders, approvals and other authorizations from, and has
made all declarations and filings with, all Federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts and
other tribunals, domestic or foreign, necessary to own or lease, as the case may
be, and to operate its properties and to carry on its business as conducted as
of the date hereof, except where failures to own, possess or obtain any such
licenses, permits, certificates, consents, orders, approvals or other
authorizations would not have, and could not reasonably be expected to have, in
the aggregate a Material Adverse Effect; no Covered Company has received any
notice of any proceeding relating to revocation or modification of any such
license, permit, certificate, consent, order, approval or other authorization,
except where such revocations or modifications would not have, and could not
reasonably be expected to have, in the aggregate a Material Adverse Effect; and
each Covered Company is in compliance with all laws and regulations relating to
the conduct of its business except where such noncompliance would not have, and
could not reasonably be expected to have, in the aggregate a Material Adverse
Effect.

 

7. The chief executive office of each Covered Company for purposes of KRS
355.9-103(3)(d) is 680 South Fourth Avenue, Louisville, Kentucky 40202.

 

8. Each Covered Financing Document and Master Lease Agreement has been duly
authorized by all necessary action of the Covered Companies party thereto, and
each Covered Financing Document and Master Lease Agreement has been duly
executed and delivered under the law of the State of New York by each Covered
Company party thereto and is a valid and legally binding obligation of each
Covered Company party thereto, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles.

 

I am a member of the bar of the State of California. The foregoing opinions
(with the exception of paragraphs (1) and (2), above) are limited to the Federal
laws of the United States, and the law of the States of California and New York,
the General Corporation Law of the State of Delaware, the Limited Liability
Company Act of the State of Delaware and Subchapter X of the Revised Uniform
Partnership Act of the State of Delaware. In rendering the foregoing opinions, I
have relied as to matters involving the application of law of the State of New
York, the General Corporation Law of the State of Delaware, the Limited
Liability Company Act of the State of Delaware and Subchapter X of the Revised
Uniform Partnership Act of the State of Delaware, upon the opinion of Cleary,
Gottlieb, Steen & Hamilton, dated and delivered to you

 

3

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today (the “Cleary Opinion”), and to the extent the Cleary Opinion is stated to
be based on any assumption or to be given in reliance on any certificate or
other document or to be subject to any limitation, qualification or exemption,
the opinions expressed herein in reliance on such opinion are based upon the
same assumption, are given in reliance on the certificate or document, and are
subject to the same limitation, qualification or exemption. I have also relied
as to matters of fact, on information obtained from public officials and other
sources believed by me to be responsible. With respect to the opinions expressed
in paragraph (1) above, I have relied upon certificates of good standing issued
by the Secretary of State of the respective jurisdiction of incorporation of
each Covered Company. In addition, I have assumed that the Covered Documents
have been duly authorized, executed and delivered by all parties thereto other
than the Covered Companies parties thereto.

 

4

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This opinion is rendered solely to you, as a Lender, and in the case of JPMorgan
Chase Bank, as Administrative Agent and Collateral Agent, solely for your
benefit in your capacity as such in connection with the transactions
contemplated by the Credit Agreement. This opinion letter is not to be relied on
by or furnished to any other person or used, circulated, quoted or otherwise
referred to for any other purpose. Notwithstanding the foregoing, a copy of this
opinion may be furnished to, and relied upon by, any transferee of a Lender’s
rights and obligations under the Credit Agreement properly transferred in
accordance with the Credit Agreement, and you or any such transferee may show
this opinion to any governmental authority pursuant to requirements of
applicable law or regulations. The opinions expressed herein are rendered on and
as of the date hereof, and I assume no obligation to advise you or any such
transferee or governmental authority or any other person, or to make any
investigations, as to any legal developments or factual matters arising
subsequent to the date hereof that might affect the opinions expressed herein.

 

Very truly yours,

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

M. Suzanne Riedman

 

5

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Annex A - Covered Companies

 

1. Kindred Healthcare, Inc., a Delaware corporation.

 

2. Each Restricted Subsidiary listed in Schedule 1.01B to the Credit Agreement.

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Annex B - Covered Financing Documents

 

1. the Credit Agreement

 

2. the Security Agreement

 

3. the Deposit Account Control Agreements

 

4. the Securities Account Control Agreement

 

5. the Copyright Security Agreement

 

6. the Trademark Security Agreement

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EXHIBIT B.2

 

[Kindred Logo appears here]

 

June 28, 2004

 

To each of the Lenders and the Agent referred to below

c/o JPMorgan Chase Bank

as Administrative Agent and Collateral Agent

270 Park Avenue

New York, NY 10017

 

Ladies and Gentlemen:

 

This opinion is being rendered to you in my capacity as Senior Vice President of
Corporate Legal Affairs and Corporate Secretary of Kindred Healthcare, Inc., a
Delaware corporation (the “Borrower”), in connection with (i) the $300,000,000
Amended and Restated Credit Agreement dated as of June 28, 2004 (the “Credit
Agreement”) among Kindred, the Lenders party thereto (the “Lenders”), JPMorgan
Chase Bank, as Administrative Agent and Collateral Agent (the “Agent”), Citicorp
USA, Inc., as Syndication Agent and General Electric Capital Corporation, The
CIT Group/Business Credit, Inc. and Wells Fargo Foothill, as Co-Documentation
Agents, and the other Financing Documents referred to therein and (ii) the
Master Lease Agreements referred to therein. This opinion is being issued to you
pursuant to Section 4.01(g)(ii) of the Credit Agreement.

 

Unless otherwise defined herein, capitalized terms defined in the Credit
Agreement or the Amended and Restated Guarantee and Security Agreement dated as
of June 28, 2004 among Kindred Healthcare, Inc., the Subsidiary Guarantors party
thereto and JPMorgan Chase Bank, as Collateral Agent are used herein as defined
therein.

 

I have examined originals or copies, certified or otherwise identified to my
satisfaction, of each of the agreements listed on Annex A hereto (the “Covered
Financing Documents”), the Master Lease Agreements and such other documents,
corporate records, certificates of public officials and other instruments, and
have conducted such other investigations of fact and law, as I have deemed
necessary or advisable for purposes of this opinion.

 

Upon the basis of the foregoing, I am of the opinion that:

 

1. To the best of my knowledge after due inquiry, the execution and delivery by
each of the Persons listed on Annex B hereto (each, a “Covered Company”) and its
performance of its obligations under the Covered Financing Documents and the
Master Lease Agreements to which it is a party and the consummation of the
transactions contemplated therein will not require any action by or in respect
of, or filing with, any governmental body, agency or official, except (i)
filings of Uniform Commercial Code financing statements (as in effect in the
Commonwealth of Kentucky) delivered to the Collateral Agent on or before the
date hereof for filing promptly after the date hereof, (ii) Intellectual
Property Filings, (iii) the due recordation of memoranda of lease with respect
to the Master Lease Agreements and any assignment thereof to the Borrower, (iv)

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the due recordation of the Leasehold Mortgages, (v) the due recordation of the
Fee Mortgages, (vi) any other filings required after the date hereof pursuant to
Section 5.09 of the Credit Agreement and (vii) filings of Uniform Commercial
Code continuation statements when required.

 

2. The financing statements attached hereto as Annex C are in appropriate form
for filing with the Secretary of State of the Commonwealth of Kentucky. To the
extent that a security interest in the Personal Property Collateral may be
perfected by the filing of a financing statement in the Commonwealth of
Kentucky, the security interest in the Personal Property Collateral will be
perfected upon the filing of such financing statements with the Secretary of
State of the Commonwealth of Kentucky, and no further filing or recording of any
document or instrument or other action will be required so to perfect such
security interest, except that (i) continuation statements with respect to each
such financing statement must be filed within five years after the date of
filing of such financing statements and (ii) additional filings may be necessary
if any Lien Grantor changes its name or its location (as defined in Section
9-307 of the Uniform Commercial Code as in effect in the Commonwealth of
Kentucky).

 

I am a member of the bar of the Commonwealth of Kentucky. The foregoing opinions
are limited to the laws of the Commonwealth of Kentucky and I am expressing no
opinion as to the effect of laws of any other jurisdiction.

 

2

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This opinion is rendered solely to you, as a Lender, and in the case of JPMorgan
Chase Bank, as Administrative Agent and Collateral Agent, solely for your
benefit in your capacity as such in connection with the transactions
contemplated by the Credit Agreement. This opinion letter is not to be relied on
by or furnished to any other person or used, circulated, quoted or otherwise
referred to for any other purpose. Notwithstanding the foregoing, a copy of this
opinion may be furnished to, and relied upon by, any transferee of a Lender’s
rights and obligations under the Credit Agreement properly transferred in
accordance with the Credit Agreement, and you or any such transferee may show
this opinion to any governmental authority pursuant to requirements of
applicable law or regulations. The opinions expressed herein are rendered on and
as of the date hereof, and I assume no obligation to advise you or any such
transferee or governmental authority or any other person, or to make any
investigations, as to any legal developments or factual matters arising
subsequent to the date hereof that might affect the opinions expressed herein.

 

Very truly yours,

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

Joseph L. Landenwich

 

3

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Annex A – Covered Financing Documents

 

1. Credit Agreement

 

2. Security Agreement

 

3. Deposit Account Control Agreements

 

4. Securities Account Control Agreements

 

5. Copyright Security Agreement

 

6. Trademark Security Agreement

 

A-1

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Annex B – Covered Companies

 

1. the Borrower

 

2. each Restricted Subsidiary listed in Schedule 1.01B to the Credit Agreement

 

B-1

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Annex C – Financing Statements

 

[To come]

 

C-1

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EXHIBIT B.3

 

Writer’s Direct Dial: (212) 225-2038

E-Mail: skang@cgsh.com

 

June 28, 2004

 

To each of the Lenders and the Agent referred to below

c/o JPMorgan Chase Bank

as Administrative Agent and Collateral Agent

270 Park Avenue

New York, NY 10017

 

Ladies and Gentlemen:

 

We have acted as special counsel to Kindred Healthcare, Inc., a Delaware
corporation (the “Company” and, collectively with each Restricted Subsidiary
listed in Schedule 1.01B to the Amended and Restated Credit Agreement referred
to below, the “Covered Companies”), in connection with the $300,000,000 Amended
and Restated Credit Agreement dated as of June 28, 2004 (the “Credit Agreement”)
among the Company, the Lenders party thereto (the “Lenders”), JPMorgan Chase
Bank, as Administrative Agent and Collateral Agent (the “Agent”), Citicorp USA,
Inc., as Syndication Agent and General Electric Capital Corporation, The CIT
Group/Business Credit, Inc. and Wells Fargo Foothill, as Co-Documentation
Agents. This opinion is furnished to you pursuant to Section 4.01(g)(iii) of the
Credit Agreement.

 

Unless otherwise defined herein, capitalized terms defined in the Credit
Agreement or the other Financing Documents are used herein as defined therein.

 

In arriving at the opinions expressed below, we have reviewed the following
documents:

 

  (a) an executed copy of the Credit Agreement;

 

  (b) an executed copy of the Security Agreement;

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  (c) an executed copy of the Copyright Security Agreement;

 

  (d) an executed copy of the Trademark Security Agreement;

 

  (e) an executed copy of the promissory note of the Company dated June 28, 2004
(the “Note”) delivered to General Electric Capital Corporation pursuant to
Section 2.08(e) of the Credit Agreement; and

 

  (f) the other documents furnished by the Company pursuant to Article 4 of the
Credit Agreement.

 

The documents referenced in items (a) through (e) above are collectively
referred to herein as the “Covered Documents.”

 

In addition, we have reviewed the originals or copies certified or otherwise
identified to our satisfaction of all such corporate records of each Covered
Company that is organized under the laws of the State of New York or Delaware
(each such Covered Company, a “Domestic Covered Company”), and such other
instruments and other certificates of public officials, officers and
representatives of each Domestic Covered Company and such other persons, and we
have made such investigations of law, as we have deemed necessary as a basis for
the opinions expressed below.

 

In rendering the opinions expressed below, we have assumed the authenticity of
all documents submitted to us as originals and the conformity to the originals
of all documents submitted to us as copies. In addition, we have assumed and
have not verified the accuracy as to factual matters of each document we have
reviewed (including, without limitation, the accuracy of the representations and
warranties of each Covered Company in the Covered Documents).

 

Based upon the foregoing, and subject to the further assumptions and
qualifications set forth below, it is our opinion that:

 

1. Each Domestic Covered Company has corporate power to enter into each Covered
Document to which it is a party.

 

2. The execution and delivery of each Covered Document have been duly authorized
by all necessary corporate action of each Domestic Covered Company party
thereto, and each Covered Document has been duly executed and delivered under
the law of the State of New York by each Covered Company party thereto, and is a
valid and binding obligation of each Covered Company party thereto, enforceable
in accordance with its terms.

 

3. The execution and delivery of each Covered Document by each Covered Company
party thereto do not, and the performance by each such Covered Company of its
obligations thereunder will not, require any consent, approval, authorization,
registration or qualification of or with any governmental authority of the
United States of America or the State of New York that in our experience
normally would be applicable to general business entities with respect to such
execution, delivery or performance, except (i) filings of Uniform Commercial
Code (as in effect in the State of New York, the “UCC”) financing statements
delivered to the Collateral Agent on or before the date hereof for filing
promptly after the date

 

2

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hereof, (ii) Intellectual Property Filings, (iii) any other filings required
after the date hereof pursuant to Section 5.09 of the Credit Agreement, (iv)
filings of UCC continuation statements when required and (v) such other
consents, authorizations, approvals or filings, if any, as may be required in
connection with the performance of the Covered Documents due to the specific
nature or scope of any particular business or activity conducted, or asset held,
by a Covered Company.

 

4. The Collateral Documents create a security interest, in favor of the
Collateral Agent for the benefit of the Secured Parties, in each Lien Grantor’s
rights in the items of collateral pledged by it and listed in Section 3 of the
Security Agreement (the “Collateral”), to the extent Article 9 of the UCC is
applicable thereto, to secure the Secured Obligations, except that the Security
Agreement will create a security interest in any such portion of the Collateral
pledged by such Lien Grantor in which such Lien Grantor has no present rights
only when such Lien Grantor acquires rights therein.

 

5. With respect to that portion of the Collateral that consists of instruments
(within the meaning of Section 9-102 of the UCC) or Certificated Securities
(within the meaning of Section 8-102(a)(4) of the UCC), the Collateral Agent
will have a perfected first priority security interest for the benefit of the
Secured Parties in each such instrument or Certificated Security from time to
time delivered, duly indorsed in the name of the Collateral Agent or, in the
case of an instrument, in blank to the Collateral Agent in the State of New
York, which security interest will remain a perfected first priority security
interest for as long as possession thereof is continuously maintained in the
State of New York by the Collateral Agent.

 

6. The security interest in the Personal Property Collateral will continue in
any “identifiable proceeds” (within the meaning of the UCC) of such Personal
Property Collateral to the extent and subject to the limitations provided in
Section 9-315 of the UCC.

 

7. The making of the Loans, the issuance of the Letters of Credit and the use of
proceeds thereof as contemplated by the Credit Agreement do not violate
Regulation T, U or X of the Board of Governors of the Federal Reserve System
(the “Board”).

 

In rendering the opinions set forth above, we express no opinion with respect
to:

 

(i) the validity, binding effect or enforceability of any provision in the
Security Agreement or any other Covered Document that purports to (a) impose on
the Collateral Agent or any other person standards for the care of Personal
Property Collateral in its possession other than as provided for in Section
9-207 of the UCC, (b) permit the Collateral Agent or any other person to vote or
otherwise exercise any rights with respect to any of the Personal Property
Collateral absent compliance with the requirements of applicable laws and
regulations as to the voting of or other exercise of rights with respect to such
Personal Property Collateral, (c) waive, or consent to the absence of compliance
with, any rights of any Covered Company, or duties owing to it as a matter of
law, except to the extent that the Covered Company may so waive or consent under
applicable law, or (d) provide indemnification of any person to the extent such
provision covers or could be construed to cover losses or claims under federal
or state securities laws or to the extent inconsistent with public policy; and

 

3

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(ii) the priority of any security interest in or to any of the Personal Property
Collateral or the perfection of any security interest in or to any of the
Personal Property Collateral, other than as specifically expressed in such
opinions.

 

In addition, in rendering the opinions set forth in paragraph 4, 5 and 6 above
above, we have assumed that the relevant Lien Grantor has rights in the
Collateral pledged by it (and we express no opinion with respect thereto).

 

In addition, in rendering the opinion in paragraph 5 above, we have assumed that
as of the date hereof and at any time an Instrument or a Certificated Security
is delivered to the Collateral Agent for the benefit of the Secured Parties, the
relevant Lien Grantor will own Collateral consisting of an Instrument or
Certificated Security free and clear of any lien, claim or encumbrance (and we
express no opinion with respect thereto), each signature on any endorsement or
stock power is genuine and duly authorized and compliance with any restrictive
indorsements or other restrictions on or procedures required for transfer of
interests in the Collateral. We express no opinion with respect to the priority
of the security interest of the Collateral Agent for the benefit of the Secured
Parties against (i) any lien, claim or other interest that arises by operation
of law and is given priority over perfected security interests, (ii) any lien or
claim in favor of the United States or any agency or instrumentality thereof
(including without limitation liens arising under the federal or state tax laws
or ERISA), and (iii) any claim given priority pursuant to 31 U.S.C. §3713. In
addition, insofar as the security interest secures “future advances” within the
meaning of the UCC, the priority of such security interest will be subject to
the limitations set forth in Section 9-323 of the UCC.

 

With respect to the foregoing opinions, (a) we have assumed that each Covered
Company and each other party to such agreement has satisfied those legal
requirements that are applicable to it to the extent necessary to make such
agreement or obligation enforceable against it (except that no such assumption
is made as to any Covered Company regarding matters of the federal law of the
United States of America, the law of the State of New York, the General
Corporation Law of the State of Delaware, the Limited Liability Company Act of
the State of Delaware or Subchapter X of the Revised Uniform Partnership Act of
the State of Delaware that in our experience normally would be applicable to
general business entities with respect to such agreement or obligation) and (b)
such opinions are subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general principles of equity.

 

In addition, certain of the remedial provisions of the Covered Documents may be
further limited or rendered unenforceable by other applicable laws or judicially
adopted principles, which, however, in our judgment do not make the remedies
provided for therein (taken as a whole) inadequate for the practical realization
of the principal benefits purported to be afforded thereby (except for the
economic consequences of procedural or other delay).

 

The opinions set forth above are subject to the following qualifications:

 

(a) In rendering the opinion in paragraph 3 above, we have assumed that the
Covered Companies are subject only to New York State laws and regulations
generally applicable to companies doing business in the State of New York.

 

4

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(b) In rendering the opinion in paragraph 7 above, we have assumed that none of
the Lenders is a “creditor” within the meaning of Regulation T of the Board.

 

(c) We express no opinion as to (i) either Sections 2.16 or 10.08 of the Credit
Agreement or Section 2(g) of the Security Agreement insofar as it provides that
any holder of a participation in a Loan or LC Reimbursement Obligation may
exercise set-off or similar rights with respect to such participation and (ii)
the effect of the law of any jurisdiction other than the State of New York
wherein any Lender may be located or wherein enforcement of the Credit Agreement
or any of the other Covered Documents may be sought that limits the rates of
interest legally chargeable or collectible.

 

(d) With respect to the submission in any Covered Document to the jurisdiction
of a United States federal court sitting in the State of New York, we express no
opinion as to the subject matter jurisdiction of any such court to adjudicate
any action relating to the Covered Document where jurisdiction based on
diversity of citizenship under 28 U.S.C. §1332 or §1404(a) does not exist.

 

(e) Our opinion in paragraph 1 above is subject to the effective rate of
interest payable by the Company in connection with the transactions contemplated
by the Financing Documents being not in excess of 25% per annum. In addition, we
express no opinion as to the applicability or effect of the laws of any
jurisdiction other than the State of New York wherein any Lender may be located
or wherein enforcement of the Credit Agreement may be sought that may limit the
rates of interest which may be charged or collected.

 

(f) We have assumed that any assignments made by or among the Lenders of their
rights and obligations under the Credit Agreement will not contravene New York
Judiciary Law Section 489 (which makes it a criminal offense to take an
assignment of a debt obligation with the intent of and for the purpose of
bringing an action or proceeding thereon).

 

The foregoing opinions are limited to the federal law of the United States, the
law of the State of New York, the General Corporation Law of the State of
Delaware, the Limited Liability Company Act of the State of Delaware and
Subchapter X of the Revised Uniform Partnership Act of the State of Delaware,
but we express no opinion as to any state securities or Blue Sky laws, United
States federal securities laws or any other regulations or laws specific to the
healthcare industry.

 

5

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We are furnishing this opinion letter to you, as a Lender, and in the case of
JPMorgan Chase Bank, as Administrative Agent and Collateral Agent, solely for
your benefit in your capacity as such in connection with the transactions
contemplated by the Credit Agreement. This opinion letter is not to be relied on
by or furnished to any other person or used, circulated, quoted or otherwise
referred to for any other purpose. Notwithstanding the foregoing, a copy of this
opinion may be furnished to, and relied upon by, any transferee of a Lender’s
rights and obligations under the Credit Agreement properly transferred in
accordance with the Credit Agreement, and any such transferee may show this
opinion to any governmental authority pursuant to requirements of applicable law
or regulations. The opinions expressed herein are rendered on and as of the date
hereof, and we assume no obligation to advise you or any such transferee or
governmental authority or any other person, or to make any investigations, as to
any legal developments or factual matters arising subsequent to the date hereof
that might affect the opinions expressed herein.

 

Very truly yours,

CLEARY, GOTTLIEB, STEEN & HAMILTON

By

 

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

    Sung K. Kang, a Partner

 

6

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EXHIBIT B.4

 

MORRIS, NICHOLS, ARSHT & TUNNELL

1201 NORTH MARKET STREET

P. O. BOX 1347

WILMINGTON, DELAWARE 19899-1347

 

TELEPHONE (302) 658-9200

TELECOPY (302) 658-3989

 

June 28, 2004

 

To the Collateral Agent (as defined below) and

  the Lenders Party to the Credit Agreement

  Referred to Below

 

Re: Kindred Healthcare, Inc.

 

Ladies and Gentlemen:

 

We have acted as special Delaware counsel to Kindred Healthcare, Inc., a
Delaware corporation (the “Borrower”), and each of the Subsidiary Guarantors
listed on Exhibit 1 hereto (the Borrower and each of such Subsidiary Guarantors
being sometimes herein individually referred to as a “Company” and,
collectively, as the “Companies”), in connection with certain matters of
Delaware law set forth below relating to (i) that certain Amended and Restated
Credit Agreement dated as of June 28, 2004 (the “Credit Agreement”) among the
Borrower, the lenders party thereto, JPMorgan Chase Bank, as administrative
agent and as collateral agent (in such capacity, the “Collateral Agent”),
Citicorp USA, Inc., as syndication agent, and General Electric Capital
Corporation, the CIT Group/Business Credit, Inc. and Wells Fargo Foothill, as
co-documentation agents, and (ii) that certain Amended and Restated Guarantee
and Security Agreement dated as of June 28, 2004 (the “Guarantee and Security
Agreement”) among the Companies and the Collateral Agent. Capitalized terms used
herein and not otherwise herein defined are used as defined in the Guarantee and
Security Agreement. Non-capitalized terms used in connection with the opinions
given herein with respect to matters within the scope of Article 9 of the
Uniform Commercial Code are used as defined in the Uniform Commercial Code as
enacted and presently in effect in the State of Delaware (the “Delaware UCC”),
to the extent that they are defined in the Delaware UCC.

 

In rendering this opinion, we have examined and relied upon copies of the
following documents in the forms provided to us: the Credit Agreement; the
Guarantee and Security Agreement; UCC-1 Financing Statements and, as applicable,
amendments thereto naming the applicable Company as “debtor” and the Collateral
Agent as “secured party” in the forms attached hereto as Exhibit 2 (each, as
amended, as applicable, a “Financing Statement,” and, collectively, the
“Financing Statements”) to be filed in the Office of the Secretary of State of
the State of Delaware (the “State Office”); and certifications of good standing
of the Companies obtained as of a recent date from the State Office. In such
examinations, we have

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

To the Collateral Agent and the Lenders

June 28, 2004

Page 2

 

assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as copies or drafts of documents to be executed and
the legal capacity of natural persons to complete the execution of documents. We
have further assumed for purposes of this opinion: (i) the due formation or
organization, valid existence and good standing of each entity that is a
signatory to any of the documents examined by us under the laws of the
jurisdiction of its formation or organization; (ii) the due authorization,
authentication, adoption, approval, certification, acknowledgement, execution
and delivery, as applicable, of each of the above-referenced documents by each
of the parties thereto; (iii) that each of the Credit Agreement and the
Guarantee and Security Agreement constitutes a legal, valid and binding
agreement of each of the parties thereto and is enforceable against each of the
parties thereto in accordance with its terms; (iv) that no Company was
originally or is organized or existing under the laws of any jurisdiction other
than the State of Delaware; and (v) that the documents examined by us are in
full force and effect, express the entire understanding of the parties thereto
with respect to the subject matter thereof and have not been amended,
supplemented or otherwise modified. We have not reviewed any documents other
than those referenced above in connection with rendering this opinion, and we
have assumed there are no other documents that are contrary to or inconsistent
with the opinions herein expressed. No opinion is expressed herein with respect
to the requirements of, or compliance with, federal or state securities or blue
sky laws. As to any facts material to our opinion, other than those assumed, we
have relied without independent investigation on the above-referenced documents
and on the accuracy as of the date hereof of the matters therein contained.

 

Based on and subject to the foregoing and to the qualifications set forth below,
and limited in all respects to matters of Delaware law, it is our opinion that:

 

1. Solely to the extent that the Delaware UCC is applicable to the perfection of
the security interest of the Collateral Agent in the Collateral owned by a
Company (the “Company Collateral”), (A) the Financing Statement relating to such
Company is in sufficient form for filing with the State Office under the
Delaware UCC with respect to the portion of the Company Collateral as to which a
security interest can be perfected by filing a financing statement in the State
Office under the Delaware UCC (the “Company Filing Collateral”), and (B) upon
the proper filing of such Financing Statement in the State Office pursuant to
the provisions of the Delaware UCC, the security interest of the Collateral
Agent in such Company Filing Collateral will be perfected.

 

2. Solely to the extent that the Delaware UCC is applicable to the authorization
of the filing of the Financing Statements, for purposes of Section 9-509 of the
Delaware UCC, each of the Companies, pursuant to the Guarantee and Security
Agreement, authorized the filing of the relevant Financing Statement with
respect to perfection of the security interest of the Collateral Agent in the
applicable Filing Collateral (as defined below).

 

3. Each of the Financing Statements includes all of the types of information
required by Section 9-502(a) of the Delaware UCC with respect to perfection of
the security interest in the applicable Filing Collateral in favor of the
Collateral Agent. Each of the Financing Statements also includes all of the
types of information without which the State Office

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

To the Collateral Agent and the Lenders

June 28, 2004

Page 3

 

may refuse to accept such Financing Statement pursuant to Section
9-516(b)(3)-(5) of the Delaware UCC.

 

4. Under Delaware law, the State of Delaware must maintain a public record
showing each of the Companies to have been organized, and accordingly, solely to
the extent that the Delaware UCC is applicable to the determination of whether
each of the Companies is a “registered organization,” each of the Companies is a
“registered organization” for the purposes of Section 9-102(a)(70) of the
Delaware UCC.

 

In connection with the opinions set forth in paragraph 1 above, we have assumed
(i) that the Guarantee and Security Agreement creates or, with respect to after
acquired property, will create in favor of the Collateral Agent a valid security
interest in and to the Company Filing Collateral of each of the Companies
(collectively, the “Filing Collateral”), which security interest has attached
or, with respect to after acquired property, will attach under the Uniform
Commercial Code as in effect in the State of New York (the “New York UCC”) and
(ii) that under the New York UCC, the substantive law of the Delaware UCC (and
not the Delaware UCC choice-of-law rules) governs the perfection of a security
interest in the Filing Collateral.

 

In addition, in connection with the opinions set forth above, we express no
opinion as to (i) the effect of perfection or nonperfection or the priority of
any security interest of the Collateral Agent in any portion of the Filing
Collateral, (ii) any Collateral until such Collateral is acquired by the
applicable Company, (iii) the rights or interests of any of the parties to the
Guarantee and Security Agreement or any other person or entity in, or title of
any such parties, persons or entities to, any of the Collateral, or as to the
value of any such Collateral, (iv) in the case of any Collateral that is secured
by other property, the rights or interests of any of the parties to the
Guarantee and Security Agreement or any other person or entity in, or title of
any such parties, persons or entities to, any of such underlying property, (v)
any Collateral other than the Filing Collateral, (vi) any Filing Collateral due
from any government or any agency or instrumentality thereof, (vii) any Filing
Collateral that constitutes as extracted collateral or timber to be cut, (viii)
any Filing Collateral that constitutes commercial tort claims, (ix) any Filing
Collateral that constitutes consumer goods, (x) any Filing Collateral that
constitutes goods subject to a negotiable document of title and (xi)
transactions excluded from the application of Article 9 of the Delaware UCC
pursuant to the provisions of Section 9-109 thereof. Further, to the extent the
opinions set forth above relate to proceeds, such opinions are subject to the
qualification that the perfection of an interest in proceeds is subject to the
limitations and requirements of Section 9-315 of the Delaware UCC.

 

Further, in connection with the opinions set forth above, we note that the
security interest of the Collateral Agent in certain Filing Collateral may be
subject to the rights of account debtors in respect of such Filing Collateral,
claims and defenses of such account debtors and terms of agreements with such
account debtors.

 

In addition, in connection with the opinions set forth above, we express no
opinion as to any actions that may be required to be taken periodically under
the Delaware UCC or other applicable law in order for the effectiveness of the
Financing Statements, or the perfection of the security interest of the
Collateral Agent in the Filing Collateral, to be

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

To the Collateral Agent and the Lenders

June 28, 2004

Page 4

 

maintained. We note, however, that the perfection of the security interest of
the Collateral Agent in the Filing Collateral and the effectiveness of each
Financing Statement will either terminate or be materially limited (i) unless an
appropriate continuation statement is properly filed (a) within the period of
six months prior to the expiration of the five-year period from the date of the
original filing of the Financing Statement and (b) if a prior continuation
statement has been filed, within the period of six months prior to the
expiration of the Financing Statement continued by such prior continuation
statement, (ii) if a Company changes its name so as to make the relevant
Financing Statement seriously misleading, unless an amendment to such Financing
Statement that renders such Financing Statement not seriously misleading is
properly filed within four months after such a change in name, (iii) if a
Company changes its jurisdiction of formation or organization to another
jurisdiction, four months after such Company changes its jurisdiction of
formation or organization to another jurisdiction, unless such security interest
is perfected in such new jurisdiction within such time, (iv) if a Company
transfers the Filing Collateral to a person or entity that thereby becomes a
debtor and is located in another jurisdiction, one year after such Company
transfers such Filing Collateral to a person or entity that thereby becomes a
debtor and is located in another jurisdiction, unless such security interest is
perfected in such new jurisdiction within such time, and (v) if a Company
becomes organized under the laws of another jurisdiction in addition to the
State of Delaware.

 

Further, the opinions set forth in paragraph 1 above are subject to the effect
of (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other laws of general application relating to or affecting the enforcement of
creditors’ rights and remedies, as from time to time in effect, (ii) application
of equitable principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law) and (iii) principles of course of dealing
or course of performance and standards of good faith, fair dealing, materiality
and reasonableness that may be applied by a court to the exercise of rights and
remedies by, and other acts of, a creditor.

 

The opinions herein expressed are intended solely for the benefit of the
addressees hereof and their permitted successors and assigns under the Credit
Agreement and may not be relied upon by any other person or entity or for any
other purpose without our prior written consent. This opinion speaks only as of
the date hereof, and is based on our understandings and assumptions as to
present facts and a review of the above-referenced documents and the application
of Delaware law as the same exist on the date hereof, and we undertake no duty
to update or supplement this opinion for the benefit of any person or entity
(including any permitted successor or assign of any addressee hereof) with
respect to any facts or circumstances that may hereafter come to our attention
or any changes in facts, circumstances or law that may hereafter occur or take
effect.

 

Very truly yours,

MORRIS, NICHOLS, ARSHT & TUNNELL

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

Jonathan I. Lessner

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

EXHIBIT 1

 

SUBSIDIARY GUARANTORS

 

CPC Managed Care Health Services, Inc.

First Rehab, Inc.

Helian Health Group, Inc.

Kindred Acute Pulmonary East, Inc.

Kindred Acute Pulmonary Limited Partnership

Kindred Acute Pulmonary West, Inc.

Kindred Facility Services, Inc.

Kindred Healthcare Operating, Inc.

Kindred Healthcare Services, Inc.

Kindred Holdings, L.L.C.

Kindred Homecare Services, Inc.

Kindred Hospital Pharmacy Services, Inc.

Kindred Hospitals East, L.L.C.

Kindred Hospitals Limited Partnership

Kindred Hospitals West, L.L.C.

Kindred Institutional Pharmacy Services, Inc.

Kindred Insurance Holdings, Inc.

Kindred Investment Company

Kindred Nevada, L.L.C.

Kindred Nursing Centers Central Limited Partnership

Kindred Nursing Centers East, L.L.C.

Kindred Nursing Centers Limited Partnership

Kindred Nursing Centers North, L.L.C.

Kindred Nursing Centers South, L.L.C.

Kindred Nursing Centers West, L.L.C.

Kindred Pharmacy Services, Inc.

Kindred Rehab Services, Inc.

Kindred Support Services, L.L.C.

Kindred Systems, Inc.

KPS East, Inc.

KPS Midwest, Inc.

KPS Mountain, Inc.

KPS Seattle, Inc.

KPS Wisconsin, Inc.

Medisave of Tennessee, Inc.

PersonaCare Living Center of Clearwater, Inc.

PersonaCare of Bradenton, Inc.

PersonaCare of Clearwater, Inc.

PersonaCare of Georgia, Inc.

PersonaCare of Huntsville, Inc.

PersonaCare of Little Rock, Inc.

PersonaCare of Ohio, Inc.

 

PersonaCare of Owensboro, Inc.

PersonaCare of Pennsylvania, Inc.

PersonaCare of Pompano East, Inc.

PersonaCare of Pompano West, Inc.

PersonaCare of Reading, Inc.

PersonaCare of San Antonio, Inc.

PersonaCare of San Pedro, Inc.

PersonaCare of Shreveport, Inc.

PersonaCare of St. Petersburg, Inc.

PersonaCare of Warner Robins, Inc.

PersonaCare of Wisconsin, Inc.

Respiratory Care Services, Inc.

Specialty Healthcare Services, Inc.

TheraTx Healthcare Management, Inc.

TheraTx Health Services, Inc.

TheraTx Rehabilitation Services, Inc.

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

EXHIBIT 2

 

FINANCING STATEMENTS

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

EXHIBIT C: FORM OF SECURITY AGREEMENT

 

--------------------------------------------------------------------------------

EXECUTION COPY

 

AMENDED AND RESTATED GUARANTEE

AND SECURITY AGREEMENT

 

dated as of

 

June 28, 2004

 

among

 

KINDRED HEALTHCARE, INC.,

 

THE SUBSIDIARY GUARANTORS PARTY HERETO

 

and

 

JPMORGAN CHASE BANK,

as Collateral Agent

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

     PAGE

--------------------------------------------------------------------------------

SECTION 1. Definitions.

   2

SECTION 2. Guarantees by Subsidiary Guarantors.

   12

SECTION 3. Grant of Security Interest.

   15

SECTION 4. General Representations and Warranties

   18

SECTION 5. Further Assurances; General Covenants

   20

SECTION 6. Accounts

   22

SECTION 7. Chattel Paper and Instruments

   23

SECTION 8. Commercial Tort Claims

   24

SECTION 9. Material Government Contracts

   25

SECTION 10. Recordable Intellectual Property

   26

SECTION 11. Investment Property

   27

SECTION 12. Investment Property Collateral Accounts

   30

SECTION 13. Controlled Deposit Accounts

   30

SECTION 14. Cash Collateral Accounts

   30

SECTION 15. Operation of Collateral Accounts

   32

SECTION 16. Transfer of Record Ownership

   33

SECTION 17. Right to Vote Securities

   34

SECTION 18. Certain Cash Distributions

   35

SECTION 19. Remedies upon Enforcement Notice

   35

SECTION 20. Application of Proceeds

   37

SECTION 21. Fees and Expenses; Indemnification

   38

SECTION 22. Authority to Administer Collateral

   40

SECTION 23. Limitation on Duty in Respect of Collateral

   40

SECTION 24. General Provisions Concerning the Collateral Agent

   41

SECTION 25. Termination of Security Interests; Release of Collateral

   44

SECTION 26. Additional Subsidiary Guarantors and Lien Grantors

   44

SECTION 27. Additional Secured Obligations

   45

SECTION 28. Notices

   45

SECTION 29. No Implied Waivers; Remedies Not Exclusive

   47

SECTION 30. Successors and Assigns

   47

SECTION 31. Amendments and Waivers

   47

SECTION 32. Choice of Law.

   48

SECTION 33. Waiver of Jury Trial

   48

SECTION 34. Severability

   49

SECTION 35. Counterparts

   49

SECTION 36. Consequences Of Effectiveness

   49

SECTION 37. Withdrawal of Enforcement Notice

   50

--------------------------------------------------------------------------------

SCHEDULES:

 

Schedule 1

   Securities and Securities Accounts Owned by Original Lien Grantors

Schedule 2

   List of Material Government Contracts

 

EXHIBITS:

 

Exhibit A

   Form of Security Agreement Supplement

Exhibit B

   Form of Copyright Security Agreement

Exhibit C

   Form of Patent Security Agreement

Exhibit D

   Form of Trademark Security Agreement

Exhibit E

   Form of Perfection Certificate

Exhibit F

   Form of Issuer Control Agreement

Exhibit G

   Form of Securities Account Control Agreement

Exhibit H

   Form of Deposit Account Control Agreement

Exhibit I-1

   Form of Assignment of Government Contract

Exhibit I-2

   Form of Notice of Assignment of Government Contract

 

ii

--------------------------------------------------------------------------------

AMENDED AND RESTATED GUARANTEE AND SECURITY AGREEMENT

 

AMENDED AND RESTATED AGREEMENT dated as of June 28, 2004 among KINDRED
HEALTHCARE, INC., the SUBSIDIARY GUARANTORS party hereto and JPMORGAN CHASE
BANK, as Collateral Agent.

 

WHEREAS, Kindred Healthcare Operating, Inc. (f/k/a Vencor Operating, Inc.) (the
“Original Borrower”) entered into the $120,000,000 Credit Agreement, dated as
April 20, 2001, among the Original Borrower, as borrower, the Borrower, the
lenders party thereto, the Swingline Bank party thereto, the LC Issuing Banks
party thereto, JPMorgan Chase Bank (as successor in interest to Morgan Guaranty
Trust Company of New York), as Administrative Agent and Collateral Agent, and
General Electric Capital Corporation, as Documentation Agent and Collateral
Monitoring Agent (as in effect immediately prior to the Effective Date, the
“Exit Facility”);

 

WHEREAS, (a) the Borrower, the parent company of the Original Borrower,
guaranteed the obligations of the Original Borrower under the Exit Facility
pursuant to the Vencor Guaranty Agreement (as defined in the Exit Facility) and
(b) the Restricted Subsidiaries (as defined in the Exit Facility) of the
Original Borrower guaranteed the obligations of the Original Borrower under the
Exit Facility pursuant to the Subsidiary Guaranty Agreement (as defined in the
Exit Facility), which guarantees by the Borrower and such Restricted
Subsidiaries were secured pursuant to the Security Agreement (as defined in the
Exit Facility);

 

WHEREAS, on the Effective Date, (a) the Borrower will assume all of the
obligations of the Original Borrower under the Exit Facility, (b) the Borrower
will be released from its obligations under the Vencor Guaranty Agreement (as
defined in the Exit Facility) and (c) the Original Borrower will assume the
obligations of the Borrower under the Vencor Guaranty Agreement and thereby
guarantee all of the obligations of the Borrower and will secure its guarantee
hereunder;

 

WHEREAS, also on the Effective Date, the Security Agreement, the Vencor Guaranty
Agreement and the Subsidiary Guaranty Agreement (each as defined in the Exit
Facility) will be amended and restated in their entirety to read as set forth in
this Agreement;

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

--------------------------------------------------------------------------------

SECTION 1. Definitions.

 

(a) Terms Defined in Credit Agreement. Terms defined in the Credit Agreement and
not otherwise defined in subsection (b) or (c) of this Section have, as used
herein, the respective meanings provided for therein.

 

(b) Terms Defined in UCC. As used herein, each of the following terms has the
meaning specified in the UCC:

 

Term

--------------------------------------------------------------------------------

   UCC

--------------------------------------------------------------------------------

Authenticate

   9-102

Certificated Security

   8-102

Chattel Paper

   9-102

Commercial Tort Claim

   9-102

Deposit Account

   9-102

Document

   9-102

Entitlement Holder

   8-102

Entitlement Order

   8-102

Equipment

   9-102

Financial Asset

   8-102 & 103

General Intangibles

   9-102

Goods

   9-102

Instrument

   9-102

Inventory

   9-102

Investment Property

   9-102

Payment Intangible

   9-102

Record

   9-102

Securities Account

   8-501

Securities Intermediary

   8-102

Security

   8-102 & 103

Security Entitlement

   8-102

Supporting Obligations

   9-102

Tangible Chattel Paper

   9-102

Uncertificated Security

   8-102

 

(c) Additional Definitions. The following additional terms, as used herein, have
the following meanings:

 

“Account” has the meaning specified in Section 9-102 of the UCC; provided that
the term “Account” shall not include a Lien Grantor’s right, title and interest
in and to any Retained Collection Rights.

 

“Assignment of Claims Act” has the meaning specified in Section 9(e).

 

2

--------------------------------------------------------------------------------

“Borrower” means Kindred Healthcare, Inc. (f/k/a Vencor, Inc.), a Delaware
corporation.

 

“Cash Collateral Account” has the meaning set forth in Section 14.

 

“Cash Distributions” means dividends, interest and other distributions and
payments (including proceeds of liquidation, sale or other disposition) made or
received in cash upon or with respect to any Collateral.

 

“Collateral” means all property, whether now owned or hereafter acquired, on
which a security interest or other Lien is granted or purports to be granted to
the Collateral Agent pursuant to the Collateral Documents. When used with
respect to a specific Lien Grantor, the term “Collateral” means all its property
on which such a security interest or other Lien is granted or purports to be
granted.

 

“Collateral Accounts” means the Cash Collateral Accounts, the Controlled Deposit
Accounts, the Controlled Securities Accounts and the Investment Property
Collateral Accounts.

 

“Collateral Agent” means JPMorgan Chase Bank, in its capacity as collateral
agent for the holders of the Secured Obligations under the Financing Documents.

 

“Collateral Documents” means this Agreement, the Security Agreement Supplements,
the Deposit Account Control Agreements, the Issuer Control Agreements, the
Securities Account Control Agreements, the Mortgages, the Intellectual Property
Security Agreements and all other supplemental or additional security
agreements, control agreements, mortgages or similar instruments delivered
pursuant to the Financing Documents.

 

“Contingent Secured Obligation” means, at any time, any Secured Obligation (or
portion thereof) that is contingent in nature at such time, including any
Secured Obligation that is:

 

(i) an obligation to reimburse a bank for drawings not yet made under a letter
of credit issued by it;

 

(ii) an obligation under a Designated Interest Rate Agreement to make payments
that cannot be quantified at such time;

 

(iii) any other obligation (including any guarantee) that is contingent in
nature at such time; or

 

3

--------------------------------------------------------------------------------

(iv) an obligation to provide collateral to secure any of the foregoing types of
obligations.

 

“Control” has the following meanings:

 

(a) when used with respect to any Security or Security Entitlement, the meaning
specified in UCC Section 8-106; and

 

(b) when used with respect to any Deposit Account, the meaning specified in UCC
Section 9-104.

 

“Controlled Deposit Account” means a Deposit Account (i) that is subject to a
Deposit Account Control Agreement or (ii) as to which the Collateral Agent is
the Depositary Bank’s “customer” (as defined in UCC Section 4-104).

 

“Controlled Securities Account” means a Securities Account that (i) is
maintained in the name of a Lien Grantor at an office of a Securities
Intermediary located in the United States and (ii) together with all Financial
Assets credited thereto and all related Security Entitlements, is subject to a
Securities Account Control Agreement among such Lien Grantor, the Collateral
Agent and such Securities Intermediary.

 

“Copyright License” means any agreement now or hereafter in existence granting
to any Lien Grantor, or pursuant to which any Lien Grantor grants to any other
Person, any right to use, copy, reproduce, distribute, prepare derivative works,
display or publish any records or other materials on which a Copyright is in
existence or may come into existence, including any agreement identified in
Schedule 1 to any Copyright Security Agreement.

 

“Copyrights” means all the following: (i) all copyrights under the laws of the
United States or any other country (whether or not the underlying works of
authorship have been published), all registrations and recordings thereof, all
copyrightable works of authorship (whether or not published), and all
applications for copyrights under the laws of the United States or any other
country, including registrations, recordings and applications in the United
States Copyright Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision thereof,
including those described in Schedule 1 to any Copyright Security Agreement,
(ii) all renewals of any of the foregoing, (iii) all claims for, and rights to
sue for, past or future infringements of any of the foregoing, and (iv) all
income, royalties, damages and payments now or hereafter due or payable with
respect to any of the foregoing, including damages and payments for past or
future infringements thereof.

 

4

--------------------------------------------------------------------------------

“Copyright Security Agreement” means a Copyright Security Agreement,
substantially in the form of Exhibit B, executed and delivered by a Lien Grantor
in favor of the Collateral Agent for the benefit of the Secured Parties.

 

“Credit Agreement” means the Amended and Restated Credit Agreement dated as of
the date hereof among the Borrower, the Lenders party thereto, JPMorgan Chase
Bank, as Administrative Agent and Collateral Agent, Citicorp USA, Inc., as
Syndication Agent, and General Electric Capital Corporation, The CIT
Group/Business Credit, Inc. and Wells Fargo Foothill, as Co-Documentation
Agents.

 

“Deposit Account Control Agreement” means, with respect to any Deposit Account
of any Lien Grantor, a Deposit Account Control Agreement substantially in the
form of Exhibit H (with any changes that the Collateral Agent shall have
approved) among such Lien Grantor, the Collateral Agent and the relevant
Depositary Bank, (i) providing that such Depositary Bank will comply with
instructions originated by the Collateral Agent directing disposition of the
funds in such Deposit Account without further consent by such Lien Grantor and
(ii) subordinating to the relevant Security Interest all claims of the
Depositary Bank to such Deposit Account (except its right to deduct its normal
operating charges and any uncollected funds previously credited thereto).

 

“Depositary Bank” means a bank at which a Controlled Deposit Account is
maintained.

 

“Equity Interest” means (i) in the case of a corporation, any shares of its
capital stock, (ii) in the case of a limited liability company, any membership
interest therein, (iii) in the case of a partnership, any partnership interest
(whether general or limited) therein, (iv) in the case of any other business
entity, any participation or other interest in the equity or profits thereof,
(v) any warrant, option or other right to acquire any Equity Interest described
in this definition or (vi) any Security Entitlement in respect of any Equity
Interest described in this definition.

 

“Exit Facility” has the meaning specified in the recitals hereto.

 

“Federal Government” means the federal government of the United States or any
agency or instrumentality thereof.

 

“Foothill Nursing Company Promissory Notes” means the $1,800,842 promissory
note, the $400,000 promissory note and the $3,690,000 promissory note made by
Foothill Nursing Company Partnership in favor of Kindred Healthcare Operating
(successor to First Healthcare Corporation).

 

5

--------------------------------------------------------------------------------

“Foreign Subsidiary” means any Subsidiary which is a “controlled foreign
corporation” within the meaning of the Internal Revenue Code of 1986, as amended
from time to time.

 

“Intellectual Property” means (i) Patents, (ii) Patent Licenses, (iii)
Trademarks, (iv) Trademark Licenses, (v) Copyrights, (vi) Copyright Licenses,
(vii) confidential information, (viii) proprietary technology, (ix) trade
secrets, (x) domain names and (xi) mask works, and all rights in or under any of
the foregoing.

 

“Intellectual Property Filing” means (i) with respect to any Patent, Patent
License, Trademark or Trademark License, the filing of the applicable Patent
Security Agreement or Trademark Security Agreement with the United States Patent
and Trademark Office, together with an appropriately completed recordation form,
and (ii) with respect to any Copyright or Copyright License, the filing of the
applicable Copyright Security Agreement with the United States Copyright Office,
together with an appropriately completed recordation form, in each case
sufficient to record the Security Interest granted to the Collateral Agent in
such Recordable Intellectual Property.

 

“Intellectual Property Security Agreement” means a Copyright Security Agreement,
a Patent Security Agreement or a Trademark Security Agreement.

 

“Investment Property Collateral Account” has the meaning specified in Section
12.

 

“Issuer Control Agreement” means an Issuer Control Agreement substantially in
the form of Exhibit F (with any changes that the Collateral Agent shall have
approved).

 

“LC Reimbursement Obligations” means, at any time, all obligations of the
Borrower to reimburse the Issuing Lender for amounts paid by it in respect of
drawings under Letters of Credit.

 

“Lien Grantors” means the Borrower and the Subsidiary Guarantors.

 

“Liquid Investment” means a Temporary Cash Investment (other than commercial
paper) that matures within 30 days after it is first included in the Collateral.

 

“LLC Interest” means a membership interest or similar interest in a limited
liability company.

 

“Material Commercial Tort Claim” means a Commercial Tort Claim involving a claim
for more than $5,000,000.

 

6

--------------------------------------------------------------------------------

“Material Government Contract” means a contract, between a Lien Grantor and
either (i) the Federal Government or (ii) a state or local government or any
agency or instrumentality thereof, that provides (or can reasonably be expected
to provide) for payments to such Lien Grantor in an aggregate amount exceeding
$5,000,000; provided that applicable federal, state or local law do not prohibit
the granting of a security interest in, or Lien upon, such contract.

 

“Medicaid Receivable” means any Account with respect to which the obligor is a
state governmental authority (or agent thereof) obligated to pay, pursuant to
federal or state Medicaid program statutes or regulations, for services rendered
to eligible beneficiaries thereunder.

 

“Medicare Receivable” means any Account with respect to which the obligor is a
federal governmental authority (or agent thereof) obligated to pay, pursuant to
federal Medicare program statutes or regulations, for services rendered to
eligible beneficiaries thereunder.

 

“Non-Contingent Secured Obligation” means at any time any Secured Obligation (or
portion thereof) that is not a Contingent Secured Obligation at such time.

 

“Opinion of Counsel” means a written opinion of legal counsel (who may be
counsel to a Lien Grantor or other counsel, in either case approved by the
Collateral Agent) addressed and delivered to the Collateral Agent.

 

“Original Lien Grantor” means any Lien Grantor that grants a Lien on any of its
assets hereunder on the Effective Date.

 

“own” refers to the possession of sufficient rights in property to grant a
security interest therein as contemplated by UCC Section 9-203, and “acquire”
refers to the acquisition of any such rights.

 

“Partnership Interest” means a partnership interest, whether general or limited.

 

“Patent License” means any agreement now or hereafter in existence granting to
any Lien Grantor, or pursuant to which any Lien Grantor grants to any other
Person, any right with respect to any Patent or any invention now or hereafter
in existence, whether patentable or not, whether a patent or application for
patent is in existence on such invention or not, and whether a patent or
application for patent on such invention may come into existence or not,
including any agreement identified in Schedule 1 to any Patent Security
Agreement.

 

“Patents” means (i) all letters patent and design letters patent of the United
States or any other country and all applications for letters patent or design

 

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letters patent of the United States or any other country, including applications
in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other country or any
political subdivision thereof, including those described in Schedule 1 to any
Patent Security Agreement, (ii) all reissues, divisions, continuations,
continuations in part, revisions and extensions of any of the foregoing, (iii)
all claims for, and rights to sue for, past or future infringements of any of
the foregoing and (iv) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the foregoing, including damages
and payments for past or future infringements thereof.

 

“Patent Security Agreement” means a Patent Security Agreement, substantially in
the form of Exhibit C, executed and delivered by a Lien Grantor in favor of the
Collateral Agent for the benefit of the Secured Parties.

 

“Perfection Certificate” means, with respect to any Lien Grantor, a certificate
substantially in the form of Exhibit E, completed and supplemented with the
schedules and attachments contemplated thereby to the satisfaction of the
Collateral Agent, and signed by an officer of such Lien Grantor; provided that
in the case of Perfection Certificates required to be delivered in connection
with the Closing, such requirements may be satisfied as to all Lien Grantors
through the delivery on their behalf by the Borrower of Perfection Certificates,
duly executed by a Financial Officer, that sets forth in a form satisfactory to
the Collateral Agent all of the information required to be provided.

 

“Permitted Liens” means (i) the Security Interests and (ii) any other Liens on
the Collateral permitted to be created or assumed or to exist pursuant to
Section 7.02 of the Credit Agreement.

 

“Personal Property Collateral” means all property included in the Collateral
except Real Property Collateral.

 

“Pledged”, when used in conjunction with any type of asset, means at any time an
asset of such type that is included (or that creates rights that are included)
in the Collateral at such time. For example, “Pledged Equity Interest” means an
Equity Interest that is included in the Collateral at such time.

 

“Post-Petition Interest” means any interest that accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of any one or more of the Lien Grantors (or would accrue but
for the operation of applicable bankruptcy or insolvency laws), whether or not
such interest is allowed or allowable as a claim in any such proceeding.

 

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“Proceeds” means all proceeds of, and all other profits, products, rents or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or other realization upon, any
Collateral, including all claims of the relevant Lien Grantor against third
parties for loss of, damage to or destruction of, or for proceeds payable under,
or unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any
Collateral.

 

“Real Property Collateral” means all real property (including leasehold
interests in real property) included in the Collateral.

 

“Recordable Intellectual Property” means (i) any Patent registered with the
United States Patent and Trademark Office, and any Patent License with respect
to a Patent so registered, (ii) any Trademark registered with the United States
Patent and Trademark Office, and any Trademark License with respect to a
Trademark so registered and (iii) any Copyright registered with the United
States Copyright Office and any Copyright License with respect to a Copyright so
registered, and all rights in or under any of the foregoing.

 

“Release Conditions” means the following conditions for releasing all the
Secured Guarantees and terminating all the Security Interests:

 

(i) all Commitments under the Credit Agreement shall have expired or been
terminated;

 

(ii) all Non-Contingent Secured Obligations shall have been paid in full; and

 

(iii) no Contingent Secured Obligation (other than contingent indemnification
and expense reimbursement obligations as to which no claim shall have been
asserted) shall remain outstanding;

 

provided that the condition in clause (iii) shall not apply to outstanding
Letters of Credit if (x) no Event of Default has occurred and is continuing and
(y) the Borrower has granted to the Collateral Agent, for the benefit of the
Lenders, a security interest in Temporary Cash Investments acceptable to the
Required Lenders (or causes a bank acceptable to the Required Lenders to issue a
letter of credit naming the Collateral Agent as beneficiary) in an amount
exceeding 105% of the LC Exposure (plus any accrued and unpaid interest thereon)
as of the date of such termination, on terms and conditions and pursuant to
documentation reasonably satisfactory to the Required Lenders.

 

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“Retained Collection Rights” means, with respect to any Medicaid Receivable,
Medicare Receivable, VA Receivable, TRICARE Receivable or CHAMPUS Receivable of
any Lien Grantor, the right of such Lien Grantor to collect and receive from the
obligor thereon payments in respect of such Receivable in the absence of a court
order requiring such obligor to submit payments thereon directly to a Person
other than such Lien Grantor.

 

“Secured Agreement”, when used with respect to any Secured Obligation, refers
collectively to each instrument, agreement or other document that sets forth
obligations of the Borrower, obligations of a guarantor and/or rights of the
holder with respect to such Secured Obligation.

 

“Secured Guarantee” means, with respect to each Subsidiary Guarantor, its
guarantee of the Secured Obligations under Section 2 hereof or Section 1 of a
Security Agreement Supplement.

 

“Secured Obligations” means (i) all principal of all Loans and LC Reimbursement
Obligations outstanding from time to time under the Credit Agreement, all
interest (including Post-Petition Interest) on such Loans and LC Reimbursement
Obligations and all other amounts now or hereafter payable pursuant to any
Financing Document and (ii) all obligations (if any) designated by the Borrower
as additional Secured Obligations pursuant to Section 27.

 

“Secured Parties” means the holders from time to time of the Secured
Obligations.

 

“Secured Party Requesting Notice” means, at any time, a Secured Party that has,
at least five Business Days prior thereto, delivered to the Collateral Agent a
written notice (i) stating that it holds one or more Secured Obligations and
wishes to receive copies of the notices referred to in Section 24(g) and (ii)
setting forth its address, facsimile number and e-mail address to which copies
of such notices should be sent.

 

“Securities Account Control Agreement” means, when used with respect to a
Securities Account, a Securities Account Control Agreement substantially in the
form of Exhibit G (with any changes that the Collateral Agent shall have
approved) among the relevant Securities Intermediary, the relevant Lien Grantor
and the Collateral Agent to the effect that such Securities Intermediary will
comply with Entitlement Orders originated by the Collateral Agent with respect
to such Securities Account without further consent by the relevant Lien Grantor.

 

“Security Agreement Supplement” means a Security Agreement Supplement,
substantially in the form of Exhibit A, signed and delivered to the

 

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Collateral Agent for the purpose of adding a Subsidiary as a party hereto
pursuant to Section 26 and/or adding additional property to the Collateral.

 

“Security Interests” means the Liens granted by the Lien Grantors under the
Collateral Documents.

 

“Subsidiary Guarantor” means each Subsidiary listed on the signature pages
hereof under the caption “Subsidiary Guarantors” and each Subsidiary that shall,
at any time after the date hereof, become a Subsidiary Guarantor pursuant to
Section 26.

 

“Trademark License” means any agreement now or hereafter in existence granting
to any Lien Grantor, or pursuant to which any Lien Grantor grants to any other
Person, any right to use any Trademark, including any agreement identified in
Schedule 1 to any Trademark Security Agreement.

 

“Trademarks” means: (i) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service marks,
logos, brand names, trade dress, prints and labels on which any of the foregoing
have appeared or appear, package and other designs, and all other source or
business identifiers, and all general intangibles of like nature, and the rights
in any of the foregoing which arise under applicable law, (ii) the goodwill of
the business symbolized thereby or associated with each of them, (iii) all
registrations and applications in connection therewith, including registrations
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, including those described in
Schedule 1 to any Trademark Security Agreement, (iv) all renewals of any of the
foregoing, (v) all claims for, and rights to sue for, past or future
infringements of any of the foregoing and (vi) all income, royalties, damages
and payments now or hereafter due or payable with respect to any of the
foregoing, including damages and payments for past or future infringements
thereof.

 

“Trademark Security Agreement” means a Trademark Security Agreement,
substantially in the form of Exhibit D, executed and delivered by a Lien Grantor
in favor of the Collateral Agent for the benefit of the Secured Parties.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York; provided that, if perfection or the effect of perfection or
non-perfection or the priority of any Security Interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, “UCC” means the Uniform Commercial Code as in effect from time to
time in such other jurisdiction for purposes of the

 

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provisions hereof relating to such perfection, effect of perfection or
non-perfection or priority.

 

“VA Receivable” means any Account payable pursuant to CHAMPVA.

 

“United States” means the United States of America.

 

(d) Terms Generally. The definitions of terms herein (including those
incorporated by reference to the UCC or to another document) apply equally to
the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun includes the corresponding masculine, feminine and neuter
forms. The words “include”, “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”. The word “will” shall be construed
to have the same meaning and effect as the word “shall”. Unless the context
requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (iii) the words “herein”, “hereof” and “hereunder”, and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (iv) all references herein to
Sections, Exhibits and Schedules shall be construed to refer to Sections of, and
Exhibits and Schedules to, this Agreement and (v) the word “property” shall be
construed to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.

 

SECTION 2. Guarantees by Subsidiary Guarantors.

 

(a) Secured Guarantees. Each Subsidiary Guarantor, jointly and severally,
unconditionally and irrevocably guarantees the full and punctual payment of each
Secured Obligation as and when the same shall become due and payable (whether at
stated maturity, upon acceleration or otherwise). If the Borrower fails to pay
any Secured Obligation punctually when due and payable, each Subsidiary
Guarantor unconditionally agrees that it will forthwith on demand pay the amount
not so paid at the place and in the manner specified in the relevant Secured
Agreement.

 

(b) Secured Guarantees Unconditional. The obligations of each Subsidiary
Guarantor under its Secured Guarantee shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:

 

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(i) any extension, renewal, settlement, compromise, waiver or release in respect
of any obligation of the Borrower, any other Subsidiary Guarantor or any other
Person under any Secured Agreement, by operation of law or otherwise;

 

(ii) any modification, waiver or amendment of or supplement to any Secured
Agreement;

 

(iii) any release, impairment, non-perfection or invalidity of any direct or
indirect security, or of any guarantee or other liability of any third party,
for any obligation of the Borrower, any other Subsidiary Guarantor or any other
Person under any Secured Agreement;

 

(iv) any change in the corporate existence, structure or ownership of the
Borrower, any other Subsidiary Guarantor or any other Person or any of their
respective subsidiaries, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Borrower, any other Subsidiary Guarantor or any
other Person or any of their assets or any resulting release or discharge of any
obligation of the Borrower, any other Subsidiary Guarantor or any other Person
under any Secured Agreement;

 

(v) the existence of any claim, set-off or other right whatsoever (in any case,
whether based on contract, tort or any other theory) that such Subsidiary
Guarantor may have at any time against the Borrower, any other Subsidiary
Guarantor, any Secured Party or any other Person, whether in connection with the
Financing Documents or any unrelated transactions, provided that nothing herein
shall prevent the assertion of any such claim by separate suit or compulsory
counterclaim;

 

(vi) any invalidity or unenforceability relating to or against the Borrower, any
other Subsidiary Guarantor or any other Person for any reason of any Secured
Agreement, or any provision of applicable law or regulation purporting to
prohibit the payment of any Secured Obligation by the Borrower, any other
Subsidiary Guarantor or any other Person; or

 

(vii) any other act or omission to act or delay of any kind by the Borrower, any
other Subsidiary Guarantor, any other party to any Secured Agreement, any
Secured Party or any other Person, or any other circumstance whatsoever that
might, but for the provisions of this clause (vii), constitute a legal or
equitable discharge of or defense to any obligation of any Subsidiary Guarantor
hereunder (other than a discharge arising from the payment in full of the
Secured Obligations).

 

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(c) Release of Secured Guarantees. (i) All the Secured Guarantees will be
released when all the Release Conditions are satisfied. If at any time any
payment of a Secured Obligation is rescinded or must be otherwise restored or
returned upon the insolvency or receivership of the Borrower or otherwise, the
Secured Guarantees shall be reinstated with respect thereto as though such
payment had been due but not made at such time.

 

(ii) If all the capital stock of a Subsidiary Guarantor or all the assets of a
Subsidiary Guarantor are sold to a Person other than the Borrower or one of its
Subsidiaries in a transaction permitted by the Credit Agreement (any such sale,
a “Sale of Subsidiary Guarantor”) or upon a Subsidiary Guarantor becoming an
Unrestricted Subsidiary in accordance with Section 5.06 of the Credit Agreement
(any such event, an “Unrestricted Subsidiary Designation”), the Collateral Agent
shall release such Subsidiary Guarantor from its Secured Guarantee. Such release
shall not require the consent of any Secured Party, and the Collateral Agent
shall be fully protected in relying on a certificate of the Borrower as to
whether any particular sale constitutes a Sale of Subsidiary Guarantor or as to
whether any particular event constitutes an Unrestricted Subsidiary Designation.

 

(iii) In addition to any release permitted by subsection (ii), the Collateral
Agent may release any Secured Guarantee with the prior written consent of the
Required Lenders; provided that any release of all or substantially all the
Secured Guarantees shall require the consent of all the Lenders.

 

(d) Waiver by Subsidiary Guarantors. Each Subsidiary Guarantor irrevocably
waives acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action be
taken by any Person against the Borrower, any other Subsidiary Guarantor or any
other Person.

 

(e) Subrogation. A Subsidiary Guarantor that makes a payment with respect to a
Secured Obligation hereunder shall be subrogated to the rights of the payee
against the Borrower with respect to such payment; provided that no Subsidiary
Guarantor shall enforce any payment by way of subrogation against the Borrower,
or by reason of contribution against any other guarantor of such Secured
Obligation, until all the Release Conditions have been satisfied.

 

(f) Stay of Acceleration. If acceleration of the time for payment of any Secured
Obligation by the Borrower is stayed by reason of the insolvency or receivership
of the Borrower or otherwise, all Secured Obligations otherwise subject to
acceleration under the terms of any Secured Agreement shall

 

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nonetheless be payable by the Subsidiary Guarantors hereunder forthwith upon
demand by the Collateral Agent made, in the case of any Loans, at the request of
the Required Lenders or, in the case of obligations under a Designated Interest
Rate Agreement, at the request of the relevant Interest Hedge Counterparty.

 

(g) Right of Set-Off. If an Event of Default shall have occurred and be
continuing or if any Secured Obligation is not paid promptly when due, each of
the Secured Parties and their respective Affiliates is authorized, at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other obligations at any time owing by such Secured
Party or Affiliate to or for the credit or the account of any Subsidiary
Guarantor against any of and all the obligations of such Subsidiary Guarantor
now or hereafter existing under its Secured Guarantee, irrespective of whether
or not such Secured Party shall have made any demand thereunder and although
such obligations may be unmatured. The rights of each Secured Party under this
subsection are in addition to all other rights and remedies (including other
rights of set-off) that such Secured Party may have.

 

(h) Continuing Guarantee. Each Secured Guarantee is a continuing guarantee,
shall be binding on the relevant Subsidiary Guarantor and its successors and
assigns, and shall be enforceable by the Collateral Agent or the Secured
Parties. If all or part of any Secured Party’s interest in any Secured
Obligation is assigned or otherwise transferred, the transferor’s rights under
each Secured Guarantee, to the extent applicable to the obligation so
transferred, shall automatically be transferred with such obligation.

 

(i) Limitation on Obligations of Subsidiary Guarantor. The obligations of each
Subsidiary Guarantor under its Secured Guarantee shall be limited to an
aggregate amount equal to the largest amount that would not render such Secured
Guarantee subject to avoidance under Section 548 of the United States Bankruptcy
Code or any comparable provisions of applicable law.

 

SECTION 3. Grant of Security Interest.

 

(a) The Borrower, in order to secure the Secured Obligations, and each
Subsidiary Guarantor listed on the signature pages hereof, in order to secure
its Secured Guarantee, grants to the Collateral Agent for the benefit of the
Secured Parties, a continuing security interest in all the following property of
the Borrower or such Subsidiary Guarantor, as the case may be, whether now owned
or existing or hereafter acquired or arising and regardless of where located:

 

(i) all Accounts;

 

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(ii) all Documents;

 

(iii) all Equipment;

 

(iv) all General Intangibles (including any Equity Interests in other Persons
that do not constitute Investment Property);

 

(v) all Goods;

 

(vi) all Instruments;

 

(vii) all Inventory;

 

(viii) all Chattel Paper;

 

(ix) all Deposit Accounts;

 

(x) all Investment Property;

 

(xi) all books and records (including customer lists, credit files, computer
programs, printouts and other computer materials and records) of such Original
Lien Grantor pertaining to any of its Collateral;

 

(xii) such Original Lien Grantor’s ownership interest in (1) its Collateral
Accounts, (2) all Financial Assets credited to its Collateral Accounts from time
to time and all Security Entitlements in respect thereof, (3) all cash held in
its Collateral Accounts from time to time and (4) all other money in the
possession of the Collateral Agent; and

 

(xiii) all Proceeds of the Collateral described in the foregoing clauses (i)
through (xii);

 

provided that the following property is excluded from the foregoing security
interests: (A) motor vehicles the perfection of a security interest in which is
excluded from the Uniform Commercial Code in the relevant jurisdiction, (B)
voting Equity Interests in any Foreign Subsidiary, to the extent (but only to
the extent) required to prevent the Collateral from including more than 66% of
all voting Equity Interests in such Foreign Subsidiary, (C) Equipment leased by
an Original Lien Grantor under a lease that prohibits the granting of a Lien on
such Equipment and any general intangibles or other rights arising under any
contract, instrument, license or other document, in each such case if (but only
to the extent that) the grant of a security interest therein would constitute a
material violation of a valid and effective restriction in favor of a third
party, unless and until all required consents shall have been obtained, (D)
subject to Section 5.09(f) of the Credit Agreement, Equity Interests in
Cornerstone, (E) subject to Section 5.09(a)

 

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of the Credit Agreement, Equity Interests in Excluded Partnerships and (F)
Equity Interests in Transitional Hospitals Corporation of Michigan, Inc.
(“Transitional Hospitals”); provided that if Transitional Hospitals has not been
sold on or prior to June 30, 2005 or upon a sale to the Borrower or any
Restricted Subsidiary of the Borrower, Kindred Healthcare Operating (or the
Borrower or other Restricted Subsidiary of whom Transitional Hospitals shall
have become a Subsidiary) shall promptly (and in any event by no later than July
15, 2005) cause the Equity Interests in Transitional Hospitals to be added to
the Collateral and shall comply with Section 11 with respect thereto. Each
Original Lien Grantor shall use all reasonable efforts to obtain any required
consent referred to in clause (C) that is reasonably obtainable; provided that
no Original Lien Grantor shall be obligated to obtain any such consent with
respect to any Retained Collection Rights or any Third Party Lease.

 

(b) With respect to each right to payment or performance included in the
Collateral from time to time, the Security Interest granted therein includes a
continuing security interest in (i) any Supporting Obligation that supports such
payment or performance and (ii) any Lien that (x) secures such right to payment
or performance or (y) secures any such Supporting Obligation.

 

(c) The Security Interests are granted as security only and shall not subject
the Collateral Agent or any other Secured Party to, or transfer or in any way
affect or modify, any obligation or liability of any Lien Grantor with respect
to any of the Collateral or any transaction in connection therewith.

 

(d) If the superintendent of insurance or other similar official having
jurisdiction over any Insurance Subsidiary determines that any pledge of the
shares of capital stock of such Insurance Subsidiary hereunder constitutes the
acquisition of or a change of control with respect to such Insurance Subsidiary
as to which the prior approval of such superintendent or similar official was
required, then, immediately upon the relevant Lien Grantor’s (1) written
memorialization of oral notice or (2) receipt of written notice from such
official of such determination and without any action on the part of the
Collateral Agent or any other Person, such pledge shall be rendered void ab
initio and of no effect. Upon any such occurrence, (i) the Collateral Agent
shall, at such Lien Grantor’s written request and expense, return all
certificates representing such capital stock to such Lien Grantor and execute
and deliver such documents as such Lien Grantor shall reasonably request to
evidence such Lien Grantor’s retention of all rights in such capital stock and
(ii) such Lien Grantor shall promptly submit a request to the superintendent of
insurance or other appropriate official for approval of the pledge of such
shares to the Collateral Agent hereunder and, upon receipt of such approval,
shall forthwith pledge and deposit with the Collateral Agent certificates
representing all of the outstanding shares of capital stock of such Insurance
Subsidiary.

 

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SECTION 4. General Representations and Warranties. Each Original Lien Grantor
represents and warrants that:

 

(a) Such Lien Grantor is duly organized, validly existing and in good standing
under the laws of the jurisdiction identified as its jurisdiction of
organization in its Perfection Certificate.

 

(b) Schedule 1.01B of the Credit Agreement lists all Equity Interests in
Subsidiaries and Affiliates owned by such Lien Grantor as of the Effective Date.
Such Lien Grantor holds all such Equity Interests directly (i.e., not through a
Subsidiary, a Securities Intermediary or any other Person).

 

(c) Schedule 1 lists, as of the Effective Date, (i) all Securities directly
owned by such Lien Grantor (except Securities evidencing Equity Interests in
Subsidiaries and Affiliates) and (ii) all Securities Accounts to which Financial
Assets are credited in respect of which such Lien Grantor owns Security
Entitlements.

 

(d) All Pledged Equity Interests directly owned by such Lien Grantor and issued
by any Subsidiary of such Lien Grantor are owned by it free and clear of any
Lien other than (i) the Security Interests and (ii) any inchoate tax liens. All
shares of capital stock included in such Pledged Equity Interests (including
shares of capital stock in respect of which such Lien Grantor owns a Security
Entitlement) have been duly authorized and validly issued and are fully paid and
non-assessable. None of such Pledged Equity Interests is subject to any option
to purchase or similar right of any Person. Such Lien Grantor is not and will
not become a party to or otherwise bound by any agreement (except the Financing
Documents) which restricts in any manner the rights of any present or future
holder of any Pledged Equity Interest directly owned by such Lien Grantor and
issued by any Subsidiary of such Lien Grantor with respect thereto.

 

(e) Such Lien Grantor has good and marketable title to all its Collateral
(except Intellectual Property), free and clear of any Lien other than Permitted
Liens. To the best of its knowledge, such Lien Grantor has good title or other
rights in and to its Intellectual Property, free and clear of any Liens other
than Permitted Liens.

 

(f) Other than granting Permitted Liens, such Lien Grantor has not performed any
acts that might prevent the Collateral Agent from enforcing any of the
provisions of the Collateral Documents or that would limit the Collateral Agent
in any such enforcement. No financing statement, security agreement, mortgage or
similar or equivalent document or instrument covering all or part of the
Collateral owned by such Lien Grantor is on file or of record in any
jurisdiction in which such filing or recording would be effective to perfect or
record a Lien on such

 

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Collateral, except financing statements, mortgages or other similar or
equivalent documents with respect to (i) Liens under the Senior Secured Notes
Facility (so long as arrangements reasonably satisfactory to the Agent have been
made for the termination of such financing statements, mortgages or other
similar or equivalent documents on or promptly after the Effective Date) and
(ii) Permitted Liens. After the Effective Date, no Collateral owned by such Lien
Grantor will be in the possession or under the Control of any other Person
having a claim thereto or security interest therein (other than a Permitted
Lien), except that (A) the Collateral Agent or its designee may have possession
of Collateral as contemplated hereby and (B) cash and Temporary Cash Investments
may be held in the Collateral Accounts or in any other account to the extent
permitted by Section 7.13 of the Credit Agreement.

 

(g) The Security Interests in all Personal Property Collateral owned by such
Lien Grantor (i) have been validly created, (ii) will attach to each item of
such Collateral on the Effective Date (or, if such Lien Grantor first obtains
rights thereto on a later date, on such later date) and (iii) when so attached,
will secure all the Secured Obligations or such Lien Grantor’s Secured
Guarantee, as the case may be.

 

(h) Such Lien Grantor has delivered a Perfection Certificate to the Collateral
Agent. The information set forth therein is correct and complete as of the
Effective Date.

 

(i) When UCC financing statements describing the Collateral as set forth in an
Exhibit to such Lien Grantor’s Perfection Certificate have been filed in the
offices specified in such Perfection Certificate, the Security Interests will
constitute perfected security interests in the Personal Property Collateral
owned by such Lien Grantor to the extent that a security interest therein may be
perfected by filing pursuant to the UCC, prior (except in the case of
Intellectual Property) to all Liens and rights of others therein except
Permitted Liens. When, in addition to the filing of such UCC financing
statements, the applicable Intellectual Property Filings have been made with
respect to such Lien Grantor’s Recordable Intellectual Property (including any
future filings required pursuant to Sections 5(a) and 10(a)), the Security
Interests will constitute perfected security interests in all right, title and
interest of such Lien Grantor in its Recordable Intellectual Property to the
extent that security interests therein may be perfected by such filings, prior
to all Liens and rights of others therein except Permitted Liens. Except for (i)
the filing of such UCC financing statements, (ii) such Intellectual Property
Filings, (iii) the due recordation of memoranda of lease with respect to the
Master Lease Agreements and any assignment thereof to the Borrower and (iv) the
due recordation of the Mortgages, no registration, recordation or filing with
any governmental body, agency or official is required in connection with the
execution or delivery of the Collateral Documents or is necessary for the
validity or

 

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enforceability thereof or for the perfection or due recordation of the Security
Interests or (except with respect to the capital stock of any Insurance
Subsidiary) for the enforcement of the Security Interests.

 

(j) Such Lien Grantor has taken, and will continue to take, all actions
necessary under the UCC to perfect its interest in (i) any Accounts or Chattel
Paper purchased or otherwise acquired by it, as against its assignors and
creditors of its assignors and (ii) any Payment Intangibles or promissory notes
purchased or otherwise acquired by it, as against its assignors and creditors of
its assignors.

 

(k) Such Lien Grantor’s Collateral is insured as required by the Credit
Agreement.

 

(l) In executing and delivering this Agreement, such Lien Grantor (other than
the Borrower) has (i) without reliance on the Collateral Agent or any other
Secured Party or any information received from the Collateral Agent or any other
Secured Party and based upon such documents and information it deems
appropriate, made an independent investigation of the transactions contemplated
hereby and the Borrower, the Borrower’s business, assets, operations, prospects
and condition, financial or otherwise, and any circumstances which may bear upon
such transactions, the Borrower or the obligations and risks undertaken herein
with respect to the Secured Obligations; (ii) adequate means to obtain from the
Borrower on a continuing basis information concerning the Borrower; (iii) full
and complete access to the Financing Documents and any other documents executed
in connection with the Financing Documents; and (iv) not relied and will not
rely upon any representations or warranties of the Collateral Agent or any other
Secured Party not embodied herein or any acts heretofore or hereafter taken by
the Collateral Agent or any other Secured Party (including but not limited to
any review by the Collateral Agent or any other Secured Party of the affairs of
the Borrower).

 

SECTION 5. Further Assurances; General Covenants. Each Lien Grantor covenants as
follows:

 

(a) Such Lien Grantor will, from time to time, at the Borrower’s expense,
execute, deliver, file and record any statement, assignment, instrument,
document, agreement or other paper and take any other action (including any
Intellectual Property Filing and any filing of financing or continuation
statements under the UCC) that from time to time may be necessary or desirable,
or that the Collateral Agent may reasonably request, in order to:

 

(i) create, preserve, perfect, confirm or validate the Security Interests in
such Lien Grantor’s Collateral;

 

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(ii) in the case of Pledged Deposit Accounts listed on Schedule 4.01 of the
Credit Agreement and Pledged Investment Property, cause the Collateral Agent to
have Control thereof;

 

(iii) enable the Collateral Agent and the other Secured Parties to obtain the
full benefits of the Collateral Documents; or

 

(iv) enable the Collateral Agent to exercise and enforce any of its rights,
powers and remedies with respect to any of such Lien Grantor’s Collateral.

 

To the extent permitted by applicable law, such Lien Grantor authorizes the
Collateral Agent to execute and file such financing statements or continuation
statements. Such Lien Grantor constitutes the Collateral Agent its
attorney-in-fact to execute and file all Intellectual Property Filings and other
filings required or so requested for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; and such power, being coupled with
an interest, shall be irrevocable until all the Security Interests granted by
such Lien Grantor terminate pursuant to Section 25. The Borrower will pay the
costs of, or incidental to, any Intellectual Property Filings and any recording
or filing of any financing or continuation statements or other documents
recorded or filed pursuant hereto.

 

(b) Such Lien Grantor will not (i) change its name or corporate structure, (ii)
change its location (determined as provided in UCC Section 9-307) or (iii)
become bound, as provided in UCC Section 9-203(d) or otherwise, by a security
agreement entered into by another Person, unless such Lien Grantor shall have
given the Collateral Agent prior notice thereof.

 

(c) At least 30 days before it takes any action contemplated by Section 5(b),
such Lien Grantor will, at the Borrower’s expense, cause to be delivered to the
Collateral Agent an officer’s certificate, in form and substance satisfactory to
the Collateral Agent, to the effect that (i) all financing statements and
amendments or supplements thereto, continuation statements and other documents
required to be filed or recorded in order to perfect and protect the Security
Interests against all creditors of and purchasers from such Lien Grantor after
it takes such action (except any continuation statements specified in such
officer’s certificate that are to be filed more than six months after the date
thereof) have been filed or recorded in each office necessary for such purpose,
(ii) all fees and taxes, if any, payable in connection with such filings or
recordations have been paid in full and (iii) except as otherwise agreed by the
Required Lenders, such action will not adversely affect the accuracy of such
Lien Grantor’s representations and warranties herein relating to such
Collateral.

 

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(d) If any of its Collateral is in the possession or control of a warehouseman,
bailee or agent at any time, such Lien Grantor will (i) notify such
warehouseman, bailee or agent of the relevant Security Interests, (ii) instruct
such warehouseman, bailee or agent to hold all such Collateral for the
Collateral Agent’s account subject to the Collateral Agent’s instructions (which
shall permit such Collateral to be removed by such Lien Grantor in the ordinary
course of business until the Collateral Agent notifies such warehouseman, bailee
or agent that an Event of Default has occurred and is continuing), (iii) use its
best efforts to cause such warehouseman, bailee or agent to Authenticate a
Record acknowledging that it holds possession of such Collateral for the
Collateral Agent’s benefit and (iv) if such warehouseman, bailee or agent
Authenticates such a Record, make such Authenticated Record available to the
Collateral Agent.

 

(e) Such Lien Grantor will not sell, lease, exchange, assign or otherwise
dispose of, or grant any option with respect to, any of its Collateral; provided
that, unless an Enforcement Notice is in effect, (i) such Lien Grantor may sell,
lease or exchange its Inventory and obsolete, unused or unnecessary Equipment,
in each case in the ordinary course of business and (ii) such Lien Grantor may
sell or otherwise dispose of any of its Collateral unless the sale or
disposition thereof would violate any covenant in the Credit Agreement.
Concurrently with any sale or other disposition (except a sale or disposition to
another Lien Grantor) permitted by the foregoing proviso, the Security Interests
in the assets sold or disposed of (but not in any Proceeds arising from such
sale or disposition) will cease immediately without any action by the Collateral
Agent or any other Secured Party. The Collateral Agent will, at the Borrower’s
expense, execute and deliver to the relevant Lien Grantor such documents as such
Lien Grantor shall reasonably request to evidence the fact that any asset so
sold or disposed of is no longer subject to a Security Interest.

 

(f) Such Lien Grantor will, promptly upon request, provide to the Collateral
Agent all information and evidence concerning such Lien Grantor’s Collateral
that the Collateral Agent may reasonably request from time to time to enable it
to enforce the provisions of the Collateral Documents.

 

(g) From time to time upon request by the Collateral Agent at the direction of
the Required Lenders, or upon the request of the Collateral Agent in the case of
any action contemplated by Section 5(b), such Lien Grantor will, at the
Borrower’s expense, cause to be delivered to the Secured Parties an Opinion of
Counsel satisfactory to the Collateral Agent as to such matters relating to the
transactions contemplated hereby as the Required Lenders or the Collateral
Agent, as the case may be, may reasonably request.

 

SECTION 6. Accounts. Each Lien Grantor represents, warrants and covenants as
follows:

 

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(a) Such Lien Grantor will use its best efforts to cause to be collected from
its account debtors, when due, all amounts owing under its Accounts (including
delinquent Accounts, which will be collected in accordance with lawful
collection procedures) and will apply all amounts collected thereon, forthwith
upon receipt thereof, to the outstanding balances of such Accounts. Subject to
the rights of the Collateral Agent and the other Secured Parties hereunder if an
Event of Default shall have occurred and be continuing, such Lien Grantor may
allow in the ordinary course of business as adjustments to amounts owing under
its Accounts (i) any extension or renewal of the time or times for payment, or
settlement for less than the total unpaid balance, that such Lien Grantor finds
appropriate in accordance with sound business judgment and (ii) refunds or
credits, all in the ordinary course of business and consistent with such Lien
Grantor’s historical collection practices. The reasonable costs and
out-of-pocket expenses (including attorney’s fees) of collection, whether
incurred by such Lien Grantor or the Collateral Agent, shall be paid by such
Lien Grantor.

 

(b) Such Lien Grantor shall allow payments with respect to any of such Lien
Grantor’s Accounts to be received in a lockbox or similar account other than a
Controlled Deposit Account only to the extent that a breach of Section 7.13 of
the Credit Agreement will not result therefrom. To the extent required by
Section 7.13 of the Credit Agreement, the Lien Grantor will instruct the
relevant depositary bank to transfer funds credited to any such account, as
promptly as practicable after receipt thereof, to a Controlled Deposit Account
designated by such Lien Grantor; provided that, if an Enforcement Notice is in
effect, the Collateral Agent may designate the Controlled Deposit Account to
which such funds are transferred.

 

(c) If an Enforcement Notice is in effect, such Lien Grantor will, if requested
to do so by the Collateral Agent, promptly notify (and such Lien Grantor
authorizes the Collateral Agent so to notify) each account debtor in respect of
any of its Accounts (other than Accounts received or deposited in an account
over which the Collateral Agent has Control) that such Accounts have been
assigned to the Collateral Agent hereunder, and that any payments due or to
become due in respect of such Accounts are to be made directly to the Collateral
Agent or its designee.

 

SECTION 7. Chattel Paper and Instruments. Except as to actions to be taken by
the Collateral Agent, each Lien Grantor represents, warrants and covenants as
follows:

 

(a) On the Effective Date (in the case of an Original Lien Grantor) or the date
on which it signs and delivers its first Security Agreement Supplement (in the
case of any other Lien Grantor), such Lien Grantor will deliver to the
Collateral Agent as Collateral hereunder all Pledged Tangible Chattel Paper and
Pledged Instruments (other than the Instruments listed on Schedule 3.13 of the

 

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Credit Agreement; provided that the Foothill Nursing Company Promissory Notes
will be delivered to the Collateral Agent 60 Business Days after the Effective
Date if such notes remain outstanding at such time) then owned by such Lien
Grantor. Thereafter, whenever such Lien Grantor acquires any other Pledged
Tangible Chattel Paper or Pledged Instrument, such Lien Grantor will as soon as
practicable deliver such Pledged Tangible Chattel Paper or Pledged Instrument to
the Collateral Agent as Collateral hereunder; provided that such Lien Grantor
may retain for collection such Pledged Tangible Chattel Paper or Pledged
Instrument in the ordinary course of business.

 

(b) So long as no Enforcement Notice is in effect, the Collateral Agent will,
promptly upon request by the relevant Lien Grantor, make appropriate
arrangements for making any Pledged Tangible Chattel Paper or Pledged Instrument
previously delivered to it available to such Lien Grantor for purposes of
presentation, collection or renewal (any such arrangement to be effected, to the
extent deemed appropriate by the Collateral Agent, against trust receipt or like
document).

 

(c) All Pledged Tangible Chattel Paper and Pledged Instruments owned by such
Lien Grantor, when delivered to the Collateral Agent, will be indorsed to the
order of the Collateral Agent, or accompanied by duly executed instruments of
assignment, all in form and substance satisfactory to the Collateral Agent.

 

(d) Upon the delivery of any Pledged Tangible Chattel Paper or Pledged
Instrument owned by such Lien Grantor to the Collateral Agent, the Security
Interest in such Collateral will be perfected, subject to no prior Liens (other
than Permitted Encumbrances) or rights of others.

 

SECTION 8. Commercial Tort Claims. Each Lien Grantor represents, warrants and
covenants as follows:

 

(a) In the case of an Original Lien Grantor, there are no Material Commercial
Tort Claims with respect to which such Original Lien Grantor is the claimant as
of the Effective Date. In the case of any other Lien Grantor, Schedule 3 to its
first Security Agreement Supplement will accurately describe, with the
specificity required to satisfy Official Comment 5 to UCC Section 9-108, each
Material Commercial Tort Claim with respect to which such Lien Grantor is the
claimant as of the date on which it signs and delivers such Security Agreement
Supplement.

 

(b) If any Lien Grantor acquires a Material Commercial Tort Claim after the
Effective Date (in the case of an Original Lien Grantor) or the date on which it
signs and delivers its first Security Agreement Supplement (in the case of any
other Lien Grantor), such Lien Grantor will promptly sign and deliver to the

 

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Collateral Agent a Security Agreement Supplement granting a security interest in
such Material Commercial Tort Claim (which shall be described therein with the
specificity required to satisfy Official Comment 5 to UCC Section 9-108) to the
Collateral Agent for the benefit of the Secured Parties.

 

(c) Upon the filing of a UCC financing statement in the jurisdiction under the
laws of which the relevant Lien Grantor is organized, the Security Interest in
each Material Commercial Tort Claim described pursuant to subsection (a) or (b)
above will be perfected, subject to no prior Liens (other than Permitted
Encumbrances) or rights of others.

 

SECTION 9. Material Government Contracts. Except as to actions to be taken by
the Collateral Agent, each Lien Grantor represents, warrants and covenants as
follows:

 

(a) In the case of an Original Lien Grantor, Schedule 2 lists all Material
Government Contracts to which such Lien Grantor is a party as of the Effective
Date.

 

(b) In the case of any other Lien Grantor, Schedule 2 to its first Security
Agreement Supplement will list all Material Government Contracts to which such
Lien Grantor is a party as of the date on which it signs and delivers such
Security Agreement Supplement. On or before such date such Lien Grantor will
execute and deliver to the Collateral Agent assignments and notices of
assignment, substantially in the forms of Exhibits I-1 and I-2 hereto, with
respect to each of its Material Government Contracts with the Federal
Government.

 

(c) Each Lien Grantor will, from time to time, amend and supplement the relevant
Schedule 2 to include each Material Government Contract entered into by it after
the Effective Date (in the case of an Original Lien Grantor) or the date on
which it signs and delivers its first Security Agreement Supplement (in the case
of any other Lien Grantor), by delivering to the Collateral Agent a supplemental
schedule of Material Government Contracts. Concurrently therewith, such Lien
Grantor will execute and deliver to the Collateral Agent assignments and notices
of assignment, substantially in the forms of Exhibits I-1 and I-2, with respect
to each Material Government Contract with the Federal Government listed on such
supplemental schedule.

 

(d) Each Lien Grantor will, from time to time, execute and deliver to the
Collateral Agent all assignments, notices of assignment and other documents
required to be filed with any state or local government or agency to insure that
such Lien Grantor’s Material Government Contracts with such government or agency
are validly assigned to the Collateral Agent to the extent that such validity is
governed by applicable provisions of state or local law.

 

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(e) If an Enforcement Notice is in effect or if the maturity of the Loans shall
have been accelerated pursuant to Article 8 of the Credit Agreement, the
Collateral Agent may, at the Borrower’s expense:

 

(i) file, deliver and record with the Federal Government in accordance with the
Assignment of Claims Act of 1940, as amended, 31 U.S.C. Section 3727 and 41
U.S.C. Section 15 (the “Assignment of Claims Act”) any or all assignments and/or
notices of assignment executed and delivered to the Collateral Agent pursuant to
subsection (b) or (c) above; and

 

(ii) file, deliver and/or record with the relevant state or local government or
agency any or all assignments, notices of assignment and/or other documents
executed and delivered to the Collateral Agent pursuant to subsection (d) above.

 

(f) When the Collateral Agent files any notice of assignment referred to in
subsection (b) or (c) above with the governmental authority or agency or other
office described therein, the relevant Security Interest will constitute a valid
assignment of the Material Government Contract identified therein, to the extent
that such validity is governed by the Assignment of Claims Act.

 

SECTION 10. Recordable Intellectual Property. Each Lien Grantor covenants as
follows:

 

(a) On the Effective Date (in the case of an Original Lien Grantor) or the date
on which it signs and delivers its first Security Agreement Supplement (in the
case of any other Lien Grantor), such Lien Grantor will sign and deliver to the
Collateral Agent Intellectual Property Security Agreements with respect to all
Recordable Intellectual Property then owned by it. Within 30 days after each
March 31 and September 30 thereafter, it will sign and deliver to the Collateral
Agent an appropriate Intellectual Property Security Agreement covering any
Recordable Intellectual Property owned by it on such March 31 or September 30
that is not covered by any previous Intellectual Property Security Agreement so
signed and delivered by it. In each case, it will promptly make all Intellectual
Property Filings necessary to record the Security Interest in such Recordable
Intellectual Property.

 

(b) Such Lien Grantor will notify the Collateral Agent as promptly as
practicable if it knows that any application or registration relating to any
material Recordable Intellectual Property owned or licensed by it may become
abandoned or dedicated to the public, or of any adverse determination or
development (including the institution of, or any adverse determination or
development in, any proceeding in the United States Copyright Office, the United
States Patent and

 

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Trademark Office or any court) regarding such Lien Grantor’s ownership of such
material Recordable Intellectual Property, its right to register or patent the
same, or its right to keep and maintain the same. If any of such Lien Grantor’s
rights to any material Recordable Intellectual Property are infringed,
misappropriated or diluted by a third party, such Lien Grantor will notify the
Collateral Agent as promptly as practicable after it learns thereof and will,
unless such Lien Grantor shall reasonably determine that such action would be of
negligible value, economic or otherwise, promptly sue for infringement,
misappropriation or dilution and to recover any and all damages for such
infringement, misappropriation or dilution, and take such other actions as such
Lien Grantor shall reasonably deem appropriate under the circumstances and in
light of its business operations to protect such Recordable Intellectual
Property.

 

SECTION 11. Investment Property. Each Lien Grantor represents, warrants and
covenants as follows:

 

(a) Certificated Securities. On the Effective Date (in the case of an Original
Lien Grantor) or the date on which it signs and delivers its first Security
Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor
will deliver to the Collateral Agent as Collateral hereunder all certificates
representing Pledged Certificated Securities then directly owned by such Lien
Grantor and issued by any Subsidiary of such Lien Grantor. Thereafter, whenever
such Lien Grantor acquires any other certificate representing a Pledged
Certificated Security directly owned by such Lien Grantor and issued by any
Subsidiary of such Lien Grantor, such Lien Grantor will immediately deliver such
certificate to the Collateral Agent as Collateral hereunder. The provisions of
this subsection are subject to the limitation in Section 11(k) in the case of
voting Equity Interests in a Foreign Subsidiary.

 

(b) Uncertificated Securities. On the Effective Date (in the case of an Original
Lien Grantor) or the date on which it signs and delivers its first Security
Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor
will enter into (and cause the relevant issuer to enter into) an Issuer Control
Agreement in respect of each Pledged Uncertificated Security directly owned by
such Lien Grantor and issued by any Subsidiary of such Lien Grantor and deliver
such Issuer Control Agreement to the Collateral Agent (which shall enter into
the same). Thereafter, whenever such Lien Grantor acquires any other Pledged
Uncertificated Security directly owned by such Lien Grantor and issued by any
Subsidiary of such Lien Grantor, such Lien Grantor will enter into (and cause
the relevant issuer to enter into) an Issuer Control Agreement in respect of
such Pledged Uncertificated Security and deliver such Issuer Control Agreement
to the Collateral Agent (which shall enter into the same). The provisions of
this subsection are subject to Section 11(k) and Section 16.

 

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(c) Security Entitlements. On the Effective Date, such Lien Grantor (in the case
of an Original Lien Grantor) will, with respect to each Security Entitlement
then owned by it, enter into (and use its best efforts to cause the relevant
Securities Intermediary to enter into) a Securities Account Control Agreement in
respect of such Security Entitlement and the Securities Account to which the
underlying Financial Asset is credited and will deliver such Securities Account
Control Agreement to the Collateral Agent (which shall enter into the same).
Thereafter, to the extent required by Section 7.13, such Lien Grantor will, with
respect to each Security Entitlement owned by it, as promptly as practicable,
cause the underlying Financial Asset to be credited to a Controlled Securities
Account. The provisions of this subsection are subject to Section 16.

 

(d) Insurance Subsidiaries. If the Collateral includes any capital stock of an
Insurance Subsidiary that is not represented by certificates, the relevant Lien
Grantor shall exercise its best efforts to cause such capital stock to be
represented by certificates and, promptly upon receipt thereof, comply with
Section 11(a) with respect thereto. No Lien Grantor shall hold any capital stock
of an Insurance Subsidiary in a Securities Account. The provisions of this
subsection are subject to the limitation in Section 11(k) in the case of voting
Equity Interests in a Foreign Subsidiary.

 

(e) Perfection as to Certificated Securities. When such Lien Grantor delivers
the certificate representing any Pledged Certificated Security owned by it to
the Collateral Agent and complies with Section 11(i) in connection with such
delivery, (i) the Security Interest in such Pledged Certificated Security will
be perfected, subject to no prior Liens or rights of others, (ii) the Collateral
Agent will have Control of such Pledged Certificated Security and (iii) the
Collateral Agent will be a protected purchaser (within the meaning of UCC
Section 8-303) thereof; provided that the Collateral Agent does not have prior
notice of any adverse claim to such Pledged Certificated Security.

 

(f) Perfection as to Uncertificated Securities. When such Lien Grantor, the
Collateral Agent and the issuer of any Pledged Uncertificated Security owned by
such Lien Grantor enter into an Issuer Control Agreement with respect thereto,
(i) the Security Interest in such Pledged Uncertificated Security will be
perfected, subject to no prior Liens or rights of others, (ii) the Collateral
Agent will have Control of such Pledged Uncertificated Security and (iii) the
Collateral Agent will be a protected purchaser (within the meaning of UCC
Section 8-303) thereof; provided that the Collateral Agent does not have prior
notice of any adverse claim to such Pledged Uncertificated Security.

 

(g) Perfection as to Security Entitlements. So long as the Financial Asset
underlying any Security Entitlement owned by such Lien Grantor is credited to a
Controlled Securities Account or to its Investment Property

 

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Collateral Account, (i) the Security Interest in such Security Entitlement will
be perfected, subject to no prior Liens or rights of others (except Liens and
rights of the relevant Securities Intermediary that are Permitted Liens), (ii)
the Collateral Agent will have Control of such Security Entitlement and (iii) no
action based on an adverse claim to such Security Entitlement or such Financial
Asset, whether framed in conversion, replevin, constructive trust, equitable
lien or other theory, may be asserted against the Collateral Agent or any other
Secured Party; provided that the Collateral Agent or such other Secured Party
does not have prior notice of such adverse claim to such Security Entitlement.

 

(h) Agreement as to Applicable Jurisdiction. In respect of all Security
Entitlements owned by such Lien Grantor, and all Securities Accounts to which
the related Financial Assets are credited, the Securities Intermediary’s
jurisdiction (determined as provided in UCC Section 8-110(e)) will at all times
be located in the United States.

 

(i) Delivery of Pledged Certificates. All certificates representing Pledged
Certificated Securities, when delivered to the Collateral Agent, will be in
suitable form for transfer by delivery, or accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Collateral Agent.

 

(j) Communications. Each Lien Grantor will promptly give to the Collateral Agent
copies of any material notices and other communications received by it with
respect to (i) Pledged Securities registered in the name of such Lien Grantor or
its nominee and (ii) Pledged Security Entitlements as to which such Lien Grantor
is the Entitlement Holder.

 

(k) Foreign Subsidiaries. A Lien Grantor will not be obligated to comply with
the provisions of this Section at any time with respect to any voting Equity
Interest in a Foreign Subsidiary if and to the extent (but only to the extent)
that such voting Equity Interest is excluded from the Security Interests at such
time pursuant to clause (B) of the proviso at the end of Section 3(a) and/or the
comparable provisions of one or more Security Agreement Supplements.

 

(l) Compliance with Applicable Foreign Laws. If and so long as the Collateral
includes (i) any Equity Interest in, or other Investment Property issued by, a
legal entity organized under the laws of a jurisdiction outside the United
States or (ii) any Security Entitlement in respect of a Financial Asset issued
by such a foreign legal entity, the relevant Lien Grantor will take all such
action as may be required under the laws of such foreign jurisdiction to ensure
that the Security Interest in such Collateral ranks prior to all Liens and
rights of others therein. If and so long as the Collateral includes any Pledged
Uncertificated Security issued by such a foreign legal entity, the relevant Lien
Grantor will

 

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comply with this subsection, and will not be required to comply with Section
11(b), with respect thereto.

 

SECTION 12. Investment Property Collateral Accounts. (a) At any time an
Enforcement Notice is in effect, the Collateral Agent may establish, at an
office located in the United States, a Securities Account with respect to each
Lien Grantor (each an “Investment Property Collateral Account”), in the name and
under the exclusive control of the Collateral Agent, to which there shall be
credited from time to time (i) all Securities that are to be credited thereto
pursuant to Section 16(a) or any other provision of any Collateral Document,
(ii) any other Financial Assets that underlie Security Entitlements included in
such Lien Grantor’s Collateral and (iii) the cash proceeds thereof. Each
Investment Property Collateral Account will be operated as provided in Section
15.

 

(b) The Collateral Agent and each Lien Grantor agree (and each Lien Grantor will
use its best efforts to cause the relevant Securities Intermediary, if other
than the Collateral Agent, to agree) that (i) each Investment Property
Collateral Account will be a Securities Account, (ii) the Collateral Agent will
be the Entitlement Holder with respect thereto and (iii) all property (whether
Investment Property, financial asset, security, instrument, cash or other
property) credited to such account will be treated as Financial Assets.

 

SECTION 13. Controlled Deposit Accounts. Each Lien Grantor represents, warrants
and covenants as follows:

 

(a) To the extent required by Section 7.13 of the Credit Agreement, all cash
owned by such Lien Grantor will be deposited, upon or promptly after the receipt
thereof, in one or more Controlled Deposit Accounts. Each Controlled Deposit
Account will be operated as provided in Section 15.

 

(b) In respect of each Controlled Deposit Account, the Depositary Bank’s
jurisdiction (determined as provided in UCC Section 9-304) will at all times be
a jurisdiction in which Article 9 of the Uniform Commercial Code is in effect.

 

(c) So long as the Collateral Agent has Control of a Controlled Deposit Account,
the Security Interest in such Controlled Deposit Account will be perfected,
subject to no prior Liens or rights of others (except Permitted Encumbrances and
the Depositary Bank’s right to deduct its normal operating charges and any
uncollected funds previously credited thereto).

 

SECTION 14. Cash Collateral Accounts. (a) If and when required for purposes
hereof, the Collateral Agent will establish with respect to each Lien Grantor an
account (its “Cash Collateral Account”), in the name and under the

 

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exclusive control of the Collateral Agent, into which all amounts owned by such
Lien Grantor that are to be deposited therein pursuant to the Financing
Documents shall be deposited from time to time. Each Cash Collateral Account
will be operated as provided in this Section and Section 15.

 

(b) The Collateral Agent shall deposit the following amounts, as and when
received by it, in the Borrower’s Cash Collateral Account:

 

(i) each amount required by Section 2.04(k) or Section 2.09(c) of the Credit
Agreement to be deposited therein to cover outstanding LC Reimbursement
Obligations;

 

(ii) each Cash Distribution required by Section 18 to be deposited therein; and

 

(iii) each amount realized or otherwise received by the Collateral Agent with
respect to assets of the Borrower upon any exercise of remedies pursuant to any
Collateral Document.

 

(c) The Collateral Agent shall deposit in the Cash Collateral Account of each
Lien Grantor (other than the Borrower):

 

(i) each Cash Distribution required by Section 18 to be deposited therein; and

 

(ii) each amount realized or otherwise received by the Collateral Agent with
respect to assets of such Lien Grantor upon any exercise of remedies pursuant to
any Collateral Document.

 

(d) The Collateral Agent shall maintain such records and/or establish such
sub-accounts as shall be required to enable it to identify the amounts held in
each Cash Collateral Account from time to time pursuant to each clause of
subsection (b) or (c) of this Section, as applicable.

 

(e) Unless (x) the maturity of the Loans shall have been accelerated pursuant to
Article 8 of the Credit Agreement or (y) an Enforcement Notice is in effect, the
Collateral Agent shall withdraw amounts from the Cash Collateral Accounts and
apply them for the following purposes:

 

(i) any amount deposited pursuant to Section 2.04(k) or Section 2.09(c) of the
Credit Agreement to cover outstanding LC Reimbursement Obligations shall be
withdrawn and applied to pay such LC Reimbursement Obligations as they become
due; provided that such amount (to the extent not theretofore so applied) shall
be withdrawn and

 

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returned to the Borrower if and when permitted by said Section 2.04(k) or
Section 2.09(c), as applicable; and

 

(ii) any Cash Distribution deposited pursuant to Section 18 shall, at the
relevant Lien Grantor’s request, (x) be withdrawn and applied to pay Secured
Obligations that are then due and payable or (y) if no Enforcement Notice is in
effect, be withdrawn and returned to such Lien Grantor.

 

SECTION 15. Operation of Collateral Accounts. (a) All Cash Distributions
received with respect to assets held in any Collateral Account shall be
deposited in a Collateral Account promptly upon receipt thereof.

 

(b) Funds held in any Controlled Securities Account or Investment Property
Collateral Account may, until withdrawn, be invested and reinvested in such
Liquid Investments as the relevant Lien Grantor shall request from time to time;
provided that, if an Enforcement Notice is in effect, the Collateral Agent may
select such Liquid Investments.

 

(c) Funds held in any Controlled Deposit Account or Cash Collateral Account may,
until withdrawn, be invested and reinvested in such Liquid Investments as the
relevant Lien Grantor shall request from time to time; provided that (i) if an
Enforcement Notice is in effect, the Collateral Agent may select such Liquid
Investments and (ii) if such Liquid Investments are to be held in a Securities
Account, either (x) the Collateral Agent is the Entitlement Holder with respect
to such Liquid Investments or (y) the relevant Entitlement Holder and the
relevant Securities Intermediary shall have theretofore entered into a
Securities Account Control Agreement with respect to such Securities Account and
delivered it to the Collateral Agent (which shall enter into the same).

 

(d) With respect to each Collateral Account (except a Cash Collateral Account,
as to which Section 14 applies), the Collateral Agent will instruct the relevant
Securities Intermediary or Depositary Bank that the relevant Lien Grantor may
withdraw, or direct the disposition of, funds held therein unless and until the
Collateral Agent rescinds such instruction. The Collateral Agent will not
rescind such instructions unless an Enforcement Notice is in effect.

 

(e) No Lien Grantor will cause funds to be transferred from a Collateral Account
to any other account owned by the Borrower or any of its Subsidiaries or
Affiliates unless (i) such other account is a Collateral Account or (ii) such
transfer is permitted by the Credit Agreement.

 

(f) If an Enforcement Notice is in effect, the Collateral Agent may (i) retain,
or instruct the relevant Securities Intermediary or Depositary Bank to retain,

 

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all cash and investments then held in any Collateral Account, (ii) liquidate, or
instruct the relevant Securities Intermediary or Depositary Bank to liquidate,
any or all investments held therein and/or (iii) withdraw any amounts held
therein and apply such amounts as provided in Section 20.

 

(g) If (i) an Enforcement Notice is in effect or the maturity of the Loans shall
have been accelerated pursuant to Article 8 of the Credit Agreement and (ii)
immediately available cash on deposit in any Collateral Account is not
sufficient to make any distribution or withdrawal to be made pursuant hereto,
the Collateral Agent will cause to be liquidated, as promptly as practicable,
such investments held in or credited to such Collateral Account as shall be
required to obtain sufficient cash to make such distribution or withdrawal and,
notwithstanding any other provision hereof, such distribution or withdrawal
shall not be made until such liquidation has taken place.

 

SECTION 16. Transfer of Record Ownership. (a) At any time an Enforcement Notice
is in effect, the Collateral Agent may (and to the extent that action by it is
required, the relevant Lien Grantor, if directed to do so by the Collateral
Agent, will as promptly as practicable):

 

(i) cause each of the Pledged Securities (or any portion thereof specified in
such direction) to be (x) transferred of record into the name of the Collateral
Agent or its nominee or (y) credited to the relevant Lien Grantor’s Investment
Property Collateral Account; and

 

(ii) cause the Financial Asset underlying each Pledged Security Entitlement to
be credited to the relevant Lien Grantor’s Investment Property Collateral
Account;

 

provided that no such action shall be taken with respect to any capital stock of
any Insurance Subsidiary unless any and all regulatory approvals required under
applicable law shall have been obtained. Each Lien Grantor will take any and all
actions reasonably requested by the Collateral Agent to facilitate compliance
with this subsection.

 

(b) Perfection upon Transfer of Record Ownership. If and when any Pledged
Security (whether certificated or uncertificated) owned by such Lien Grantor is
transferred of record into the name of the Collateral Agent or its nominee
pursuant to Section 16(a), (i) the Security Interest in such Pledged Security
will be perfected, subject to no prior Liens or rights of others, (ii) the
Collateral Agent will have Control of such Pledged Security and (iii) the
Collateral Agent will be a protected purchaser (within the meaning of UCC
Section 8-303) thereof. If and when any Pledged Security owned by such Lien

 

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Grantor is credited to its Investment Property Collateral Account pursuant to
Section 16(a), Section 11(g) will apply to the resulting Security Entitlement.

 

(c) Provisions Inapplicable after Transfer of Record Ownership. If the
provisions of Section 16(a) are implemented, Sections 11(b) and 11(c) shall not
thereafter apply to (i) any Pledged Security that is registered in the name of
the Collateral Agent or its nominee or (ii) any Security Entitlement in respect
of which the Collateral Agent or its nominee is the Entitlement Holder.

 

(d) Communications after Transfer of Record Ownership. The Collateral Agent will
promptly give to the relevant Lien Grantor copies of any notices and other
communications received by the Collateral Agent with respect to (i) Pledged
Securities registered in the name of the Collateral Agent or its nominee and
(ii) Pledged Security Entitlements as to which the Collateral Agent or its
nominee is the Entitlement Holder.

 

SECTION 17. Right to Vote Securities. (a) Unless an Enforcement Notice directing
the Collateral Agent to vote the Pledged Securities is in effect, each Lien
Grantor will have the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to any Pledged Security owned by it and
the Financial Asset underlying any Pledged Security Entitlement owned by it, and
the Collateral Agent will, upon receiving a written request from such Lien
Grantor, deliver to such Lien Grantor or as specified in such request such
proxies, powers of attorney, consents, ratifications and waivers in respect of
any such Pledged Security that is registered in the name of the Collateral Agent
or its nominee or any such Pledged Security Entitlement as to which the
Collateral Agent or its nominee is the Entitlement Holder, in each case as shall
be specified in such request and be in form and substance satisfactory to the
Collateral Agent. Unless an Enforcement Notice directing the Collateral Agent to
do so is in effect, the Collateral Agent will have no right to take any action
which the owner of a Pledged Partnership Interest or Pledged LLC Interest is
entitled to take with respect thereto, except the right to receive payments and
other distributions to the extent provided herein.

 

(b) If an Enforcement Notice directing the Collateral Agent to do so is in
effect, the Collateral Agent will have the right to the extent permitted by law
(and, in the case of a Pledged Partnership Interest or Pledged LLC Interest, by
the relevant partnership agreement, limited liability company agreement,
operating agreement or other governing document) to vote, to give consents,
ratifications and waivers and to take any other action with respect to the
Pledged Investment Property, the other Pledged Equity Interests (if any) and the
Financial Assets underlying the Pledged Security Entitlements, with the same
force and effect as if the Collateral Agent were the absolute and sole owner
thereof, and each Lien Grantor will take all such action as the Collateral Agent
may reasonably request

 

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from time to time to give effect to such right; provided that the Collateral
Agent will not have the right to vote, to give consents, ratifications or
waivers or to take any other action with respect to the capital stock of any
Insurance Subsidiary, in each case to the extent that such action would require
prior regulatory approval under applicable law, unless such approval shall have
been granted.

 

SECTION 18. Certain Cash Distributions. Cash Distributions with respect to
assets held in a Collateral Account shall be deposited and held therein, or
withdrawn therefrom, as provided in Section 15. Cash Distributions with respect
to any Pledged Equity Interest or Pledged Indebtedness that is not held in a
Collateral Account (whether held in the name of a Lien Grantor or in the name of
the Collateral Agent or its nominee) shall be deposited, promptly upon receipt
thereof, in a Controlled Deposit Account of the relevant Lien Grantor; provided
that, if an Enforcement Notice is in effect, the Collateral Agent may deposit,
or direct the recipient thereof to deposit, each such Cash Distribution in the
relevant Lien Grantor’s Cash Collateral Account.

 

SECTION 19. Remedies upon Enforcement Notice. (a) Upon being instructed to do so
in an Enforcement Notice or in written instructions given by the Required
Lenders at any time while an Enforcement Notice is in effect, the Collateral
Agent shall exercise (or cause its sub-agents, if any, to exercise) any or all
of the remedies available to it (or to such sub-agents) under the Collateral
Documents.

 

(b) Without limiting the generality of the foregoing, upon being instructed to
do so in an Enforcement Notice or in written instructions given by the Required
Lenders at any time while an Enforcement Notice is in effect, the Collateral
Agent may exercise on behalf of the Secured Parties all the rights of a secured
party under the UCC (whether or not in effect in the jurisdiction where such
rights are exercised) with respect to any Personal Property Collateral and, in
addition, the Collateral Agent may, without being required to give any notice,
except as provided in the Credit Agreement or herein or as may be required by
mandatory provisions of law, withdraw all cash and Liquid Investments held in
any of the Collateral Accounts and apply such cash and Liquid Investments then
held by it as Collateral as specified in Section 20 and, if there shall be no
such cash or if such cash shall be insufficient to pay all the Secured
Obligations in full, sell or otherwise dispose of the Collateral or any part
thereof; provided that the right of the Collateral Agent to sell or otherwise
dispose of the capital stock of any Insurance Subsidiary shall be subject to the
Collateral Agent or the relevant Lien Grantor obtaining, to the extent necessary
under applicable law, the prior approval of such sale or other disposition by
the governmental body or official having jurisdiction with respect to such
Insurance Subsidiary. Notice of any such sale or other disposition shall be
given to the relevant Lien Grantor(s) as required by Section 22. The foregoing
provisions of this subsection shall apply to Real

 

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Property Collateral only to the extent permitted by applicable law and the
provisions of any applicable Mortgage or other document.

 

(c) Without limiting the generality of the foregoing, if an Enforcement Notice
is in effect:

 

(i) the Collateral Agent may license or sublicense, whether general, special or
otherwise, and whether on an exclusive or non-exclusive basis, any Pledged
Intellectual Property (including any Pledged Recordable Intellectual Property)
throughout the world for such term or terms, on such conditions and in such
manner as the Collateral Agent shall in its sole discretion determine; provided
that such licenses or sublicenses do not conflict with any existing license of
which the Collateral Agent shall have received a copy;

 

(ii) the Collateral Agent may (without assuming any obligation or liability
thereunder), at any time and from time to time, in its sole and reasonable
discretion, enforce (and shall have the exclusive right to enforce) against any
licensee or sublicensee all rights and remedies of any Lien Grantor in, to and
under any of its Pledged Intellectual Property and take or refrain from taking
any action under any thereof, and each Lien Grantor releases the Collateral
Agent and each other Secured Party from liability for, and agrees to hold the
Collateral Agent and each other Secured Party free and harmless from and against
any claims and expenses arising out of, any lawful action so taken or omitted to
be taken with respect thereto, except for claims and expenses arising from the
Collateral Agent’s or such Secured Party’s gross negligence or willful
misconduct; and

 

(iii) upon request by the Collateral Agent (which shall not be construed as
implying any limitation on its rights or powers), each Lien Grantor will execute
and deliver to the Collateral Agent a power of attorney, in form and substance
satisfactory to the Collateral Agent, for the implementation of any lease,
assignment, license, sublicense, grant of option, sale or other disposition of
any Pledged Intellectual Property owned by such Lien Grantor or any action
related thereto. In the event of any such disposition, subject to any
confidentiality restrictions imposed on such Lien Grantor in any license or
similar agreement, such Lien Grantor shall supply to the Collateral Agent its
know-how and expertise relating to or the products or services made or rendered
in connection with such Intellectual Property, and its customer lists and other
records relating to such Intellectual Property and to the distribution of said
products or services, to the Collateral Agent.

 

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SECTION 20. Application of Proceeds. (a) Upon being instructed to do so in an
Enforcement Notice or in written instructions given by the Required Lenders at
any time while an Enforcement Notice is in effect, the Collateral Agent shall
apply (i) any cash held in the Collateral Accounts and (ii) the proceeds of any
sale or other disposition of all or any part of the Collateral in the following
order of priorities:

 

first, to pay the expenses of such sale or other disposition, including
reasonable compensation to agents of and counsel for the Collateral Agent, and
all expenses, liabilities and advances incurred or made by the Collateral Agent
in connection with the Collateral Documents, and any other amounts then due and
payable to the Collateral Agent pursuant to Section 21 or pursuant to Section
10.03 of the Credit Agreement;

 

second, to pay the unpaid principal of the Secured Obligations ratably (or
provide for the payment thereof pursuant to Section 20(b)), until payment in
full of the principal of all Secured Obligations shall have been made (or so
provided for);

 

third, to pay ratably (i) all interest (including Post-Petition Interest) on the
Secured Obligations and (ii) all fees payable under the Credit Agreement, until
payment in full of all such interest and fees shall have been made;

 

fourth, to pay all other Secured Obligations ratably (or provide for the payment
thereof pursuant to Section 20(b)), until payment in full of all such other
Secured Obligations shall have been made (or so provided for); and

 

finally, to pay to the relevant Lien Grantor, or as a court of competent
jurisdiction may direct, any surplus then remaining from the proceeds of the
Collateral owned by it;

 

provided that Collateral owned by a Subsidiary Guarantor and any proceeds
thereof shall be applied pursuant to the foregoing clauses first, second, third
and fourth only to the extent permitted by the limitation in Section 2(i). The
Collateral Agent may make such distributions hereunder in cash or in kind or, on
a ratable basis, in any combination thereof.

 

(b) If at any time any portion of any monies collected or received by the
Collateral Agent would, but for the provisions of this Section 20(b), be payable
pursuant to Section 20(a) in respect of a Contingent Secured Obligation, the
Collateral Agent shall not apply any monies to pay such Contingent Secured

 

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Obligation but instead shall request the holder thereof, at least 10 days before
each proposed distribution hereunder, to notify the Collateral Agent as to the
maximum amount of such Contingent Secured Obligation if then ascertainable
(e.g., in the case of a letter of credit, the maximum amount available for
subsequent drawings thereunder). If the holder of such Contingent Secured
Obligation does not notify the Collateral Agent of the maximum ascertainable
amount thereof at least two Business Days before such distribution, such holder
will not be entitled to share in such distribution. If such holder does so
notify the Collateral Agent as to the maximum ascertainable amount thereof, the
Collateral Agent will allocate to such holder a portion of the monies to be
distributed in such distribution, calculated as if such Contingent Secured
Obligation were outstanding in such maximum ascertainable amount. However, the
Collateral Agent will not apply such portion of such monies to pay such
Contingent Secured Obligation, but instead will hold such monies or invest such
monies in Liquid Investments. All such monies and Liquid Investments and all
proceeds thereof will constitute Collateral hereunder, but will be subject to
distribution in accordance with this Section 20(b) rather than Section 20(a).
The Collateral Agent will hold all such monies and Liquid Investments and the
net proceeds thereof in trust until all or part of such Contingent Secured
Obligation becomes a Non-Contingent Secured Obligation, whereupon the Collateral
Agent at the request of the relevant Secured Party will apply the amount so held
in trust to pay such Non-Contingent Secured Obligation; provided that, if the
other Secured Obligations theretofore paid pursuant to the same clause of
Section 20(a) (i.e., clause second or fourth) were not paid in full, the
Collateral Agent will apply the amount so held in trust to pay the same
percentage of such Non-Contingent Secured Obligation as the percentage of such
other Secured Obligations theretofore paid pursuant to the same clause of
Section 20(a). If (i) the holder of such Contingent Secured Obligation shall
advise the Collateral Agent that no portion thereof remains in the category of a
Contingent Secured Obligation and (ii) the Collateral Agent still holds any
amount held in trust pursuant to this Section 20(b) in respect of such
Contingent Secured Obligation (after paying all amounts payable pursuant to the
preceding sentence with respect to any portions thereof that became
Non-Contingent Secured Obligations), such remaining amount will be applied by
the Collateral Agent in the order of priorities set forth in Section 20(a).

 

(c) In making the payments and allocations required by this Section, the
Collateral Agent may rely upon information supplied to it pursuant to Section
24(f). All distributions made by the Collateral Agent pursuant to this Section
shall be final (except in the event of manifest error) and the Collateral Agent
shall have no duty to inquire as to the application by any Secured Party of any
amount distributed to it.

 

SECTION 21. Fees and Expenses; Indemnification. (a) The Borrower will forthwith
upon demand pay to the Collateral Agent:

 

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(i) the amount of any taxes that the Collateral Agent may have been required to
pay by reason of the Security Interests or to free any Collateral from any other
Lien thereon;

 

(ii) the amount of any and all reasonable out-of-pocket expenses, including
transfer taxes and reasonable fees and expenses of counsel and other experts,
that the Collateral Agent may incur in connection with (w) the administration or
enforcement of the Collateral Documents, including such expenses as are incurred
to preserve the value of the Collateral or the validity, perfection, rank or
value of any Security Interest, (x) the collection, sale or other disposition of
any Collateral or (y) the exercise by the Collateral Agent of any of its rights
or powers under the Collateral Documents or (z) any Enforcement Notice;

 

(iii) the amount of any fees that the Borrower shall have agreed in writing to
pay to the Collateral Agent and that shall have become due and payable in
accordance with such written agreement; and

 

(iv) the amount required to indemnify the Collateral Agent for, or hold it
harmless and defend it against, any loss, liability or expense (including the
reasonable fees and expenses of its counsel and any experts or sub-agents
appointed by it hereunder) incurred or suffered by the Collateral Agent in
connection with the Collateral Documents, except to the extent that such loss,
liability or expense arises from the Collateral Agent’s gross negligence or
willful misconduct or a breach of any duty that the Collateral Agent has under
this Agreement (after giving effect to Sections 23 and 24).

 

Any such amount not paid to the Collateral Agent on demand will bear interest
for each day thereafter until paid at a rate per annum equal to the sum of 2.0%
plus the rate applicable to ABR Loans for such day.

 

(b) If any transfer tax, documentary stamp tax or other tax is payable in
connection with any transfer or other transaction provided for in the Collateral
Documents, the Borrower will pay such tax and provide any required tax stamps to
the Collateral Agent or as otherwise required by law.

 

(c) The Borrower shall indemnify each of the Secured Parties, their respective
affiliates and the respective directors, officers, agents and employees of the
foregoing (each an “Indemnitee”) against, and hold each Indemnitee harmless
from, any and all liabilities, losses, damages, costs and expenses of any kind
(including reasonable expenses of investigation by engineers, environmental
consultants and similar technical personnel and reasonable fees and
disbursements of counsel) arising out of, or in connection with any and all
Environmental

 

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Liabilities. Without limiting the generality of the foregoing, each Lien Grantor
waives all rights for contribution and all other rights of recovery with respect
to liabilities, losses, damages, costs and expenses arising under or related to
Environmental Laws that it might have by statute or otherwise against any
Indemnitee.

 

SECTION 22. Authority to Administer Collateral. Each Lien Grantor irrevocably
appoints the Collateral Agent its true and lawful attorney, with full power of
substitution, in the name of such Lien Grantor, any Secured Party or otherwise,
for the sole use and benefit of the Secured Parties, but at the Borrower’s
expense, to the extent permitted by law to exercise, at any time and from time
to time while an Event of Default shall have occurred and be continuing, all or
any of the following powers with respect to all or any of such Lien Grantor’s
Collateral:

 

(a) to demand, sue for, collect, receive and give acquittance for any and all
monies due or to become due upon or by virtue thereof,

 

(b) to settle, compromise, compound, prosecute or defend any action or
proceeding with respect thereto,

 

(c) to sell, lease, license or otherwise dispose of the same or the proceeds or
avails thereof, as fully and effectually as if the Collateral Agent were the
absolute owner thereof, and

 

(d) to extend the time of payment of any or all thereof and to make any
allowance or other adjustment with reference thereto;

 

provided that, except in the case of Personal Property Collateral that is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, the Collateral Agent will give the relevant Lien
Grantor at least ten days’ prior written notice of the time and place of any
public sale thereof or the time after which any private sale or other intended
disposition thereof will be made. Any such notice shall (i) contain the
information specified in UCC Section 9-613, (ii) be Authenticated and (iii) be
sent to the parties required to be notified pursuant to UCC Section 9-611(c);
provided that, if the Collateral Agent fails to comply with this sentence in any
respect, its liability for such failure shall be limited to the liability (if
any) imposed on it as a matter of law under the UCC.

 

SECTION 23. Limitation on Duty in Respect of Collateral. Beyond the exercise of
reasonable care in the custody and preservation thereof, the Collateral Agent
will have no duty as to any Collateral in its possession or control or in the
possession or control of any agent or bailee or any income therefrom or as to
the preservation of rights against prior parties or any other rights pertaining
thereto.

 

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The Collateral Agent will be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession or control if such
Collateral is accorded treatment substantially equal to that which it accords
its own property, and will not be liable or responsible for any loss or damage
to any of the Collateral, or for any diminution in the value thereof, by reason
of any act or omission of any agent or bailee selected by the Collateral Agent
in good faith or by reason of any act or omission by the Collateral Agent
pursuant to instructions from the Required Lenders (including, without
limitation, any voting instruction pursuant to Section 17), except to the extent
that such liability arises from the Collateral Agent’s gross negligence or
willful misconduct.

 

SECTION 24. General Provisions Concerning the Collateral Agent. (a) Authority.
The Collateral Agent is authorized to take such actions and to exercise such
powers as are delegated to the Collateral Agent by the terms of the Collateral
Documents, together with such actions and powers as are reasonably incidental
thereto. As to any matters not expressly provided for herein or in an
Enforcement Notice or in written requests, directions or instructions given as
expressly provided in Sections 17, 19, 22 or 25 including, without limitation,
the timing and methods of realization upon the Collateral, the Collateral Agent
shall act or refrain from acting in accordance with written instructions from
the Required Lenders or, in the absence of such instructions, in accordance with
its discretion (subject to Section 24(c)); provided that the Collateral Agent
shall not be obligated to comply with any such instructions that are
inconsistent with the provisions of the Collateral Documents.

 

(b) Rights and Powers as a Secured Party. The bank serving as the Collateral
Agent shall, in its capacity as a Secured Party, have the same rights and powers
as any other Secured Party and may exercise the same as though it were not the
Collateral Agent. Such bank and its Affiliates may accept deposits from, lend
money to and generally engage in any kind of business with the Borrower or any
Subsidiary or Affiliate of the Borrower as if it were not the Collateral Agent
hereunder.

 

(c) Limited Duties and Responsibilities. The Collateral Agent shall not have any
duties or obligations under the Collateral Documents except those expressly set
forth therein. Without limiting the generality of the foregoing, (i) the
Collateral Agent shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing, (ii) the
Collateral Agent shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Collateral Documents that the Collateral Agent is
required in writing to exercise by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02 of the Credit Agreement), and (iii) except as
expressly set forth in

 

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the Financing Documents, the Collateral Agent shall not have any duty to
disclose, and shall not be liable for any failure to disclose, any information
relating to the Borrower or any of its Subsidiaries that is communicated to or
obtained by the bank serving as Collateral Agent or any of its Affiliates in any
capacity. The Collateral Agent shall not be liable for any action taken or not
taken by it with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 10.02 of the Credit Agreement) or in the
absence of its own gross negligence or willful misconduct. The Collateral Agent
shall not be responsible for the existence, genuineness or value of any
Collateral or for the validity, perfection, priority or enforceability of any
Security Interest, whether impaired by operation of law or by reason of any
action or omission to act on its part under the Collateral Documents. The
Collateral Agent shall be deemed not to have knowledge of any Default unless and
until written notice thereof is given to the Collateral Agent by the Borrower or
a Secured Party, and the Collateral Agent shall not be responsible for or have
any duty to ascertain or inquire into (A) any statement, warranty or
representation made in or in connection with any Collateral Document, (B) the
contents of any certificate, report or other document delivered thereunder or in
connection therewith, (C) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Collateral Document,
(D) the validity, enforceability, effectiveness or genuineness of any Collateral
Document or any other agreement, instrument or document, or (E) the satisfaction
of any condition set forth in any Collateral Document.

 

(d) Authority to Rely on Certain Writings, Statements and Advice. The Collateral
Agent shall be entitled to rely on, and shall not incur any liability for
relying on, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed
or sent by the proper Person. The Collateral Agent also may rely on any
statement made to it orally or by telephone and believed by it to be made by the
proper Person, and shall not incur any liability for relying thereon. The
Collateral Agent may consult with legal counsel (who may be counsel for the
Borrower), 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, accountant or expert.

 

(e) Sub-Agents and Related Parties. The Collateral Agent may perform any of its
duties and exercise any of its rights and powers through one or more sub-agents
appointed by it. The Collateral Agent and any such sub-agent may perform any of
its duties and exercise any of its rights and powers through its Related
Parties. The exculpatory provisions of Section 23 and this Section shall apply
to any such sub-agent and to the Related Parties of the Collateral Agent and any
such sub-agent.

 

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(f) Information as to Secured Obligations and Actions by Secured Parties. For
all purposes of the Collateral Documents, including determining the amounts of
the Secured Obligations and whether a Secured Obligation is a Contingent Secured
Obligation or not, or whether any action has been taken under any Secured
Agreement, the Collateral Agent will be entitled to rely on information from (i)
the Administration Agent for information as to the Lenders, their Secured
Obligations and actions taken by them, (ii) any Secured Party (or any trustee,
agent or similar representative designated to supply such information) for
information as to its Secured Obligations and actions taken by it, to the extent
that the Collateral Agent has not obtained such information from the foregoing
sources, and (iii) the Borrower, to the extent that the Collateral Agent has not
obtained information from the foregoing sources.

 

(g) Within two Business Days after it receives or sends any notice referred to
in this subsection, the Collateral Agent shall send to the Lenders and each
Secured Party Requesting Notice, copies of any Enforcement Notice received by
the Collateral Agent, any certificate designating additional obligations as
Secured Obligations received by the Collateral Agent pursuant to Section 27 and
any notice given by the Collateral Agent to any Lien Grantor, or received by it
from any Lien Grantor, pursuant to Section 17, 19, 20, 22, 24(i) or 25.

 

(h) The Collateral Agent may refuse to act on any notice, consent, direction or
instruction from any Secured Parties or any agent, trustee or similar
representative thereof that, in the Collateral Agent’s opinion, (i) is contrary
to law or the provisions of any Collateral Document, (ii) may expose the
Collateral Agent to liability (unless the Collateral Agent shall have been
indemnified, to its reasonable satisfaction, for such liability by the Secured
Parties that gave such notice, consent, direction or instruction) or (iii) is
unduly prejudicial to Secured Parties not joining in such notice, consent,
direction or instruction.

 

(i) Resignation; Successor Collateral Agent. Subject to the appointment and
acceptance of a successor Collateral Agent as provided in this subsection, the
Collateral Agent may resign at any time by notifying the Lenders, the Issuing
Lender and the Borrower. Upon any such resignation, the Required Lenders shall
have the right, in consultation with the Borrower, to appoint a successor
Collateral Agent. If no successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Collateral Agent gives notice of its resignation, then the retiring
Collateral Agent may, on behalf of the Secured Parties, appoint a successor
Collateral Agent which shall be a bank with an office in New York, New York, or
an Affiliate of any such bank. Upon acceptance of its appointment as Collateral
Agent hereunder by a successor, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent hereunder, and the retiring Collateral Agent shall be
discharged from its duties and obligations hereunder.

 

43

--------------------------------------------------------------------------------

The fees payable by the Borrower to a successor Collateral Agent shall be the
same as those payable to its predecessor unless otherwise agreed by the Borrower
and such successor. After the Collateral Agent’s resignation hereunder, the
provisions of this Section, Section 21 and Section 23 shall continue in effect
for the benefit of such retiring Collateral Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Collateral Agent was acting as
Collateral Agent.

 

SECTION 25. Termination of Security Interests; Release of Collateral. (a) The
Security Interests granted by each Subsidiary Guarantor shall terminate when its
Secured Guarantee is released pursuant to Section 2(c).

 

(b) The Security Interests granted by the Borrower shall terminate when all the
Release Conditions are satisfied.

 

(c) At any time before the Security Interests granted by the Borrower terminate,
the Collateral Agent may, at the written request of the Borrower, release any
Collateral (but not all or substantially all the Collateral) with the prior
written consent of the Required Lenders.

 

(d) At any time before the Security Interests granted by the Borrower terminate,
unless an Enforcement Notice is in effect, the Collateral Agent shall release
Collateral (but not all or substantially all the Collateral) upon receiving from
the Borrower a written request in accordance with Section 2.18 of the Credit
Agreement. No such release shall require the consent of any Secured Party.

 

(e) The Security Interest in any property abandoned by any Lien Grantor to
Ventas pursuant to Section 6.2 of any Master Lease Agreement to which the
Borrower is a party shall be automatically terminated without any necessity to
deliver any termination statements or releases. Notwithstanding the foregoing,
at the request of Ventas, certifying that such an abandonment has occurred, the
Collateral Agent, shall execute and deliver to Ventas, at the expense of Ventas,
such documents as are necessary in order to evidence such termination of the
Security Interest.

 

(f) Upon any termination of a Security Interest or release of Collateral, the
Collateral Agent will, at the expense of the relevant Lien Grantor, execute and
deliver to such Lien Grantor such documents as such Lien Grantor shall
reasonably request to evidence the termination of such Security Interest or the
release of such Collateral, as the case may be.

 

SECTION 26. Additional Subsidiary Guarantors and Lien Grantors. Any Subsidiary
may become a party hereto by signing and delivering to the Collateral

 

44

--------------------------------------------------------------------------------

Agent a Security Agreement Supplement, whereupon such Subsidiary shall become a
“Subsidiary Guarantor” and a “Lien Grantor” as defined herein.

 

SECTION 27. Additional Secured Obligations. The Borrower may from time to time
designate its obligations under any Interest Rate Agreement with a Lender or an
Affiliate of a Lender at the time such agreement is entered into as an
additional Secured Obligation for purposes hereof by delivering to the
Collateral Agent a certificate signed by a Financial Officer that (i) identifies
such Interest Rate Agreement, specifying the name and address of the other party
thereto, the notional principal amount thereof and the expiration date thereof,
(ii) states that the Borrower’s obligations thereunder are designated as Secured
Obligations for purposes hereof and (iii) states that, after giving effect to
such designation, the aggregate notional principal amount of all outstanding
Designated Interest Rate Agreements included in the Secured Obligations will not
exceed $300,000,000.

 

SECTION 28. Notices. Each notice, request or other communication given to any
party hereunder shall be in writing (which term includes facsimile) and shall be
effective (i) when delivered to such party at its address specified below, (ii)
when sent to such party by facsimile, addressed to it at its facsimile number
specified below, and such party sends back confirmation of receipt or (iii) ten
days after being sent to such party by certified or registered United States
mail, addressed to it at its address specified below, with first class or
airmail postage prepaid:

 

(i) in the case of any Lien Grantor listed on the signature pages hereof, to it
at:

 

Kindred Healthcare, Inc.

680 South Fourth Avenue

Louisville, KY 40202

Attn: General Counsel

Facsimile: (502) 596-4075

 

with copies to:

 

Cleary, Gottlieb, Steen & Hamilton

One Liberty Plaza

New York, NY 10006

Attn:    Thomas Moloney, Esq.

              Lindsee Granfield, Esq.

 

(ii) in the case of any other Lien Grantor, to it at its address or facsimile
number set forth in its Security Agreement Supplement;

 

45

--------------------------------------------------------------------------------

(iii) in the case of the Collateral Agent, to it at:

 

JPMorgan Agency Services

1111 Fannin - 10th Floor

Houston, TX 77002

Attention: Erin Merritt

Telephone: (713) 750-2119

Facsimile: (713) 750-2782

 

with copies to:

 

JPMorgan Chase Bank - Corporate Banking Group

270 Park Avenue - 4th Floor

New York, NY 10017

Attention: Dawn Lee Lum

Telephone: (212) 270-5100

Facsimile: (212) 270-2472

 

and to:

 

JPMorgan Chase Bank - Corporate Banking Group

270 Park Avenue - 20th Floor

New York, NY 10017

Attention: Lisa Dee

Telephone: (212) 270-6265

Facsimile: (212) 270-7449

 

(iv) in the case of any Lender, to the Collateral Agent to be forwarded to such
Lender at its address or facsimile number specified in or pursuant to Section
10.01 of the Credit Agreement; or

 

(v) in the case of any other Secured Party Requesting Notice, to it at such
address or facsimile number as such party may hereafter specify for the purpose
by notice to the Collateral Agent.

 

Any party may change its address or facsimile number for purposes of this
Section by giving notice of such change to the Collateral Agent and the Borrower
in the manner specified above.

 

NOTICE TO THE BORROWER UNDER THIS AGREEMENT OR UNDER ANY OTHER FINANCING
DOCUMENT SHALL CONSTITUTE NOTICE TO ALL LIEN GRANTORS FOR ALL PURPOSES HEREUNDER
AND THEREUNDER, AND NOTICE FROM THE BORROWER UNDER THIS AGREEMENT OR UNDER ANY
OTHER FINANCING DOCUMENT

 

46

--------------------------------------------------------------------------------

PURPORTING TO BE NOTICE FROM ALL LIEN GRANTORS SHALL CONSTITUTE NOTICE FROM ALL
LIEN GRANTORS FOR ALL PURPOSES HEREUNDER AND THEREUNDER. Each Lien Grantor other
than the Borrower hereby irrevocably appoints the Borrower as such Lien
Grantor’s agent and attorney-in-fact, with full authority in the place and stead
of such Lien Grantor and in the name of such Lien Grantor, the Borrower or
otherwise, from time to time in the Borrower’s discretion, to execute and
deliver (and receive, where applicable) any and all written notices and
communications hereunder on behalf of the Lien Grantors to the Collateral Agent
and the Lenders, and to deliver oral notices and communications to the foregoing
effect, and the Collateral Agent and each Lender shall be entitled to rely upon
any such notice or communication as a notice, communication or consent, as the
case may be, of the Lien Grantors, and shall incur no liability to the Borrower
or any other Lien Grantor in acting upon any such notice or communication that
the Collateral Agent or such Lender believes in good faith to have been given by
a duly authorized officer or other person authorized by the Borrower.

 

SECTION 29. No Implied Waivers; Remedies Not Exclusive. No failure by the
Collateral Agent or any Secured Party to exercise, and no delay in exercising
and no course of dealing with respect to, any right or remedy under any
Collateral Document shall operate as a waiver thereof; nor shall any single or
partial exercise by the Collateral Agent or any Secured Party of any right or
remedy under any Financing Document preclude any other or further exercise
thereof or the exercise of any other right or remedy. The rights and remedies
specified in the Financing Documents are cumulative and are not exclusive of any
other rights or remedies provided by law.

 

SECTION 30. Successors and Assigns. This Agreement is for the benefit of the
Collateral Agent and the Secured Parties. If all or any part of any Secured
Party’s interest in any Secured Obligation is assigned or otherwise transferred,
the transferor’s rights hereunder, to the extent applicable to the obligation so
transferred, shall be automatically transferred with such obligation. This
Agreement shall be binding on the Lien Grantors and their respective successors
and assigns.

 

SECTION 31. Amendments and Waivers. Neither this Agreement nor any provision
hereof may be waived, amended, modified or terminated except pursuant to an
agreement or agreements in writing entered into by the parties hereto, with the
consent of such Lenders as are required to consent thereto under Section 10.02
of the Credit Agreement. No such waiver, amendment or modification shall affect
the rights of a Secured Party (other than a Lender) hereunder more adversely
than it affects the comparable rights of the Lenders hereunder, without the
consent of such Secured Party.

 

47

--------------------------------------------------------------------------------

SECTION 32. Choice of Law.

 

(a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), EXCEPT AS OTHERWISE REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK ARE GOVERNED BY
THE LAWS OF SUCH JURISDICTION.

 

(b) Each Lien Grantor hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of the Supreme Court of the
State of New York sitting in New York County and of the United States District
Court of the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to any Financing
Document, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in any Financing
Document shall affect any right that the Collateral Agent may otherwise have to
bring any action or proceeding relating to any Financing Document against any
Lien Grantor or its properties in the courts of any jurisdiction.

 

(c) Each Lien Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to any Financing Document in any court referred to in
paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

 

(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 28. Nothing in any Financing Document
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.

 

SECTION 33. Waiver of Jury Trial. EACH PARTY HERETO WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR

 

48

--------------------------------------------------------------------------------

RELATING TO ANY COLLATERAL DOCUMENT OR ANY TRANSACTION CONTEMPLATED THEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

 

SECTION 34. Severability. If any provision of any Collateral Document is invalid
or unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions of the Collateral Documents shall remain in full
force and effect in such jurisdiction and shall be liberally construed in favor
of the Collateral Agent and the Secured Parties in order to carry out the
intentions of the parties thereto as nearly as may be possible and (ii) the
invalidity or unenforceability of such provision in such jurisdiction shall not
affect the validity or enforceability thereof in any other jurisdiction.

 

SECTION 35. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement.

 

SECTION 36. Consequences Of Effectiveness. (a) On the Effective Date, the
Security Agreement, the Vencor Guaranty Agreement and the Subsidiary Guaranty
Agreement (each as defined in the Exit Facility) shall be amended and restated
in their entirety to read as set forth in this Agreement.

 

(b) The parties hereto acknowledge and agree that (i) this Agreement and the
other Financing Documents, whether executed and delivered in connection herewith
or otherwise, do not constitute a novation or termination of the “Obligations”
(as defined in the Exit Facility) under the Exit Facility as in effect prior to
the Effective Date and which remain outstanding, (ii) such “Obligations” are in
all respects continuing (as amended and restated by the Credit Agreement and
this Agreement) and (iii) the Liens and security interests as granted under the
Collateral Documents securing payment of such “Obligations” are in all respects
continuing and in full force and effect.

 

(c) On and after the Effective Date, the rights and obligations of the parties
hereto shall be governed by the provisions of this Agreement and the other

 

49

--------------------------------------------------------------------------------

Financing Documents; provided that the rights and obligations of the parties
hereto with respect to the period prior to the Effective Date shall continue to
be governed by the provisions of the Exit Facility, the Security Agreement (as
defined in the Exit Facility), the Vencor Guaranty Agreement (as defined in the
Exit Facility) and the Subsidiary Guaranty Agreement (as defined in the Exit
Facility) as in effect prior to the Effective Date.

 

SECTION 37. Withdrawal of Enforcement Notice. An Enforcement Notice, once given,
shall remain in effect unless and until (i) the Required Lenders notify the
Collateral Agent that they wish to withdraw such Enforcement Notice, (ii) no
monies have been applied to pay any Secured Obligations pursuant to Section 20
(except pursuant to clause first of subsection (a) thereof) as a result of such
Enforcement Notice and (iii) the Collateral Agent determines that the withdrawal
of such Enforcement Notice will not result in any liability or unreimbursed loss
to the Collateral Agent by reason of actions taken by it in reliance thereon.

 

50

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

KINDRED HEALTHCARE, INC.

 

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

JPMORGAN CHASE BANK, as Collateral Agent

 

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

--------------------------------------------------------------------------------

Subsidiary Guarantors:

 

ADVANCED INFUSION SYSTEMS, INC.

AMERICAN X-RAYS, INC.

CARIBBEAN BEHAVIORAL HEALTH SYSTEMS, INC.

COMMUNITY BEHAVIORAL HEALTH SYSTEM, INC.

COMMUNITY PSYCHIATRIC CENTERS PROPERTIES OF TEXAS, INC.

COMMUNITY PSYCHIATRIC CENTERS PROPERTIES OF UTAH, INC.

COURTLAND GARDENS HEALTH CENTER, INC.

CPC MANAGED CARE HEALTH SERVICES, INC.

FIRST REHAB, INC.

HELIAN ASC OF NORTHRIDGE, INC.

HELIAN HEALTH GROUP, INC.

HELIAN RECOVERY CORPORATION

HOMESTEAD HEALTH CENTER, INC.

HORIZON HEALTHCARE SERVICES, INC.

J. B. THOMAS HOSPITAL, INC.

KPS EAST, INC.

KPS MIDWEST, INC.

KPS MOUNTAIN, INC.

KPS SEATTLE, INC.

KPS WISCONSIN, INC.

KINDRED ACUTE PULMONARY EAST, INC.

KINDRED ACUTE PULMONARY WEST, INC.

KINDRED FACILITY SERVICES, INC.

KINDRED HEALTHCARE OPERATING, INC.

 

By:

 

 

--------------------------------------------------------------------------------

Name:

 

Donald H. Robinson

Title:

 

Senior Vice President of Tax and

Treasurer

--------------------------------------------------------------------------------

Subsidiary Guarantors (Continued):

 

KINDRED HEALTHCARE SERVICES, INC.

KINDRED HOLDINGS, L.L.C.

KINDRED HOME CARE SERVICES, INC.

KINDRED HOSPICE, INC.

KINDRED HOSPITAL PHARMACY SERVICES, INC.

KINDRED HOSPITALS EAST, L.L.C.

KINDRED HOSPITALS WEST, L.L.C.

KINDRED INSTITUTIONAL PHARMACY SERVICES, INC.

KINDRED INSURANCE HOLDINGS, INC.

KINDRED INVESTMENT COMPANY

KINDRED NEVADA, L.L.C.

KINDRED NURSING CENTERS EAST, L.L.C.

KINDRED NURSING CENTERS NORTH, L.L.C.

KINDRED NURSING CENTERS SOUTH, L.L.C.

KINDRED NURSING CENTERS WEST, L.L.C.

KINDRED PHARMACY SERVICES, INC.

KINDRED PULMONARY ILLINOIS, INC.

KINDRED REHAB SERVICES, INC.

KINDRED SUPPORT SERVICES, L.L.C.

KINDRED SYSTEMS, INC.

 

By:

 

 

--------------------------------------------------------------------------------

Name:

 

Donald H. Robinson

Title:

 

Senior Vice President of Tax and

Treasurer

--------------------------------------------------------------------------------

Subsidiary Guarantors (Continued):

 

LAFAYETTE HEALTH CARE CENTER, INC.

MEDEQUITIES, INC.

MEDISAVE OF TENNESSEE, INC.

PALO ALTO SURGECENTER CORPORATION

PERSONACARE LIVING CENTER OF CLEARWATER, INC.

PERSONACARE OF BRADENTON, INC.

PERSONACARE OF CLEARWATER, INC.

PERSONACARE OF CONNECTICUT, INC.

PERSONACARE OF GEORGIA, INC.

PERSONACARE OF HUNTSVILLE, INC.

PERSONACARE OF LITTLE ROCK, INC.

PERSONACARE OF OHIO, INC.

PERSONACARE OF OWENSBORO, INC.

PERSONACARE OF PENNSYLVANIA, INC.

PERSONACARE OF POMPANO EAST, INC.

PERSONACARE OF POMPANO WEST, INC.

PERSONACARE OF READING, INC.

PERSONACARE OF SAN ANTONIO, INC.

PERSONACARE OF SAN PEDRO, INC.

PERSONACARE OF SHREVEPORT, INC.

PERSONACARE OF ST. PETERSBURG, INC.

PERSONACARE OF WARNER ROBINS, INC.

PERSONACARE OF WISCONSIN, INC.

PERSONACARE PROPERTIES, INC.

 

By:

 

 

--------------------------------------------------------------------------------

Name:

 

Donald H. Robinson

Title:

 

Senior Vice President of Tax and

Treasurer

--------------------------------------------------------------------------------

Subsidiary Guarantors (Continued):

 

PRODATA SYSTEMS, INC.

RECOVERY INNS OF AMERICA, INC.

RESPIRATORY CARE SERVICES, INC.

SOUTHERN CALIFORNIA SPECIALTY CARE, INC.

SPECIALTY HEALTHCARE SERVICES, INC.

SPECIALTY HOSPITAL OF CLEVELAND, INC.

SPECIALTY HOSPITAL OF DALLAS, INC.

SPECIALTY HOSPITAL OF PHILADELPHIA, INC.

SPECIALTY HOSPITAL OF SOUTH CAROLINA, INC.

STAMFORD HEALTH FACILITIES, INC.

THC – CHICAGO, INC.

THC – HOLLYWOOD, INC.

THC – HOUSTON, INC.

THC – MINNEAPOLIS, INC.

THC – NORTH SHORE, INC.

THC – ORANGE COUNTY, INC.

THC – SAN DIEGO, INC.

THC – SEATTLE, INC.

 

By:

 

 

--------------------------------------------------------------------------------

Name:

 

Donald H. Robinson

Title:

 

Senior Vice President of Tax and

Treasurer

--------------------------------------------------------------------------------

Subsidiary Guarantors (Continued):

 

THERATX HEALTH SERVICES, INC.

THERATX HEALTHCARE MANAGEMENT, INC.

THERATX MANAGEMENT SERVICES, INC.

THERATX REHABILITATION SERVICES, INC.

THERATX STAFFING, INC.

TRANSITIONAL HOSPITALS CORPORATION OF INDIANA, INC.

TRANSITIONAL HOSPITALS CORPORATION OF LOUISIANA, INC.

TRANSITIONAL HOSPITALS CORPORATION OF NEVADA, INC.

TRANSITIONAL HOSPITALS CORPORATION OF NEW MEXICO, INC.

TRANSITIONAL HOSPITALS CORPORATION OF TAMPA, INC.

TRANSITIONAL HOSPITALS CORPORATION OF TEXAS, INC.

TRANSITIONAL HOSPITALS CORPORATION OF WISCONSIN, INC.

TUCKER NURSING CENTER, INC.

TUNSTALL ENTERPRISES, INC.

 

By:

 

 

--------------------------------------------------------------------------------

Name:

 

Donald H. Robinson

Title:

 

Senior Vice President of Tax and

Treasurer

--------------------------------------------------------------------------------

Subsidiary Guarantors (Continued):

 

HILLHAVEN-MSC PARTNERSHIP

   

By:

 

KINDRED NURSING CENTERS

       

WEST, L.L.C. and KINDRED

       

HOSPITALS WEST, L.L.C., General

Partners

 

By:

 

 

--------------------------------------------------------------------------------

Name:

 

Donald H. Robinson

Title:

 

Senior Vice President of Tax and

Treasurer

 

KINDRED ACUTE PULMONARY LIMITED PARTNERSHIP

   

By:

 

KINDRED HOSPITALS LIMITED

       

PARTNERSHIP and KINDRED

       

HEALTHCARE OPERATING, INC.,

General Partners

 

By:

 

 

--------------------------------------------------------------------------------

Name:

 

Donald H. Robinson

Title:

 

Senior Vice President of Tax and

Treasurer

 

KINDRED HOME CARE AND HOSPICE INDIANA PARTNERSHIP

   

By:

 

KINDRED HOME CARE

       

SERVICES, INC. and KINDRED

       

HOSPICE, INC., General Partners

 

By:

 

 

--------------------------------------------------------------------------------

Name:

 

Donald H. Robinson

Title:

 

Senior Vice President of Tax and

Treasurer

--------------------------------------------------------------------------------

Subsidiary Guarantors (Continued):

 

KINDRED HOSPITALS LIMITED PARTNERSHIP

   

By:

 

KINDRED NURSING CENTERS

       

LIMITED PARTNERSHIP and

       

KINDRED HOSPITALS WEST,

L.L.C., General Partners

 

By:

 

 

--------------------------------------------------------------------------------

Name:

 

Donald H. Robinson

Title:

 

Senior Vice President of Tax and Treasurer

 

KINDRED NURSING CENTERS CENTRAL LIMITED PARTNERSHIP

   

By:

 

KINDRED NURSING CENTERS

LIMITED PARTNERSHIP and

KINDRED HEALTHCARE

OPERATING, INC., General Partners

               

 

By:

 

 

--------------------------------------------------------------------------------

Name:

 

Donald H. Robinson

Title:

 

Senior Vice President of Tax and Treasurer

 

KINDRED NURSING CENTERS LIMITED PARTNERSHIP

   

By:

 

KINDRED HOSPITALS LIMITED

       

PARTNERSHIP and KINDRED

       

NURSING CENTERS EAST, L.L.C.,

       

General Partners

 

By:

 

 

--------------------------------------------------------------------------------

Name:

 

Donald H. Robinson

Title:

 

Senior Vice President of Tax and Treasurer

--------------------------------------------------------------------------------

Subsidiary Guarantors (Continued):

 

RECOVERY INN OF MENLO PARK, L.P.

   

By:

 

HELIAN RECOVERY

       

CORPORATION, General Partner

By:

 

--------------------------------------------------------------------------------

Name:

 

Donald H. Robinson

Title:

 

Senior Vice President of Tax and Treasurer

 

--------------------------------------------------------------------------------

SCHEDULE 1

 

SECURITIES AND SECURITIES ACCOUNTS

OWNED BY ORIGINAL LIEN GRANTORS

(as of the Effective Date)

 

PART 1 — Securities

 

Issuer

--------------------------------------------------------------------------------

  

Jurisdiction of

Organization

--------------------------------------------------------------------------------

  

Owner of Securities

--------------------------------------------------------------------------------

   Amount
Owned

--------------------------------------------------------------------------------

  

Type of Security

--------------------------------------------------------------------------------

Ledgewood Health Care Corporation

  

Massachusetts

  

Kindred Healthcare Operating, Inc.

   7,500   

Class B common stock

HealthEssentials Solutions, Inc.

  

Delaware

  

Kindred Healthcare Operating, Inc.

   50,000   

common stock

 

PART 2 — Securities Accounts

 

The Original Lien Grantors own Security Entitlements with respect to Financial
Assets credited to the following Securities Accounts:

 

Owner

--------------------------------------------------------------------------------

 

Securities

Intermediary

--------------------------------------------------------------------------------

 

Account Number

--------------------------------------------------------------------------------

None.

       

 

S-1

--------------------------------------------------------------------------------

SCHEDULE 2

 

LIST OF MATERIAL GOVERNMENT CONTRACTS

 

None.

 

S-2

--------------------------------------------------------------------------------

EXHIBIT A

to Security Agreement

 

SECURITY AGREEMENT SUPPLEMENT

 

SECURITY AGREEMENT SUPPLEMENT dated as of             ,             , between
[NAME OF LIEN GRANTOR] (the “Lien Grantor”) and JPMORGAN CHASE BANK, as
Collateral Agent.

 

WHEREAS, Kindred Healthcare, Inc. (the “Borrower”), the Subsidiary Guarantors
party thereto and JPMorgan Chase Bank, as Collateral Agent, are parties to an
Amended and Restated Guarantee and Security Agreement dated as of June 28, 2004
(as heretofore amended and/or supplemented, the “Security Agreement”) under
which the Borrower secures certain of its obligations (the “Secured
Obligations”) and the Subsidiary Guarantors guarantee the Secured Obligations
and secure their respective guarantees thereof;

 

WHEREAS, [name of Lien Grantor] [desires to become] [is] a party to the Security
Agreement as a Subsidiary Guarantor and Lien Grantor thereunder;1 and

 

WHEREAS, terms defined in the Security Agreement (or whose definitions are
incorporated by reference in Section 1 of the Security Agreement) and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein;

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

1. Secured Guarantee.2 The Lien Grantor unconditionally and irrevocably
guarantees the full and punctual payment of each Secured Obligation as and when
the same shall become due and payable (whether at stated maturity, upon
acceleration or otherwise). The Lien Grantor acknowledges that, by signing this
Security Agreement Supplement and delivering it to the Collateral Agent, the
Lien Grantor becomes a “Subsidiary Guarantor” and “Lien Grantor” for all
purposes of the Security Agreement and that its obligations under the foregoing
Secured Guarantee are subject to all the provisions of the Security Agreement
(including those set forth in Section 2 thereof) applicable to the obligations
of a Subsidiary Guarantor thereunder.

 

--------------------------------------------------------------------------------

1 If the Lien Grantor is the Borrower, delete this recital and Section 1 hereof.

2 Delete this Section if the Lien Grantor is the Borrower or a Subsidiary
Guarantor that is already a party to the Security Agreement.

 

A-1

--------------------------------------------------------------------------------

2. Grant of Security Interests. (a) In order to secure [its Secured Guarantee]3
[the Secured Obligations]4, the Lien Grantor grants to the Collateral Agent for
the benefit of the Secured Parties a continuing security interest in all the
following property of the Lien Grantor, whether now owned or existing or
hereafter acquired or arising and regardless of where located (the “New
Collateral”):

 

[describe property being added to the Collateral]5

 

(b) With respect to each right to payment or performance included in the
Collateral from time to time, the Security Interest granted therein includes a
continuing security interest in (i) any Supporting Obligation that supports such
payment or performance and (ii) any Lien that (x) secures such right to payment
or performance or (y) secures any such Supporting Obligation.

 

(c) The foregoing Security Interests are granted as security only and shall not
subject the Collateral Agent or any other Secured Party to, or transfer or in
any way affect or modify, any obligation or liability of the Lien Grantor with
respect to any of the New Collateral or any transaction in connection therewith.

 

3. Delivery of Collateral. Concurrently with delivering this Security Agreement
Supplement to the Collateral Agent, the Lien Grantor is complying with the
provisions of Section 7 of the Security Agreement with respect to Chattel Paper
and Instruments, Section 9 of the Security Agreement with respect to assignments
and notices of assignment of Material Government Contracts, and Section 11 of
the Security Agreement with respect to Investment Property, in each case if and
to the extent included in the New Collateral at such time.

 

4. Party to Security Agreement. Upon delivering this Security Agreement
Supplement to the Collateral Agent, the Lien Grantor will become a party to the
Security Agreement and will thereafter have all the rights and obligations of a
Subsidiary Guarantor and a Lien Grantor thereunder and be bound by all the
provisions thereof as fully as if the Lien Grantor were one of the original
parties thereto.6

--------------------------------------------------------------------------------

3 Delete bracketed words if the Lien Grantor is the Borrower.

4 Delete bracketed words if the Lien Grantor is a Subsidiary Guarantor.

5 If the Lien Grantor is not already a party to the Security Agreement, clauses
(i) through (xiii) of, and the proviso to, Section 3(a) of the Security
Agreement may be appropriate.

6 Delete Sections 4 and 5 if the Lien Grantor is already a party to the Security
Agreement.

 

A-2

--------------------------------------------------------------------------------

5. Address of Lien Grantor. The address, facsimile number and e-mail address of
the Lien Grantor for purposes of Section 28 of the Security Agreement are:

 

[address, facsimile number and e-mail address of Lien Grantor]

 

6. Representations and Warranties.7 The Lien Grantor represents and warrants
that:

 

(a) The Lien Grantor is a corporation duly organized, validly existing and in
good standing under the laws of [jurisdiction of organization].

 

(b) The Lien Grantor has delivered a Perfection Certificate to the Collateral
Agent. The information set forth therein is correct and complete as of the date
hereof.

 

(c) The execution and delivery of this Security Agreement Supplement by the Lien
Grantor and the performance by it of its obligations under the Security
Agreement as supplemented hereby are within its corporate or other powers, have
been duly authorized by all necessary corporate or other action, require no
action by or in respect of, or filing with, any governmental body, agency or
official (other than filings necessary to perfect the Security interests) and do
not contravene, or constitute a default under, any provision of applicable law
or regulation or of its Organizational Documents, or of any agreement or other
instrument binding upon it or result in the creation or require the imposition
of any Lien (except a Security Interest) on any of its assets.

 

(d) The Security Agreement as supplemented hereby constitutes a valid and
binding agreement of the Lien Grantor, enforceable in accordance with its terms,
except as limited by (i) applicable bankruptcy, insolvency, fraudulent
conveyance or other similar laws affecting creditors’ rights generally and (ii)
general principles of equity.

 

(e) Each of the representations and warranties set forth in Sections 4 through
16 of the Security Agreement is true as applied to the Lien Grantor and the New
Collateral. For purposes of the foregoing sentence, references in said Sections
to a “Lien Grantor” shall be deemed to refer to the Lien Grantor, references to
Schedules to the Security Agreement shall be deemed to refer to the
corresponding Schedules to this Security Agreement Supplement, references to
“Collateral” shall be deemed to refer to the New Collateral, and references to
the “Effective

--------------------------------------------------------------------------------

7 Modify as needed if the Lien Grantor is not a corporation.

 

A-3

--------------------------------------------------------------------------------

Date” shall be deemed to refer to the date on which the Lien Grantor signs and
delivers this Security Agreement Supplement.

 

7. Governing Law. This Security Agreement Supplement shall be construed in
accordance with and governed by the laws of the State of New York.

 

IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
Supplement to be duly executed by their respective authorized officers as of the
day and year first above written.

 

A-4

--------------------------------------------------------------------------------

[NAME OF LIEN GRANTOR]

By:

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

JPMORGAN CHASE BANK, as Collateral Agent

By:

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

A-5

--------------------------------------------------------------------------------

Schedule 1

to Security Agreement

Supplement

 

SECURITIES AND SECURITIES ACCOUNTS

OWNED BY LIEN GRANTOR

 

PART 1 — Securities

 

Issuer

--------------------------------------------------------------------------------

 

Jurisdiction

of

Organization

--------------------------------------------------------------------------------

 

Owner of

Securities

--------------------------------------------------------------------------------

  

Amount

Owned

--------------------------------------------------------------------------------

  

Type of

Security

--------------------------------------------------------------------------------

 

PART 2 — Securities Accounts

 

The Lien Grantor owns Security Entitlements with respect to Financial Assets
credited to the following Securities Accounts:

 

Owner

--------------------------------------------------------------------------------

 

Securities Intermediary

--------------------------------------------------------------------------------

 

Account Number

--------------------------------------------------------------------------------

 

A-6

--------------------------------------------------------------------------------

Schedule 2

to Security Agreement

Supplement

 

LIST OF MATERIAL GOVERNMENT CONTRACTS

 

A-7

--------------------------------------------------------------------------------

Schedule 3

to Security Agreement

Supplement

 

MATERIAL COMMERCIAL TORT CLAIMS

 

[Describe each existing Material Commercial Tort Claim with the specificity
required to satisfy Official Comment 5 to UCC Section 9-108.]

 

B-1

--------------------------------------------------------------------------------

EXHIBIT B

to Security Agreement

 

COPYRIGHT SECURITY AGREEMENT

 

(Copyrights, Copyright Registrations, Copyright

Applications and Copyright Licenses)

 

WHEREAS, [name of Lien Grantor], a                      corporation1 (herein
referred to as the “Lien Grantor”) owns, or in the case of licenses is a party
to, the Copyright Collateral (as defined below);

 

WHEREAS, Kindred Healthcare, Inc. (the “Borrower”), the Lenders party thereto,
JPMorgan Chase Bank, as Administrative Agent and Collateral Agent, Citicorp USA,
Inc., as Syndication Agent, and General Electric Capital Corporation, The CIT
Group/Business Credit, Inc. and Wells Fargo Foothill, as Co-Documentation
Agents, are parties to an Amended and Restated Credit Agreement dated as of June
28, 2004 (as amended from time to time, the “Credit Agreement”); and

 

WHEREAS, pursuant to (i) an Amended and Restated Guarantee and Security
Agreement dated as of June 28, 2004 (as amended and/or supplemented from time to
time, the “Security Agreement”) among the Borrower, the Subsidiary Guarantors
party thereto and JPMorgan Chase Bank, as Collateral Agent for the Secured
Parties referred to therein (in such capacity, together with its successors in
such capacity, the “Grantee”), and (ii) certain other Collateral Documents (as
defined in the Credit Agreement), including this Copyright Security Agreement,
the Lien Grantor has [secured certain of its obligations (the “Secured
Obligations”)]2 [guaranteed certain obligations of the Borrower and secured such
guarantee (the “Lien Grantor’s Secured Guarantee”)]3 by granting to the Grantee
for the benefit of the Secured Parties (as defined in the Security Agreement) a
continuing security interest in personal property of the Lien Grantor, including
all right, title and interest of the Lien Grantor in, to and under the Copyright
Collateral (as defined below);

--------------------------------------------------------------------------------

1 Modify as needed if the Lien Grantor is not a corporation.

2 Delete these bracketed words if the Lien Grantor is a Subsidiary Guarantor.

3 Delete these bracketed words if the Lien Grantor is the Borrower.

 

B-1

--------------------------------------------------------------------------------

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Lien Grantor grants to the Grantee, to
secure the [Secured Obligations] [Lien Grantor’s Secured Guarantee], a
continuing security interest in all of the Lien Grantor’s right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the “Copyright Collateral”),
whether now owned or existing or hereafter acquired or arising:

 

(i) each Copyright (as defined in the Security Agreement) owned by the Lien
Grantor, including, without limitation, each Copyright registration or
application therefor referred to in Schedule 1 hereto;

 

(ii) each Copyright License (as defined in the Security Agreement) to which the
Lien Grantor is a party, including, without limitation, each Copyright License
identified in Schedule 1 hereto; and

 

(iii) all proceeds of, revenues from, and accounts and general intangibles
arising out of, the foregoing, including, without limitation, all proceeds of
and revenues from any claim by the Lien Grantor against third parties for past,
present or future infringement of any Copyright (including, without limitation,
any Copyright owned by the Lien Grantor and identified in Schedule 1), and all
rights and benefits of the Lien Grantor under any Copyright License (including,
without limitation, any Copyright License identified in Schedule 1).

 

The Lien Grantor irrevocably constitutes and appoints the Grantee and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of the Lien
Grantor or in the Grantee’s name, from time to time, in the Grantee’s
discretion, so long as an Enforcement Notice (as defined in the Credit
Agreement) is in effect, to take with respect to the Copyright Collateral any
and all appropriate action which the Lien Grantor might take with respect to the
Copyright Collateral and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Copyright Security
Agreement and to accomplish the purposes hereof.

 

Except to the extent permitted in the Security Agreement or the Credit
Agreement, the Lien Grantor agrees not to sell, license, exchange, assign or
otherwise transfer or dispose of, or grant any rights with respect to, or
mortgage or otherwise encumber, any of the Copyright Collateral.

 

The foregoing security interest is granted in conjunction with the security
interests granted by the Lien Grantor to the Grantee pursuant to the Security
Agreement. The Lien Grantor acknowledges and affirms that the rights and
remedies of the Grantee with respect to the security interest in the Copyright
Collateral granted hereby are more fully set forth in the Security Agreement,
the

 

B-2

--------------------------------------------------------------------------------

terms and provisions of which are incorporated by reference herein as if fully
set forth herein.

 

IN WITNESS WHEREOF, the Lien Grantor has caused this Copyright Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
         day of                     ,         .

 

[NAME OF LIEN GRANTOR]

By:

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

Acknowledged:

 

JPMORGAN CHASE BANK, as Collateral Agent

By:

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

B-3

--------------------------------------------------------------------------------

Schedule 1

to Copyright

Security Agreement

 

[NAME OF LIEN GRANTOR]

 

COPYRIGHT REGISTRATIONS

 

Registration No.

--------------------------------------------------------------------------------

 

Registration Date

--------------------------------------------------------------------------------

 

Title

--------------------------------------------------------------------------------

 

COPYRIGHT APPLICATIONS

 

Case No.

--------------------------------------------------------------------------------

 

Serial No.

--------------------------------------------------------------------------------

 

Country

--------------------------------------------------------------------------------

   Date

--------------------------------------------------------------------------------

   Filing Title

--------------------------------------------------------------------------------

 

COPYRIGHT LICENSES

 

Name of

Agreement

--------------------------------------------------------------------------------

 

Parties

Licensor/Licensee

--------------------------------------------------------------------------------

 

Date of

Agreement

--------------------------------------------------------------------------------

  

Subject

Matter

--------------------------------------------------------------------------------

 

B-4

--------------------------------------------------------------------------------

EXHIBIT C

to Security Agreement

 

PATENT SECURITY AGREEMENT

 

(Patents, Patent Applications and Patent Licenses)

 

WHEREAS, [name of Lien Grantor], a                      corporation1 (herein
referred to as the “Lien Grantor”) owns, or in the case of licenses is a party
to, the Patent Collateral (as defined below);

 

WHEREAS, Kindred Healthcare, Inc. (the “Borrower”), the Lenders party thereto,
JPMorgan Chase Bank, as Administrative Agent and Collateral Agent, Citicorp USA,
Inc., as Syndication Agent, and General Electric Capital Corporation, The CIT
Group/Business Credit, Inc. and Wells Fargo Foothill, as Co-Documentation
Agents, are parties to an Amended and Restated Credit Agreement dated as of June
28, 2004 (as amended from time to time, the “Credit Agreement”); and

 

WHEREAS, pursuant to (i) an Amended and Restated Guarantee and Security
Agreement dated as of June 28, 2004 (as amended and/or supplemented from time to
time, the “Security Agreement”) among the Borrower, the Subsidiary Guarantors
party thereto and JPMorgan Chase Bank, as Collateral Agent for the Secured
Parties referred to therein (in such capacity, together with its successors in
such capacity, the “Grantee”), and (ii) certain other Collateral Documents (as
defined in the Credit Agreement), including this Patent Security Agreement, the
Lien Grantor has [secured certain of its obligations (the “Secured
Obligations”)]2 [guaranteed certain obligations of the Borrower and secured such
guarantee (the “Lien Grantor’s Secured Guarantee”)]3 by granting to the Grantee
for the benefit of the Secured Parties (as defined in the Security Agreement) a
continuing security interest in personal property of the Lien Grantor, including
all right, title and interest of the Lien Grantor in, to and under the Patent
Collateral (as defined below);

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Lien Grantor grants to the Grantee, to
secure the [Secured Obligations] [Lien Grantor’s Secured Guarantee],

--------------------------------------------------------------------------------

1 Modify as needed if the Lien Grantor is not a corporation.

2 Delete these bracketed words if the Lien Grantor is a Subsidiary Guarantor.

3 Delete these bracketed words if the Lien Grantor is the Borrower.

 

C-1

--------------------------------------------------------------------------------

a continuing security interest in all of the Lien Grantor’s right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the “Patent Collateral”),
whether now owned or existing or hereafter acquired or arising:

 

(i) each Patent (as defined in the Security Agreement) owned by the Lien
Grantor, including, without limitation, each Patent referred to in Schedule 1
hereto;

 

(ii) each Patent License (as defined in the Security Agreement) to which the
Lien Grantor is a party, including, without limitation, each Patent License
identified in Schedule 1 hereto; and

 

(iii) all proceeds of and revenues from the foregoing, including, without
limitation, all proceeds of and revenues from any claim by the Lien Grantor
against third parties for past, present or future infringement of any Patent
owned by the Lien Grantor (including, without limitation, any Patent identified
in Schedule 1 hereto) and all rights and benefits of the Lien Grantor under any
Patent License (including, without limitation, any Patent License identified in
Schedule 1 hereto).

 

The Lien Grantor irrevocably constitutes and appoints the Grantee and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of the Lien
Grantor or in the Grantee’s name, from time to time, in the Grantee’s
discretion, so long as an Enforcement Notice (as defined in the Credit
Agreement) is in effect, to take with respect to the Patent Collateral any and
all appropriate action which the Lien Grantor might take with respect to the
Patent Collateral and to execute any and all documents and instruments which may
be necessary or desirable to carry out the terms of this Patent Security
Agreement and to accomplish the purposes hereof.

 

Except to the extent permitted in the Security Agreement or the Credit
Agreement, the Lien Grantor agrees not to sell, license, exchange, assign or
otherwise transfer or dispose of, or grant any rights with respect to, or
mortgage or otherwise encumber, any of the Patent Collateral.

 

The foregoing security interest is granted in conjunction with the security
interests granted by the Lien Grantor to the Grantee pursuant to the Security
Agreement. The Lien Grantor acknowledges and affirms that the rights and
remedies of the Grantee with respect to the security interest in the Patent
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.

 

C-2

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Lien Grantor has caused this Patent Security Agreement
to be duly executed by its officer thereunto duly authorized as of the         
day of                     ,         .

 

[NAME OF LIEN GRANTOR]

By:

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

Acknowledged:

 

JPMORGAN CHASE BANK, as Collateral Agent

By:

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

C-3

--------------------------------------------------------------------------------

Schedule 1

to Patent

Security Agreement

 

[NAME OF LIEN GRANTOR]

 

PATENTS AND DESIGN PATENTS

 

Patent No.

--------------------------------------------------------------------------------

 

Issued

--------------------------------------------------------------------------------

 

Expiration

--------------------------------------------------------------------------------

   Country

--------------------------------------------------------------------------------

   Title

--------------------------------------------------------------------------------

 

PATENT APPLICATIONS

 

Case No.

--------------------------------------------------------------------------------

 

Serial No.

--------------------------------------------------------------------------------

 

Country

--------------------------------------------------------------------------------

   Date

--------------------------------------------------------------------------------

   Filing Title

--------------------------------------------------------------------------------

 

PATENT LICENSES

 

Name of

Agreement

--------------------------------------------------------------------------------

 

Parties

Licensor/Licensee

--------------------------------------------------------------------------------

 

Date of

Agreement

--------------------------------------------------------------------------------

  

Subject

Matter

--------------------------------------------------------------------------------

 

C-4

--------------------------------------------------------------------------------

EXHIBIT D

to Security Agreement

 

TRADEMARK SECURITY AGREEMENT

 

(Trademarks, Trademark Registrations, Trademark

Applications and Trademark Licenses)

 

WHEREAS, [name of Lien Grantor], a                      corporation1 (herein
referred to as the “Lien Grantor”) owns, or in the case of licenses is a party
to, the Trademark Collateral (as defined below);

 

WHEREAS, Kindred Healthcare, Inc. (the “Borrower”), the Lenders party thereto,
JPMorgan Chase Bank, as Administrative Agent and Collateral Agent, Citicorp USA,
Inc., as Syndication Agent, and General Electric Capital Corporation, The CIT
Group/Business Credit, Inc. and Wells Fargo Foothill, as Co-Documentation
Agents, are parties to an Amended and Restated Credit Agreement dated as of June
28, 2004 (as amended from time to time, the “Credit Agreement”); and

 

WHEREAS, pursuant to (i) an Amended and Restated Guarantee and Security
Agreement dated as of June 28, 2004 (as amended and/or supplemented from time to
time, the “Security Agreement”) among the Borrower, the Subsidiary Guarantors
party thereto and JPMorgan Chase Bank, as Collateral Agent for the Secured
Parties referred to therein (in such capacity, together with its successors in
such capacity, the “Grantee”), and (ii) certain other Collateral Documents (as
defined in the Credit Agreement), including this Trademark Security Agreement,
the Lien Grantor has [secured certain of its obligations (the “Secured
Obligations”)]2 [guaranteed certain obligations of the Borrower and secured such
guarantee (the “Lien Grantor’s Secured Guarantee”)]3 by granting to the Grantee
for the benefit of the Secured Parties (as defined in the Security Agreement) a
continuing security interest in personal property of the Lien Grantor, including
all right, title and interest of the Lien Grantor in, to and under the Trademark
Collateral (as defined below);

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Lien Grantor grants to the

--------------------------------------------------------------------------------

1 Modify as needed if the Lien Grantor is not a corporation.

2 Delete these bracketed words if the Lien Grantor is a Subsidiary Guarantor.

3 Delete these bracketed words if the Lien Grantor is the Borrower.

 

D-1

--------------------------------------------------------------------------------

Grantee, to secure the [Secured Obligations] [Lien Grantor’s Secured Guarantee],
a continuing security interest in all of the Lien Grantor’s right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the “Trademark Collateral”),
whether now owned or existing or hereafter acquired or arising:

 

(i) each Trademark (as defined in the Security Agreement) owned by the Lien
Grantor, including, without limitation, each Trademark registration and
application referred to in Schedule 1 hereto, and all of the goodwill of the
business connected with the use of, or symbolized by, each Trademark;

 

(ii) each Trademark License (as defined in the Security Agreement) to which the
Lien Grantor is a party, including, without limitation, each Trademark License
identified in Schedule 1 hereto, and all of the goodwill of the business
connected with the use of, or symbolized by, each Trademark licensed pursuant
thereto; and

 

(iii) all proceeds of and revenues from the foregoing, including, without
limitation, all proceeds of and revenues from any claim by the Lien Grantor
against third parties for past, present or future unfair competition with, or
violation of intellectual property rights in connection with or injury to, or
infringement or dilution of, any Trademark owned by the Lien Grantor (including,
without limitation, any Trademark identified in Schedule 1 hereto), and all
rights and benefits of the Lien Grantor under any Trademark License (including,
without limitation, any Trademark License identified in Schedule 1 hereto), or
for injury to the goodwill associated with any of the foregoing.

 

The Lien Grantor irrevocably constitutes and appoints the Grantee and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of the Lien
Grantor or in the Grantee’s name, from time to time, in the Grantee’s
discretion, so long as an Enforcement Notice (as defined in the Credit
Agreement) is in effect, to take with respect to the Trademark Collateral any
and all appropriate action which the Lien Grantor might take with respect to the
Trademark Collateral and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Trademark Security
Agreement and to accomplish the purposes hereof.

 

Except to the extent permitted in the Security Agreement or the Credit
Agreement, the Lien Grantor agrees not to sell, license, exchange, assign or
otherwise transfer or dispose of, or grant any rights with respect to, or
mortgage or otherwise encumber, any of the Trademark Collateral.

 

D-2

--------------------------------------------------------------------------------

The foregoing security interest is granted in conjunction with the security
interests granted by the Lien Grantor to the Grantee pursuant to the Security
Agreement. The Lien Grantor acknowledges and affirms that the rights and
remedies of the Grantee with respect to the security interest in the Trademark
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.

 

IN WITNESS WHEREOF, the Lien Grantor has caused this Trademark Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
         day of                     ,         .

 

[NAME OF LIEN GRANTOR]

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

Acknowledged:

 

JPMORGAN CHASE BANK,
as Collateral Agent

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

D-3

--------------------------------------------------------------------------------

Schedule 1

to Trademark

Security Agreement

 

[NAME OF LIEN GRANTOR]

 

TRADEMARK REGISTRATIONS

 

TRADEMARK

--------------------------------------------------------------------------------

 

REG. NO.

--------------------------------------------------------------------------------

 

REG. DATE

--------------------------------------------------------------------------------

 

TRADEMARK APPLICATIONS

 

TRADEMARK

--------------------------------------------------------------------------------

 

REG. NO.

--------------------------------------------------------------------------------

 

REG. DATE

--------------------------------------------------------------------------------

 

D-4

--------------------------------------------------------------------------------

TRADEMARK LICENSES

 

Name of

Agreement

--------------------------------------------------------------------------------

 

Parties

Licensor/Licensee

--------------------------------------------------------------------------------

 

Date of

Agreement

--------------------------------------------------------------------------------

  

Subject

Matter

--------------------------------------------------------------------------------

 

D-5

--------------------------------------------------------------------------------

EXHIBIT E

to Security Agreement

 

PERFECTION CERTIFICATE

 

The undersigned is a duly authorized officer of [NAME OF LIEN GRANTOR] (the
“Lien Grantor”). With reference to the Amended and Restated Guarantee and
Security Agreement dated as of June 28, 2004 among Kindred Healthcare, Inc., the
Subsidiary Guarantors party thereto, and JPMorgan Chase Bank, as Collateral
Agent (terms defined therein being used herein as therein defined), the
undersigned certifies to the Collateral Agent and each other Secured Party as
follows:

 

A. Information Required for Filings and Searches for Prior Filings.

 

1. Jurisdiction of Organization. The Lien Grantor is a [corporation]1 organized
under the laws of                     .

 

1. Name. The exact [corporate] name of the Lien Grantor as it appears in its
[certificate of incorporation] is as follows:

 

2. Prior Names. a) Set forth below is each other [corporate] name that the Lien
Grantor has had since its organization, together with the date of the relevant
change:

 

(a) Except as set forth in Schedule [1] hereto, the Lien Grantor has not changed
its corporate structure2 in any way within the past five years.

 

(b) None of the Lien Grantor’s Collateral was acquired from another Person
within the past five years, except

 

--------------------------------------------------------------------------------

1 Modify as needed if the Lien grantor is not a corporation.

2 Changes in corporate structure would include mergers and consolidations, as
well as any change in the Lien Grantor’s form of organization. If any such
change has occurred, include in Schedule [1] the information required by Part A
of this certificate as to each constituent party to a merger or consolidation
and any other predecessor organization.

 

E-1

--------------------------------------------------------------------------------

(i) property sold to the Lien Grantor by another Person in the ordinary course
of such other Person’s business;

 

(ii) property with respect to which the Security Interests are to be perfected
by taking possession or control thereof;

 

(iii) property acquired in transactions described in Schedule [2] hereto; and

 

(iv) other property having an aggregate fair market value not exceeding $50,000.

 

3. Filing Office. In order to perfect the Security Interests granted by the Lien
Grantor, a duly completed financing statement on Form UCC-1, with the collateral
described as set forth on Schedule [3] hereto, should be on file in the office
of                      in                     3 .

 

B. Additional Information Required for Searches for Prior Filings Under Old
Article 9.

 

1. Current Locations. (a) The chief executive office of the Lien Grantor is
located at the following address:

 

Mailing Address

--------------------------------------------------------------------------------

 

County

--------------------------------------------------------------------------------

 

State

--------------------------------------------------------------------------------

 

The Lien Grantor [does] [does not] have a place of business in another county of
the State listed above.

 

(a) The following are all places of business of the Lien Grantor not identified
above:

 

Mailing Address

--------------------------------------------------------------------------------

 

County

--------------------------------------------------------------------------------

 

State

--------------------------------------------------------------------------------

 

(b) The following are all locations not identified above where the Lien Grantor
maintains any Inventory:

 

Mailing Address

--------------------------------------------------------------------------------

 

County

--------------------------------------------------------------------------------

 

State

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

3 Insert Lien Grantor’s “location” determined as provided in UCC Section 9-307.

 

E-2

--------------------------------------------------------------------------------

(c) The following are the names and addresses of all Persons (other than the
Lien Grantor) that have possession of any of the Lien Grantor’s Inventory:

 

Mailing Address

--------------------------------------------------------------------------------

 

County

--------------------------------------------------------------------------------

 

State

--------------------------------------------------------------------------------

 

2. Prior Locations. c) Set forth below is the information required by paragraphs
b) and (a) of Part B–1 above with respect to each other location or place of
business maintained by the Lien Grantor at any time during the past five years:

 

(a) Set forth below is the information required by paragraphs (b) and (c) of
Part B–1 above with respect to each other location or bailee where or with whom
any of the Lien Grantor’s Inventory has been lodged at any time during the past
four months:

 

C. Search Reports.

 

Attached hereto as Schedule [4] is a true copy of a file search report from the
central UCC filing office in each jurisdiction identified in Part A–3 and Part B
above with respect to each name set forth in Part A–1 and Part A–2 above
(searches in local filing offices, if any, are not required). Attached hereto as
Schedule [5] is a true copy of each financing statement or other filing
identified in such file search reports.

 

D. UCC Filings.

 

Attached hereto as Schedule [6] is a schedule setting forth filing information
with respect to the filings referred to in Part A-4 and Part B above. All filing
fees and taxes payable in connection with such filings have been paid before or
at the time of the filings.

 

IN WITNESS WHEREOF, I have hereunto set my hand this          day of
                    ,             .

 

--------------------------------------------------------------------------------

Name:

Title:

 

E-3

--------------------------------------------------------------------------------

Schedule [1]

to Perfection Certificate

 

CHANGES IN CORPORATE STRUCTURE

 

E-4

--------------------------------------------------------------------------------

Schedule [3]

to Perfection Certificate

 

DESCRIPTION OF COLLATERAL

 

All Debtor’s personal property.

 

E-5

--------------------------------------------------------------------------------

Schedule [6] to

Perfection Certificate

 

SCHEDULE OF FILINGS

 

AGAINST                     ,

AS DEBTOR

 

Filing Office

--------------------------------------------------------------------------------

 

File Number

--------------------------------------------------------------------------------

 

Date of Filing4

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

4 Also indicate lapse date, if other than fifth anniversary.

 

E-6

--------------------------------------------------------------------------------

EXHIBIT F

to Security Agreement

 

ISSUER CONTROL AGREEMENT

 

ISSUER CONTROL AGREEMENT dated as of             ,              among
                     (the “Lien Grantor”), JPMORGAN CHASE BANK, as Collateral
Agent (the “Secured Party”), and                      (the “Issuer”). All
references herein to the “UCC” refer to the Uniform Commercial Code as in effect
from time to time in [Issuer’s jurisdiction of incorporation].

 

W I T N E S S E T H :

 

WHEREAS, the Lien Grantor is the registered holder of [specify Pledged
Uncertificated Securities issued by the Issuer] issued by the Issuer (the
“Securities”);

 

WHEREAS, pursuant to an Amended and Restated Guarantee and Security Agreement
dated as of June 28, 2004 (as such agreement may be amended and/or supplemented
from time to time, the “Security Agreement”), the Lien Grantor has granted to
the Secured Party a continuing security interest (the “Security Interest”) in
all right, title and interest of the Lien Grantor in, to and under the
Securities, whether now existing or hereafter arising; and

 

WHEREAS, the parties hereto are entering into this Agreement in order to perfect
the Security Interests on the Securities;

 

NOW, THEREFORE, the parties hereto agree as follows:

 

Section 1. Nature of Securities. The Issuer confirms that (i) the Securities are
“uncertificated securities” (as defined in Section 8-102 of the UCC) and (ii)
the Lien Grantor is registered on the books of the Issuer as the registered
holder of the Securities.

 

Section 2. Instructions. The Issuer agrees to comply with any “instruction” (as
defined in Section 8-102 of the UCC) originated by the Secured Party and
relating to the Securities without further consent by the Lien Grantor or any
other person. The Lien Grantor consents to the foregoing agreement by the
Issuer.

 

Section 3. Waiver of Lien; Waiver of Set-off. The Issuer waives any security
interest, lien or right of set-off that it may now have or hereafter acquire in
or with respect to the Securities. The Issuer’s obligations in respect of the

 

F-1

--------------------------------------------------------------------------------

Securities will not be subject to deduction, set-off or any other right in favor
of any person other than the Secured Party.

 

Section 4. Choice of Law. This Agreement shall be governed by the laws of
[Issuer’s jurisdiction of incorporation].

 

Section 5. Conflict with Other Agreements. There is no agreement (except this
Agreement) between the Issuer and the Lien Grantor with respect to the
Securities [except for [identify any existing other agreements] (the “Existing
Other Agreements”)]. In the event of any conflict between this Agreement (or any
portion hereof) and any other agreement [(including any Existing Other
Agreement)] between the Issuer and the Lien Grantor with respect to the
Securities, whether now existing or hereafter entered into, the terms of this
Agreement shall prevail.

 

Section 6. Amendments. No amendment or modification of this Agreement or waiver
of any right hereunder shall be binding on any party hereto unless it is in
writing and is signed by all the parties hereto.

 

Section 7. Notice of Adverse Claims. Except for the claims and interests of the
Secured Party and the Lien Grantor in the Securities, the Issuer does not know
of any claim to, or interest in, the Securities. If any person asserts any lien,
encumbrance or adverse claim (including any writ, garnishment, judgment,
attachment, execution or similar process) against the Securities, the Issuer
will promptly notify the Secured Party and the Lien Grantor thereof.

 

Section 8. Maintenance of Securities. In addition to, and not in lieu of, the
obligation of the Issuer to honor instructions as agreed in Section 2 hereof,
the Issuer agrees as follows:

 

(i) Lien Grantor Instructions; Notice of Exclusive Control. So long as the
Issuer has not received a Notice of Exclusive Control (as defined below), the
Issuer shall comply with instructions of the Lien Grantor or any duly authorized
agent of the Lien Grantor in respect of the Securities. After the Issuer
receives a written notice from the Secured Party that it is exercising exclusive
control over the Securities (a “Notice of Exclusive Control”), the Issuer will
cease complying with instructions of the Lien Grantor or any of its agents.

 

(ii) Non-Cash Dividends and Distributions. After the Issuer receives a Notice of
Exclusive Control, the Issuer shall deliver to the Secured Party all dividends,
interest and other distributions paid or made upon or with respect to the
Securities.

 

F-2

--------------------------------------------------------------------------------

(iii) Voting Rights. Until the Issuer receives a Notice of Exclusive Control,
the Lien Grantor shall be entitled to direct the Issuer with respect to voting
the Securities.

 

(iv) Statements and Confirmations. The Issuer will promptly send copies of all
material notices and other correspondence concerning the Securities
simultaneously to each of the Lien Grantor and the Secured Party at their
respective addresses specified in Section 11 hereof.

 

(v) Tax Reporting. All items of income, gain, expense and loss recognized in
respect of the Securities shall be reported to the Internal Revenue Service and
all applicable state and local taxing authorities under the name and taxpayer
identification number of the Lien Grantor.

 

Section 9. Representations, Warranties and Covenants of the Issuer. The Issuer
makes the following representations, warranties and covenants:

 

(i) This Agreement is a valid and binding agreement of the Issuer enforceable in
accordance with its terms.

 

(ii) The Issuer has not entered into, and until the termination of this
Agreement will not enter into, any agreement with any other person relating to
the Securities pursuant to which it has agreed, or will agree, to comply with
instructions (as defined in Section 8-102 of the UCC) of such person. The Issuer
has not entered into any other agreement with the Lien Grantor or the Secured
Party purporting to limit or condition the obligation of the Issuer to comply
with instructions as agreed in Section 2 hereof.

 

Section 10. Successors. This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and their respective successors and assigns.

 

Section 11. Notices. Each notice, request or other communication given to any
party hereunder shall be in writing (which term includes facsimile or other
electronic transmission) and shall be effective (i) when delivered to such party
at its address specified below, (ii) when sent to such party by facsimile or
other electronic transmission, addressed to it at its facsimile number or
electronic address specified below, and such party sends back an electronic
confirmation of receipt or (iii) ten days after being sent to such party by
certified or registered United States mail, addressed to it at its address
specified below, with first class or airmail postage prepaid:

 

Lien Grantor:

 

Secured Party:

 

F-3

--------------------------------------------------------------------------------

Issuer:

 

Any party may change its address, facsimile number and/or e-mail address for
purposes of this Section by giving notice of such change to the other parties in
the manner specified above.

 

Section 12. Termination. The rights and powers granted herein to the Secured
Party (i) have been granted in order to perfect the Security Interest, (ii) are
powers coupled with an interest and (iii) will not be affected by any bankruptcy
of the Lien Grantor or any lapse of time. The obligations of the Issuer
hereunder shall continue in effect until the Secured Party has notified the
Issuer in writing that the Security Interest has been terminated pursuant to the
Security Agreement.

 

Section 13. Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.

 

[NAME OF LIEN GRANTOR]

By:

 

 

--------------------------------------------------------------------------------

    Name:     Title:

JPMORGAN CHASE BANK,

as Collateral Agent

By:

 

 

--------------------------------------------------------------------------------

    Name:     Title:

[NAME OF ISSUER]

By:

 

 

--------------------------------------------------------------------------------

   

Name:

    Title:

 

F-4

--------------------------------------------------------------------------------

Exhibit A

 

[Letterhead of Secured Party]

 

[Date]

 

[Name and Address of Issuer]

 

Attention:                             

 

Re: Notice of Exclusive Control

 

Ladies and Gentlemen:

 

As referenced in the Issuer Control Agreement dated as of             ,         
among [name of Lien Grantor], us and you (a copy of which is attached), we
notify you that we will hereafter exercise exclusive control over [specify
Pledged Uncertificated Securities] registered in the name of [name of Lien
Grantor] (the “Securities”). You are instructed not to accept any directions or
instructions with respect to the Securities from any person other than the
undersigned unless otherwise ordered by a court of competent jurisdiction.

 

You are instructed to deliver a copy of this notice by facsimile transmission to
[name of Lien Grantor].

 

 

Very truly yours,

JPMORGAN CHASE BANK, as Collateral Agent

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

cc: [name of Lien Grantor]

 

F-5

--------------------------------------------------------------------------------

EXHIBIT G

to Security Agreement

 

SECURITIES ACCOUNT CONTROL AGREEMENT

 

SECURITIES ACCOUNT CONTROL AGREEMENT dated as of             ,             
among                      (the “Lien Grantor”), JPMORGAN CHASE BANK, as
Collateral Agent (the “Secured Party”), and              (the “Securities
Intermediary”). All references herein to the “UCC” refer to the Uniform
Commercial Code as in effect from time to time in the State of New York. Terms
defined in the UCC have the same meanings when used herein.

 

W I T N E S S E T H :

 

WHEREAS, the Lien Grantor is the entitlement holder with respect to the Account
(as defined below);

 

WHEREAS, pursuant to an Amended and Restated Guarantee and Security Agreement
dated as of June 28, 2004 (as such agreement may be amended and/or supplemented
from time to time, the “Security Agreement”), the Lien Grantor has granted to
the Secured Party a continuing security interest (the “Security Interest”) in
all right, title and interest of the Lien Grantor in, to and under the Account,
all financial assets credited thereto and all security entitlements in respect
thereof, whether now owned or existing or hereafter acquired or arising; and

 

WHEREAS, the parties hereto are entering into this Agreement in order to perfect
the Security Interest on the Account, all financial assets from time to time
credited thereto and all security entitlements in respect thereof;

 

NOW, THEREFORE, the parties hereto agree as follows:

 

Section 1. Establishment of Account. The Securities Intermediary confirms that:

 

(i) the Securities Intermediary has established account number [identify account
number] in the name of “[name of Lien Grantor]” (such account and any successor
account, the “Account”),

 

(ii) the Account is a “securities account” as defined in Section 8-501 of the
UCC,

 

G-1

--------------------------------------------------------------------------------

(iii) the Securities Intermediary is acting as a “securities intermediary” (as
defined in Section 8-102 of the UCC) in respect of the Account,

 

(iv) the Securities Intermediary shall, subject to the terms of this Agreement,
treat the Lien Grantor as entitled to exercise the rights that comprise all
financial assets from time to time credited to the Account,

 

(v) all property delivered to the Securities Intermediary by or on behalf of the
Lien Grantor will be promptly credited to the Account, and

 

(vi) all financial assets (except cash) credited to the Account will be
registered in the name of the Securities Intermediary, indorsed to the
Securities Intermediary or in blank or credited to another securities account
maintained in the name of the Securities Intermediary and in no case will any
financial asset credited to the Account be registered in the name of the Lien
Grantor, payable to the order of the Lien Grantor or specially indorsed to the
Lien Grantor unless such financial asset has been further indorsed to the
Securities Intermediary or in blank.

 

Section 2. “Financial Assets” Election. The parties hereto agree that each item
of property (whether investment property, financial asset, security, instrument,
cash or other property) credited to the Account shall be treated as a “financial
asset” within the meaning of Sections 8-102(a)(9) and 8-103 of the UCC.

 

Section 3. Entitlement Orders. The Securities Intermediary agrees to comply with
any “entitlement order” (as defined in Section 8-102 of the UCC) originated by
the Secured Party and relating to the Account or any financial asset credited
thereto without further consent by the Lien Grantor or any other person. The
Lien Grantor consents to the foregoing agreement by the Securities Intermediary.

 

Section 4. Waiver of Lien; Waiver of Set-off. The Securities Intermediary waives
any security interest, lien or right to make deductions or setoffs that it may
now have or hereafter acquire in or with respect to the Account, any financial
asset credited thereto or any security entitlement in respect thereof (except
that the Securities Intermediary may set off all amounts due to it in respect of
its customary fees and expenses for the routine maintenance and operation of the
Account). Neither the financial assets credited to the Account nor the security
entitlements in respect thereof will be subject to deduction, set-off, banker’s
lien, or any other right in favor of any person other than the Secured Party
(except that the Securities Intermediary may set off all amounts due to it in
respect of its customary fees and expenses for the routine maintenance and
operation of the Account).

 

G-2

--------------------------------------------------------------------------------

Section 5. Choice of Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York. The State of New York shall
be deemed to be the Securities Intermediary’s jurisdiction for purposes of the
UCC (including, without limitation, Section 8-110 thereof).

 

Section 6. Conflict with Other Agreements. There is no agreement (except this
Agreement) between the Securities Intermediary and the Lien Grantor with respect
to the Account [except for [identify any existing other agreements] (the
“Existing Other Agreements”)]. In the event of any conflict between this
Agreement (or any portion hereof) and any other agreement [(including any
Existing Other Agreement)] between the Securities Intermediary and the Lien
Grantor with respect to the Account, whether now existing or hereafter entered
into, the terms of this Agreement shall prevail. [If any Existing Other
Agreement does not specify that it is governed by the laws of New York, such
Existing Other Agreement is hereby amended to specify that it is governed by the
laws of New York.]

 

Section 7. Amendments. No amendment or modification of this Agreement or waiver
of any right hereunder shall be binding on any party hereto unless it is in
writing and is signed by all the parties hereto.

 

Section 8. Notice of Adverse Claims. Except for the claims and interests of the
Secured Party and the Lien Grantor, the Securities Intermediary does not know of
any claim to, or interest in, the Account, any financial asset credited thereto
or any security entitlement in respect thereof. If any person asserts any lien,
encumbrance or adverse claim (including any writ, garnishment, judgment,
attachment, execution or similar process) against the Account, any financial
asset credited thereto or any security entitlement in respect thereof, the
Securities Intermediary will promptly notify the Secured Party and the Lien
Grantor thereof.

 

Section 9. Maintenance of Account. In addition to, and not in lieu of, the
obligation of the Securities Intermediary to honor entitlement orders as agreed
in Section 3 hereof, the Securities Intermediary agrees to maintain the Account
as follows:

 

(i) Lien Grantor Entitlement Orders; Notice of Exclusive Control. So long as the
Securities Intermediary has not received a Notice of Exclusive Control (as
defined below), the Securities Intermediary shall, subject to paragraph (iii)
below, comply with entitlement orders of the Lien Grantor or any duly authorized
agent of the Lien Grantor in respect of the Account and any or all financial
assets credited thereto. After the Securities Intermediary receives a written
notice from the Secured Party that is exercising exclusive control over the
Account (a “Notice of Exclusive Control”), the Securities Intermediary will
cease complying with entitlement orders of the Lien Grantor or any of its
agents.

 

G-3

--------------------------------------------------------------------------------

(ii) Voting Rights. Until the Securities Intermediary receives a Notice of
Exclusive Control, the Lien Grantor shall be entitled to direct the Securities
Intermediary with respect to the voting of any financial assets credited to the
Account.

 

(iii) Permitted Investments. Until the Securities Intermediary receives a Notice
of Exclusive Control, the Lien Grantor shall be entitled to direct the
Securities Intermediary with respect to the selection of investments to be made
and credited to the Account; provided that the Securities Intermediary shall not
honor any instruction or entitlement order to purchase any investment except
investments of a type described in Exhibit B hereto.1

 

(iv) Statements and Confirmations. The Securities Intermediary will promptly
send copies of all statements, confirmations and other correspondence concerning
the Account and/or any financial assets credited thereto simultaneously to each
of the Lien Grantor and the Secured Party at their respective addresses
specified in Section 12 hereof.

 

(v) Tax Reporting. All items of income, gain, expense and loss recognized in the
Account or in respect of any financial assets credited thereto shall be reported
to the Internal Revenue Service and all state and local taxing authorities under
the name and taxpayer identification number of the Lien Grantor.

 

Section 10. Representations, Warranties and Covenants of the Securities
Intermediary. The Securities Intermediary makes the following representations,
warranties and covenants:

 

(i) The Account has been established as set forth in Section 1 above and will be
maintained in the manner set forth herein until this Agreement is terminated.
The Securities Intermediary will not change the name or account number of the
Account without the prior written consent of the Secured Party.

 

(ii) No financial asset credited to the Account is or will be registered in the
name of the Lien Grantor, payable to the order of the Lien Grantor, or specially
indorsed to the Lien Grantor, unless such financial asset has been further
indorsed by the Lien Grantor to the Securities Intermediary or in blank.

 

(iii) This Agreement is a valid and binding agreement of the Securities
Intermediary enforceable in accordance with its terms.

--------------------------------------------------------------------------------

1 This Schedule should list the types of investments that are Permitted
Investments.

 

G-4

--------------------------------------------------------------------------------

(iv) The Securities Intermediary has not entered into, and until the termination
of this Agreement will not enter into, any agreement with any person (other than
the Secured Party) relating to the Account and/or any financial asset credited
thereto pursuant to which it has agreed, or will agree, to comply with
entitlement orders of such person. The Securities Intermediary has not entered
into any other agreement with the Lien Grantor or the Secured Party purporting
to limit or condition the obligation of the Securities Intermediary to comply
with entitlement orders as agreed in Section 3 hereof.

 

Section 11. Successors. This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and their respective successors and assigns.

 

Section 12. Notices. Each notice, request or other communication given to any
party hereunder shall be in writing (which term includes facsimile or other
electronic transmission) and shall be effective (i) when delivered to such party
at its address specified below, (ii) when sent to such party by facsimile or
other electronic transmission, addressed to it at its facsimile number or
electronic address specified below, and such party sends back an electronic
confirmation of receipt or (iii) ten days after being sent to such party by
certified or registered United States mail, addressed to it at its address
specified below, with first class or airmail postage prepaid:

 

Lien Grantor:

 

Secured Party:

 

Securities Intermediary:

 

Any party may change its address, facsimile number and/or e-mail address for
purposes of this Section by giving notice of such change to the other parties in
the manner specified above.

 

Section 13. Termination. The rights and powers granted herein to the Secured
Party (i) have been granted in order to perfect the Security Interest, (ii) are
powers coupled with an interest and (iii) will not be affected by any bankruptcy
of the Lien Grantor or any lapse of time. The obligations of the Securities
Intermediary hereunder shall continue in effect until the Secured Party has
notified the Securities Intermediary in writing that the Security Interest has
been terminated pursuant to the terms of the Security Agreement or that the
Secured Party has consented to the termination of this agreement together with
the related account agreement.

 

G-5

--------------------------------------------------------------------------------

[NAME OF LIEN GRANTOR]

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

JPMORGAN CHASE BANK,
as Collateral Agent

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

[NAME OF SECURITIES INTERMEDIARY]

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

G-6

--------------------------------------------------------------------------------

Exhibit A

 

[Letterhead of Secured Party]

 

[Date]

 

[Name and Address of Securities Intermediary]

 

Attention:                         

 

Re: Notice of Exclusive Control

 

Ladies and Gentlemen:

 

As referenced in the Securities Account Control Agreement dated as of
            ,          among [name of Lien Grantor], us and you (a copy of which
is attached), we notify you that we will hereafter exercise exclusive control
over securities account number                      (the “Account”), all
financial assets from time to time credited thereto and all security
entitlements in respect thereof. You are instructed not to accept any
directions, instructions or entitlement orders with respect to the Account or
the financial assets credited thereto from any person other than the undersigned
unless otherwise ordered by a court of competent jurisdiction.

 

You are instructed to deliver a copy of this notice by facsimile transmission to
[name of Lien Grantor].

 

Very truly yours,

 

JPMORGAN CHASE BANK,

as Collateral Agent

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

cc: [name of Lien Grantor]

 

G-7

--------------------------------------------------------------------------------

Exhibit B

 

Permitted Investments

 

G-8

--------------------------------------------------------------------------------

Exhibit H

to Security Agreement

 

DEPOSIT ACCOUNT CONTROL AGREEMENT

 

DEPOSIT ACCOUNT CONTROL AGREEMENT dated as of             ,          among
                     (the “Lien Grantor”), JPMORGAN CHASE BANK, as Collateral
Agent (the “Secured Party”), and                      (the “Bank”). All
references herein to the “UCC” refer to the Uniform Commercial Code as in effect
from time to time in the State of New York. Terms defined in the UCC have the
same meanings when used herein.

 

W I T N E S S E T H :

 

WHEREAS, the Lien Grantor is the Bank’s customer (as defined in Section
4-104(1)(e) of the UCC) with respect to the Account (as defined below);

 

WHEREAS, pursuant to an Amended and Restated Guarantee and Security Agreement
dated as of June 28, 2004 (as such agreement may be amended and/or supplemented
from time to time, the “Security Agreement”), the Lien Grantor has granted to
the Secured Party a continuing security interest (the “Security Interest”) in
all right, title and interest of the Lien Grantor in, to and under the Account;
and

 

WHEREAS, the parties hereto are entering into this Agreement in order to perfect
the Security Interest on the Account and any and all funds or deposits from time
to time held therein or credited thereto, whether now owned or existing or
hereafter acquired or arising;

 

NOW, THEREFORE, the parties hereto agree as follows:

 

Section 1. Establishment Of Account. The Bank confirms that:

 

(i) the Bank has established account number [identify account number] in the
name of “[name of Lien Grantor]” (such account and any successor account, the
“Account”);

 

(ii) the Account is a “deposit account” as defined in Section 9-102(a)(29) of
the UCC; and

 

(iii) the Bank is a “bank” (as defined in section 9-102 of the UCC) and is
acting in such capacity in respect of the Account.

 

H-1

--------------------------------------------------------------------------------

Section 2. Instructions. The Lien Grantor, the Secured Party and the Bank agree
that the Bank will comply with (i) any instruction originated by the Secured
Party directing disposition of funds in the Account and (ii) any other
instruction from the Secured Party in respect of the Account, in each case
without further consent by the Lien Grantor or any other person.

 

Section 3. Waiver of Lien; Waiver of Set-off. The Bank waives any security
interest, lien or right to make deductions or setoffs that it may now have or
hereafter acquire in or with respect to the Account or any or all funds or
deposits from time to time held therein or credited thereto. No amounts credited
to the Account will be subject to deduction, set-off, banker’s lien, or any
other right in favor of any person other than the Secured Party (except that the
Bank may set off (i) all amounts due to it in respect of its customary fees and
expenses for the routine maintenance and operation of the Account and (ii) the
face amount of any checks that have been credited to the Account but are
subsequently returned unpaid because of uncollected or insufficient funds).

 

Section 4. Choice of Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York. The State of New York shall
be deemed to be the bank’s jurisdiction (as defined in Section 9-304 of the UCC)
with respect to the Account.

 

Section 5. Conflict with Other Agreements. There is no agreement (except this
Agreement) between the Bank and the Lien Grantor with respect to the Account
[except for [identify any existing other agreements] (the “Existing Other
Agreements”)]. In the event of any conflict between this Agreement (or any
portion hereof) and any other agreement [(including any Existing Other
Agreement)] between the Bank and the Lien Grantor with respect to the Account or
any or all funds or deposits from time to time held therein or credited thereto,
whether now existing or hereafter entered into, the terms of this Agreement
shall prevail. [If any Existing Other Agreement does not specify that it is
governed by the laws of the State of New York, such Existing Other Agreement is
hereby amended to specify that it is governed by the laws of the State of New
York.]

 

Section 6. Amendments. No amendment or modification of this Agreement or waiver
of any right hereunder shall be binding on any party hereto unless it is in
writing and is signed by all the parties hereto.

 

Section 7. Notice of Adverse Claims. Except for the claims and interests of the
Secured Party and the Lien Grantor, the Bank does not know of any claim to, or
interest in, the Account or any or all funds or deposits held therein or
credited thereto. If any person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, attachment, execution or similar
process) against the Account or any or all funds or deposits held therein or
credited thereto, the Bank will promptly notify the Secured Party and the Lien
Grantor thereof.

 

H-2

--------------------------------------------------------------------------------

Section 8. Maintenance of Account. In addition to, and not in lieu of, the
obligation of the Bank to honor instructions originated by the Secured Party as
agreed in Section 2 hereof, the Bank agrees to maintain the Account as follows:

 

(i) Lien Grantor Entitlement Orders; Notice of Exclusive Control. So long as the
Bank has not received a Notice of Exclusive Control (as defined below), the Bank
may comply with instructions originated by the Lien Grantor or any duly
authorized agent of the Lien Grantor in respect of the Account and any or all
funds or deposits held therein or credited thereto. After the Bank receives a
written notice from the Secured Party that it is exercising exclusive control
over the Account (a “Notice of Exclusive Control”), the Bank will cease
complying with instructions originated by the Lien Grantor or any of its agents.

 

(ii) Statements. The Bank will promptly send copies of all statements and other
correspondence concerning the Account simultaneously to each of the Lien Grantor
and the Secured Party at their respective addresses specified in Section 11
hereof.

 

(iii) Tax Reporting. All items of income, gain, expense and loss recognized in
the Account or in respect of any funds or deposits held therein or credited
thereto shall be reported to the Internal Revenue Service and all state and
local taxing authorities under the name and taxpayer identification number of
the Lien Grantor.

 

Section 9. Representations, Warranties and Covenants of the Bank. The Bank makes
the following representations, warranties and covenants:

 

(i) The Account has been established as set forth in Section 1 above and will be
maintained in the manner set forth herein until this Agreement is terminated.
The Bank will not change the name or account number of the Account without the
prior written consent of the Secured Party.

 

(ii) Neither the Account nor any funds or deposits at any time held therein or
credited thereto is or will be evidenced by any instrument (as defined in
Section 9-102 of the UCC) or constitutes or will constitute investment property
(as defined in Section 9-102 of the UCC).

 

(iii) This Agreement is a valid and binding agreement of the Bank enforceable in
accordance with its terms.

 

(iv) The Bank has not entered into, and until the termination of this Agreement
will not enter into, any agreement with any person (other than the Secured
Party) relating to the Account and/or any funds or deposits held therein or
credited thereto pursuant to which it has agreed, or

 

H-3

--------------------------------------------------------------------------------

will agree, to comply with instructions of such person. The Bank has not entered
into any other agreement with the Lien Grantor or the Secured Party purporting
to limit or condition the obligation of the Bank to comply with instructions
originated by the Secured Party as agreed in Section 2 hereof.

 

Section 10. Successors. This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and their respective successors and assigns.

 

Section 11. Notices. Each notice, request or other communication given to any
party hereunder shall be in writing (which term includes facsimile or other
electronic transmission) and shall be effective (i) when delivered to such party
at its address specified below, (ii) when sent to such party by facsimile or
other electronic transmission, addressed to it at its facsimile number or
electronic address specified below, and such party sends back an electronic
confirmation of receipt or (iii) ten days after being sent to such party by
certified or registered United States mail, addressed to it at its address
specified below, with first class or airmail postage prepaid:

 

Lien Grantor:

 

Secured Party:

 

Bank:

 

Any party may change its address, facsimile number and/or e-mail address for
purposes of this Section by giving notice of such change to the other parties in
the manner specified above.

 

Section 12. Termination. The rights and powers granted herein to the Secured
Party (i) have been granted in order to perfect the Security Interest, (ii) are
powers coupled with an interest and (iii) will not be affected by any bankruptcy
of the Lien Grantor or any lapse of time. The obligations of the Bank hereunder
shall continue in effect until the Secured Party has notified the Bank in
writing that the Security Interest has been terminated pursuant to the terms of
the Security Agreement.

 

H-4

--------------------------------------------------------------------------------

[NAME OF LIEN GRANTOR]

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

JPMORGAN CHASE BANK,
as Collateral Agent

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

[NAME OF BANK]

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

H-5

--------------------------------------------------------------------------------

Exhibit A

 

[Letterhead of Secured Party]

 

[Date]

 

[Name and Address of Bank]

 

Attention:                                         

 

Re: Notice of Exclusive Control

 

Ladies and Gentlemen:

 

As referenced in the Deposit Account Control Agreement dated as of             ,
         among [name of Lien Grantor], us and you (a copy of which is attached),
we notify you that we will hereafter exercise exclusive control over deposit
account number                      (the “Account”) and all funds and deposits
from time to time held therein or credited thereto. You are instructed not to
accept any directions or instructions with respect to the Account or the funds
or deposits held therein or credited thereto from any person other than the
undersigned unless otherwise ordered by a court of competent jurisdiction.

 

You are instructed to deliver a copy of this notice by facsimile transmission to
[name of Lien Grantor].

 

Very truly yours,

JPMORGAN CHASE BANK,

as Collateral Agent

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

cc: [name of Lien Grantor]

 

H-6

--------------------------------------------------------------------------------

EXHIBIT I-1

to Security Agreement

 

ASSIGNMENT OF GOVERNMENT CONTRACT

 

FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer unto
JPMORGAN CHASE BANK, as Collateral Agent, all monies due or to become due under
[identify qualifying contract].

 

I-1-1

--------------------------------------------------------------------------------

EXHIBIT I-2

to Security Agreement

 

NOTICE OF ASSIGNMENT OF GOVERNMENT CONTRACT

 

TO:                                          , [address to one of the parties
specified in FAR 32.802(e)].

 

This has reference to Contract No.          dated                     , entered
into between [NAME OF LIEN GRANTOR], [address] (the “Contractor”), and
                             [governmental agency, name of office, and address],
for                                  [describe nature of the contract].

 

Moneys due or to become due under the contract described above have been
assigned to the undersigned under the provisions of the Assignment of Claims Act
of 1940, as amended, 31 U.S.C. Section 3727 and 41 U.S.C. Section 15.

 

A true copy of the instrument of assignment executed by the Contractor on
         [date], is attached to the original notice.

 

Payments due or to become due under this contract should be made to the
undersigned assignee.

 

Please return to the undersigned the three enclosed copies of this notice with
appropriate notations showing the date and hour of receipt, and signed by the
person acknowledging receipt on behalf of the addressee.

 

Very truly yours,

JPMORGAN CHASE BANK, as Collateral Agent

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

I-2-1

--------------------------------------------------------------------------------

ACKNOWLEDGMENT

 

Receipt is acknowledged of the above notice and of a copy of the instrument of
assignment. They were received at          (a.m.) (p.m.) on                 ,
            .

 

 

--------------------------------------------------------------------------------

[signature and title]

 

On Behalf of

 

--------------------------------------------------------------------------------

[name of addressee of this notice]

 

I-2-2

--------------------------------------------------------------------------------

Exhibit D

Page 1 of 2

 

Form of Borrowing Base Certificate

 

Kindred Healthcare, Inc.

Monthly Borrowing Base Certificate

For the Month Ended                     

 

(000’s US$)

 

A.   Net available accounts receivable (from page 2 of 2)           $ 0         
             

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

       B.   Eligible real estate (from page 2 of 2)           $ 0             
         

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

       C.   Borrowing Base (lines A + B)                  $ 0                  
    

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

D.   Lower of:                          Borrowing Base (line C)           $ 0   
                   

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                              $ 0                       

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

    Revolving Credit Commitment           $ 300,000                       

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

       E.   Revolving Credit Outstandings                          Revolving
Loans    $             0                       

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                  Letter of Credit    $ 0                       

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                  Total Revolving Credit Outstandings                  $
            0                       

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

G.   Available credit (overadvance) (line D—E)                  $ 0             
         

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

Officer’s Certification:

 

Pursuant to the Amended and Restated Credit Agreement dated as of June     ,
2004, among Kindred Healthcare, Inc., the Lenders party thereto, and JPMorgan
Chase Bank, as Administrative Agent and Collateral Agent (as heretofore amended,
the “Credit Agreement”), the undersigned Financial Officer of Kindred
Healthcare, Inc. certifies that the information provided in this certificate to
JP Morgan Chase Bank, as Collateral Agent, is true and correct based on the
accounting records of Kindred Healthcare, Inc. and that the amounts reflected
herein have been calculated in compliance with the provisions of the Credit
Agreement

 

Kindred Healthcare, Inc.

 

 

Signature & Title

       Date

 

*Borrowing Base Certificate to be accompanied by the documentation outlined in
Schedule 1 to Exhibit D*

--------------------------------------------------------------------------------

Exhibit D

Page 2 of 2

 

Kindred Healthcare Inc.

Monthly Borrowing Base Certificate

For the Month Ended             

(in 000’s US$)

 

Calculation of available accounts receivable

 

     Hospitals

--------------------------------------------------------------------------------

    SNF’s

--------------------------------------------------------------------------------

    Pharmacy

--------------------------------------------------------------------------------

    Aged A/R

--------------------------------------------------------------------------------

    Peoplefirst

--------------------------------------------------------------------------------

    Total

--------------------------------------------------------------------------------

Balance per A/R aging

                                           $ —  

Less ineligibles:

                                              

Over 120 days old

                                             —  

Private pay less than 120 days

                                             —  

Advance payments

                                             —  

Potential impairment reserve

                                             —  

In collection

                                             —  

Athena facility lien

                                             —  

Other (per terms of Credit Agreement)

                                             —       

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Total ineligibles

     —         —         —         —         —         —  

Less:

                                              

PIP Reserve

                                             —  

Dilution Reserve (as implemented)

                                             —       

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Total:

     —         —         —         —         —         —  

Total eligible A/R

     —         —         —         —         —         —  

Advance rate

     80 %     80 %     80 %     50 %     80 %      

Available A/R

   $ —       $ —       $ —       $ —       $ —       $ —  

Less Established Reserves:

                                              

Cost Report Liability Reserve

                                             —  

Interest Rate Agreement Reserve

                                             —  

Total Established Reserves:

     —         —         —         —         —         —  

Net available A/R

   $ —       $ —       $ —       $ —       $ —       $ —       

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Calculation of Eligible Real Estate

                                              

Adjusted EBITDA of Eligible Real Estate for 4 most recent fiscal quarters

                                              

Multiple factor

                                             5

Eligible Real Estate Borrowing Base Amount

                                           $ —                                 
             

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Schedule 1

To Exhibit D

Page 1 of 2

 

Kindred Healthcare, Inc.

Collateral Monitoring Reporting Requirements

Documents to be Submitted to the Bank

 

The following information is to be submitted on a monthly basis according to
Section 5.01(q) of the Amended and Restated Credit Agreement for all divisions
of Kindred Healthcare, Inc. including: Hospital, Health Services, Pharmacy and
Peoplefirst:

 

· Borrowing Base Certificate in the form of Exhibit D.

 

· Accounts Receivable (all divisions*):

 

1) Accounts receivable aging, consolidated and for each division.

2) Accounts receivable by payor class, consolidated and for each division.

3) Reconciliation of A/R aging report to general ledger and financial
statements.

4) Supporting documentation (system generated extract report where applicable)
for the A/R ineligibles/reserves as follows:

 

>120 days past invoice date

Private pay less than 120 days

Medicaid advance payments

Potential impairment reserve

In collection

Pledged collateral

PIP Reserve

Cost Report Liability Reserve

Interest Rate Agreement Reserve

All other ineligibles (per terms of Credit Agreement)

 

5) Patient census counts for hospital and health services divisions.

6) On a quarterly basis, accounts receivable rollforward by division.*

7) On a quarterly basis, top 10 accounts receivable balances for the commercial
payor class, aged including address and terms per the most recent aging.*

 

*Health Services Division to be excluded from requirements of 6 and 7 until such
time as divisional I/T systems are able to provide detailed consolidated
information.

 

· Eligible Real Estate (on a quarterly basis):

 

1) Individual facility balance sheets and income statements for all eligible
owned real estate included in the Borrowing Base, to include individual facility
financial results as well as allocation of overhead, interim adjustments, rent
and management fees.

--------------------------------------------------------------------------------

Schedule 1

To Exhibit D

Page 2 of 2

 

· Other

 

1) Consolidated financial statements (to be submitted per terms of Section 5 of
the Credit Agreement).

2) Forecasted facility usage and BBC availability (to be provided through annual
projections, submitted per terms of Section 5 of the Credit Agreement).

 

Submit to:

JPMorgan Chase Bank

Collateral Agent Services Group

Attn: Lisa Dee, Associate

270 Park Avenue – 20th Floor

New York, NY 10017

Phone: (212) 270-6265

Fax: (212) 270-7449

E-mail: lisa.dee@jpmorgan.com