Exhibit 10.8

CUSIP: 29358XAA2

CREDIT AGREEMENT

dated as of May 30, 2014

among

THE ENSIGN GROUP, INC.

as Borrower

THE LENDERS FROM TIME TO TIME PARTY HERETO

and

SUNTRUST BANK

as Administrative Agent

 

 

 

SUNTRUST ROBINSON HUMPHREY, INC.

as Joint Lead Arranger and Joint Book Manager

WELLS FARGO SECURITIES, LLC

as Joint Lead Arranger and Joint Book Manager

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Syndication Agent

BBVA COMPASS

as Co-Documentation Agent

and

FIFTH THIRD BANK

as Co-Documentation Agent

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TABLE OF CONTENTS

 

          Page  

ARTICLE I

   DEFINITIONS; CONSTRUCTION      1   

Section 1.1.

   Definitions      1   

Section 1.2.

   Classifications of Loans and Borrowings      38   

Section 1.3.

   Accounting Terms and Determination      38   

Section 1.4.

   Terms Generally      39   

ARTICLE II

   AMOUNT AND TERMS OF THE COMMITMENTS      40   

Section 2.1.

   General Description of Facilities      40   

Section 2.2.

   Revolving Loans      40   

Section 2.3.

   Procedure for Revolving Borrowings      40   

Section 2.4.

   Swingline Commitment      40   

Section 2.5.

   [Reserved]      42   

Section 2.6.

   Funding of Borrowings      42   

Section 2.7.

   Interest Elections      43   

Section 2.8.

   Optional Reduction and Termination of Commitments      43   

Section 2.9.

   Repayment of Loans      44   

Section 2.10.

   Evidence of Indebtedness      44   

Section 2.11.

   Optional Prepayments      45   

Section 2.12.

   Mandatory Prepayments      45   

Section 2.13.

   Interest on Loans      46   

Section 2.14.

   Fees      46   

Section 2.15.

   Computation of Interest and Fees      47   

Section 2.16.

   Inability to Determine Interest Rates      48   

Section 2.17.

   Illegality      48   

Section 2.18.

   Increased Costs      48   

Section 2.19.

   Funding Indemnity      49   

Section 2.20.

   Taxes      50   

Section 2.21.

   Payments Generally; Pro Rata Treatment; Sharing of Set-offs      53   

Section 2.22.

   Letters of Credit      54   

Section 2.23.

   Increase of Commitments; Additional Lenders      58   

Section 2.24.

   Mitigation of Obligations      61   

Section 2.25.

   Replacement of Lenders      61   

Section 2.26.

   Defaulting Lenders      62   

Section 2.27.

   Request for Extended Facilities      65   

Section 2.28.

   Refinancing Amendment      67    ARTICLE III    CONDITIONS PRECEDENT TO LOANS
AND LETTERS OF CREDIT      68   

Section 3.1.

   Conditions to Effectiveness      68   

Section 3.2.

   Conditions to Each Credit Event      71   

Section 3.3.

   Delivery of Documents      72   

Section 3.4.

   Termination of Existing Credit Facility      72   

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ARTICLE IV

  

REPRESENTATIONS AND WARRANTIES

     72   

Section 4.1.

   Existence; Power      72   

Section 4.2.

   Organizational Power; Authorization      72   

Section 4.3.

   Governmental Approvals; No Conflicts      72   

Section 4.4.

   Financial Statements      73   

Section 4.5.

   Litigation and Environmental Matters      73   

Section 4.6.

   Compliance with Laws and Agreements      73   

Section 4.7.

   Investment Company Act      73   

Section 4.8.

   Taxes      74   

Section 4.9.

   Use of Proceeds; Margin Regulations      74   

Section 4.10.

   ERISA      74   

Section 4.11.

   Ownership of Property; Insurance      75   

Section 4.12.

   Disclosure      75   

Section 4.13.

   Labor Relations      76   

Section 4.14.

   Subsidiaries      76   

Section 4.15.

   Solvency      76   

Section 4.16.

   [Reserved]      76   

Section 4.17.

   Collateral Documents      76   

Section 4.18.

   [Reserved]      77   

Section 4.19.

   Healthcare Matters      77   

Section 4.20.

   OFAC      79   

Section 4.21.

   Patriot Act      80    ARTICLE V    AFFIRMATIVE COVENANTS      80   

Section 5.1.

   Financial Statements and Other Information      80   

Section 5.2.

   Notices of Material Events      81   

Section 5.3.

   Existence; Conduct of Business      84   

Section 5.4.

   Compliance with Laws      84   

Section 5.5.

   Payment of Obligations      84   

Section 5.6.

   Books and Records      84   

Section 5.7.

   Visitation and Inspection      84   

Section 5.8.

   Maintenance of Properties; Insurance      85   

Section 5.9.

   Use of Proceeds; Margin Regulations      85   

Section 5.10.

   [Reserved]      85   

Section 5.11.

   Cash Management      85   

Section 5.12.

   Additional Subsidiaries and Collateral      86   

Section 5.13.

   Additional Negative Pledges; Leased Locations; Mortgages      88   

Section 5.14.

   Further Assurances      89   

Section 5.15.

   Health Care Matters      89   

Section 5.16.

   Post-Closing Matters      90   

Section 5.17.

   Limitations on Designation of Immaterial Subsidiaries      90   

Section 5.18.

   Limitations on Designation of Excluded Subsidiaries      91   

Section 5.19.

   Spin-Off Transaction      92   

 

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ARTICLE VI    FINANCIAL COVENANTS      93   

Section 6.1.

   Leverage Ratio      93   

Section 6.2.

   Interest/Rent Coverage Ratio      93    ARTICLE VII    NEGATIVE COVENANTS   
  93   

Section 7.1.

   Indebtedness and Preferred Equity      93   

Section 7.2.

   Liens      95   

Section 7.3.

   Fundamental Changes      97   

Section 7.4.

   Investments, Loans      97   

Section 7.5.

   Restricted Payments      99   

Section 7.6.

   Sale of Assets      101   

Section 7.7.

   Transactions with Affiliates      102   

Section 7.8.

   Restrictive Agreements      102   

Section 7.9.

   Sale and Leaseback Transactions      103   

Section 7.10.

   Hedging Transactions      103   

Section 7.11.

   Amendment to Material Documents      103   

Section 7.12.

   PropCo Master Leases      103   

Section 7.13.

   Accounting Changes      104   

Section 7.14.

   Government Regulation      104   

Section 7.15.

   Spin-Off      104    ARTICLE VIII    EVENTS OF DEFAULT      104   

Section 8.1.

   Events of Default      104   

Section 8.2.

   Application of Proceeds from Collateral      107    ARTICLE IX    THE
ADMINISTRATIVE AGENT      108   

Section 9.1.

   Appointment of the Administrative Agent      108   

Section 9.2.

   Nature of Duties of the Administrative Agent      109   

Section 9.3.

   Lack of Reliance on the Administrative Agent      109   

Section 9.4.

   Certain Rights of the Administrative Agent      110   

Section 9.5.

   Reliance by the Administrative Agent      110   

Section 9.6.

   The Administrative Agent in its Individual Capacity      110   

Section 9.7.

   Successor Administrative Agent      110   

Section 9.8.

   Withholding Tax      111   

Section 9.9.

   The Administrative Agent May File Proofs of Claim      112   

Section 9.10.

   Authorization to Execute Other Loan Documents      112   

Section 9.11.

   Collateral and Guaranty Matters      112   

Section 9.12.

   Co-Documentation Agents; Syndication Agent      112   

Section 9.13.

   Right to Realize on Collateral and Enforce Guarantee      112   

Section 9.14.

   Secured Bank Product Obligations and Hedging Obligations      113    ARTICLE
X    MISCELLANEOUS      113   

Section 10.1.

   Notices      113   

Section 10.2.

   Waiver; Amendments      116   

 

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Section 10.3.

   Expenses; Indemnification      118   

Section 10.4.

   Successors and Assigns      120   

Section 10.5.

   Governing Law; Jurisdiction; Consent to Service of Process      123   

Section 10.6.

   WAIVER OF JURY TRIAL      124   

Section 10.7.

   Right of Set-off      124   

Section 10.8.

   Counterparts; Integration      124   

Section 10.9.

   Survival      125   

Section 10.10.

   Severability      125   

Section 10.11.

   Confidentiality      125   

Section 10.12.

   Interest Rate Limitation      126   

Section 10.13.

   Waiver of Effect of Corporate Seal      126   

Section 10.14.

   Patriot Act      126   

Section 10.15.

   No Advisory or Fiduciary Responsibility      126   

Section 10.16.

   Location of Closing      127   

Section 10.17.

   Releases of Collateral      127   

Schedules

 

Schedule I

      Commitment Amounts

Schedule II

      Existing Letters of Credit

Schedule 1.1

   –    Subsidiary Agreements

Schedule 4.11

   –    Real Estate

Schedule 4.14

   –    Subsidiaries

Schedule 4.19

   –    Healthcare Matters

Schedule 5.16

   –    Post-Closing Matters

Schedule 7.1

   –    Existing Indebtedness

Schedule 7.2

   –    Existing Liens

Schedule 7.4

   –    Existing Investments

Schedule 7.8

   –    Existing Leases with Restrictive Agreements

Exhibits

 

Exhibit A

   –    Form of Assignment and Acceptance

Exhibit B

   –    Form of Guaranty and Security Agreement

Exhibit 2.3

   –    Form of Notice of Revolving Borrowing

Exhibit 2.4

   –    Form of Notice of Swingline Borrowing

Exhibit 2.7

   –    Form of Notice of Continuation/Conversion

Exhibit 3.1(b)(ii)

   –    Form of Secretary’s Certificate

Exhibit 3.1(b)(iv)

   –    Form of Officer’s Certificate

Exhibit 5.1(c)

   –    Form of Compliance Certificate

 

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT (as amended, restated, supplemented, or otherwise
modified, this “Agreement”) is made and entered into as of May 30, 2014, by and
among THE ENSIGN GROUP, INC., a Delaware corporation (the “Borrower”), the
several banks and other financial institutions and lenders from time to time
party hereto (the “Lenders”) and SUNTRUST BANK, in its capacity as
administrative agent for the Lenders (in such capacity, the “Administrative
Agent”), as issuing bank (in such capacity, an “Issuing Bank”) and as swingline
lender (in such capacity, the “Swingline Lender”).

W I T N E S S E T H:

WHEREAS, the Borrower has requested that the Lenders establish a $150,000,000
revolving credit facility in favor of the Borrower; and

WHEREAS, subject to the terms and conditions of this Agreement, the Lenders, the
Issuing Banks and the Swingline Lender, to the extent of their respective
Commitments as defined herein, are willing severally to establish the requested
revolving credit facility, letter of credit subfacility and swingline
subfacility in favor of the Borrower;

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

ARTICLE I

DEFINITIONS; CONSTRUCTION

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

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

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

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

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

“Acquisition Consideration Available Amount” shall mean 50% of the Available
Amount; provided that (i) the total Acquisition Consideration paid in connection
with the Acquisition of Excluded Subsidiaries and the aggregate amount of
Investments in Excluded Subsidiaries made for the purpose of financing the
construction, development, refurbishment or expansion of any health care
facility pursuant to Section 7.4(h) in reliance on the “Acquisition
Consideration Available Amount” shall not exceed $100,000,000 in the aggregate
during the term of this Agreement and (ii) the total Acquisition Consideration
paid in connection with the Acquisition of Excluded Subsidiaries and the
aggregate amount of Investments in Excluded Subsidiaries made for the purpose of
financing the construction, development, refurbishment or expansion of any
health care facility pursuant to Section 7.4(h) in reliance on the “Acquisition
Consideration Available Amount” shall not exceed 50% of the aggregate sum of all
amounts added to the Available Amount pursuant to clauses (a) through (c) of the
definition thereof.

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

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

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

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

 

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

“Aggregate Revolving Commitment Amount” shall mean the aggregate principal
amount of the Aggregate Revolving Commitments from time to time. On the Closing
Date, the Aggregate Revolving Commitment Amount is $150,000,000.

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

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

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

“Applicable Margin” shall mean, as of any date, with respect to all Loans
outstanding on such date or the letter of credit fee, as the case may be, the
percentage per annum determined by reference to the applicable Leverage Ratio in
effect on such date as set forth in the pricing grid below (the “Pricing Grid”);
provided that a change in the Applicable Margin resulting from a change in the
Leverage Ratio shall be effective on the second Business Day after the Borrower
delivers each of the financial statements required by Section 5.1(a) and (b) and
the Compliance Certificate required by Section 5.1(c); provided, further, that
if at any time the Borrower shall have failed to deliver such financial
statements and such Compliance Certificate when so required, the Applicable
Margin shall be at Level I as set forth in the Pricing Grid until such time as
such financial statements and Compliance Certificate are delivered, at which
time the Applicable Margin shall be determined as provided above.
Notwithstanding the foregoing, the Applicable Margin from the Closing Date until
the date by which the financial statements and Compliance Certificate for the
Fiscal Quarter ending September 30, 2014 are required to be delivered shall be
at Level V as set forth in the Pricing Grid. In the event that any financial
statement or Compliance Certificate delivered hereunder is shown to be
inaccurate (regardless of whether this Agreement or the Commitments are in
effect when such inaccuracy is discovered), and such inaccuracy, if corrected,
would have led to the application of a higher Applicable Margin based upon the
Pricing Grid (the “Accurate Applicable Margin”) for any period that such
financial statement or Compliance Certificate covered, then (i) the Borrower
shall promptly deliver to the Administrative Agent a correct financial statement
or Compliance Certificate, as the case may be, for such period, (ii) the
Applicable Margin shall be adjusted such that after giving effect to the
corrected financial statement or Compliance Certificate, as the case may be, the
Applicable Margin shall be reset to the Accurate Applicable Margin based upon
the Pricing Grid for such period and (iii) the Borrower shall promptly pay to
the Administrative Agent, for the account of the Lenders, the accrued additional
interest owing as a result of such Accurate Applicable Margin for such
period. The provisions of this definition shall not limit the rights of the
Administrative Agent and the Lenders with respect to Section 2.13(c) or Article
VIII.

 

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Pricing Grid

 

Pricing

Level

  

Leverage Ratio

  

Applicable

Margin for

Eurodollar

Loans

  

Applicable

Margin for

Base Rate

Loans

  

Applicable

Margin for

Letter of

Credit Fees

  

Applicable

Percentage for

Commitment

Fee

I    Greater than or equal to 2.50:1.00    3.25% per annum    2.25% per annum   
3.25% per annum    0.50% per annum II    Less than 2.50:1.00 but greater than or
equal to 2.00:1.00    3.00% per annum    2.00% per annum    3.00% per annum   
0.45% per annum III    Less than 2.00:1.00 but greater than or equal to
1.50:1.00    2.75% per annum    1.75% per annum    2.75% per annum   
0.40% per annum IV    Less than 1.50:1.00 but greater than or equal to 1.00:1.00
   2.50% per annum    1.50% per annum    2.50% per annum    0.35% per annum V   
Less than 1.00:1.00    2.25% per annum    1.25% per annum    2.25% per annum   
0.30% per annum

“Applicable Percentage” shall mean, as of any date, with respect to the
commitment fee as of such date, the percentage per annum determined by reference
to the Leverage Ratio in effect on such date as set forth in the Pricing Grid;
provided that a change in the Applicable Percentage resulting from a change in
the Leverage Ratio shall be effective on the second Business Day after which the
Borrower delivers each of the financial statements required by Section 5.1(a)
and (b) and the Compliance Certificate required by Section 5.1(c); provided,
further, that if at any time the Borrower shall have failed to deliver such
financial statements and such Compliance Certificate when so required, the
Applicable Percentage shall be at Level I as set forth in the Pricing Grid until
such time as such financial statements and Compliance Certificate are delivered,
at which time the Applicable Percentage shall be determined as provided above.
Notwithstanding the foregoing, the Applicable Percentage for the commitment fee
from the Closing Date until the date by which the financial statements and
Compliance Certificate for the Fiscal Quarter ending September 30, 2014 are
required to be delivered shall be at Level V as set forth in the Pricing Grid.
In the event that any financial statement or Compliance Certificate delivered
hereunder is shown to be inaccurate (regardless of whether this Agreement or the
Commitments are in effect when such inaccuracy is discovered), and such
inaccuracy, if corrected, would have led to the application of a higher
Applicable Percentage based upon the Pricing Grid (the “Accurate Applicable
Percentage”) for any period that such financial statement or Compliance
Certificate covered, then (i) the Borrower shall promptly deliver to the
Administrative Agent a correct financial statement or Compliance Certificate, as
the case may be, for such period, (ii) the Applicable Percentage shall be
adjusted such that after giving effect to the corrected financial statement or
Compliance Certificate, as the case may be, the Applicable Percentage shall be
reset to the Accurate Applicable Percentage based upon the Pricing Grid for such
period and (iii) the Borrower shall promptly pay to the Administrative Agent,
for the account of the Lenders, the accrued additional commitment fee owing as a
result of such Accurate Applicable Percentage for such period. The provisions of
this definition shall not limit the rights of the Administrative Agent and the
Lenders with respect to Section 2.13(c) or Article VIII.

 

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

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

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

(a) the aggregate amount of Equity Issuance Proceeds (including upon conversion
or exchange of a debt instrument into or for any Capital Stock (other than
Disqualified Capital Stock)) received by Borrower from or in exchange for the
issuance of Capital Stock (other than Disqualified Capital Stock and any
issuance or distribution of Capital Stock in connection with the Spin-Off
Transaction) after the Closing Date and on or prior to such date; plus

(b) the aggregate fair market value (determined as of the date of purchase
and/or acquisition) of the Capital Stock (other than Disqualified Capital Stock)
of any Person that is acquired by the Borrower in connection with a Permitted
Acquisition or other Acquisition permitted hereunder (the “Target Capital
Stock”) in exchange for Capital Stock (other than Disqualified Capital Stock) of
the Borrower that is issued by the Borrower to the seller(s) or issuer(s) of
such Target Capital Stock after the Closing Date and on or prior to such date;
plus

(c) the aggregate fair market value of assets or Real Estate (determined as of
the date of purchase and/or acquisition) acquired in exchange for Capital Stock
(other than Disqualified Capital Stock) of the Borrower after the Closing Date
and on or prior to such date; minus

(d) the aggregate amount of any (i) Acquisition Consideration for all Permitted
Acquisitions of Excluded Subsidiaries pursuant to Section 7.4(h) and
(ii) Restricted Payments made pursuant to Section 7.5(ix) (in each case, in
reliance on the then-outstanding Available Amount) made since the Closing Date
and on or prior to such date.

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

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

“Bank Product Provider” shall mean any Person that (i) is a Lender or an
Affiliate of a Lender that provides a Bank Product to a Loan Party and
(ii) except when the Bank Product Provider is either (A) Wells Fargo Bank,
National Association with respect to Bank Products in existence on the Closing
Date or (B) SunTrust Bank and its Affiliates, has provided prior written notice
to the Administrative Agent which has been acknowledged by the Borrower of
(x) the existence of such Bank Product, (y) the maximum dollar amount of
obligations arising thereunder (the “Bank Product Amount”) and (z) the
methodology to be used by such parties in determining the obligations under such
Bank Product from time to time; provided, the term “Bank Product Provider” shall
include any Person that is the Administrative Agent, an Affiliate of the
Administrative Agent, a Lender or an Affiliate of a Lender as of the Closing
Date or as of the date that such Person provides any Bank Product to any Loan
Party, but subsequently ceases to be the Administrative Agent, an Affiliate of
the Administrative Agent, a Lender or an Affiliate of a Lender, as the case may
be. In no event shall any Bank Product Provider acting in such capacity be
deemed a Lender for purposes hereof to the extent of and as to Bank Products

 

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except that each reference to the term “Lender” in Article IX and
Section 10.3(b) shall be deemed to include such Bank Product Provider and in no
event shall the approval of any such person in its capacity as Bank Product
Provider be required in connection with the release or termination of any
security interest or Lien of the Administrative Agent. The Bank Product Amount
may be changed from time to time upon written notice to the Administrative Agent
by the applicable Bank Product Provider. No Bank Product Amount may be
established at any time that a Default or Event of Default exists.

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

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

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

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

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

“Capital Lease Obligations” of any Person shall mean all obligations of such
Person to pay rent or other amounts under any lease (or other arrangement
conveying the right to use) of real or personal property, or a combination
thereof, which obligations are required to be classified and accounted for as
capital leases on a balance sheet of such Person under GAAP, and the amount of
such obligations shall be the capitalized amount thereof determined in
accordance with GAAP; provided that, (i) for the avoidance of doubt, any lease
of a property operated as a healthcare facility shall be accounted for as an
operating lease and not as a Capital Lease Obligation, and (ii) any lease that
is accounted for by any Person as an operating lease as of the Closing Date and
any lease entered into in the future that would have been accounted for as an
operating lease if such lease had been in effect on the Closing Date shall be
accounted for as an operating lease and not as a Capital Lease Obligation;
provided, that notwithstanding the foregoing clause (ii), any lease with annual
lease payments no greater than $2,500,000 individually or in the aggregate for
all such leases shall be treated as either an operating lease or a capital
lease, at the sole discretion of the Borrower.

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

 

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

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

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

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

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

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

 

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

“Closing Date Refinancing” shall have the meaning set forth in Section 5.9.

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

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

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

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

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

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

“Consolidated EBITDA” shall mean, for the Borrower and its Subsidiaries for any
period, an amount equal to the sum of (i) Consolidated Net Income for such
period plus (ii) to the extent deducted in determining Consolidated Net Income
for such period, and without duplication, (A) Consolidated Interest Expense,
amortization or write-off of debt discount and debt issuance costs and
commissions and discounts, premiums and other fees, expenses and charges
associated with Indebtedness including underwriting, arrangement and commitment
fees, letter of credit fees, and Bank Product fees and prepayment or related
premiums, (B) income tax expense determined on a consolidated basis in
accordance with GAAP, (C) depreciation and amortization determined on a
consolidated basis in accordance with GAAP, (D) unusual, extraordinary or
non-recurring charges or losses determined on a consolidated basis in accordance
with GAAP; provided that the amount added back in the determination of
Consolidated EBITDA for such Test Period pursuant to this clause (D) shall not
exceed 20% of Consolidated EBITDA (after giving effect to such addbacks) of the
Borrower and its Subsidiaries for such period, (E) severance, business
integration, restructuring or optimization costs determined on a consolidated
basis in accordance with GAAP, (F) costs and expenses in connection with equity
or stock option plans or other employee benefit plans or stock subscriptions to
the extent funded directly or indirectly with proceeds of an equity issuance by,
or capital contribution to, the Borrower or constituting

 

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non-cash charges determined on a consolidated basis in accordance with GAAP,
(G) any non-cash charges or expenses determined on a consolidated basis in
accordance with GAAP; provided that to the extent any such non-cash charge or
expense represents an accrual or reserve for a potential cash item in any future
period, the Borrower may elect to either not add such item pursuant to this
clause (G) (or to add such item in part), or to have the cash payment in respect
thereof in such future period (to the extent previously added pursuant to this
clause (G)) subtracted from Consolidated EBITDA to such extent in such future
period in which such cash payment occurs, and excluding amortization of a
prepaid cash item that was paid in a prior period, (H) expenses related to
Permitted Acquisitions and other Acquisitions permitted hereunder or approved in
writing by the Required Lenders (or attempted Permitted Acquisitions and
attempted Acquisitions permitted hereunder or approved in writing by the
Required Lenders), equity issuances (whether or not consummated) and the Related
Transactions, in each case for such period, (I) costs, fees, expenses or charges
related to the Spin-Off Transaction, this Agreement, and the transactions
related thereto, and (J) charges, costs, losses and expenses relating to any
Development Facility solely during the first twelve (12) months following the
opening of such Development Facility; provided that the amount added back in the
determination of Consolidated EBITDA for such Test Period pursuant to this
clause (J) shall not exceed 5.0% of Consolidated EBITDA (after giving effect to
such addbacks) of the Borrower and its Subsidiaries for such period, minus
(iii)(A) unusual, extraordinary or non-recurring gains determined on a
consolidated basis in accordance with GAAP and (B) non-cash gains (excluding any
non-cash gain to the extent it (x) represents the reversal of an accrual or
reserve for a potential cash item that reduced Consolidated Net Income or
Consolidated EBITDA in any prior period, (y) is in respect of cash received in a
prior period and not included in Consolidated Net Income or Consolidated EBITDA
in a prior period or (z) represents an accrual in the ordinary course); provided
that if any non-cash gain represents an accrual or asset outside the ordinary
course for potential cash items in any future period, the cash payment in
respect thereof shall in such future period be added to Consolidated EBITDA for
such period to the extent such non-cash gain was excluded from Consolidated
EBITDA in any prior period; plus (iv) to the extent not included in the
calculation of Consolidated Net Income or not added back to Consolidated Net
Income pursuant to clause (ii) above, proceeds of business interruption
insurance (to the extent actually received in cash); provided that for purposes
of calculating compliance with the financial covenants set forth in Article VI,
to the extent that during such period any Loan Party shall have consummated a
Permitted Acquisition or other Acquisition permitted hereunder or approved in
writing by the Required Lenders, or any sale, transfer or other disposition of
any Person, business, property or assets (excluding the Spin-Off Transaction),
Consolidated EBITDA shall be calculated on a Pro Forma Basis with respect to
such Person, business, property or assets so acquired or disposed of.
Notwithstanding the foregoing, the total amount of Consolidated EBITDA that is
attributable to Excluded Subsidiaries (and their respective Subsidiaries) shall
not exceed 25% of Consolidated EBITDA (prior to inclusion of Consolidated EBITDA
of any Excluded Subsidiary and its Subsidiaries) of the Borrower and its
Subsidiaries in any Test Period (determined on a consolidated basis, inclusive
of intercompany transactions). Notwithstanding the foregoing or anything to the
contrary contained herein, (i) Consolidated EBITDA for each of the Fiscal
Quarters ended June 30, 2013, September 30, 2013, December 31, 2013 and
March 31, 2014 shall be deemed to be $20,510,000, $18,824,000, $23,702,000 and
$23,632,000, respectively, and (ii) Consolidated EBITDA for the Fiscal Quarter
ending June 30, 2014 shall be determined in accordance with the foregoing
definition as if the Spin-Off Transaction had been consummated as of the first
day of such Fiscal Quarter.

“Consolidated EBITDAR” shall mean, for the Borrower and its Subsidiaries for any
Test Period, an amount equal to the sum of (i) Consolidated EBITDA for such Test
Period plus the aggregate amount of Consolidated EBITDA attributable to Excluded
Subsidiaries (and their respective Subsidiaries) for such Test Period, if any,
that was excluded from the calculation of Consolidated EBITDA for such Test
Period as a result of the provision in the definition of Consolidated EBITDA
limiting Consolidated EBITDA attributable to Excluded Subsidiaries (and their
respective Subsidiaries) for such Test Period to 25% of Consolidated EBITDA
(prior to inclusion of Consolidated EBITDA of any Excluded Subsidiary and its
Subsidiaries) of the Borrower and its Subsidiaries in such Test Period and
(ii) Consolidated Lease Expense for such Test Period.

 

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“Consolidated Interest Expense” shall mean, for the Borrower and its
Subsidiaries for any period, determined on a consolidated basis in accordance
with GAAP, the sum of (i) total interest expense, including, without limitation,
the interest component of any payments in respect of Capital Lease Obligations,
expensed during such period (whether or not actually paid during such period)
plus (ii) the net amount payable or expensed or deducted in calculating
Consolidated Net Income (or minus the net amount receivable) with respect to
Hedging Transactions during such period (whether or not actually paid or
received during such period).

“Consolidated Lease Expense” shall mean, for the Borrower and its Subsidiaries
for any period, the aggregate amount of fixed and contingent rentals expensed
with respect to leases of real and personal property (excluding Capital Lease
Obligations) for such period (whether or not actually paid during such period)
determined on a consolidated basis in accordance with GAAP.

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

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

“Consolidated Total Net Debt” shall mean, as of any date, (i) Consolidated Total
Debt minus (ii) all cash and Permitted Investments held on such date by the
Borrower and its Subsidiaries in Controlled Accounts in excess of $20,000,000;
provided that the aggregate amount of cash and Permitted Investments deducted
from Consolidated Total Debt at any time pursuant to this clause (ii) shall not
exceed $150,000,000.

“Continuing Director” shall mean, with respect to any period, any individuals
(A) who were members of the board of directors or other equivalent governing
body of the Borrower on the first day of such period, (B) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (A) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body, or (C) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (A) and
(B) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body (excluding, in the case of
both clauses (B) and (C), any individual whose initial nomination for, or
assumption of office as, a member of that board or equivalent governing body
occurs as a result of an actual or threatened (in writing) solicitation of
proxies or consents for the election or removal of one or more directors by any
person or group other than a solicitation for the election of one or more
directors by or on behalf of the board of directors).

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

 

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

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

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

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

“Corporate Integrity Agreement” shall mean that certain Corporate Integrity
Agreement, dated as of October 1, 2013, between the Borrower and the Office of
the Inspector General of the United States Department of Health and Human
Services, as amended in accordance with the terms hereof.

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

 

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

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

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

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

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

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

 

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

“Disqualified Capital Stock” shall mean, with respect to any Person, any Capital
Stock of such Person that, by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable), or upon the happening
of any event, matures (excluding any maturity as the result of an optional
redemption by the issuer thereof) or is mandatorily redeemable or redeemable at
the sole option of the holder thereof (other than solely (x) for Qualified
Capital Stock or upon a sale of assets, casualty event or a change of control,
in each case, subject to the prior payment in full of the Obligations or (y) as
a result of a redemption that by the terms of such Capital Stock is contingent
upon such redemption not being prohibited by this Agreement), pursuant to a
sinking fund obligation or otherwise (other than solely for Qualified Capital
Stock) or exchangeable or convertible into debt securities of the issuer thereof
at the sole option of the holder thereof, in whole or in part, on or prior to
the date that is 181 days after the latest Maturity Date then in effect at the
time of issuance thereof.

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

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

“DOJ Settlement Agreement” shall mean that certain Settlement Agreement, dated
as of October 1, 2013, among the Borrower, certain of its Affiliates and the
United States of America, acting through the United States Department of Justice
and on behalf of the Office of Inspector General of the Department of Health and
Human Services.

“DOJ Settlement Documents” mean the Corporate Integrity Agreement, the DOJ
Settlement Agreement and any other document or agreement executed in connection
therewith.

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

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

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

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

“Employee Matters Agreement” shall mean the Employee Matters Agreement, dated as
of the Closing Date, by and between the Borrower and CTRI.

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

 

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

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

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

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

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

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

“ERISA Event” shall mean (i) any “reportable event” as defined in Section 4043
of ERISA with respect to a Plan (other than an event as to which the PBGC has
waived under subsection .22, .23, .25, .27 or .28 of PBGC Regulation Section
4043 the requirement of Section 4043(a) of ERISA that it be notified of such
event); (ii) any failure to make a required contribution to any Plan that would
result in the imposition of a lien or other encumbrance or the provision of
security under Section 430 of the Code or Section 303 or 4068 of ERISA, or the
arising of such a lien or encumbrance, there being or arising any “unpaid
minimum required contribution” or “accumulated funding deficiency” (as defined
or otherwise set forth in Section 4971 of the Code or Part 3 of Subtitle B of
Title 1 of ERISA), whether or not waived, or any filing of any request for or
receipt of a minimum funding waiver under Section 412 of the Code or Section 303
of ERISA with respect to any Plan or Multiemployer Plan, or that such filing may
be made, or any determination that any Plan is, or is expected to be, in at-risk
status under Title IV of ERISA; (iii) any incurrence by the Borrower, any of its
Subsidiaries or any of their respective ERISA Affiliates of any liability under
Title IV of ERISA with respect to any Plan or Multiemployer Plan (other than for
premiums due and not delinquent under Section 4007 of ERISA); (iv) any
institution of proceedings, or the occurrence of an event or condition which
would reasonably be expected to constitute grounds for the institution of
proceedings by the PBGC, under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan; (v) any incurrence by the
Borrower, any of its

 

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Subsidiaries or any of their respective ERISA Affiliates of any liability with
respect to the withdrawal or partial withdrawal from any Plan or Multiemployer
Plan, or the receipt by the Borrower, any of its Subsidiaries or any of their
respective ERISA Affiliates of any notice that a Multiemployer Plan is in
endangered or critical status under Section 305 of ERISA; (vi) any receipt by
the Borrower, any of its Subsidiaries or any of their respective ERISA
Affiliates of any notice, or any receipt by any Multiemployer Plan from the
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates of
any notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA; (vii) engaging in a
non-exempt prohibited transaction within the meaning of Section 4975 of the Code
or Section 406 of ERISA; or (viii) any filing of a notice of intent to terminate
any Plan if such termination would require material additional contributions in
order to be considered a standard termination within the meaning of
Section 4041(b) of ERISA, any filing under Section 4041(c) of ERISA of a notice
of intent to terminate any Plan, or the termination of any Plan under
Section 4041(c) of ERISA.

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

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

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

“Excluded Subsidiary” shall mean (i) Ensign Whittier West LLC, (ii) Claremont
Foothills Health Associates LLC, (iii) City Heights Health Associates LLC,
(iv) Vista Woods Health Associates LLC, (v) Permunitum LLC, (vi) each Insurance
Subsidiary and (vii) each other Subsidiary of the Borrower that is designated by
the Borrower by written notice to the Administrative Agent as an “Excluded
Subsidiary” pursuant to Section 5.18 subsequent to the Closing Date.
Notwithstanding the foregoing, in no event shall any tenant under any PropCo
Master Lease be an Excluded Subsidiary.

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

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

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

“Excluded Taxes” shall mean, with respect to any Recipient of any payment to be
made by or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) the Recipient’s net income by the
United States, 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, (b) any branch
profits taxes imposed by the United States or any similar tax imposed by any
other jurisdiction in which such Recipient is located, and (c) any withholding
taxes that (i) are imposed on amounts payable to such Recipient pursuant to a
law in effect at the time such Recipient becomes a Recipient under this
Agreement or designates a new lending office, except in each case to the extent
that amounts with respect to such taxes were payable either (A) to such
Recipient’s assignor immediately before such Recipient became a Recipient under
this Agreement, or (B) to such Recipient immediately before it designated a new
lending office, (ii) are attributable to such Recipient’s failure to comply with
Section 2.20(e), or (iii) are imposed under FATCA.

 

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“Existing Credit Agreement” shall mean that certain Revolving Credit and Term
Loan Agreement, dated as of July 15, 2011, by and among the Borrower, the
several banks and other financial institutions and lenders from time to time
party thereto, and SunTrust Bank, as administrative agent for the lenders, as
issuing bank, and as swingline lender, as amended or modified from time to time.

“Existing HUD Note” shall mean that certain Deed of Trust Note, dated as of
January 30, 2001, executed by Ensign Southland LLC, a Subsidiary of the
Borrower, for the benefit of Continental Wingate Associates, Inc.

“Existing Lenders” shall mean (i) all lenders party to the Existing Credit
Agreement, (ii) all lenders who are beneficiaries of the RBS Note Due 2018,
(iii) all lenders who are beneficiaries of the RBS Note Due 2019 and (iv) all
lenders who are beneficiaries of the Existing HUD Note.

“Existing Letters of Credit” shall mean those letters of credit issued under the
Existing Credit Agreement which remain outstanding as of the Closing Date that
are listed on Schedule II.

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

“Federal Funds Rate” shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the next 1/100 of 1%) equal to the weighted average of
the rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers, as published by the
Federal Reserve Bank of New York on the next succeeding Business Day or, if such
rate is not so published for any Business Day, the Federal Funds Rate for such
day shall be the average (rounded upwards, if necessary, to the next 1/100 of
1%) of the quotations for such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by the Administrative Agent.

“Fee Letter” shall mean that certain fee letter, dated as of April 4, 2014,
executed by SunTrust Robinson Humphrey, Inc. and accepted by the Borrower.

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

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

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

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

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

“GE Term Loan Agreement” shall mean that certain Fourth Amended and Restated
Loan Agreement, dated as of November 10, 2009, by and among certain Subsidiaries
of CTRI, as borrowers, and General Electric Capital Corporation, as agent and
lender, as amended or modified from time to time on or prior to the date of this
Agreement.

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

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

 

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

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

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

“Guaranty and Security Agreement” shall mean the Guaranty and Security
Agreement, dated as of the date hereof and substantially in the form of Exhibit
B, made by the Loan Parties in favor of the Administrative Agent for the benefit
of the Secured Parties.

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

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

 

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

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

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

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

“Immaterial Subsidiary” shall mean, as of any date of determination, any direct
or indirect Subsidiary of the Borrower that is formed or acquired after the
Closing Date having, when taken together with all other then-existing Immaterial
Subsidiaries (the “Immaterial Subsidiary Threshold Amount”): (a) assets in an
amount not in excess of 10.0% of the total assets of the Borrower and its
Subsidiaries determined on a consolidated basis as of such date; or (b) revenues
in an amount not in excess of 5.0% of the total revenues of the Borrower and its
Subsidiaries on a consolidated basis for the most recently ended Test Period.

“Immaterial Subsidiary Redesignation” shall have the meaning set forth in
Section 5.17.

“Included Immaterial Subsidiary” shall have the meaning set forth in
Section 5.17.

“Inclusion Designation” shall have the meaning set forth in Section 5.17.

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

 

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

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

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

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

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

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

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

“Information Memorandum” shall mean the Confidential Information Memorandum
dated April 2014 relating to the Borrower and the transactions contemplated by
this Agreement and the other Loan Documents.

“Insurance Subsidiary” shall mean (i) Standardbearer Insurance Company, Inc., an
Arizona corporation and a wholly-owned Subsidiary of the Borrower, and
(ii) Cornet Limited, Inc., an Arizona corporation and a wholly-owned Subsidiary
of the Borrower.

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

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

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

 

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

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

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

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

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

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

“Johnson Notes” shall mean, collectively, those certain Promissory Notes, each
dated as of October 1, 2009, executed by certain Subsidiaries of the Borrower
for the benefit of Johnson Land Enterprises, L.L.C.

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

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

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

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

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

 

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

“Lender Insolvency Event” shall mean that (i) a Lender or its Parent Company is
insolvent, or is generally unable to pay its debts as they become due, or admits
in writing its inability to pay its debts as they become due, or makes a general
assignment for the benefit of its creditors, (ii) a Lender or its Parent Company
is the subject of a bankruptcy, insolvency, reorganization, liquidation or
similar proceeding, or a receiver, trustee, conservator, custodian or similar
Person charged with reorganization or liquidation of its business or assets,
including the Federal Deposit Insurance Corporation or any other state or
federal regulatory authority acting in such capacity, has been appointed for
such Lender or its Parent Company, or such Lender or its Parent Company has
taken any action in furtherance of or indicating its consent to or acquiescence
in any such proceeding or appointment, or (iii) a Lender or its Parent Company
has been adjudicated as, or determined by any Governmental Authority having
regulatory authority over such Person or its assets to be, insolvent; provided
that, for the avoidance of doubt, a Lender Insolvency Event shall not be deemed
to have occurred solely by virtue of the ownership or acquisition of any equity
interest in or control of a Lender or a Parent Company thereof by a Governmental
Authority or an instrumentality thereof so long as such ownership or acquisition
does not result in or provide such Lender with immunity from the jurisdiction of
courts within the United States or from the enforcement of judgments or writs of
attachment on its assets or permit such Lender (or such Governmental Authority)
to reject, repudiate, disavow or disaffirm any contracts or agreements made with
such Lender.

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

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

“Letter of Credit” shall mean any stand-by letter of credit issued pursuant to
Section 2.22 by an Issuing Bank for the account of the Borrower pursuant to the
LC Commitment. For the avoidance of doubt, each Existing Letter of Credit shall
be deemed to be a Letter of Credit issued pursuant to Section 2.22 by an Issuing
Bank for the account of the Borrower pursuant to the LC Commitment effective
from and after the Closing Date.

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

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

 

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

“Liquidity” shall mean, as of any date of determination, the sum of (i) an
amount equal to (x) the Aggregate Revolving Commitment Amount minus (y) the
aggregate Revolving Credit Exposure of all Lenders plus (ii) all cash and
Permitted Investments held on such date by the Borrower and its Subsidiaries in
Controlled Accounts in excess of $20,000,000.

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

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

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

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

“Material Adverse Effect” shall mean, with respect to any event, act, condition
or occurrence of whatever nature, whether singularly or in conjunction with any
other event or events, act or acts, condition or conditions, occurrence or
occurrences whether or not related, resulting in a material adverse change in,
or a material adverse effect on, (i) the business, results of operations,
financial condition, assets, liabilities or properties of the Borrower and its
Subsidiaries taken as a whole and after giving effect to the Related
Transactions (including, without limitation, the Spin-Off Transaction), (ii) the
ability of the Loan Parties, taken as a whole, to perform their respective
obligations under the Loan Documents, (iii) the rights and remedies of the
Administrative Agent, each Issuing Bank, the Swingline Lender or the Lenders
under any of the Loan Documents or (iv) the legality, validity or enforceability
of any of the Loan Documents.

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

“Material Indebtedness” shall mean any Indebtedness (other than the Loans and
the Letters of Credit) of the Borrower or any of its Subsidiaries individually
or in an aggregate committed or outstanding principal amount exceeding
$10,000,000. For purposes of determining the amount of attributed Indebtedness
from Hedging Obligations, the “principal amount” of any Hedging Obligations at
any time shall be the Net Mark-to-Market Exposure of such Hedging Obligations.

“Material Master Lease” shall mean a master lease of multiple properties to the
Borrower or its Subsidiaries concerning properties from which the Borrower and
its Subsidiaries, when taken together, derived in excess of 10% of their
consolidated revenues for any Test Period.

 

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“Material Real Estate” shall mean Real Estate with a fair market value in excess
of $2,500,000.

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

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

“Medicaid” shall mean, collectively, the health care assistance program
established by Title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) and
any statutes succeeding thereto, and all laws, rules, regulations, manuals,
orders or requirements pertaining to such program, including (a) all federal
statutes affecting such program; (b) all state statutes and plans for medical
assistance enacted in connection with such program and federal rules and
regulations promulgated in connection with such program; and (c) all applicable
provisions of all rules, regulations, manuals, orders and administrative,
reimbursement, and requirements of all Government Authorities promulgated in
connection with such program (whether or not having the force of law), in each
case as the same may be amended and in effect from time to time.

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

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

“Mortgaged Property” shall mean, collectively, the Real Estate in which the
Administrative Agent has been granted Liens pursuant to Mortgages.

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

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

(ii) if a Mortgage Trigger Event resulted pursuant to clause (i)(B) of the
definition of Mortgage Trigger Event, (x) the Leverage Ratio of the Borrower
shall have been less than 2.50:1.00 for two (2) consecutive Fiscal Quarters
following the date of such Mortgage Trigger Event and (y) no other Mortgage
Trigger Event shall have occurred for which the relevant Mortgage Release Event
pursuant to clause (i) above and/or clause (iii) below has not occurred as of
such date; and/or

 

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

“Mortgage Trigger Event” shall mean, as of any date of determination, that
(i) (A) an Event of Default has occurred and is continuing, (B) the Leverage
Ratio of the Borrower is equal to or greater than 2.50:1.00 for two consecutive
Fiscal Quarters, or (C) Liquidity is equal to or less than 10% of the Aggregate
Revolving Commitment Amount for a period of ten (10) consecutive Business Days,
and (ii) the Required Lenders (or the Administrative Agent acting at the
direction of the Required Lenders) shall have delivered a written notice to the
Borrower indicating their election to require the Borrower to provide
Mortgage(s) under Section 5.13.

“Mortgages” shall mean each mortgage, deed of trust, deed to secure debt or
other real estate security documents delivered by any Loan Party to the
Administrative Agent from time to time, all in form and substance reasonably
satisfactory to the Administrative Agent.

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

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

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

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

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

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

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

 

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

“Notices of Borrowing” shall mean, collectively, the Notices of Revolving
Borrowing and the Notices of Swingline Borrowing.

“Obligations” shall mean (a) all amounts owing by the Loan Parties to the
Administrative Agent, any Issuing Bank, any Lender (including the Swingline
Lender) or any Lead Arranger pursuant to or in connection with this Agreement or
any other Loan Document or otherwise with respect to any Loan or Letter of
Credit, including, without limitation, all principal, interest (including any
interest accruing after the filing of any petition in bankruptcy or the
commencement of any insolvency, reorganization or like proceeding relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), reimbursement obligations, fees, expenses,
indemnification and reimbursement payments, costs and expenses, whether direct
or indirect, absolute or contingent, liquidated or unliquidated, now existing or
hereafter arising hereunder or thereunder, (b) all Hedging Obligations owed by
any Loan Party to any Lender-Related Hedge Provider, and (c) all Bank Product
Obligations, together with all renewals, extensions, modifications or
refinancings of any of the foregoing.

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

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

“Opportunities Agreement” shall mean the Opportunities Agreement dated as of the
Closing Date by and between the Borrower and CTRI.

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

 

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“Permitted Acquisition” shall mean any Acquisition by a Loan Party that occurs
when the following conditions have been satisfied:

(i) before and after giving effect to such Acquisition, no Default or Event of
Default has occurred and is continuing or would result therefrom, provided that
this clause (i) shall be limited to Events of Default referenced in
Section 2.23(a)(iii) if an Incremental Commitment is being funded in connection
with any such Permitted Acquisition);

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

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

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

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

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

(vii) at least five (5) days (or such shorter period of time as may be agreed to
by the Administrative Agent) prior to the date of the consummation of any such
Acquisition for which the aggregate consideration to be paid is at least
$20,000,000, the Borrower shall have delivered to the Administrative Agent a
certificate executed by a Responsible Officer certifying that each of the
conditions set forth above has been satisfied (or, with respect to the condition
set forth in clause (iv), that such condition will be satisfied by the date of
the consummation of such Acquisition).

 

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

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

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

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

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

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

“Permitted Encumbrances” shall mean:

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

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

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

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

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

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

 

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

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

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

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

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

“Permitted Investments” shall mean:

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

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

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

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

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

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

 

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

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

“Pro Forma Basis” shall mean, (i) with respect to any Person, business, property
or asset acquired in a Permitted Acquisition or other Acquisition permitted
hereunder or approved in writing by the Required Lenders, the inclusion as
“Consolidated EBITDA” of the Consolidated EBITDA (determined by reference to
such Person, business, property or asset) for such Person, business, property or
asset as if such Acquisition had been consummated on the first day of the
applicable period, based on historical results accounted for in accordance with
GAAP, adjusted by (A) any credit received for acquisition-related costs and
savings to the extent expressly permitted pursuant to Article 11 of Securities
and Exchange Commission Regulation S-X and (B) other reasonable adjustments
consistent with the operation by the Borrower or any of its Subsidiaries of
comparable businesses, properties or assets that are in the same or reasonably
related line of business in the same or similar geographies for (1) insurance
expense savings, (2) bad debt expense savings, (3) any other non-recurring or
non-cash charges that have been deducted from the EBITDA of or attributable to
such Person, business, property or asset prior to such Acquisition and (4) cost
savings and synergies reasonably expected to be achieved by the Borrower
relating to such Acquisition; provided that in each case (x) the cost savings or
synergies associated with such adjustments are reasonably expected by the
Borrower in good faith to be realized within twelve (12) months of the
consummation of such Acquisition and (y) for any such adjustments included
twelve (12) months after the consummation of such Acquisition, the Borrower and
its Subsidiaries have achieved annualized run-rate savings consistent with such
adjustments; and (ii) with respect to any Person, business, property or asset
sold, transferred or otherwise disposed of, the exclusion from “Consolidated
EBITDA” of the portion of Consolidated EBITDA for such Person, business,
property or asset so disposed of during such period as if such disposition had
been consummated on the first day of the applicable period, in accordance with
GAAP.

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

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

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

 

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Exposure) and Term Loan and the denominator of which shall be the sum of all
Lenders’ Revolving Commitments (or, if such Revolving Commitments have been
terminated or expired or the Loans have been declared to be due and payable, all
Revolving Credit Exposure of all Lenders funded under such Commitments) and Term
Loans.

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

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

“RBS Note Due 2018” shall mean that certain Note, dated as of December 31, 2010,
executed by certain Subsidiaries of the Borrower for the benefit of RBS Asset
Finance, Inc.

“RBS Note Due 2019” shall mean that certain Note, dated as of February 17, 2012,
executed by certain Subsidiaries of the Borrower for the benefit of RBS Asset
Finance, Inc.

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

“Real Estate Documents” shall mean, collectively, all Mortgages, all
environmental indemnity agreements, and all other documents, instruments,
agreements and certificates executed and delivered by any Loan Party to the
Administrative Agent and the Lenders in connection with the foregoing.

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

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

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

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

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

 

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

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

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

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

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

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

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

“Required Lenders” shall mean, at any time, Lenders holding more than 50% of the
aggregate outstanding Revolving Commitments and Term Loans at such time or, if
the Lenders have no Commitments outstanding, then Lenders holding more than 50%
of the aggregate outstanding Revolving Credit Exposure and Term Loans of the
Lenders at such time; provided that to the extent that any Lender is a
Defaulting Lender, such Defaulting Lender and all of its Revolving Commitments,
Revolving Credit Exposure and Term Loans shall be excluded for purposes of
determining Required Lenders.

“Required Revolving Lenders” shall mean, at any time, Lenders holding more than
50% of the aggregate outstanding Revolving Commitments at such time or, if the
Lenders have no Revolving Commitments outstanding, then Lenders holding more
than 50% of the aggregate outstanding Revolving Credit Exposure at such time;
provided that to the extent that any Lender is a Defaulting Lender, such
Defaulting Lender and all of its Revolving Commitments and Revolving Credit
Exposure shall be excluded for purposes of determining Required Revolving
Lenders.

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

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

 

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

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

“Revolving Commitment Termination Date” shall mean the earliest of (a) (i) with
respect to the Revolving Commitments (including any Incremental Revolving
Commitments) of the Revolving Lenders (other than any portion constituting
Extended Revolving Commitments or Other Refinancing Revolving Commitments),
May 30, 2019, (ii) with respect to any Extended Revolving Commitments, the
maturity date specified therefor in the applicable Extended Facility Agreement
and (iii) with respect to any Other Refinancing Revolving Commitments, the
maturity date specified therefor in the applicable Refinancing Amendment,
(b) the date on which the Revolving Commitments are terminated pursuant to
Section 2.8 and (c) the date on which all amounts outstanding under this
Agreement have been declared or have automatically become due and payable
(whether by acceleration or otherwise).

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

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

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

“Sanctioned Country” shall mean a country subject to a sanctions program
identified on the list maintained by OFAC and available at
http://www.treasury.gov/resource-center/sanctions/Pages/ default.aspx, or as
otherwise published from time to time.

“Sanctioned Person” shall mean (i) a Person named on the list of “Specially
Designated Nationals and Blocked Persons” maintained by OFAC available at
http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx,
or as otherwise published from time to time, or (ii) (A) an agency of the
government of a Sanctioned Country, (B) an organization controlled by a
Sanctioned Country, or (C) a person resident in a Sanctioned Country, to the
extent subject to a sanctions program administered by OFAC.

 

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

“Separation and Distribution Agreement” shall mean the Separation and
Distribution Agreement, dated as of the Closing Date, between the Borrower and
CTRI.

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

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

“Specified Subsidiary” shall mean (i) any Pass-Through Foreign Holdco and
(ii) any Subsidiary that is prohibited by applicable law, rule or regulation or
by agreement, instrument or other undertaking to which such Subsidiary is a
party or by which it or any of its property or assets is bound from guaranteeing
the Obligations; provided that any such agreement, instrument or other
undertaking (x) is in existence on the Closing Date and listed on Schedule 1.1
(or, with respect to a Subsidiary acquired after the Closing Date, as of the
date of such acquisition) and (y) in the case of a Subsidiary acquired after the
Closing Date, was not entered into in connection with or in anticipation of such
acquisition. Notwithstanding the foregoing, in no event shall any tenant under
any PropCo Master Lease be a Specified Subsidiary.

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

“Spin-Off Documents” shall mean the Separation and Distribution Agreement, the
Ensign Guaranty, the PropCo Master Leases, the Opportunities Agreement, the
Employee Matters Agreement, the Tax Matters Agreement and the Transition
Services Agreement.

“Spin-Off Subsidiary” shall mean CTRI and each other Subsidiary of the Borrower
identified on Schedule 4.4 as a “Spin-Off Subsidiary”, the equity interests of
which will be distributed to the Borrower’s shareholders in connection with the
Spin-Off Transaction.

“Spin-Off Transaction” shall mean (a) the transfer by the Borrower of
(x) substantially all of the existing Real Estate assets of the Borrower and its
Subsidiaries (other than the fee owned Real Estate assets described on Schedule
4.11) and (y) the Transferred IL Facilities to CTRI, (b) the spin-off of CTRI
and its Subsidiaries to the Borrower’s shareholders and (c) the series of
corporate and other restructurings and other transactions entered into in
connection with the foregoing, in each case within the first three (3) Business
Days following the Closing Date.

 

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“Subsidiary” shall mean, with respect to any Person (the “parent”) at any date,
any corporation, partnership, joint venture, limited liability company,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent’s consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, partnership, joint venture, limited liability
company, association or other entity (i) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held,
or (ii) that is, as of such date, otherwise controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent. Unless otherwise indicated, all references to “Subsidiary” hereunder
shall mean a Subsidiary of the Borrower. Notwithstanding anything in this
Agreement to the contrary, in no event shall any Spin-Off Subsidiary be a
Subsidiary of the Borrower or any other Loan Party for any purposes hereof or
any other Loan Document.

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

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

“Swingline Commitment” shall mean the commitment of the Swingline Lender to make
Swingline Loans in an aggregate principal amount at any time outstanding not to
exceed $10,000,000.

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

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

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

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

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

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

“Tax Matters Agreement” shall mean the Tax Matters Agreement, dated as of the
Closing Date, by and between the Borrower and CTRI.

 

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“Ten Project Note” shall mean, collectively, (i) that certain Consolidated
Amended and Restated Promissory Note, dated as of December 29, 2006, executed by
certain Subsidiaries of CTRI and (ii) that certain Additional Ten Project
Promissory Note, dated as of the Closing Date, executed by certain Subsidiaries
of CTRI, in order to evidence the Loan under as and as defined in the GE Term
Loan Agreement.

“Term Loan” shall mean a term loan made by a Lender to the Borrower pursuant to
Section 2.23, Section 2.27, or Section 2.28.

“Term Loan Commitment” shall mean, with respect to each Lender, such Lender’s
Incremental Term Loan Commitment, Extended Term Loan Commitment or Other
Refinancing Term Loan Commitment.

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

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

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

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

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

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

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

“Transferred IL Facilities” shall mean, collectively, (i) Lakeland Hills
Independent Living, located in Dallas, Texas, (ii) The Cottages at Golden Acres,
located in Dallas, Texas and (iii) The Apartments at St. Joseph Villa, located
in Salt Lake City, Utah.

“Transition Services Agreement” shall mean the Transition Services Agreement,
dated as of the Closing Date, by and between the Borrower and CTRI.

 

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

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

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

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

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

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

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

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

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

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

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

Section 1.3. Accounting Terms and Determination. Unless otherwise defined or
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with GAAP as
in effect from time to time, applied, except as otherwise indicated therein, on
a basis consistent with the most recent audited consolidated financial statement
of the Borrower delivered pursuant to Section 5.1(a); provided that if the
Borrower notifies the Administrative Agent that the Borrower wishes to amend any
covenant in Article VI to eliminate the effect of any change in GAAP on the
operation of such covenant (or if the Administrative Agent notifies the Borrower
that the Required Lenders wish to amend Article VI for such purpose), then the
Borrower’s compliance with such covenant

 

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shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such covenant is amended in a manner satisfactory to the Borrower and the
Required Lenders (and each party hereto agrees to negotiate in good faith with
respect to such amendment). Notwithstanding any other provision contained
herein, (i) all terms of an accounting or financial nature used herein shall be
construed, and all computations of amounts and ratios referred to herein shall
be made, without giving effect to any election under Accounting Standards
Codification Section 825-10 (or any other Financial Accounting Standard having a
similar result or effect) to value any Indebtedness or other liabilities of any
Loan Party or any Subsidiary of any Loan Party at “fair value”, as defined
therein; and (ii) for purposes of this Agreement, any change in GAAP requiring
leases which were previously classified as operating leases (or which, had they
been entered into prior to the Closing Date, would have been treated as an
operating lease on the Closing Date) to be treated as capitalized leases shall
be disregarded and such leases shall (unless otherwise elected by the Borrower
with respect to any lease with annual lease payments no greater than $2,500,000
individually or in the aggregate for all such leases, which shall be treated as
either an operating lease or a capital lease, at the sole discretion of the
Borrower) continue to be, or shall be, treated as operating leases consistent
with GAAP as in effect immediately before such change in GAAP became effective.

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

Section 1.4. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”. In
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including” and the word “to” means “to but
excluding”. Unless the context requires otherwise (i) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as it was
originally executed or as it may from time to time be amended, restated,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include such Person’s successors and
permitted assigns, (iii) the words “hereof”, “herein” and “hereunder” and words
of similar import shall be construed to refer to this Agreement as a whole and
not to any particular provision hereof, (iv) all references to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles,
Sections, Exhibits and Schedules to this Agreement and (v) all references to a
specific time shall be construed to refer to the time in Atlanta, Georgia,
unless otherwise indicated.

 

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ARTICLE II

AMOUNT AND TERMS OF THE COMMITMENTS

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

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

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

Section 2.4. Swingline Commitment.

(a) Subject to the terms and conditions set forth herein, the Swingline Lender
may, in its sole discretion, make Swingline Loans to the Borrower, from time to
time during the Availability Period, in an aggregate principal amount
outstanding at any time not to exceed the lesser of (i) the Swingline Commitment
then in effect and (ii) the difference between the Aggregate Revolving

 

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Commitment Amount and the aggregate Revolving Credit Exposures of all Lenders;
provided that the Swingline Lender shall not be required to make a Swingline
Loan to refinance an outstanding Swingline Loan. The Borrower shall be entitled
to borrow, repay and reborrow Swingline Loans in accordance with the terms and
conditions of this Agreement.

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

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

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

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

 

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Loans in the amount of the unpaid participation for all purposes of the Loan
Documents. In addition, such Lender shall be deemed to have assigned any and all
payments made of principal and interest on its Loans and any other amounts due
to it hereunder to the Swingline Lender to fund the amount of such Lender’s
participation interest in such Swingline Loans that such Lender failed to fund
pursuant to this Section, until such amount has been purchased in full.

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

Section 2.5. [Reserved].

Section 2.6. Funding of Borrowings.

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

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

 

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

Section 2.7. Interest Elections.

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

(b) To make an election pursuant to this Section, the Borrower shall give the
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) of each Borrowing that is to be converted or continued, as the case may
be, substantially in the form of Exhibit 2.7 attached hereto (a “Notice of
Conversion/Continuation”) (x) prior to 1:00 p.m. one (1) Business Day prior to
the requested date of a conversion into a Base Rate Borrowing and (y) prior to
1:00 p.m. three (3) Business Days prior to a continuation of or conversion into
a Eurodollar Borrowing. Each such Notice of Conversion/Continuation shall be
irrevocable and shall specify (i) the Borrowing to which such Notice of
Conversion/Continuation applies and, if different options are being elected with
respect to different portions thereof, the portions thereof that are to be
allocated to each resulting Borrowing (in which case the information to be
specified pursuant to clauses (iii) and (iv) shall be specified for each
resulting Borrowing), (ii) the effective date of the election made pursuant to
such Notice of Conversion/Continuation, which shall be a Business Day,
(iii) whether the resulting Borrowing is to be a Base Rate Borrowing or a
Eurodollar Borrowing, and (iv) if the resulting Borrowing is to be a Eurodollar
Borrowing, the Interest Period applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of “Interest
Period”. If any such Notice of Conversion/ Continuation requests a Eurodollar
Borrowing but does not specify an Interest Period, the Borrower shall be deemed
to have selected an Interest Period of one month. The principal amount of any
resulting Borrowing shall satisfy the minimum borrowing amount for Eurodollar
Borrowings and Base Rate Borrowings set forth in Section 2.3.

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

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

Section 2.8. Optional Reduction and Termination of Commitments.

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

 

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

(c) With the written approval of the Administrative Agent, the Borrower may
terminate (on a non-ratable basis) the unused amount of the Revolving Commitment
of a Defaulting Lender, and in such event the provisions of Section 2.26 will
apply to all amounts thereafter paid by the Borrower for the account of any such
Defaulting Lender under this Agreement (whether on account of principal,
interest, fees, indemnity or other amounts); provided that such termination will
not be deemed to be a waiver or release of any claim that the Borrower, the
Administrative Agent, any Issuing Bank, the Swingline Lender or any other Lender
may have against such Defaulting Lender.

Section 2.9. Repayment of Loans.

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

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

Section 2.10. Evidence of Indebtedness.

(a) Each Lender shall maintain in accordance with its usual practice appropriate
records evidencing the Indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender from time to time, including the amounts of
principal and interest payable thereon and paid to such Lender from time to time
under this Agreement. The Administrative Agent shall maintain appropriate
records in which shall be recorded (i) the Revolving Commitment and the Term
Loan Commitment of each Lender, (ii) the amount of each Loan made hereunder by
each Lender, the Class and Type thereof and, in the case of each Eurodollar
Loan, the Interest Period applicable thereto, (iii) the date of any continuation
of any Loan pursuant to Section 2.7, (iv) the date of any conversion of all or a
portion of any Loan to another Type pursuant to Section 2.7, (v) the date and
amount of any principal or interest due and payable or to become due and payable
from the Borrower to each Lender hereunder in respect of the Loans and (vi) both
the date and amount of any sum received by the Administrative Agent hereunder
from the Borrower in respect of the Loans and each Lender’s Pro Rata Share
thereof. The entries made in

 

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such records shall be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided that the failure or delay
of any Lender or the Administrative Agent in maintaining or making entries into
any such record or any error therein shall not in any manner affect the
obligation of the Borrower to repay the Loans (both principal and unpaid accrued
interest) of such Lender in accordance with the terms of this Agreement.

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

Section 2.11. Optional Prepayments. The Borrower shall have the right at any
time and from time to time to prepay any Borrowing, in whole or in part, without
premium or penalty, by giving written notice (or telephonic notice promptly
confirmed in writing) to the Administrative Agent no later than (i) in the case
of any prepayment of any Eurodollar Borrowing, 1:00 p.m. not less than three
(3) Business Days prior to the date of such prepayment, (ii) in the case of any
prepayment of any Base Rate Borrowing, 1:00 p.m. not less than one (1) Business
Day prior to the date of such prepayment, and (iii) in the case of any
prepayment of any Swingline Borrowing, prior to 1:00 p.m. on the date of such
prepayment. Each such notice shall be irrevocable (provided that (x) any such
notice in connection with the repayment of all Loans may be conditioned on the
occurrence of another financing or transaction, in which case such notice may be
revoked if such financing or transaction does not occur on a timely basis and
(y) the Borrower shall pay all amounts required to be paid pursuant to
Section 2.19 as a result of such revocation) and shall specify the proposed date
of such prepayment and the principal amount of each Borrowing or portion thereof
to be prepaid. Upon receipt of any such notice, the Administrative Agent shall
promptly notify each affected Lender of the contents thereof and of such
Lender’s Pro Rata Share of any such prepayment. If such notice is given, the
aggregate amount specified in such notice shall be due and payable on the date
designated in such notice (unless revoked as provided above), together with
accrued interest to such date on the amount so prepaid in accordance with
Section 2.13(d); provided that if a Eurodollar Borrowing is prepaid on a date
other than the last day of an Interest Period applicable thereto, the Borrower
shall also pay all amounts required pursuant to Section 2.19. Each partial
prepayment of any Loan shall be in an amount that would be permitted in the case
of an advance of a Revolving Borrowing of the same Type pursuant to Section 2.2
or, in the case of a Swingline Loan, pursuant to Section 2.4. Each prepayment of
a Borrowing shall be applied ratably to the Loans comprising such Borrowing.

Section 2.12. Mandatory Prepayments.

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

 

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Section 2.13. Interest on Loans.

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

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

(c) Notwithstanding subsections (a) and (b) of this Section, automatically upon
the occurrence and during the continuance of an Event of Default, the Borrower
shall pay interest (“Default Interest”) with respect to all overdue principal
and interest and all other Obligations not paid when due at the rate per annum
equal to 200 basis points above the otherwise applicable interest rate with
respect thereto (i.e., for Eurodollar Loans at the rate per annum equal to 200
basis points above the otherwise applicable interest rate for such Eurodollar
Loans for the then-current Interest Period until the last day of such Interest
Period, and thereafter, and with respect to all Base Rate Loans and all other
Obligations hereunder (other than Loans), at the rate per annum equal to 200
basis points above the otherwise applicable interest rate for Base Rate Loans).
Notwithstanding the foregoing, automatically upon the occurrence and during the
continuance of an Event of Default under Sections 8.1(g), (h) or (i) with
respect to the Borrower, the Borrower shall pay Default Interest in accordance
with the preceding sentence with respect to all Obligations whether or not
overdue.

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

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

Section 2.14. Fees.

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

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

 

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

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

(e) Accrued fees under subsections (b) and (c) of this Section shall be payable
quarterly in arrears on the last day of each March, June, September and
December, commencing on June 30, 2014, and on the Revolving Commitment
Termination Date (and, if later, the date the Loans and LC Exposure shall be
repaid in their entirety); provided that any such fees accruing after the
Revolving Commitment Termination Date shall be payable on demand.

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

Section 2.15. Computation of Interest and Fees.

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

 

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Section 2.16. Inability to Determine Interest Rates. If, prior to the
commencement of any Interest Period for any Eurodollar Borrowing:

(i) the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant interbank market, adequate means do not exist for
ascertaining Adjusted LIBOR for such Interest Period, or

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

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

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

Section 2.18. Increased Costs.

(a) If any Change in Law shall:

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

 

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

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

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

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

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

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

Section 2.19. Funding Indemnity. In the event of (a) the payment of any
principal of a Eurodollar Loan other than on the last day of the Interest Period
applicable thereto (including as a result of an Event of Default), (b) the
conversion or continuation of a Eurodollar Loan other than on the last day

 

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

Section 2.20. Taxes.

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

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

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

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

 

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(e) Tax Forms.

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

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

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

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

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

 

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

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

(f) If a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by the Borrower
or the Administrative Agent such documentation prescribed by applicable law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Borrower or the
Administrative Agent as may be necessary for the Borrower and the Administrative
Agent to comply with their obligations under FATCA and to determine that such
Lender has complied with such Lender’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment.

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

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

 

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

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

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

(c) If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans or participations in LC Disbursements or Swingline Loans then due that
would result in such Lender receiving payment of a greater proportion of the
aggregate amount of its Revolving Credit Exposure, Term Loans and accrued
interest and fees thereon (as applicable) than the proportion received by any
other Lender with respect to its Revolving Credit Exposure or Term Loans (as
applicable), then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Revolving Credit Exposure and
Term Loans (as applicable) of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Revolving Credit Exposure and Term Loans (as applicable);
provided that (i) if any such participations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such
recovery, without interest, and (ii) the provisions of this subsection shall not
be construed to apply to any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any
of its Revolving Credit Exposure or Term Loans to any assignee or participant,
other than to the Borrower or any Subsidiary or Affiliate thereof (as to which
the provisions of this subsection shall apply). The Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.

(d) Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Administrative Agent for
the account of the Lenders or the Issuing Banks hereunder that the Borrower will
not make such payment, the Administrative Agent

 

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

Section 2.22. Letters of Credit.

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

(b) To request the issuance of a Letter of Credit (or any amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall give the
applicable Issuing Bank and the Administrative Agent irrevocable written notice
prior to 1:00 p.m. at least three (3) Business Days prior to the requested date
of such issuance specifying the date (which shall be a Business Day) such Letter
of Credit is to be issued (or amended, renewed or extended, as the case may be),
the expiration date of such Letter of Credit, the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. In addition to the satisfaction of the conditions in Section 3.2, the
issuance of such Letter of Credit (or any

 

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amendment which increases the amount of such Letter of Credit) will be subject
to the further conditions that such Letter of Credit shall be in such form and
contain such terms as the applicable Issuing Bank shall approve and that the
Borrower shall have executed and delivered any additional applications,
agreements and instruments relating to such Letter of Credit as such Issuing
Bank shall reasonably require; provided that in the event of any conflict
between such applications, agreements or instruments and this Agreement, the
terms of this Agreement shall control.

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

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

(e) If for any reason a Base Rate Borrowing may not be (as determined in the
sole discretion of the Administrative Agent), or is not, made in accordance with
the foregoing provisions, then each Lender (other than the applicable Issuing
Bank) shall be obligated to fund the participation that such Lender purchased
pursuant to subsection (a) of this Section in an amount equal to its Pro Rata
Share of such LC Disbursement on and as of the date which such Base Rate
Borrowing should have occurred. Each Lender’s obligation to fund its
participation shall be absolute and unconditional and shall not be affected by
any circumstance, including, without limitation, (i) any set-off, counterclaim,
recoupment, defense or other right that such Lender or any other Person may have
against the applicable Issuing Bank or any other Person for any reason
whatsoever, (ii) the existence of a Default or an Event of Default or the
termination of the Aggregate Revolving Commitments, (iii) any adverse change in
the condition (financial or otherwise) of the Borrower or any of its
Subsidiaries, (iv) any breach of this Agreement by the Borrower or any other
Lender, (v) any amendment, renewal or extension of any Letter of Credit or

 

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(vi) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing. On the date that such participation is required
to be funded, each Lender shall promptly transfer, in immediately available
funds, the amount of its participation to the Administrative Agent for the
account of the applicable Issuing Bank. Whenever, at any time after the
applicable Issuing Bank has received from any such Lender the funds for its
participation in a LC Disbursement, such Issuing Bank (or the Administrative
Agent on its behalf) receives any payment on account thereof, the Administrative
Agent or such Issuing Bank, as the case may be, will distribute to such Lender
its Pro Rata Share of such payment; provided that if such payment is required to
be returned for any reason to the Borrower or to a trustee, receiver,
liquidator, custodian or similar official in any bankruptcy proceeding, such
Lender will return to the Administrative Agent or such Issuing Bank any portion
thereof previously distributed by the Administrative Agent or such Issuing Bank
to it.

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

(g) If any Event of Default shall occur and be continuing, on the Business Day
that the Borrower receives notice from the Administrative Agent or the Required
Lenders demanding that its reimbursement obligations with respect to the Letters
of Credit be Cash Collateralized pursuant to this subsection, the Borrower shall
deposit in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of each Issuing Bank and the Lenders,
an amount in cash equal to 103% of the aggregate LC Exposure of all Lenders as
of such date plus any accrued and unpaid fees thereon; provided that such
obligation to Cash Collateralize the reimbursement obligations of the Borrower
with respect to the Letters of Credit shall become effective immediately, and
such deposit shall become immediately due and payable, without demand or notice
of any kind, upon the occurrence of any Event of Default with respect to the
Borrower described in Section 8.1(h) or (i). Such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
obligations of the Borrower under this Agreement. The Administrative Agent shall
have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. The Borrower agrees to execute any documents
and/or certificates to effectuate the intent of this subsection. Other than any
interest earned on the investment of such deposits, which investments shall be
made at the option and sole discretion of the Administrative Agent and at the
Borrower’s risk and expense, such deposits shall not bear interest. Interest and
profits, if any, on such investments shall accumulate in such account. Moneys in
such account shall be applied by the Administrative Agent to reimburse the
applicable Issuing Bank for LC Disbursements for which it had not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of the Borrower for the LC Exposure at such
time or, if the maturity of the Loans has been accelerated, with the consent of
the Required Lenders, be applied to satisfy other obligations of the Borrower
under this Agreement and the other Loan Documents. If the Borrower is required
to Cash Collateralize its reimbursement obligations with respect to the Letters
of Credit as a result of the occurrence of an Event of Default, such cash
collateral so posted (to the extent not so applied as aforesaid) shall be
returned to the Borrower within three (3) Business Days after all Events of
Default have been cured or waived.

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

 

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

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

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

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

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

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

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

Neither the Administrative Agent, any Issuing Bank, any Lender nor any Related
Party of any of the foregoing shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to above), or any error, omission, interruption, loss
or delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), any error in interpretation of technical terms or
any consequence arising from causes beyond the control of the applicable Issuing
Bank; provided that the foregoing shall not be construed to excuse any Issuing
Bank from liability to the Borrower to the extent of any actual direct damages
(as opposed to special, indirect (including claims for lost profits or other
consequential damages), or punitive damages, claims in respect of which are
hereby waived by the Borrower to the extent permitted by applicable law)
suffered by the Borrower that are caused by such Issuing Bank’s failure to
exercise due care when determining whether drafts or other documents presented
under a Letter of Credit comply with the terms thereof. The parties hereto
expressly agree that, in the absence of gross negligence or willful misconduct
on the part of any Issuing Bank (as finally determined by a court of competent
jurisdiction), such Issuing Bank shall be deemed to have exercised due care in
each such determination. In furtherance of the foregoing and without limiting
the generality thereof, the parties agree that, with respect to documents
presented that appear on their face to be in substantial compliance with the
terms of a Letter of Credit, the applicable Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

 

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

(k) The parties hereto agree that the Existing Letters of Credit shall
constitute Letters of Credit for all purposes hereunder as if such letters of
credit were issued by an Issuing Bank under this Agreement.

Section 2.23. Increase of Commitments; Additional Lenders.

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

(i) the aggregate principal amount of all such Incremental Commitments made
pursuant to this Section shall not exceed $75,000,000 (the principal amount of
each such Incremental Commitment, the “Incremental Commitment Amount”);

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

(iii) at the time of and immediately after giving effect to any such Incremental
Commitment, (x) no Event of Default shall exist; provided that in the case of
any Incremental Commitment obtained for the purposes of financing an Acquisition
not prohibited by this Agreement, the Lenders providing such Incremental
Commitment and the Administrative Agent may agree that such condition shall be
limited to an absence of an Event of Default under Section 8.1(a), (b), (g),
(h) or (i), and (y) all representations and warranties of each Loan Party set
forth in the Loan Documents shall be true and correct in all material respects
(other than those representations and warranties that are expressly qualified by
Material Adverse Effect or other materiality, in which case such representations
and warranties shall be true and correct in all respects) as of the date of the
establishment of such Incremental Commitment (or, if such representation or
warranty relates to an earlier date, as of such earlier date); provided that in
the case of any Incremental Commitment obtained for the purposes of financing an
Acquisition or other Investment not prohibited by this Agreement, the Lenders
providing such Incremental Commitment may agree that the only representations
and warranties the accuracy of which shall be a condition to such Incremental
Commitment (and the Incremental Term Loans or Revolving Loans provided
thereunder) shall be (I) the Specified Representations and (II) the
representations and warranties made by or on behalf of the applicable target in
the purchase, acquisition or

 

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similar agreement governing such Acquisition or other Investment as are material
to the interests of the Lenders, but only to the extent that the Borrower (or
the Borrower’s applicable Affiliates or Subsidiaries) has the right (determined
without regard to any notice requirement) not to consummate or the right to
terminate (or cause the termination of) the Borrower’s (or such Affiliates’ or
Subsidiaries’) obligations under such purchase, acquisition or other agreement
as a result of a breach of such representations or warranties in such purchase,
acquisition or other agreement (or the failure of such representations or
warranties to be accurate or to satisfy the closing conditions in such purchase,
acquisition or other agreement applicable to such representations or warranties)
(such representations and warranties, the “Specified Target Representations”);

(iv) (x) any incremental Term Loans made pursuant to this Section (the
“Incremental Term Loans” and, the commitments with respect thereto, the
“Incremental Term Loan Commitments”) shall have a maturity date no earlier than
the Revolving Commitment Termination Date in effect at the time such Incremental
Term Loans are incurred and shall have a Weighted Average Life to Maturity no
shorter than that of any previously established Incremental Term Loans (without
giving effect to previous reductions in and previously made amortization
payments on such previously established Incremental Term Loans), and (y) any
incremental Revolving Commitments provided pursuant to this Section (the
“Incremental Revolving Commitments”) shall have identical terms (including
pricing and termination date; provided that upfront fees for any Incremental
Revolving Commitments will be permitted and shall be determined by the Borrower
and the Lenders providing such Incremental Revolving Commitments) to the
Revolving Commitments and be treated as the same Class as the Revolving
Commitments and the Borrower shall, after the establishment of any Incremental
Revolving Commitments pursuant to this Section, repay and incur Revolving Loans
ratably as between the Incremental Revolving Commitments and the Revolving
Commitments outstanding immediately prior to such increase (provided that such
repayment and incurrence may, with the Administrative Agent’s consent, be
effectuated through assignments among Lenders with Revolving Commitments, which
shall not require an Assignment and Acceptance and may be effectuated by the
Administrative Agent through changes in the Register and fundings from such
Lenders providing Incremental Commitments); provided, further, that Interest
Periods applicable to Incremental Term Loans or Revolving Loans advanced
pursuant to Incremental Revolving Commitments may, at the election of the
Administrative Agent and the Borrower, be made with Interest Period(s) identical
to the then remaining Interest Period(s) applicable to existing Term Loans of
the relevant Class or existing Revolving Loans of the applicable Class (and
allocated to such Interest Period(s) on a proportional basis);

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

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

(b) The Borrower shall provide at least ten (10) days’ (or such shorter period
of time as may be agreed to by the Administrative Agent in its sole discretion)
written notice to the Administrative Agent (who shall promptly provide a copy of
such notice to each Lender) of any proposal

 

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

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

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

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

(iii) a certificate of the Borrower signed by a Responsible Officer, in form and
substance reasonably acceptable to the Administrative Agent, certifying that
each of the conditions in subsection (a) of this Section has been satisfied;

 

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

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

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

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

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

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

Section 2.25. Replacement of Lenders. If (a) any Lender requests compensation
under Section 2.18, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.20 or any Lender has failed to approve an amendment or
waiver that requires the consent of all Lenders or all Lenders of a particular
Class or all affected Lenders (and such amendment or waiver has been approved by
Requisite Lenders or Lenders with a majority of the Commitments or Loans of a
particular Class or a majority of affected Lenders), or (b) any Lender is a
Defaulting Lender, then the Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions set forth in Section 10.4(b)), all of its interests, rights (other
than its existing rights to payments pursuant to Section 2.18 or 2.20, as
applicable) and obligations under this Agreement to an assignee that shall
assume such obligations (which assignee

 

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may be another Lender) (a “Replacement Lender”); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent, which
consent shall not be unreasonably withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal amount of all Loans owed
to it, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder from the assignee (in the case of such outstanding principal and
accrued interest) and from the Borrower (in the case of all other amounts), and
(iii) in the case of a claim for compensation under Section 2.18 or payments
required to be made pursuant to Section 2.20, such assignment will result in a
reduction in such compensation or payments. A Lender shall not be required to
make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the Borrower to
require such assignment and delegation cease to apply. If a Lender fails to
execute an Assignment and Assumption Acceptance giving effect to the assignment
contemplated under this Section 2.25, such Assignment and Acceptance may be
executed by the Borrower, the Administrative Agent and any Replacement Lender
and become effective without the consent of such replaced Lender.

Section 2.26. Defaulting Lenders.

(a) Cash Collateral

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

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

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

(iv) Cash Collateral (or the appropriate portion thereof) provided to reduce any
Issuing Bank’s LC Exposure shall no longer be required to be held as Cash
Collateral pursuant to this Section 2.26(a) following (A) the elimination of the
applicable LC Exposure (including by the termination of Defaulting Lender status
of the applicable Lender), or (ii) the determination by the Administrative Agent
and each Issuing Bank that there exists excess Cash Collateral; provided that,
subject to Section 2.26(b) through (d), the Person providing Cash

 

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Collateral and each Issuing Bank may agree that Cash Collateral shall be held to
support future anticipated LC Exposure or other obligations and provided further
that to the extent that such Cash Collateral was provided by the Borrower, such
Cash Collateral shall remain subject to the security interest granted pursuant
to the Loan Documents.

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

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

(ii) Any payment of principal, interest, fees or other amounts received by the
Administrative Agent for the account of such Defaulting Lender (whether
voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or
received by the Administrative Agent from a Defaulting Lender pursuant to
Section 10.7 shall be applied at such time or times as may be determined by the
Administrative Agent as follows: first, to the payment of any amounts owing by
such Defaulting Lender to the Administrative Agent hereunder; second, to the
payment on a pro rata basis of any amounts owing by such Defaulting Lender to
each Issuing Bank or the Swingline Lender hereunder; third, to Cash
Collateralize the Issuing Banks’ LC Exposure with respect to such Defaulting
Lender in accordance with Section 2.26(a); fourth, as the Borrower may request
(so long as no Default or Event of Default exists), to the funding of any Loan
in respect of which such Defaulting Lender has failed to fund its portion
thereof as required by this Agreement, as determined by the Administrative
Agent; fifth, if so determined by the Administrative Agent and the Borrower, to
be held in a deposit account and released pro rata in order to (x) satisfy such
Defaulting Lender’s potential future funding obligations with respect to Loans
under this Agreement and (y) Cash Collateralize the Issuing Banks’ future LC
Exposure with respect to such Defaulting Lender with respect to future Letters
of Credit issued under this Agreement, in accordance with Section 2.26(a);
sixth, to the payment of any amounts owing to the Lenders, the Issuing Banks or
the Swingline Lender as a result of any judgment of a court of competent
jurisdiction obtained by any Lender, any Issuing Bank or the Swingline Lender
against such Defaulting Lender as a result of such Defaulting Lender’s breach of
its obligations under this Agreement; seventh, so long as no Default or Event of
Default exists, to the payment of any amounts owing to the Borrower as a result
of any judgment of a court of competent jurisdiction obtained by the Borrower
against such Defaulting Lender as a result of such Defaulting Lender’s breach of
its obligations under this Agreement; and eighth, to such Defaulting Lender or
as otherwise directed by a court of competent jurisdiction; provided that if
(x) such payment is a payment of the principal amount of any Loans or LC
Disbursements in respect of which such Defaulting Lender has not fully funded
its appropriate share, and (y) such Loans were made or the related Letters of
Credit were issued at a time when the conditions set forth in Section 3.2 were
satisfied or waived, such payment shall be applied solely to pay the Loans of,
and LC Disbursements owed to, all Non-Defaulting Lenders on a pro rata basis
prior to being applied to the payment of any Loans of, or LC Disbursements owed
to, such Defaulting Lender until such time as all Loans and funded and unfunded
participations in respect of Letters of Credit and Swingline Loans are held by
the Lenders pro rata in accordance with the Commitments without giving effect to
sub-section (iv) below. Any payments, prepayments or other amounts paid or
payable to a Defaulting Lender that are applied (or held) to pay amounts owed by
a Defaulting Lender or to post Cash Collateral pursuant to this
Section 2.26(b)(ii) shall be deemed paid to and redirected by such Defaulting
Lender, and each Lender irrevocably consents hereto.

 

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

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

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

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

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

(c) Defaulting Lender Cure. If the Borrower, the Administrative Agent, Swingline
Lender and Issuing Banks agree in writing that a Lender is no longer a
Defaulting Lender, the Administrative Agent will so notify the parties hereto,
whereupon as of the effective date specified in such notice and subject to any
conditions set forth therein (which may include arrangements with respect to any
Cash Collateral), that Lender will, to the extent applicable, purchase at par
that portion of outstanding Loans of the other Lenders or take such other
actions as the Administrative Agent may determine to be necessary to cause the
Loans and funded and unfunded participations in Letters of Credit and Swingline
Loans to be held pro rata by the Lenders in accordance with the applicable
Commitments (without giving effect to Section 2.26(b)(iv)), whereupon such
Lender will cease to be a Defaulting Lender; provided that no adjustments will
be made retroactively with respect to fees accrued or payments

 

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made by or on behalf of the Borrower while that Lender was a Defaulting Lender;
and provided, further, that except to the extent otherwise expressly agreed by
the affected parties, no change hereunder from Defaulting Lender to Lender will
constitute a waiver or release of any claim of any party hereunder arising from
that Lender’s having been a Defaulting Lender.

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

Section 2.27. Request for Extended Facilities. Notwithstanding anything to the
contrary in this Agreement, pursuant to one or more offers (each, an “Extension
Offer”) made from time to time by the Borrower to all Lenders of Incremental
Term Loans with a like Maturity Date (as specified in the applicable Incremental
Commitment Joinder therefor) or all Lenders with Revolving Commitments of the
same Class, in each case on a pro rata basis (based on the outstanding amount of
the respective Loans or the aggregate amount of the Commitments, as the case may
be, with the same Maturity Date) and on the same terms to each such Lender, the
Borrower may from time to time offer (but no Lender is obligated to accept such
offer) to extend the maturity date, increase the interest rate or fees payable
in respect of such Loans and/or Commitments (and related outstandings) and/or
modify the amortization schedule in respect of such Lender’s Incremental Term
Loans for any Incremental Term Loans (each, an “Extension”, and each group of
Loans or Commitments, as applicable, in each case as so extended, as well as the
original Loans and Commitments (in each case not so extended), being a tranche;
any Extended Term Loans shall constitute a separate tranche of Term Loans from
the tranche of Term Loans from which they were converted, and any Extended
Revolving Commitments shall constitute a separate tranche of Revolving
Commitments from the tranche of Revolving Commitments from which they were
converted), all as set forth in greater detail in an Extended Facility Agreement
so long as the terms set forth below are satisfied:

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

(ii) except as to interest rates, fees and final maturity, the Revolving
Commitment of any Lender (an “Extending Revolving Lender”) extended pursuant to
an Extension (an “Extended Revolving Commitment”), and the related outstandings,
shall be a Revolving Commitment (or related Revolving Loan outstandings, as the
case may be) with the same terms as the original Revolving Commitments (and
related Revolving Loan outstandings); provided that (x) subject to the
provisions of Sections 2.22(a) and 2.4(f) to the extent dealing with Letters of
Credit and Swingline Loans which mature or expire after a Maturity Date when
there exist Extended Revolving Commitments with a longer Maturity Date, all
Letters of Credit and Swingline Loans shall be participated in on a pro rata
basis by all Lenders with Revolving Commitments in accordance with their Pro
Rata Share of the Aggregate Revolving Commitment Amount (and except as provided
in Sections 2.22(a) and 2.4(f), without giving effect to changes thereto on an
earlier Maturity Date with respect to Swingline Loans and Letters of Credit
theretofore incurred or issued) and all Borrowings under Revolving Commitments
and repayments thereunder shall be made on a pro rata basis (except for
(A) payments of interest and

 

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fees at different rates on Extended Revolving Commitments (and related
outstandings) and (B) repayments required upon the Maturity Date for the
non-extending Revolving Commitments) and (y) at no time shall there be Revolving
Commitments hereunder (including Extended Revolving Commitments and any original
Revolving Commitments) which have more than five (5) different Maturity Dates;

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

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

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

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

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

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

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

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

 

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

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

 

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ARTICLE III

CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT

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

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

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

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

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

(iii) favorable written opinions of Skadden, Arps, Slate, Meagher & Flom LLP,
counsel to the Loan Parties, and Albright, Stoddard, Warnick & Albright, Nevada
counsel to the Loan Parties, in each case, addressed to the Administrative
Agent, each Issuing Bank and each of the Lenders, and covering such matters
relating to the Loan Parties, the Loan Documents and the transactions
contemplated therein as the Administrative Agent or the Required Lenders shall
reasonably request;

(iv) a certificate in the form of Exhibit 3.1(b)(iv), dated the Closing Date and
signed by a Responsible Officer, certifying that after giving effect to the
Related Transactions, (A) no Default or Event of Default has occurred and is
continuing on the Closing Date, (B) all representations and warranties of each
Loan Party set forth in the Loan Documents are true and

 

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correct in all material respects (other than those representations and
warranties that are expressly qualified by Material Adverse Effect or other
materiality, in which case such representations and warranties shall be true and
correct in all respects), (C) since the date of the financial statements of the
Borrower described in Section 4.4(i), there has been no change which has had or
could reasonably be expected to have a Material Adverse Effect and (D) the
conditions set forth in clauses (b)(vii), (b)(xix), (c) and (d) below have been
satisfied;

(v) a duly executed Notice of Borrowing for any initial Revolving Borrowing;

(vi) a duly executed funds disbursement agreement, together with a report
setting forth the sources and uses of the proceeds hereof;

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

(viii) copies of (A) the quarterly financial statements of the Borrower and its
Subsidiaries on a consolidated basis for the Fiscal Quarter ended March 31,
2014, including the related statements of income and cash flows, (B) the audited
consolidated financial statements for the Borrower and its Subsidiaries for the
Fiscal Year ended December 31, 2013, including in each case the related
statements of income, shareholders’ equity and cash flows, and (C) financial
projections on a quarterly basis for the Fiscal Year ending December 31, 2014
and annually thereafter through December 31, 2017;

(ix) a duly completed and executed Compliance Certificate, including
calculations of the financial covenants set forth in Article VI hereof as of
March 31, 2014, calculated on a pro forma basis as if any initial Revolving
Borrowing had been funded, and the Spin-Off Transaction and the other Related
Transactions had occurred, as of the first day of the relevant period for
testing compliance (and setting forth in reasonable detail such calculations);

(x) a certificate, dated the Closing Date and signed by the chief financial
officer of the Borrower, confirming that the Borrower is, and the Borrower and
its Subsidiaries, on a consolidated basis, are, Solvent before and after giving
effect to the funding of any initial Revolving Borrowing and the consummation of
the Spin-Off Transaction and the other Related Transactions contemplated to
occur on or within three (3) Business Days of the Closing Date;

(xi) the Guaranty and Security Agreement, duly executed by the Borrower and each
of its Domestic Subsidiaries (other than the Excluded Subsidiaries), together
with (A) UCC financing statements and other applicable documents under the laws
of all necessary or appropriate jurisdictions with respect to the perfection of
the Liens granted under the Guaranty and Security Agreement, as requested by the
Administrative Agent in order to perfect such Liens, duly authorized by the Loan
Parties, (B) copies of favorable UCC, tax and judgment lien search reports in
all necessary or appropriate jurisdictions and under all legal and trade names
of the Loan Parties, as requested by the Administrative Agent, indicating that
there are no prior Liens on any of the Collateral other than Permitted
Encumbrances and Liens to be released on the Closing

 

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Date, (C) a Perfection Certificate, duly completed and executed by the Borrower,
(D) duly executed Patent Security Agreements, Trademark Security Agreements and
Copyright Security Agreements, (E) original certificates evidencing all issued
and outstanding shares of Capital Stock of all Subsidiaries (other than the
Excluded Subsidiaries) owned directly by any Loan Party; provided that, in the
case of Capital Stock of any Foreign Subsidiary that is a CFC and Capital Stock
of any Pass-Through Foreign Holdco, such original certificates shall be limited
to 65% of the issued and outstanding voting Capital Stock and 100% of the issued
and outstanding non-voting Capital Stock of such Foreign Subsidiary or such
Pass-Through Foreign Holdco, as applicable, (F) stock or membership interest
powers or other appropriate instruments of transfer executed in blank and (G) a
master intercompany promissory note duly executed by the Borrower and its
Subsidiaries;

(xii) evidence that not less than $260,000,000 of senior unsecured notes have
been, or on the Closing Date will be, issued by CareTrust Partnership, L.P. and
CareTrust Capital Corp.;

(xiii) evidence that CTRI and certain of its Subsidiaries have entered into that
certain Credit Agreement, to be dated as of the Closing Date, by and among
CareTrust Partnership, L.P., as the borrower, the guarantors party thereto and
SunTrust Bank, as administrative agent, providing for commitments thereunder on
the Closing Date of not less than $150,000,000;

(xiv) with respect to (i) the Real Estate leased for the corporate headquarters
of the Loan Parties, a copy of the underlying lease and a Collateral Access
Agreement and (ii) any other Real Estate that is leased by the Loan Parties from
any PropCo Landlord pursuant to a PropCo Master Lease, a copy of the underlying
lease and a Collateral Access Agreement, in each case which Collateral Access
Agreement shall be reasonably satisfactory in form and substance to the
Administrative Agent; provided that, with respect to the foregoing clause
(i) only, this condition shall be deemed to be satisfied if the Borrower uses
its commercially reasonable efforts to deliver such Collateral Access Agreement
on the Closing Date (whether or not any such Collateral Access Agreement is
delivered on the Closing Date) and the Borrower shall use its commercially
reasonable efforts (but not be under any requirement) to deliver such Collateral
Access Agreement within thirty (30) days after the Closing Date;

(xv) copies of duly executed payoff letters, in form and substance satisfactory
to the Administrative Agent, executed by each of the Existing Lenders or the
administrative agent or other representative under the applicable financing
documents, together with (a) UCC-3 or other appropriate termination statements,
in form and substance satisfactory to the Administrative Agent, releasing all
liens of the Existing Lenders upon any of the personal property of the Borrower
and its Subsidiaries granted pursuant to such financing documents,
(b) cancellations and releases, in form and substance satisfactory to the
Administrative Agent, releasing all liens of the Existing Lenders upon any of
the Real Estate of the Borrower and its Subsidiaries granted pursuant to such
financing documents, and (c) any other releases, terminations or other documents
reasonably required by the Administrative Agent to evidence the payoff of
Indebtedness owed to the Existing Lenders issued or incurred pursuant to such
financing documents;

(xvi) certified copies of all Material Agreements and Spin-Off Documents, in
each case, that are in effect on the Closing Date;

 

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(xvii) evidence that after giving effect to the Spin-Off Transaction neither the
Borrower nor any of its Subsidiaries (other than one or more Spin-Off
Subsidiaries) will be liable for or have any further obligations with respect
to, and that no assets of the Borrower or any of its Subsidiaries (other than
one or more Spin-Off Subsidiaries) will be subject to a Lien to secure or
otherwise provide credit support for, any Indebtedness evidenced by the Ten
Project Note, the GE Term Loan Agreement and/or the Johnson Notes;

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

(xix) evidence that the Borrower has declared the dividend or distribution
constituting the Spin-Off Transaction, in form and substance satisfactory to the
Administrative Agent; and

(xx) at least three (3) days prior to the Closing Date, all documentation and
other information with respect to the Borrower and each other Loan Party that
the Administrative Agent or any Lender reasonably determines is required by
regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including, without limitation, the Patriot
Act, to the extent reasonably requested by the Administrative Agent at least ten
(10) days before the Closing Date.

(c) The Leverage Ratio as of the Closing Date is not greater than 0.50:1.00
(calculating Consolidated Total Net Debt on a pro forma basis giving effect to
any initial Revolving Borrowing and Consolidated EBITDA with respect to the four
consecutive Fiscal Quarters ending on March 31, 2014).

(d) The Revolving Credit Exposure will not exceed $50,000,000 after giving
effect to any initial Revolving Borrowing.

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

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

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

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

 

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

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

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

Section 3.4. Termination of Existing Credit Facility. Upon this Agreement
becoming effective, the Existing Credit Agreement shall automatically terminate
(other than those provisions that by their terms survive termination of the
Existing Credit Agreement), all commitments of the lenders thereunder to fund
additional advances shall terminate automatically, and all amounts outstanding
thereunder, together with all accrued and unpaid interest, fees and other
amounts shall be automatically paid in full by the initial Borrowing hereunder
(other than with respect to the Existing Letters of Credit which shall, from and
after the Closing Date, be deemed to be Letters of Credit issued pursuant to
this Agreement).

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

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

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

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

Section 4.3. Governmental Approvals; No Conflicts. The execution, delivery and
performance by each Loan Party of the Loan Documents and the other Related
Transaction Documents to which it is a party (a) do not require any consent or
approval of, registration or filing with, or any action

 

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by, any Governmental Authority, except those as have been obtained or made and
are in full force and effect and except for filings necessary to perfect or
maintain perfection of the Liens created under the Loan Documents, (b) will not
violate any Requirement of Law applicable to the Borrower or any of its
Subsidiaries or any judgment, order or ruling of any Governmental Authority,
(c) will not violate or result in a default under any Contractual Obligation of
the Borrower or any of its Subsidiaries or any of its assets or give rise to a
right thereunder to require any payment to be made by the Borrower or any of its
Subsidiaries, (d) will not result in the creation or imposition of any Lien on
any asset of the Borrower or any of its Subsidiaries, except Liens (if any)
created under the Loan Documents, and (e) do not affect the Borrower’s or any
Subsidiary’s right to receive, or reduce the amount of, payments and
reimbursements from Third Party Payors, or materially adversely affect any
Health Care Permit.

Section 4.4. Financial Statements. The Borrower has furnished to each Lender
(i) the audited consolidated balance sheet of the Borrower and its Subsidiaries
(and the Spin-Off Subsidiaries) as of December 31, 2013, and the related audited
consolidated statements of income, shareholders’ equity and cash flows for the
Fiscal Year then ended, audited by Deloitte & Touche, LLP and (ii) the unaudited
consolidated balance sheet of the Borrower and its Subsidiaries (and the
Spin-Off Subsidiaries) as of March 31, 2014, and the related unaudited
consolidated statements of income and cash flows for the Fiscal Quarter and
year-to-date period then ended, certified by a Responsible Officer. Such
financial statements fairly present the consolidated financial condition of the
Borrower and its Subsidiaries (and the Spin-Off Subsidiaries) as of such dates
and the consolidated results of operations for such periods in conformity with
GAAP consistently applied, subject to year-end audit adjustments and the absence
of footnotes in the case of the statements referred to in clause (ii). Since
December 31, 2013, there have been no changes with respect to the Borrower and
its Subsidiaries which have had or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.

Section 4.5. Litigation and Environmental Matters.

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

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

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

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

 

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

(b) The Spin-Off Transaction will constitute a distribution under Section 355 of
the Code and a reorganization under Section 368(a)(1)(D) of the Code in which no
gain or loss recognized by the Borrower.

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

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

 

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Multiemployer Plan required by law within the applicable time limits prescribed
thereby, by the terms of such Plan or Multiemployer Plan, respectively, or by
any contract or agreement requiring contributions to a Plan or Multiemployer
Plan. No Plan which is subject to Section 412 of the Code or Section 302 of
ERISA has applied for or received an extension of any amortization period within
the meaning of Section 412 of the Code or Section 303 or 304 of ERISA. None of
the Borrower, any of its Subsidiaries or any ERISA Affiliate have ceased
operations at a facility so as to become subject to the provisions of
Section 4068(a) of ERISA, withdrawn as a substantial employer so as to become
subject to the provisions of Section 4063 of ERISA or ceased making
contributions to any Plan subject to Section 4064(a) of ERISA to which it made
contributions. None of the Borrower or any of its Subsidiaries has established,
contributes to or maintains any Non-U.S. Plan.

Section 4.11. Ownership of Property; Insurance.

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

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

(c) The properties of the Borrower and its Subsidiaries are insured (i) with
financially sound and reputable insurance companies which are not Affiliates of
the Borrower, in such amounts with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Borrower or any applicable Subsidiary
operates or (ii) as determined in the Borrower’s reasonable business judgment,
through the Borrower’s self-insured retention program maintained through the
Insurance Subsidiaries.

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

Section 4.12. Disclosure. Neither the Information Memorandum nor any of the
reports (including, without limitation, all reports that the Borrower is
required to file with the Securities and Exchange Commission), financial
statements, certificates or other information furnished by or on behalf of the
Borrower to the Administrative Agent or any Lender in connection with the
negotiation or syndication of this Agreement or any other Loan Document or
delivered hereunder or thereunder (as modified or supplemented by any other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, taken as a
whole in light of the circumstances under which they were made, not materially
misleading; provided that, with respect to projected financial information, the
Borrower represents only that such projected information was

 

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prepared in good faith based upon assumptions believed to be reasonable at the
time, it being understood and agreed that such projected information is subject
to contingencies and assumptions, many of which are not within the control of
the Borrower, and no assurances can be given that any projections will be
realized, and any divergences from projected results may be material.

Section 4.13. Labor Relations. There are no strikes, lockouts or other labor
disputes or grievances against the Borrower or any of its Subsidiaries, or, to
the Borrower’s knowledge, threatened in writing against or affecting the
Borrower or any of its Subsidiaries, and no unfair labor practice charges or
grievances are pending against the Borrower or any of its Subsidiaries, or, to
the Borrower’s knowledge, threatened in writing against any of them before any
Governmental Authority, in each case, that would, either individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect. All
payments due from the Borrower or any of its Subsidiaries pursuant to the
provisions of any collective bargaining agreement have been paid or accrued as a
liability on the books of the Borrower or any such Subsidiary, except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

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

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

Section 4.16. [Reserved].

Section 4.17. Collateral Documents.

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

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

 

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Section 4.18. [Reserved].

Section 4.19. Healthcare Matters.

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

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

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

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

 

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

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

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

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

(i) Prohibited Transactions. Except as where any of the following could not be
reasonably expected to result in a Material Adverse Effect, neither the Borrower
nor any of its Subsidiaries, nor any officer, affiliate or managing employee of
the Borrower or any of its Subsidiaries, directly or indirectly, has (i) offered
or paid or solicited or received any remuneration, in cash or in kind, or made
any financial arrangements, in violation of any Health Care Law; (ii) given or
agreed to give, or is aware that there has been made or that there is any
agreement to make, any gift or gratuitous payment of any kind, nature or
description (whether in money, property or services) in violation of any Health

 

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Care Law; (iii) made or agreed to make, or is aware that there has been made or
that there is any agreement to make, any contribution, payment or gift of funds
or property to, or for the private use of, any governmental official, employee
or agent where either the contribution, payment or gift or the purpose of such
contribution, payment or gift is or was illegal under the laws of any
Governmental Authority having jurisdiction over such payment, contribution or
gift; (iv) established or maintained any unrecorded fund or asset for any
purpose or made any misleading, false or artificial entries on any of its books
or records for any reason; or (v) made, or agreed to make, or is aware that
there has been made or that there is any agreement to make, any payment to any
person with the intention or understanding that any part of such payment would
be in violation of any Health Care Law or used or was given for any purpose
other than that described in the documents supporting such payment. To the
knowledge of the Borrower and its Subsidiaries, no Person has filed or has
threatened in writing to file against the Borrower, any of its Subsidiaries or
any of their Affiliates an action under any federal or state whistleblower
statute, including, without limitation, under the False Claims Act of 1863 (31
U.S.C. § 3729 et seq.), to the extent such a filing, if adversely determined,
would reasonably be expected to result in a Material Adverse Effect.

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

(k) Corporate Integrity Agreement. Neither the Borrower nor any of its
Subsidiaries, nor any owner, officer, director, partner, agent, managing
employee or Person with a “direct or indirect ownership interest” (as that
phrase is defined in 42 C.F.R. §1001.1001) in the Borrower or any of its
Subsidiaries is a party to, or bound by, any material order, individual
integrity agreement, corporate integrity agreement, corporate compliance
agreement or deferred prosecution agreement, other than the Corporate Integrity
Agreement.

(l) DOJ Settlement Documents. The Borrower and its Subsidiaries have not
(i) failed to make any payments under any DOJ Settlement Document when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) or (ii) failed to perform or observe any other condition or covenant
under any DOJ Settlement Document in any material respect. No material provision
of the DOJ Settlement Agreement is invalid or has ceased for any reason to be
valid and binding on or enforceable against any party thereto and the DOJ
Settlement Agreement is in full force and effect other than as such DOJ
Settlement Documents may terminate or be amended in accordance with their terms.

Section 4.20. OFAC. Neither any Loan Party nor any of its Subsidiaries or
Affiliates (i) is a Sanctioned Person, (ii) has more than 10% of its assets in
Sanctioned Countries, or (iii) derives more than 10% of its operating income
from investments in, or transactions with, Sanctioned Persons or Sanctioned
Countries. No part of the proceeds of any Loans hereunder will be used directly
or indirectly to fund any operations in, finance any investments or activities
in or make any payments to a Sanctioned Person or a

 

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Sanctioned Country or for any payments to any governmental official or employee,
political party, official of a political party, candidate for political office,
or anyone else acting in an official capacity, in order to obtain, retain or
direct business or obtain any improper advantage, in violation of the United
States Foreign Corrupt Practices Act of 1977, as amended and in effect from time
to time.

Section 4.21. Patriot Act. Neither any Loan Party nor any of its Subsidiaries is
an “enemy” or an “ally of the enemy” within the meaning of Section 2 of the
Trading with the Enemy Act or any enabling legislation or executive order
relating thereto. Neither any Loan Party nor any or its Subsidiaries is in
violation of (a) the Trading with the Enemy Act, (b) any of the foreign assets
control regulations of the United States Treasury Department (31 C.F.R.,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto or (c) the Patriot Act. None of the Loan Parties (i) is a
blocked person described in Section 1 of the Anti-Terrorism Order or (ii) to the
best of its knowledge, engages in any dealings or transactions, or is otherwise
associated, with any such blocked person.

ARTICLE V

AFFIRMATIVE COVENANTS

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

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

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

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

(c) concurrently with the delivery of the financial statements referred to in
subsections (a) and (b) of this Section, a Compliance Certificate signed by the
principal executive officer or the principal financial officer of the Borrower
(i) certifying that such financial statements fairly present

 

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the financial condition, results of operations, shareholders’ equity and cash
flows of the Borrower and its Subsidiaries on a consolidated basis in accordance
with GAAP, in the case of quarterly financial statements subject only to normal
year-end audit adjustments and the absence of footnotes, (ii) certifying as to
whether there exists a Default or Event of Default on the date of such
certificate and, if a Default or an Event of Default then exists, specifying the
details thereof and the action which the Borrower has taken or proposes to take
with respect thereto, (iii) setting forth in reasonable detail calculations
demonstrating compliance with the financial covenants set forth in Article VI
(beginning with the Fiscal Quarter ending September 30, 2014), (iv) specifying
any change in the identity of the Borrower or any of its Subsidiaries as of the
end of such Fiscal Year or Fiscal Quarter from the Borrower or any of its
Subsidiaries identified to the Lenders on the Closing Date or as of the most
recent Fiscal Year or Fiscal Quarter, as the case may be, (v) stating whether
any change in GAAP or the application thereof has occurred since the date of the
mostly recently delivered audited financial statements of the Borrower and its
Subsidiaries, and, if any change has occurred, specifying the effect of such
change on the financial statements accompanying such Compliance Certificate,
(vi) setting forth a list of all Immaterial Subsidiaries as of such date and
setting forth in reasonable detail calculations of total assets of such
Immaterial Subsidiaries as of such date and the total revenue of such Immaterial
Subsidiaries for the Test Period then ended and (vii) setting forth a list of
all Excluded Subsidiaries as of such date and setting forth in reasonable detail
calculations of Indebtedness of such Excluded Subsidiaries incurred pursuant to
Section 7.1(h) that remains outstanding as of such date and the total amount of
Investments made in Excluded Subsidiaries pursuant to Section 7.4(h) as of such
date;

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

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

(f) promptly following any request therefor, such other information regarding
the results of operations, business affairs and financial condition of the
Borrower or any of its Subsidiaries as the Administrative Agent may reasonably
request (provided that no such information shall be required to be provided if
providing such information would violate confidentiality agreements or result in
a loss of attorney-client privilege or a claim of attorney work product with
respect to such information so long as the Borrower notifies the Administrative
Agent that such information is being withheld and the reason therefor).

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

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

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

(b) the filing or commencement of, or any material development in, any action,
suit, proceeding, audit, claim, demand, order or dispute with, by or before any
arbitrator or Governmental Authority against or, to the knowledge of the
Borrower, affecting the Borrower or any of its Subsidiaries

 

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that (i) seeks injunctive or similar relief, (ii) alleges potential or actual
violations of any Health Care Law by the Borrower or any of its Subsidiaries or
any of its Licensed Personnel and (iii) would, either individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect;

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

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

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

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

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

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

(x) promptly and in any event at least fifteen (15) days prior thereto (or such
shorter period as the Administrative Agent may agree to), notice of any change
(i) in any Loan Party’s legal name (but, for the avoidance of doubt, excluding
any trade names), (ii) in any Loan Party’s chief executive office, (iii) in any
Loan Party’s organizational existence or (iv) in any Loan Party’s federal
taxpayer identification number or organizational number or jurisdiction of
organization; and

 

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

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

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

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

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

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

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

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

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

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

(x) notice of the occurrence of any material reportable event or similar term as
defined in the Corporate Integrity Agreement, any other corporate integrity
agreement, corporate compliance agreement or deferred prosecution agreement
pursuant to which the Borrower or any of its Subsidiaries has to make a
submission to any Governmental Authority or other Person under the terms of such
agreement, if any;

(xi) notice of (A) any amendment, modification or waiver to any DOJ Settlement
Document, with a copy of such amendment, modification or waiver thereof, and
(B) the occurrence of any material breach or default under any DOJ Settlement
Document, or the receipt by the Borrower or any of its Affiliates of any written
notice of any failure by the Borrower or its Affiliates to perform or observe
any term, covenant or agreement contained in any DOJ Settlement Document;

 

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(xii) concurrently with the due date therefor under any DOJ Settlement Document,
copies of all material documents and other information required to be provided
to any Person pursuant to any DOJ Settlement Document; and

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

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

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

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

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

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

Section 5.7. Visitation and Inspection. The Borrower will, and will cause each
of its Subsidiaries to, permit any representative of the Administrative Agent or
any Lender to visit and inspect its properties, to examine its books and records
and to make copies and take extracts therefrom, and to discuss its affairs,
finances and accounts with any of its officers and with its independent
certified public accountants, all at such reasonable times as the Administrative
Agent or any Lender may reasonably request after reasonable prior notice to the
Borrower; provided that (a) so long as no Event of Default shall have occurred
and be continuing, the Administrative Agent and the Lenders shall not make more
than two such visits and inspections in any Fiscal Year; (b) if an Event of
Default has occurred and is continuing, no prior notice shall be required and
the limitation on the number of visits and inspections

 

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shall no longer apply; (c) any such inspection and examination, copies and
discussions shall not be permitted to the extent it would violate
confidentiality agreements or result in a loss of attorney-client privilege or
claim of attorney work product so long as the Borrower notifies the
Administrative Agent of such limitation and the reason therefor; and (d) any
such inspection and examination, copies and discussions shall be subject to the
terms of any applicable Master Lease and the accompanying Collateral Access
Agreement.

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

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

Section 5.10. [Reserved].

Section 5.11. Cash Management.

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

 

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territories, (v) zero-balance accounts for the purpose of managing local
disbursements, payroll, withholding and other fiduciary accounts, (vi) such
accounts (other than such accounts referred to in the foregoing clauses
(i) through (v)) that have an average daily account balance of less than
$100,000 individually and less than $1,000,000 in the aggregate for all such
accounts, (vii) any deposit or securities account established by a Subsidiary of
the Borrower, and into which amounts are deposited, in the ordinary course of
business the balance of which is swept at the end of each Business Day into a
Controlled Account and (viii) Governmental Deposit Accounts) (each, a
“Controlled Account”); each Controlled Account shall be a cash collateral
account, with all cash, checks and other similar items of payment in such
account securing payment of the Obligations, and in which the Borrower and each
other Loan Party shall have granted a first priority Lien to the Administrative
Agent, on behalf of the Secured Parties, pursuant to such Control Account
Agreements.

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

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

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

Section 5.12. Additional Subsidiaries and Collateral.

(a) Within 75 days after the end of the second Fiscal Quarter of each Fiscal
Year of the Borrower, commencing with the 2015 Fiscal Year, the Borrower will
(i) cause each Domestic Subsidiary that is a Material Subsidiary (excluding any
Excluded Subsidiary, any Specified Subsidiary and any Subsidiary that is already
a Guarantor) (a “Joining Guarantor”) (A) to become a new Guarantor and to grant
Liens in favor of the Administrative Agent in all of its personal property
subject to the Guaranty and Security Agreement by executing and delivering to
the Administrative Agent a supplement to the Guaranty and Security Agreement in
form and substance reasonably satisfactory to the Administrative Agent,
executing and delivering a Copyright Security Agreement, Patent Security
Agreement and Trademark Security Agreement, as and to the extent applicable, and
authorizing and delivering, at the request of the Administrative Agent, such UCC
financing statements or similar instruments required by the Administrative Agent
to perfect the Liens in favor of the Administrative Agent and granted under any
of the Loan Documents, (B) to deliver all such other documentation (including,
without limitation, certified organizational documents, resolutions, lien
searches and legal

 

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opinions, provided, that legal opinions shall only be required for a Joining
Guarantor having a fair market value in excess of $7,500,000) and to take all
such other actions as such Joining Guarantor would have been required to deliver
and take pursuant to Section 3.1 if such Joining Guarantor had been a Loan Party
on the Closing Date, (C) to comply with Section 5.11, and (D) to deliver Real
Estate Documents with respect to owned Material Real Estate and Collateral
Access Agreements with respect to leased Real Estate (to the extent the landlord
of any such leased Real Estate is a PropCo Landlord or a landlord under a
Material Master Lease), in each case, of the type required under Section 5.13,
(ii) pledge, or cause the applicable Loan Party to pledge, all of the Capital
Stock of such Joining Guarantor to the Administrative Agent as security for the
Obligations by executing and delivering a supplement to the Guaranty and
Security Agreement in form and substance reasonably satisfactory to the
Administrative Agent, and (iii) deliver the original certificates (if any and to
the extent not prohibited under applicable law) evidencing such pledged Capital
Stock to the Administrative Agent, together with appropriate powers executed in
blank.

(b) Within 75 days after the end of the second Fiscal Quarter of each Fiscal
Year of the Borrower, commencing with the 2015 Fiscal Year (or, if the
Administrative Agent determines in its sole discretion that the Borrower is
working in good faith, such longer period as the Administrative Agent shall
permit not to exceed 60 additional days), the Borrower shall cause the
applicable Loan Parties to pledge all of the Capital Stock of each Foreign
Subsidiary and each Pass-Through Foreign Holdco that is a Material Subsidiary
(excluding any Excluded Subsidiaries) to the extent such Capital Stock is owned
directly by a Loan Party to the Administrative Agent as security for the
Obligations pursuant to the Guaranty and Security Agreement; provided that, in
the case of any such Foreign Subsidiary that is a CFC and any such Pass-Through
Foreign Holdco, such pledge shall be limited to 65% of the issued and
outstanding voting Capital Stock and 100% of the issued and outstanding
non-voting Capital Stock of such Foreign Subsidiary or such Pass-Through Foreign
Holdco, as applicable, (ii) deliver the original certificates (if any and to the
extent not prohibited under applicable law) evidencing such pledged Capital
Stock to the Administrative Agent, together with appropriate powers executed in
blank and (iii) deliver all such other documentation (including, without
limitation, certified organizational documents, resolutions, lien searches and
legal opinions) and to take all such other actions as the Administrative Agent
may reasonably request.

(c) To the extent that either (x) the aggregate assets or (y) the aggregate
revenue, in each case, of Immaterial Subsidiaries, is greater than the
Immaterial Subsidiary Threshold Amount, in each case for the four consecutive
Fiscal Quarter period ending on the last day of any Fiscal Quarter, commencing
with the Fiscal Quarter ending on or about June 30, 2015, then within 75 days
after the end of such Fiscal Quarter (or with respect to the fourth Fiscal
Quarter of each Fiscal Year, then within 120 days after the end of such Fiscal
Quarter), the Borrower shall cause one or more other Domestic Subsidiaries to
become additional Guarantors to the extent necessary to cause the aggregate
assets and the aggregate revenue of Immaterial Subsidiaries to be no greater
than the Immaterial Subsidiary Threshold Amount, by executing and delivering the
documents and taking the actions described in subsection (a) above as if such
Domestic Subsidiaries were Joining Guarantors.

(d) Within 75 days after the end of each Fiscal Quarter (or with respect to the
fourth Fiscal Quarter of each Fiscal Year, then within 120 days after the end of
such Fiscal Quarter), commencing with the Fiscal Quarter ending on or about
June 30, 2015, the Borrower will deliver to the Administrative Agent an
officer’s certificate executed by a Responsible Officer, certifying (A) an
updated Schedule 4.14 (after giving effect to compliance with clauses (a) and
(c) above) attached to such officer’s certificate, (B) the aggregate assets (on
a non-consolidated basis) of Domestic Subsidiaries that are not Loan Parties
(excluding Excluded Subsidiaries) as of the last day of such Fiscal Quarter
(after giving effect to compliance with clauses (a) and (c) above), (C) the
aggregate revenue (on a non-consolidated basis) of Domestic Subsidiaries that
are not Loan Parties (excluding Excluded Subsidiaries) for the four

 

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consecutive Fiscal Quarter period ending on the last day of such Fiscal Quarter,
and (D) that the requirements of this Section 5.12 have been satisfied for such
Fiscal Quarter (other than with respect to subsection (b) to the extent the
Administrative Agent has extended the deadline for compliance as contemplated
thereby).

(e) The Borrower agrees that, following the delivery of any Collateral Documents
required to be executed and delivered by this Section, the Administrative Agent
shall have a valid and enforceable, first priority perfected Lien on the
property required to be pledged pursuant to subsections (a), (b) and (c) of this
Section (to the extent that such Lien can be perfected by execution, delivery
and/or recording of the Collateral Documents or UCC financing statements, or
possession of such Collateral), free and clear of all Liens other than Liens
expressly permitted by Section 7.2. All actions to be taken pursuant to this
Section shall be at the expense of the Borrower or the applicable Loan Party,
and shall be taken to the reasonable satisfaction of the Administrative Agent.

Section 5.13. Additional Negative Pledges; Leased Locations; Mortgages.

(a) If any Loan Party acquires a fee ownership interest in any Material Real
Estate (or if any owned Real Estate becomes Material Real Estate) after the
Closing Date, then, unless such Material Real Estate is being encumbered with a
Lien permitted under Section 7.2(f) on a contemporaneous basis, such Loan Party
shall provide to the Administrative Agent, no later than sixty (60) days
following the acquisition thereof (or the date such Real Estate becomes Material
Real Estate) a negative pledge in recordable form and otherwise in form and
substance reasonably satisfactory to the Administrative Agent.

(b) If the Mortgage Trigger Event occurs, the Borrower shall deliver or cause to
be delivered to the Administrative Agent (i) within thirty (30) days after the
Mortgage Trigger Event occurring (or such later date to which the Administrative
Agent may agree in its sole discretion), (i) a Mortgage on such Material Real
Estate, duly executed by such Loan Party, together with such evidence of
corporate authority, legal opinions (provided, that legal opinions shall only be
required for Material Real Estate having a fair market value in excess of
$7,500,000), fixture filings and environmental indemnity agreements as the
Administrative Agent may reasonably request in connection therewith and
(ii) within ninety (90) days after the Mortgage Trigger Event occurring (or such
later date to which the Administrative Agent may agree in its sole discretion)
(A) title insurance policies, surveys, flood zone certification, zoning letters,
building permits and certificates of occupancy, in each case relating to such
Material Real Estate and in form and substance reasonably satisfactory to the
Administrative Agent, and (B) if required to be obtained under the National
Flood Insurance Act of 1968 and requested by the Administrative Agent, (x) a
policy of flood insurance that (1) covers any Mortgaged Property, (2) is written
in an amount not less than the outstanding principal amount of the Indebtedness
secured by such Mortgage reasonably allocable to such Material Real Estate or
the maximum limit of coverage made available with respect to the particular type
of property under the National Flood Insurance Act of 1968, whichever is less,
and (3) has a term ending not later than the maturity of the Indebtedness
secured by such Mortgage, (y) confirmation that the Loan Parties have received
the notice required pursuant to Section 208(e)(3) of Regulation H of the Board
of Governors of the Federal Reserve with respect to such Material Real Estate,
and (z) such other Real Estate Documents reasonably requested by the
Administrative Agent, in each case in form and substance reasonably satisfactory
to the Administrative Agent.

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

 

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

Section 5.14. Further Assurances. The Borrower will, and will cause each other
Loan Party to, execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements and other documents), which may be
required under any applicable law, or which the Administrative Agent or the
Required Lenders may reasonably request, to effectuate the transactions
contemplated by the Loan Documents or to grant, preserve, protect or perfect the
Liens created by the Collateral Documents or the validity or priority of any
such Lien, all at the expense of the Loan Parties. The Borrower also agrees to
provide to the Administrative Agent, from time to time upon reasonable request,
evidence reasonably satisfactory to the Administrative Agent as to the
perfection and priority of the Liens created or intended to be created by the
Collateral Documents.

Section 5.15. Health Care Matters.

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

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

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

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

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

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

(c) The Borrower and each of its Subsidiaries shall maintain a corporate and
health care regulatory compliance program (“CCP”) which addresses the
requirements of Health Care Laws, including, without limitation, HIPAA and
includes at least the following components and allows the Administrative Agent
(and/or its consultants) from time to time to review such CCP: (i) standards of
conduct and procedures that describe compliance policies regarding laws with an
emphasis on prevention of fraud and abuse; (ii) a specific officer within
high-level personnel identified as having overall responsibility for compliance
with such standards and procedures; (iii) training and education programs

 

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which effectively communicate the compliance standards and procedures to
employees and agents, including, without limitation, fraud and abuse laws and
illegal billing practices; (iv) auditing and monitoring systems and reasonable
steps for achieving compliance with such standards and procedures, including,
without limitation, publicizing a report system to allow employees and other
agents to anonymously report criminal or suspect conduct and potential
compliance problems; (v) disciplinary guidelines and consistent enforcement of
compliance policies, including, without limitation, discipline of individuals
responsible for the failure to detect violations of the CCP; and (vi) mechanisms
to immediately respond to detected violations of the CCP. The Borrower and its
Subsidiaries shall modify such CCPs from time to time, as may be necessary to
ensure continuing compliance with all applicable Health Care Laws. Upon request,
the Administrative Agent (and/or its consultants) shall be permitted to review
such CCPs.

(d) The Borrower and its Affiliates shall comply in all material respects with
the DOJ Settlement Documents at all times from and after the Closing Date.

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

Section 5.17. Limitations on Designation of Immaterial Subsidiaries.

(a) If for any reason the total assets or revenues of the Immaterial
Subsidiaries exceeds the Immaterial Subsidiary Threshold Amount, then, promptly
after the occurrence of such event that causes the Immaterial Subsidiary
Threshold Amount to be exceeded, the Borrower shall designate (an “Inclusion
Designation”) one or more Immaterial Subsidiaries as no longer constituting
Immaterial Subsidiaries for all purposes of this Agreement (an “Included
Immaterial Subsidiary”) as may be necessary to ensure that the Immaterial
Subsidiary Threshold is satisfied (including by executing and delivering the
documents and taking the actions described in Section 5.12(a) as if such
Subsidiaries were Joining Guarantors). The Borrower may redesignate (an
“Immaterial Subsidiary Redesignation”) an Included Immaterial Subsidiary as
constituting an Immaterial Subsidiary for purposes of this Agreement so long as
such redesignated Included Immaterial Subsidiary is in compliance with the
requirements of the definition of Immaterial Subsidiary and such Immaterial
Subsidiary Redesignation does not cause or otherwise result in the total assets
or revenues of the Immaterial Subsidiaries (after giving effect to the
Immaterial Subsidiary Redesignation of the Included Immaterial Subsidiary as an
Immaterial Subsidiary) to exceed the Immaterial Subsidiary Threshold Amount.

(b) Any such Inclusion Designation or Immaterial Subsidiary Redesignation must
be evidenced by a certificate of a Responsible Officer of the Borrower delivered
to the Administrative Agent certifying compliance with the foregoing provisions
of Section 5.17(a). If the Borrower redesignates an Included Immaterial
Subsidiary as an Immaterial Subsidiary in accordance with this Section 5.17, so
long as no Default or Event of Default exists, the Obligations of such Included
Immaterial Subsidiary (as a Guarantor) under the Loan Documents shall terminate
and be of no further force and all Liens granted by such Included Immaterial
Subsidiary (as a Guarantor) under the applicable Collateral Documents shall
terminate and be released and be of no further force and effect, in each case,
without any action required by the Administrative Agent.

(c) At the Borrower’s request, the Administrative Agent will execute and deliver
any instrument evidencing such termination and the Administrative Agent shall
take all actions appropriate in order to effect the termination and release of
such Lien and without recourse or warranty by the Administrative Agent
(including the execution and delivery of appropriate UCC termination statements
and such other instruments and releases as may be necessary and appropriate to
effect such release). Any such foregoing actions taken by the Administrative
Agent shall be at the sole cost and expense of the Borrower.

 

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Section 5.18. Limitations on Designation of Excluded Subsidiaries.

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

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

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

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

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

(v) such Subsidiary is not a tenant under any PropCo Master Lease.

 

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

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

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

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

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

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

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

Section 5.19. Spin-Off Transaction.

(a) Within three (3) Business Days following the Closing Date, the Borrower
shall have effected the Spin-Off Transaction.

(b) Within three (3) Business Days following the Closing Date, the
Administrative Agent shall have received a copy of each PropCo Master Lease duly
executed by the parties thereto and an officer’s certificate of the Borrower
certifying that (i) the Spin-Off Transaction has been effected and (ii) each
PropCo Master Lease is in full force and effect as of such date of delivery.

 

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ARTICLE VI

FINANCIAL COVENANTS

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

Section 6.1. Leverage Ratio. The Borrower will maintain, as of the last day of
each Test Period, commencing with the Test Period ending on September 30, 2014,
a Leverage Ratio of not greater than 2.75:1.00 (the “Maximum Leverage
Threshold”); provided that if the aggregate consideration paid in connection
with all Permitted Acquisitions or other Acquisitions permitted hereunder
consummated during any six (6) consecutive month period exceeds $50,000,000,
then, at the election of the Borrower by written notice to the Administrative
Agent (with a description in reasonable detail of the Permitted Acquisitions or
other Acquisitions permitted hereunder consummated during such period and the
consideration paid), the Maximum Leverage Threshold shall be increased to
3.00:1.00 for the current Fiscal Quarter and the immediately following three
Fiscal Quarters; provided, further, that the Maximum Leverage Threshold shall
not be increased pursuant to the preceding proviso (i) more than four times (or
with respect to more than twelve Fiscal Quarters) during the term of this
Agreement and (ii) unless in the most recently ended four consecutive Fiscal
Quarter period there shall be at least one Fiscal Quarter in respect of which
the Maximum Leverage Threshold has not been increased.

Section 6.2. Interest/Rent Coverage Ratio. The Borrower will maintain, as of the
last day of each Test Period, commencing with the Test Period ending on
September 30, 2014, an Interest/Rent Coverage Ratio of not less than 1.50:1.00.

ARTICLE VII

NEGATIVE COVENANTS

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

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

(a) Indebtedness created pursuant to the Loan Documents;

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

(c) Indebtedness of the Borrower or any of its Subsidiaries incurred to finance
the acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations (it being understood that the completion of
the construction or development of additional beds at existing facilities or new
facilities shall constitute the acquisition of property), and any Indebtedness
assumed in connection with the acquisition of any such assets or secured by a
Lien on any such assets (provided that such Indebtedness is incurred prior to or
within 90 days after such acquisition or the completion of such construction or
improvements), and extensions, renewals, refinancings or replacements of any
such Indebtedness that do not increase the outstanding principal amount thereof
(immediately prior to giving effect to such extension, renewal, refinancing or
replacement, other than in an amount not to exceed unpaid interest and fees and
expenses incurred in connection therewith) or shorten the maturity or the
weighted average life thereof; provided that the aggregate principal amount of

 

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such Indebtedness does not exceed $25,000,000 at any time outstanding; provided,
further, that the aggregate principal amount of Capital Lease Obligations that
are permitted under subsection (j) of this Section shall not be included in
calculating the aggregate principal amount of Indebtedness for purposes of the
limitation set forth in this subsection;

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

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

(f) Indebtedness of any Person which becomes a Subsidiary (other than an
Excluded Subsidiary) after the date of this Agreement and Indebtedness secured
by assets acquired by the Borrower or any of its Subsidiaries (other than an
Excluded Subsidiary) after the date of this Agreement; provided that in each
case (i) such Indebtedness exists at the time that such Person becomes a
Subsidiary or such asset is acquired and is not created in contemplation of or
in connection with such Person becoming a Subsidiary or such asset being
acquired, and (ii) the aggregate principal amount of all such Indebtedness
permitted hereunder shall not exceed $10,000,000 at any time outstanding;

(g) Hedging Obligations permitted by Section 7.10;

(h) Indebtedness of an Excluded Subsidiary secured by Liens permitted by
Section 7.2(f) in an aggregate principal amount, when taken together with the
aggregate amount of Investments in any Excluded Subsidiaries made pursuant to
Section 7.4(h) that remain outstanding at such time (other than any portion of
such Investment made in reliance on the Acquisition Consideration Available
Amount), for all such Indebtedness not to exceed at any time outstanding the
greater of (x) $150,000,000 and (y) an amount equal to (I) Consolidated EBITDA
for the most recently ended Test Period multiplied by (II) two; provided that,
at the time of and immediately after giving effect to the incurrence or
assumption of any such Indebtedness, (A) no Default or Event of Default shall
exist and (B) the Borrower and its Subsidiaries shall be in pro forma compliance
with Sections 6.1 and 6.2 as of the most recently ended Test Period, calculated
as if all such Indebtedness had been incurred as of the first day of the
relevant period for testing compliance;

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

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

(k) unsecured Indebtedness of a Subsidiary Loan Party owing to its landlord or
Affiliates of such landlord under a lease of Real Estate for loans advanced by
such landlord or its Affiliates for the purpose of funding capital expenditures
with respect to healthcare facilities located on such Real Estate, provided
that, at the time of and immediately after giving effect to the incurrence of
any such Indebtedness, (A) no Default or Event of Default shall exist, (B) the
Borrower and its Subsidiaries shall be in pro forma compliance with Sections 6.1
and 6.2 as of the most recently ended Test Period, calculated as if all such
Indebtedness had been incurred as of the first day of the relevant period for
testing compliance, and (C) the aggregate amount of Indebtedness outstanding
pursuant to this Section 7.1(k) shall not exceed $10,000,000;

 

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

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

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

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

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

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

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

(b) Permitted Encumbrances;

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

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

 

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

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

(g) [Reserved];

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

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

 

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Section 7.3. Fundamental Changes.

(a) The Borrower will not, and will not permit any of its Subsidiaries to, merge
into or consolidate into any other Person, or permit any other Person to merge
into or consolidate with it, or sell, lease, transfer or otherwise dispose of
(in a single transaction or a series of transactions) all or substantially all
of the assets of the Borrower and its Subsidiaries on a consolidated basis (in
each case, whether now owned or hereafter acquired) or liquidate or dissolve;
provided that if, at the time thereof and immediately after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing,
(i) the Borrower or any Subsidiary may merge with a Person if the Borrower (or
such Subsidiary if the Borrower is not a party to such merger) is the surviving
Person, (ii) any Subsidiary may merge into another Subsidiary, provided that if
any party to such merger is a Subsidiary Loan Party, the Subsidiary Loan Party
shall be the surviving Person, (iii) any Subsidiary may sell, transfer, lease or
otherwise dispose of all or substantially all of its assets to the Borrower or
to a Subsidiary Loan Party, (iv) any Subsidiary may liquidate or dissolve if the
Borrower determines in good faith that such liquidation or dissolution is in the
best interests of the Borrower and is not materially disadvantageous to the
Lenders, (v) the Borrower and its Subsidiaries may effect the Spin-Off
Transaction pursuant to the Spin-Off Documents, including the distribution of
all of the Capital Stock of CTRI and its Subsidiaries to the shareholders of the
Borrower; provided, further, that any such merger involving a Person that is not
a wholly owned Subsidiary immediately prior to such merger shall not be
permitted unless also permitted by Section 7.4, (vi) any Subsidiary may merge,
dissolve or consolidate in connection with the consummation of any Permitted
Acquisition, and (vii) any Subsidiary that is not a Loan Party may sell,
transfer, lease or otherwise dispose of all or substantially all of its assets
to the Borrower or any Subsidiary of the Borrower.

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

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

(a) (x) Investments existing on the date hereof in Excluded Subsidiaries that
are set forth on Schedule 7.4 and (y) other Investments (other than Permitted
Investments) existing on the date hereof (including Investments in Subsidiaries
but excluding, for the avoidance of doubt, Investments in Spin-Off Subsidiaries
from and after consummation of the Spin-Off Transaction);

(b) Permitted Investments;

(c) Permitted Alternative Investments; provided that the aggregate amount of all
such Permitted Alternative Investments held by the Borrower and its Subsidiaries
(other than any Insurance Subsidiary) does not exceed $20,000,000 at any time;

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

 

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(e) Investments made by the Borrower in or to any Subsidiary and by any
Subsidiary to the Borrower or in or to another Subsidiary; provided that the
aggregate outstanding amount of Investments by the Loan Parties in or to, and
Guarantees by the Loan Parties of Indebtedness of, (x) Excluded Subsidiaries
shall not exceed $25,000,000 in the aggregate and (y) any Subsidiaries that are
not Subsidiary Loan Parties (other than Excluded Subsidiaries) (including all
such Investments and Guarantees existing on the Closing Date) shall not exceed
$10,000,000 (in each case, excluding Investment permitted under the succeeding
proviso); provided, further, (i) Guarantees of Indebtedness of Excluded
Subsidiaries shall not be permitted except (x) Excluded Subsidiaries may
Guarantee Indebtedness of other Excluded Subsidiaries and (y) the Borrower may
Guarantee on an unsecured basis all Indebtedness of Excluded Subsidiaries
permitted under Section 7.1(h) (and make payments thereunder), (ii) additional
Investments in Excluded Subsidiaries pursuant to clause (h) below shall be
permitted subject to the limitations set forth therein and (iii) in the case of
Investments in Excluded Subsidiaries pursuant to this clause (e), at the time of
and immediately after giving effect to any such Investment, (A) no Default or
Event of Default shall exist and (B) the Borrower and its Subsidiaries shall be
in pro forma compliance with Sections 6.1 and 6.2 as of the most recently ended
Test Period, calculated as if such Investment had been made as of the first day
of the relevant period for testing compliance;

(f) loans or advances to employees, officers or directors of the Borrower or any
of its Subsidiaries in the ordinary course of business for travel, relocation
and related expenses; provided that the aggregate amount of all such loans and
advances does not exceed $3,000,000 at any time outstanding;

(g) Hedging Transactions permitted by Section 7.10;

(h) (x) Permitted Acquisitions, (y) Investments in Excluded Subsidiaries made
for the purpose of financing the construction, development, refurbishment or
expansion of any health care facility and (z) Investments constituting Excluded
Subsidiary Designation Amounts (other than, in the case of this clause (z), cash
or cash equivalents funded by any Loan Party into an Excluded Subsidiary prior
to such Subsidiary being designated as an Excluded Subsidiary, except to the
extent of cash or cash equivalents funded for the purpose of financing the
Permitted Acquisition of such Subsidiary or the construction, development,
refurbishment or expansion of any health care facility); provided that the
aggregate amount of Acquisition Consideration payable in connection with a
Permitted Acquisition of an Excluded Subsidiary (determined at the time of such
Permitted Acquisition) and Investments in Excluded Subsidiaries made for the
purpose of financing the construction, development, refurbishment or expansion
of any health care facility and Excluded Subsidiary Designation Amounts,
together with the amount of any then outstanding Indebtedness that was incurred
or assumed pursuant to Section 7.1(h) and any other then outstanding Investment
in any Excluded Subsidiary arising pursuant to this Section 7.4(h) (in each
case, without duplication), shall not exceed at any time the sum of (A) the
greater of (x) $150,000,000 and (y) an amount equal to (I) Consolidated EBITDA
for the most recently ended four consecutive Fiscal Quarter period for which
financial statements were required to have been delivered pursuant to
Section 5.1(a) or (b) multiplied by (II) two plus (B) the Acquisition
Consideration Available Amount; provided, that, (i) for the avoidance of doubt,
in the event of a Permitted Acquisition consisting of the purchase or
acquisition of both Excluded Subsidiaries and entities that become or will
become Subsidiary Loan Parties, the aggregate amount of Acquisition
Consideration attributable to the Excluded Subsidiaries for purposes of this
clause (h), shall be determined by the Borrower in good faith and be reasonably
acceptable to the Administrative Agent and (ii) the amount of Investments made
(or Acquisition Consideration payable) under this Section 7.4(h) in connection
with a Permitted Acquisition of an Excluded Subsidiary shall be determined
without duplication of any Indebtedness incurred or assumed under Section 7.1(h)
in connection therewith to the extent such Indebtedness is included in the
determination of Acquisition Consideration for such Permitted Acquisition;

 

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(i) with respect to the Insurance Subsidiaries only, (A) commercial paper
having, at the time of acquisition thereof, a short-term rating from S&P or
Moody’s of at least A-1/P-1; (B) certificates of deposit, bankers’ acceptances
and time deposits issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any commercial bank or other financial
institution that has total assets of not less than $500,000,000 or the
equivalent thereof at the time of acquisition thereof; (C) other securities,
including, without limitation, corporate debt, having, at the time of
acquisition thereof, a long-term rating from S&P or Moody’s of at least A-/A3;
and (D) mutual funds investing primarily in any one or more of the foregoing;

(j) other Investments that in the aggregate do not exceed $10,000,000 in any
Fiscal Year or (B) $50,000,000 during the term of this Agreement; and

(k) Investments held by a Subsidiary Loan Party that is acquired after the
Closing Date, or of a Person merged or consolidated with or into the Borrower or
a Subsidiary Loan Party, in each case in accordance with the terms of this
Agreement to the extent that such Investments were not made in contemplation of
or in connection with such acquisition, merger or consolidation and were in
existence on the date of such acquisition, merger or consolidation (such
Investments, “Acquired Investments”); provided, however, that the aggregate
amount of Acquired Investments that would not otherwise be permitted as an
Investment pursuant to clauses (a) through (i) of this Section 7.4 shall not
exceed 10% of the book value of such Subsidiary Loan Party (and its
Subsidiaries) that is acquired after the Closing Date or such Person (and its
Subsidiaries) that is merged or consolidated with or into the Borrower or a
Subsidiary Loan Party, as of the date of such acquisition, merger or
consolidation.

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

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

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

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

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

(iii) Restricted Payments necessary to effect the Spin-Off Transaction pursuant
to the Spin-Off Documents, including the distribution of all of the Capital
Stock of CTRI and its Subsidiaries to the shareholders of the Borrower;

(iv) other Restricted Payments so long as (x) no Default or Event of Default
shall have occurred and be continuing at the time such Restricted Payment is
paid, and (y) the aggregate amount of all such Restricted Payments made by the
Borrower in any Fiscal Year does not exceed 20% of Consolidated Net Income (if
greater than $0) earned during the immediately preceding Fiscal Year;

 

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(v) the Borrower may repurchase common stock or common stock options from
present or former officers, directors or employees (or heirs of, estates of or
trusts formed by such Persons) or the Borrower or any Subsidiary upon the death,
disability, retirement or termination of employment or position of such officer,
director or employee or pursuant to the terms of any stock option plan or like
agreement; provided, however, that the aggregate amount of payments under this
clause shall not exceed the lesser of (i) $1,000,000 in any Fiscal Year or
(ii) $5,000,000 during the term of this Agreement;

(vi) other Restricted Payments (including, for the avoidance of doubt, payments
with respect to subordinated Indebtedness) in an aggregate amount not to exceed
$10,000,000 in any Fiscal Year;

(vii) the Borrower and its Subsidiaries may (x) repurchase Capital Stock to the
extent deemed to occur upon exercise of stock options, warrants or rights in
respect thereof to the extent such Capital Stock represents a portion of the
exercise price of such options, warrants or rights in respect thereof and
(y) make payments in respect of withholding or similar taxes payable or expected
to be payable by any present or former member of management, director, officer,
employee, or consultant of the Borrower or any of its Subsidiaries or family
members, spouses or former spouses, heirs of, estates of or trusts formed by
such Persons in connection with the exercise of stock options or grant, vesting
or delivery of Capital Stock; provided, however, that the aggregate amount of
payments under this clause (y) shall not exceed the lesser of (i) $1,000,000 in
any Fiscal Year or (ii) $5,000,000 during the term of this Agreement;

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

(ix) in addition to the other Restricted Payments otherwise permitted under this
Section 7.5, the Borrower and its Subsidiaries may make additional Restricted
Payments in an amount not to exceed the Available Amount;

(x) in addition to the other Restricted Payments otherwise permitted under this
Section 7.5, the Borrower may make additional Restricted Payments in an amount
equal to the cash received by it from CTRI in connection with the Spin-Off
Transaction, in an aggregate amount not to exceed $15,000,000 during the term of
this Agreement; and

(xi) the refinancing of any Indebtedness that is subordinated to the
Obligations; provided that (A) no Default or Event of Default shall have
occurred and be continuing or would result therefrom; (B) any such refinancing
Indebtedness shall (x) not have a stated maturity or, other than in the case of
a revolving credit facility, a Weighted Average Life to Maturity that is shorter
than that of the Indebtedness being refinanced, (y) if the Indebtedness being
refinanced is subordinated to the Obligations by its terms or by the terms of
any agreement or instrument relating to such Indebtedness, be at least as
subordinate to the Obligations as the Indebtedness being refinanced (and
unsecured if the refinanced Indebtedness is unsecured) and (z) be in a principal
amount that does not exceed the principal amount so refinanced, plus, accrued
interest, plus, any premium or other payment required to be paid in connection
with such refinancing, plus, the amount of fees and expenses of the Borrower or
any of its Subsidiaries

 

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incurred in connection with such refinancing, plus, any unutilized commitments
thereunder; and (C) the obligors on such refinancing Indebtedness shall be the
obligors on such Indebtedness being refinanced; provided, further, however, that
(i) the borrower of the refinancing indebtedness shall be the Borrower or the
borrower of the Indebtedness being refinanced, (ii) any Loan Party shall be
permitted to guarantee any such refinancing Indebtedness of any other Loan Party
and (iii) any non-Loan Party shall be permitted to guarantee any such
refinancing Indebtedness of any other non-Loan Party.

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

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

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

(c) dispositions of cash and cash equivalents;

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

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

(f) asset sales or other dispositions in an aggregate amount not to exceed the
lesser of (i) in any Fiscal Year, 10% of the total assets of the Borrower and
its Subsidiaries determined on consolidated basis as of the date of any such
asset sale or other disposition and (ii) $100,000,000 in the aggregate during
the term of this Agreement; provided that (i) at the time of such sale or other
disposition, no Event of Default then exists or would arise therefrom, and
(ii) the Borrower or any of its Subsidiaries shall receive not less than 75% of
such consideration in the form of (x) cash or Permitted Investments or (y) real
property (and improvements thereon related to one or more healthcare facilities)
acquired in an exchange pursuant to or intended to qualify under Section 1031
(or any successor section) of the Code (it being understood that for the
purposes of clause (f)(ii)(x), the following shall be deemed to be cash: (A) any
liabilities (as shown on the Borrower’s most recent balance sheet provided
hereunder or in the footnotes thereto) of the Borrower or such Subsidiary, other
than liabilities that are by their terms subordinated to the payment in cash of
the Obligations, that are assumed by the transferee with respect to the
applicable sale or disposition and for which all of its Subsidiaries shall have
been validly released by all applicable creditors in writing, (B) any securities
received by such Subsidiary from such transferee that are converted by such
Subsidiary into cash or Permitted Investments (to the extent of the cash or
Permitted Investments received) within one hundred and eighty (180) days
following the closing of the applicable disposition and (C) any Designated
Non-Cash Consideration received in respect of such disposition having an
aggregate fair market value, taken together with all other Designated Non-Cash
Consideration received pursuant to this clause (C) that is at that time
outstanding, not in excess of $1,000,000, with the fair market value of each
item of Designated Non-Cash Consideration being measured at such date of receipt
or such agreement, as applicable, and without giving effect to subsequent
changes in value).

 

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

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

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

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

(d) the Borrower and its Subsidiaries may enter into the Spin-Off Documents (in
each case, including any amendment, restatement, replacement or other
modification thereto so long as such amendment, restatement, replacement or
other modification is not adverse to the interests of the Lenders in any
material respect, taken as a whole) and the transactions contemplated thereby.

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

 

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

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

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

Section 7.12. PropCo Master Leases. The Borrower will not, and will not permit
any of its Subsidiaries to, terminate or allow or consent to the termination of
any PropCo Master Lease or enter into any amendment, waiver or modification to
any PropCo Master Lease if (i) such amendment, waiver or modification could
reasonably be expected to have a Material Adverse Effect or (ii) after giving
pro forma effect to such amendment, waiver or modification, the Borrower will
not be in compliance with the provisions of Article VI; provided that,
notwithstanding the foregoing, the Borrower will not, and will not permit any of
its Subsidiaries to, allow any amendment, waiver or modification of any PropCo
Master Lease that (i) shortens the term of such PropCo Master Lease to less than
twelve (12) years (including extension or renewal options) from the date of such
amendment, waiver or modification, (ii) amends, waives or modifies Articles 10,
11, or 16 of such PropCo Master Lease (including by amendment of the defined
terms used therein) in a manner adverse in any material respects to the
interests of the Secured Parties or (iii) amends, waives or modifies
Section 5.13 of such PropCo Master Lease to the extent adversely impacting the
ability of the Secured Parties to obtain or maintain a Lien on any assets of the
Borrower or any of its Subsidiaries (other than the leasehold interests in such
PropCo Master Lease), in each case, without the consent of the Required Lenders.
No tenant under any PropCo Master Lease shall transfer its rights or obligations
under such PropCo Master Lease to any Person other than to the Borrower or any
other Loan Party; provided, however, that no such transfer shall be permitted
hereunder unless expressly permitted under such PropCo Master Lease or consented
to in writing by landlord under such PropCo Master Lease.

 

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

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

Section 7.15. Spin-Off. Notwithstanding anything in this Article VII or any
other provision of this Agreement to the contrary, in no event shall this
Agreement prohibit or otherwise restrict the consummation of the Spin-Off
Transaction, in each case, solely to the extent the Spin-Off Transaction occurs
no later than three (3) Business Days following the Closing Date.

ARTICLE VIII

EVENTS OF DEFAULT

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

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

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

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

(d) the Borrower shall fail to observe or perform any covenant or agreement
contained in Section 5.3 (with respect to the Borrower’s legal existence),
Section 5.17, Section 5.18, Section 5.19 or Article VI or VII; or

(e) (i) any Loan Party shall fail to observe or perform any covenant or
agreement contained in Section 5.1 or 5.2, and such failure shall remain
unremedied for fifteen (15) days after the earlier of (x) any Responsible
Officer of the Borrower becomes aware of such failure, or (y) notice thereof
shall have been given to the Borrower by the Administrative Agent or any Lender,
or (ii) any

 

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

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

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

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

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

(j) (i) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with other ERISA Events that have occurred, could
reasonably be expected to result in liability to the Borrower and its
Subsidiaries in an aggregate amount exceeding $15,000,000, (ii) there is or
arises an Unfunded Pension Liability (not taking into account Plans with
negative Unfunded Pension Liability) in an aggregate amount exceeding
$15,000,000, or (iii) there is or arises any potential Withdrawal Liability in
an aggregate amount exceeding $15,000,000; or

 

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(k) any judgment or order for the payment of money in excess of $15,000,000 in
the aggregate, to the extent not adequately covered by insurance as to which a
solvent insurance company has not contested or denied coverage, shall be
rendered against the Borrower or any of its Subsidiaries, and there shall be a
period of 60 consecutive days during which (i) a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect or (ii) such judgment or order shall remain undischarged, unvacated or
unbonded; or

(l) any non-monetary judgment or order shall be rendered against the Borrower or
any of its Subsidiaries that could reasonably be expected, either individually
or in the aggregate for all such events, to have a Material Adverse Effect, and
there shall be a period of 60 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or

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

(n) (i) there shall occur any revocation, suspension, termination, recission,
non-renewal or forfeiture or any similar final administrative action with
respect to one or more Health Care Permits, Third Party Payor Programs or Third
Party Payor Authorizations that could reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect,
(ii) (x) the Borrower or any of its Subsidiaries shall be named in any action,
fully or partially unsealed, in which the United States has affirmatively
intervened, alleging violation of the federal False Claims Act or any other
applicable law and (y) the Borrower shall have offered, agreed or paid to, or
received a final judgment requiring payment to, any Governmental Authority for
payment of any fine, penalty or overpayment in excess of $50,000,000, (iii) any
Loan Party or any Subsidiary of any Loan Party (A) fails to make any payment
required under the DOJ Settlement Documents when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) or (B) fails
to perform or observe any other condition or covenant under any DOJ Settlement
Document in any material respect, or (iv) any material provision of the DOJ
Settlement Agreement shall for any reason cease to be valid and binding on or
enforceable against any party thereto, or the DOJ Settlement Agreement shall
cease to be in full force and effect; or

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

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

(q) (i) any PropCo Master Lease shall terminate or otherwise cease to be
effective, other than upon the expiration or termination thereof with respect to
any particular property or properties pursuant to Section 10.4 or Article XI of
such PropCo Master Lease or pursuant to an amendment, waiver or modification of
such PropCo Master Lease not prohibited by Section 7.12 of this Agreement, or an
“Event of Default” (as defined in such PropCo Master Lease) shall have occurred
and is continuing under

 

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Section 12.1.1, Section 12.1.2, Section 12.1.3 (for the avoidance of doubt, in
the case of Sections 12.1.2 and 12.1.3, after the expiration of the applicable
cure period set forth therein), Section 12.1.15, Section 12.1.16 (other than
with respect to Section 5.11 and 5.12.3 thereof), or Section 16.1 of such PropCo
Master Lease, or the landlord under such PropCo Master Lease shall have given
the tenant under such PropCo Master Lease notice of termination of such PropCo
Master Lease following an “Event of Default” (as defined in such PropCo Master
Lease) or the landlord has issued a “Termination Notice” pursuant to
Section 12.2.6 of the PropCo Master Lease or (ii) any event of the type
described in the foregoing clause (i) shall have occurred with respect to any
Material Master Lease;

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

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

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

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

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

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

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

(f) sixth, to additional cash collateral for the aggregate amount of all
outstanding Letters of Credit until the aggregate amount of all cash collateral
held by the Administrative Agent pursuant to this Agreement is at least 103% of
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(g) seventh, to the extent any proceeds remain, to the Borrower or as otherwise
provided by a court of competent jurisdiction.

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

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

ARTICLE IX

THE ADMINISTRATIVE AGENT

Section 9.1. Appointment of the Administrative Agent.

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

(b) Each Issuing Bank shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith until such
time and except for so long as the Administrative Agent may agree at the request
of the Required Lenders to act for such Issuing Bank with respect thereto;
provided that each Issuing Bank shall have all the benefits and immunities
(i) provided to the Administrative Agent in this Article with respect to any
acts taken or omissions suffered by such Issuing Bank in connection with Letters
of Credit issued by it or proposed to be issued by it and the

 

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application and agreements for letters of credit pertaining to the Letters of
Credit as fully as if the term “Administrative Agent” as used in this Article
included such Issuing Bank with respect to such acts or omissions and (ii) as
additionally provided in this Agreement with respect to such Issuing Bank.

Section 9.2. Nature of Duties of the Administrative Agent. The Administrative
Agent shall not have any duties or obligations except those expressly set forth
in this Agreement and the other Loan Documents. Without limiting the generality
of the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default or an Event
of Default has occurred and is continuing, (b) the Administrative Agent shall
not have any duty to take any discretionary action or exercise any discretionary
powers, except those discretionary rights and powers expressly contemplated by
the Loan Documents that the Administrative Agent is required to exercise in
writing by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in
Section 10.2), provided that the Administrative Agent shall not be required to
take any action that, in its opinion or the opinion of its counsel, may expose
the Administrative Agent to liability or that is contrary to any Loan Document
or applicable law, including for the avoidance of doubt any action that may be
in violation of the automatic stay under any Debtor Relief Law or that may
effect a forfeiture, modification or termination of property of a Defaulting
Lender in violation of any Debtor Relief Law, and (c) except as expressly set
forth in the Loan Documents, the Administrative 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 Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken
by it, its sub-agents or its attorneys-in-fact with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in
Section 10.2) or in the absence of its own gross negligence or willful
misconduct. The Administrative Agent shall not be responsible for the negligence
or misconduct of any sub-agents or attorneys-in-fact selected by it with
reasonable care. The Administrative Agent shall not be deemed to have knowledge
of any Default or Event of Default unless and until written notice thereof
(which notice shall include an express reference to such event being a “Default”
or “Event of Default” hereunder) is given to the Administrative Agent by the
Borrower or any Lender, and the Administrative Agent shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements, or other terms and conditions
set forth in any Loan Document, (iv) the validity, enforceability, effectiveness
or genuineness of any Loan Document or any other agreement, instrument or
document, or (v) the satisfaction of any condition set forth in Article III or
elsewhere in any Loan Document, other than to confirm receipt of items expressly
required to be delivered to the Administrative Agent. The Administrative Agent
may consult with legal counsel (including counsel for the Borrower) concerning
all matters pertaining to such duties.

Section 9.3. Lack of Reliance on the Administrative Agent. Each of the Lenders,
the Swingline Lender and each Issuing Bank acknowledges that it has,
independently and without reliance upon the Administrative Agent, any other
Issuing Bank or any other Lender and based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each of the Lenders, the Swingline Lender and each Issuing
Bank also acknowledges that it will, independently and without reliance upon the
Administrative Agent, any other Issuing Bank or any other Lender and based on
such documents and information as it has deemed appropriate, continue to make
its own decisions in taking or not taking any action under or based on this
Agreement, any related agreement or any document furnished hereunder or
thereunder.

 

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

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

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

Section 9.7. Successor Administrative Agent.

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

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

 

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

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

Section 9.8. Withholding Tax.

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

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

 

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

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

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

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

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

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

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

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

Section 9.12. Co-Documentation Agents; Syndication Agent. Each Lender hereby
designates BBVA Compass and Fifth Third Bank as Co-Documentation Agents and
agrees that the Co-Documentation Agents shall have no duties or obligations
under any Loan Documents to any Lender or any Loan Party. Each Lender hereby
designates Wells Fargo Bank, National Association as Syndication Agent and
agrees that the Syndication Agent shall have no duties or obligations under any
Loan Documents to any Lender or any Loan Party.

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

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

ARTICLE X

MISCELLANEOUS

Section 10.1. Notices.

(a) Written Notices.

(i) Except in the case of notices and other communications expressly permitted
to be given by telephone, all notices and other communications to any party
herein to be effective shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopy, as follows:

 

To the Borrower:    The Ensign Group, Inc.    27101 Puerta Real, Suite 450   
Mission Viejo, CA 92691    Attention: Suzanne D. Snapper, Chief Financial
Officer    Telecopy Number: (949) 540-3003   
With a copy to:                           Ensign Facility Services, Inc.   
27101 Puerta Real, Suite 450    Mission Viejo, CA 92691    Attention: General
Counsel    Telecopy Number: (949) 540-3007

 

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To the Administrative Agent:    SunTrust Bank    3333 Peachtree Road, N.E. / 7th
Floor    Atlanta, GA 30326    Attention: Ensign Group Account Manager   
Telecopy Number: (404) 439-6700 With a copy to:    SunTrust Bank    Agency
Services    303 Peachtree Street, N.E. / 25th Floor    Atlanta, Georgia 30308   
Attention: Doug Weltz    Telecopy Number: (404) 221-2001    and    Latham &
Watkins LLP    355 South Grand Avenue    Los Angeles, CA 90071-1560   
Attention: Jason Bosworth    Telecopy Number: (213) 891-8291    Email:
jason.bosworth@lw.com To the Issuing Bank:    SunTrust Bank    25 Park Place,
N.E. / Mail Code 3706 / 16th Floor    Atlanta, Georgia 30303    Attention:
Standby Letter of Credit Dept.    Telecopy Number: (404) 588-8129 To the
Swingline Lender:    SunTrust Bank    Agency Services    303 Peachtree Street,
N.E. / 25th Floor    Atlanta, Georgia 30308    Attention: Doug Weltz    Telecopy
Number: (404) 221-2001 To any other Lender:    the address set forth in the
Administrative Questionnaire or the Assignment and Acceptance executed by such
Lender

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All such notices
and other communications shall be effective upon actual receipt by the relevant
Person or, if delivered by overnight courier service, upon the first Business
Day after the date deposited with such courier service for overnight (next-day)
delivery or, if sent by telecopy, upon transmittal in legible form by facsimile
machine or, if mailed, upon the third Business Day after the date deposited into
the mail or, if delivered by hand, upon delivery; provided that notices
delivered to the Administrative Agent, any Issuing Bank or the Swingline Lender
shall not be effective until actually received by such Person at its address
specified in this Section.

(ii) Any agreement of the Administrative Agent, any Issuing Bank or any Lender
herein to receive certain notices by telephone or facsimile is solely for the
convenience and at the request of the Borrower. The Administrative Agent, each
Issuing Bank and each Lender shall be entitled to rely on the authority of any
Person purporting to be a Person authorized by the Borrower to give such notice
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and the Lenders shall not have any liability to the Borrower or other Person on
account of any action taken or not taken by the Administrative Agent, any
Issuing Bank or any Lender in reliance upon such telephonic or facsimile notice.
The obligation of the Borrower to repay the Loans and all other Obligations
hereunder shall not be affected in any way or to any extent by any failure of
the Administrative Agent, any Issuing Bank or any Lender to receive written
confirmation of any telephonic or facsimile notice or the receipt by the
Administrative Agent, any Issuing Bank or any Lender of a confirmation which is
at variance with the terms understood by the Administrative Agent, such Issuing
Bank and such Lender to be contained in any such telephonic or facsimile notice.

(b) Electronic Communications.

(i) Notices and other communications to the Lenders and each Issuing Bank
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by the
Administrative Agent, provided that the foregoing shall not apply to notices to
any Lender or any Issuing Bank pursuant to Article II unless such Lender, such
Issuing Bank, as applicable, and the Administrative Agent have agreed to receive
notices under any Section thereof by electronic communication and have agreed to
the procedures governing such communications. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

(ii) Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement); provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

(c) Certification of Public Information. The Borrower and each Lender
acknowledge that certain of the Lenders may be Public Lenders and, if documents
or notices required to be delivered pursuant to Section 5.1 or Section 5.2
otherwise are being distributed through Syndtrak, Intralinks or any other
Internet or intranet website or other information platform (the “Platform”), any
document or notice that the Borrower has indicated contains Non-Public
Information shall not be posted on that portion of the Platform designated for
such Public Lenders. The Borrower agrees to clearly designate all information
provided to the Administrative Agent by or on behalf of the Borrower which is
suitable to make available to Public Lenders. If the Borrower has not indicated
whether a document or notice delivered pursuant to Section 5.1 or Section 5.2
contains Non-Public Information, the Administrative Agent reserves the right to
post such document or notice solely on that portion of the Platform designated
for Lenders who wish to receive Non-Public Information.

(d) Private Side Information Contacts. Each Public Lender agrees to cause at
least one individual at or on behalf of such Public Lender to at all times have
selected the “Private Side Information” or similar designation on the content
declaration screen of the Platform in order to enable such Public Lender or its
delegate, in accordance with such Public Lender’s compliance procedures and
applicable law, including Unites States federal and state securities laws, to
make reference to information

 

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that is not made available through the “Public Side Information” portion of the
Platform and that may contain Non-Public Information with respect to the
Borrower, its Affiliates or any of their securities or loans for purposes of
United States federal or state securities laws. In the event that any Public
Lender has determined for itself not to access any information disclosed through
the Platform or otherwise, such Public Lender acknowledges that (i) other
Lenders may have availed themselves of such information and (ii) neither the
Borrower nor the Administrative Agent has any responsibility for such Public
Lender’s decision to limit the scope of the information it has obtained in
connection with this Agreement and the other Loan Documents.

Section 10.2. Waiver; Amendments.

(a) No failure or delay by the Administrative Agent, any Issuing Bank or any
Lender in exercising any right or power hereunder or under any other Loan
Document, and no course of dealing between the Borrower and the Administrative
Agent or any Lender, shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power hereunder
or thereunder. The rights and remedies of the Administrative Agent, each Issuing
Bank and the Lenders hereunder and under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies provided by law. No waiver of
any provision of this Agreement or of any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by subsection (b) of this Section, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the making of
a Loan or the issuance of a Letter of Credit shall not be construed as a waiver
of any Default or Event of Default, regardless of whether the Administrative
Agent, any Lender or any Issuing Bank may have had notice or knowledge of such
Default or Event of Default at the time.

(b) No amendment or waiver of any provision of this Agreement or of the other
Loan Documents (other than the Fee Letter), nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Borrower and the Required Lenders, or the Borrower and
the Administrative Agent with the consent of the Required Lenders, and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided that, in addition to the
consent of the Required Lenders, no amendment, waiver or consent shall:

(i) 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 directly affected thereby (provided that any
change to the calculation of the Leverage Ratio or the component definitions
used therein shall not require consent of each Lender directly affected thereby
and shall only be subject to Required Lender approval);

(iii) postpone the date fixed for any payment (other than any mandatory
prepayment) of any principal of, or interest on, any Loan or LC Disbursement or
any fees hereunder or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date for the termination or reduction of any Commitment,
without the written consent of each Lender directly affected thereby (provided
that any change to the calculation of the Leverage Ratio or the component
definitions used therein shall not require consent of each Lender directly
affected thereby and shall only be subject to Required Lender approval);

 

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(iv) change Section 2.21(b) or (c) or Section 8.2 in a manner that would alter
the pro rata sharing of payments required thereby, without the written consent
of each Lender directly affected thereby;

(v) change any of the provisions of this subsection (b) or the percentage set
forth in the definition of “Required Lenders” or any other provision hereof
specifying the number or percentage of Lenders which are required to waive,
amend or modify any rights hereunder or make any determination or grant any
consent hereunder, without the consent of each Lender;

(vi) release all or substantially all of the guarantors, or limit the liability
of all or substantially all of the guarantors, under any guaranty agreement
guaranteeing any of the Obligations, without the written consent of each Lender;
or

(vii) release all or substantially all collateral (if any) securing any of the
Obligations, without the written consent of each Lender;

provided, further, that (x) no such amendment, waiver or consent shall amend,
modify or otherwise affect the rights, duties or obligations of the
Administrative Agent, the Swingline Lender or any Issuing Bank without the prior
written consent of such Person, and (y) no amendment, waiver or consent shall,
unless signed by the Borrower and the Required Revolving Lenders, or the
Borrower and the Administrative Agent with the consent of the Required Revolving
Lenders:

(1) amend or waive compliance with the conditions precedent to the obligations
of the Revolving Lenders to make any Revolving Loan or LC Disbursement;

(2) amend or waive non-compliance with any provision of Section 2.12(a);

(3) waive any Default or Event of Default for the purpose of satisfying the
conditions precedent to the obligations of the Revolving Lenders to make any
Revolving Loan or LC Disbursement; or

(4) change any of the provisions of this clause (y);

provided, further, that no such amendment, waiver or consent shall change the
number or percentage contained in the definition of “Required Revolving Lenders”
or any other provision hereof specifying the number or percentage of Revolving
Lenders which are required to waive, amend or modify any rights hereunder or
make any determination or grant any consent hereunder, without the consent of
each Revolving Lender.

(c) Notwithstanding anything to the contrary herein, no Defaulting Lender shall
have any right to approve or disapprove any amendment, waiver or consent
hereunder, except that the Commitment of such Lender may not be increased or
extended, and amounts payable to such Lender hereunder may not be permanently
reduced, without the consent of such Lender (other than reductions in fees and
interest in which such reduction does not disproportionately affect such
Lender). Notwithstanding anything contained herein to the contrary, this
Agreement may be amended and restated without the consent of any Lender (but
with the consent of the Borrower and the Administrative Agent) if, upon giving
effect to such amendment and restatement, such Lender shall no longer be a party
to this Agreement (as so amended and restated), the Commitments of such Lender
shall have terminated (but such Lender shall continue to be entitled to the
benefits of Sections 2.18, 2.19, 2.20 and 10.3), such Lender shall have no other
commitment or other obligation hereunder and such Lender shall have been paid in
full all principal, interest and other amounts owing to it or accrued for its
account under this Agreement.

 

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(d) Notwithstanding the foregoing, this Agreement may be amended (or amended and
restated) with the written consent of the Required Lenders, Administrative Agent
and Borrower (a) to add one or more additional credit facilities to this
Agreement and to permit extensions of credit from time to time outstanding
thereunder and the accrued interest and fees in respect thereof to share ratably
in the benefits of this Agreement and the other Loan Documents with the Term
Loans and the Revolving Loans and the accrued interest and fees in respect
thereof and (b) to include appropriately the Lenders holding such credit
facilities in any determination of the Required Lenders.

(e) Notwithstanding anything to the contrary herein, any Loan Document may be
waived, amended, supplemented or modified pursuant to an agreement or agreements
in writing entered into by the Borrower and the Administrative Agent (without
the consent of any Lender) solely to effect administrative changes that are not
adverse to any Lender or to correct administrative errors or omissions or to
cure an ambiguity, defect or error (including, without limitation, to revise the
legal description of any Collateral), or to grant a new Lien for the benefit of
the Secured Parties or extend an existing Lien over additional property.
Notwithstanding anything to the contrary herein, (A) additional extensions of
credit consented to by the Required Lenders shall be permitted hereunder on a
ratable basis with the existing Loans (including as to proceeds of, and sharing
in the benefits of, Collateral and sharing of prepayments), and (B) the
Administrative Agent shall enter into the intercreditor agreement upon the
request of the Borrower as contemplated by Section 7.2(i) solely to the extent
such intercreditor agreement is reasonably acceptable to the Administrative
Agent.

Section 10.3. Expenses; Indemnification.

(a) The Borrower shall pay (i) all reasonable, documented out-of-pocket costs
and expenses of the Administrative Agent, the Lead Arrangers and their
Affiliates, including the reasonable fees, charges and disbursements of one
outside counsel for the Administrative Agent, the Lead Arrangers and their
Affiliates, in connection with the syndication of the credit facilities provided
for herein, the preparation and administration of the Loan Documents and any
amendments, modifications or waivers thereof (whether or not the transactions
contemplated in this Agreement or any other Loan Document shall be consummated),
(ii) all reasonable, documented out-of-pocket expenses incurred by any Issuing
Bank in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all documented
out-of-pocket costs and expenses which shall be limited, in the case of outside
counsel, to the reasonable fees, charges and disbursements of one outside
counsel to the Secured Parties, taken as a whole, any applicable local counsel
required for the Secured Parties in any applicable jurisdiction and any special
regulatory counsel (and, solely in the case of a conflict of interest, one
additional of each such counsel for each group of similarly situated Secured
Parties)) incurred by the Administrative Agent, any Issuing Bank or any Lender
in connection with the enforcement or protection of its rights in connection
with this Agreement, including its rights under this Section, or in connection
with the Loans made or any Letters of Credit issued hereunder, including all
such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

(b) The Borrower shall indemnify the Administrative Agent (and any sub-agent
thereof), each Lender and each Issuing Bank, and each Related Party of any of
the foregoing Persons (each such Person being called an “Indemnitee”) against,
and hold each Indemnitee harmless from, any and all losses, claims, penalties,
damages, liabilities and related expenses (including the reasonable and
documented fees, charges and disbursements of one primary counsel for the
Indemnitees, taken as a whole, any local counsel for the Indemnitees in any
applicable jurisdiction and any special regulatory counsel (and, solely in the
case of a conflict of interest, one additional of each such counsel for each
group of similarly situated Indemnitees)) incurred by any Indemnitee or asserted
against any Indemnitee by any third party or by the Borrower or any other Loan
Party arising out of, in connection with, or as a

 

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result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the
proceeds therefrom (including any refusal by any Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or Release of Hazardous Materials
on or from any property owned or operated by the Borrower or any of its
Subsidiaries, or any Environmental Liability related in any way to the Borrower
or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by the
Borrower or any other Loan Party, and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, penalties, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and non-appealable judgment to have resulted from (x) the
gross negligence or willful misconduct of such Indemnitee or (y) a material
breach of such Indemnitee’s obligations hereunder or under any other Loan
Document. No Indemnitee shall be liable for any damages arising from the use by
others of any information or other materials obtained through Syndtrak,
Intralinks or any other Internet or intranet website, except as a result of such
Indemnitee’s gross negligence or willful misconduct as determined by a court of
competent jurisdiction in a final and non-appealable judgment.

(c) The Borrower shall pay, and hold the Administrative Agent, each Issuing Bank
and each of the Lenders harmless from and against, any and all present and
future stamp, documentary, and other similar taxes with respect to this
Agreement and any other Loan Documents, any collateral described therein or any
payments due thereunder, and save the Administrative Agent, each Issuing Bank
and each Lender harmless from and against any and all liabilities with respect
to or resulting from any delay or omission to pay such taxes.

(d) To the extent that the Borrower fails to pay any amount required to be paid
to the Administrative Agent, any Issuing Bank or the Swingline Lender under
subsection (a), (b) or (c) hereof, each Lender severally agrees to pay to the
Administrative Agent, the applicable Issuing Bank or the Swingline Lender, as
the case may be, such Lender’s pro rata share (in accordance with its respective
Revolving Commitment (or Revolving Credit Exposure, as applicable) and Term Loan
determined as of the time that the unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified payment, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Administrative Agent, the
applicable Issuing Bank or the Swingline Lender in its capacity as such.

(e) To the extent permitted by applicable law, each party hereto waives, and
agrees not to assert, any claim against any other party hereto, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to actual or direct damages) arising out of, in connection with or as a result
of this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby, the transactions contemplated therein, any Loan or any
Letter of Credit or the use of proceeds thereof.

(f) All amounts due under this Section shall be payable promptly after written
demand therefor.

 

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Section 10.4. Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Administrative Agent and each Lender, and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an assignee in
accordance with the provisions of subsection (b) of this Section, (ii) by way of
participation in accordance with the provisions of subsection (d) of this
Section or (iii) by way of pledge or assignment of a security interest subject
to the restrictions of subsection (f) of this Section (and any other attempted
assignment or transfer by any party hereto shall be null and void). Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in subsection (d) of this
Section and, to the extent expressly contemplated hereby, the Related Parties of
each of the Administrative Agent and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

(b) Any Lender may at any time assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitments, Loans and other Revolving Credit Exposure at the time owing
to it); provided that any such assignment shall be subject to the following
conditions:

(i) Minimum Amounts.

(A) in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitments, Loans and other Revolving Credit Exposure at the time
owing to it or in the case of an assignment to a Lender, an Affiliate of a
Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans and
Revolving Credit Exposure outstanding thereunder) or, if the applicable
Commitment is not then in effect, the principal outstanding balance of the Loans
and Revolving Credit Exposure of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent or, if “Trade Date”
is specified in the Assignment and Acceptance, as of the Trade Date) shall not
be less than $1,000,000 with respect to Term Loans and $5,000,000 with respect
to Revolving Loans and Revolving Commitments and in minimum increments of
$1,000,000, unless each of the Administrative Agent and, so long as no Event of
Default has occurred and is continuing, the Borrower otherwise consents (each
such consent not to be unreasonably withheld or delayed).

(ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans, other Revolving
Credit Exposure or the Commitments assigned, except that this subsection (b)(ii)
shall not prohibit any Lender from assigning all or a portion of its rights and
obligations among separate Commitments or Classes on a non-pro rata basis.

(iii) Required Consents. No consent shall be required for any assignment except
to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrower shall be required unless (x) an Event of Default
has occurred and is continuing at the time of such assignment or (y) (1) in the
case of Term Loans such assignment is to a Lender, an Affiliate of such Lender
or an Approved Fund of such Lender, or (2) in the case of Revolving Commitments
or Revolving Loans, such assignment is to a Lender holding Revolving Commitments
or an Affiliate of such Lender or an Approved Fund of such Lender;

 

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(B) the consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required unless such assignment is of a Term Loan
to a Lender, an Affiliate of such Lender or an Approved Fund of such Lender; and

(C) the consent of each Issuing Bank (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment that increases the
obligation of the assignee to participate in exposure under one or more Letters
of Credit (whether or not then outstanding), and the consent of the Swingline
Lender (such consent not to be unreasonably withheld or delayed) shall be
required for any assignment in respect of the Revolving Commitments unless such
assignment is to a Lender holding Revolving Commitments or Revolving Loans, an
Affiliate of such Lender or an Approved Fund of such Lender.

(iv) Assignment and Acceptance. The parties to each assignment shall deliver to
the Administrative Agent (A) a duly executed Assignment and Acceptance, (B) a
processing and recordation fee of $3,500 (except with respect to any assignment
by a Lender to one of its Affiliates), (C) an Administrative Questionnaire
unless the assignee is already a Lender and (D) the documents required under
Section 2.20(e).

(v) No Assignment to the Borrower. No such assignment shall be made to the
Borrower or any of the Borrower’s Affiliates or Subsidiaries.

(vi) No Assignment to Natural Persons, Defaulting Lenders or Disqualified
Institutions. No such assignment shall be made to a natural person, a Defaulting
Lender or a Disqualified Institution.

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) of this Section, from and after the effective date specified
in each Assignment and Acceptance, the assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Acceptance, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 2.18, 2.19, 2.20 and 10.3 with
respect to facts and circumstances occurring prior to the effective date of such
assignment; provided that, except to the extent otherwise expressly agreed by
the affected parties, no assignment by a Defaulting Lender will constitute a
waiver or release of any claim of any party hereunder arising from such Lender’s
having been a Defaulting Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section. If the consent of the Borrower to an assignment
is required hereunder (including a consent to an assignment which does not meet
the minimum assignment thresholds specified above), the Borrower shall be deemed
to have given its consent unless it shall object thereto by written notice to
the Administrative Agent within ten (10) Business Days after notice thereof has
actually been delivered by the assigning Lender (through the Administrative
Agent) to the Borrower.

(c) The Administrative Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at one of its offices in Atlanta, Georgia a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders,

 

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and the Commitments of, and principal amount of the Loans and Revolving Credit
Exposure owing to, each Lender pursuant to the terms hereof from time to time
(the “Register”). Information contained in the Register with respect to any
Lender shall be available for inspection by such Lender at any reasonable time
and from time to time upon reasonable prior notice; information contained in the
Register shall also be available for inspection by the Borrower at any
reasonable time and from time to time upon reasonable prior notice. In
establishing and maintaining the Register, the Administrative Agent shall serve
as the Borrower’s agent solely for tax purposes and solely with respect to the
actions described in this Section, and the Borrower hereby agrees that, to the
extent SunTrust Bank serves in such capacity, SunTrust Bank and its officers,
directors, employees, agents, sub-agents and affiliates shall constitute
“Indemnitees”.

(d) Any Lender may at any time, without the consent of, or notice to, the
Borrower, the Administrative Agent, the Swingline Lender or any Issuing Bank,
sell participations to any Person (other than a natural person, a Disqualified
Institution, the Borrower or any of the Borrower’s Affiliates or Subsidiaries)
(each, a “Participant”) in all or a portion of such Lender’s rights and/or
obligations under this Agreement (including all or a portion of its Commitment
and/or the Loans owing to it); provided that (i) such Lender’s obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Administrative Agent, each Issuing Bank, the
Swingline Lender and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver with respect to the following to the
extent affecting such Participant: (i) increase the Commitment of such Lender;
(ii) reduce the principal amount of any Loan or LC Disbursement or reduce the
rate of interest thereon, or reduce any fees payable hereunder (excluding the
right of any Participant to consent to changes in the calculation of the
Leverage Ratio or the component definitions thereof); (iii) postpone the date
fixed for any payment of any principal of, or interest on, any Loan or LC
Disbursement or any fees hereunder or reduce the amount of, waive or excuse any
such payment, or postpone the scheduled date for the termination or reduction of
any Commitment (excluding the right of any Participant to consent to changes in
the calculation of the Leverage Ratio or the component definitions thereof);
(iv) change Section 2.21(b) or (c) in a manner that would alter the pro rata
sharing of payments required thereby; (v) change any of the provisions of
Section 10.2(b) or the definition of “Required Lenders” or “Required Revolving
Lenders” or any other provision hereof specifying the number or percentage of
Lenders which are required to waive, amend or modify any rights hereunder or
make any determination or grant any consent hereunder; (vi) release all or
substantially all of the guarantors, or limit the liability of all or
substantially all of the guarantors, under any guaranty agreement guaranteeing
any of the Obligations; or (vii) release all or substantially all collateral (if
any) securing any of the Obligations. Subject to subsection (e) of this Section,
the Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.18, 2.19, and 2.20 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to subsection (b) of this Section;
provided that such Participant agrees to be subject to Section 2.24 as though it
were a Lender. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.7 as though it were a Lender; provided
that such Participant agrees to be subject to Section 2.21 as though it were a
Lender.

Each Lender that sells a participation shall, acting solely for this purpose as
a non-fiduciary agent of the Borrower, maintain a register in the United States
on which it enters the name and address of each Participant and the principal
amounts (and stated interest) of each Participant’s interest in the Loans or
other obligations under the Loan Documents (the “Participant Register”);
provided that no

 

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Lender shall have any obligation to disclose all or any portion of the
Participant Register to any Person (including the identity of any Participant or
any information relating to a Participant’s interest in any commitments, loans,
letters of credit or other obligations under any Loan Document) except to the
extent that such disclosure is necessary to establish that such commitment,
loan, letter of credit or other obligation is in registered form under
Section 5f.103-1(c) of the United States Treasury Regulations. The entries in
the Participant Register shall be conclusive, absent manifest error, and such
Lender shall treat each person whose name is recorded in the Participant
Register as the owner of such participation for all purposes of this Agreement
notwithstanding any notice to the contrary.

(e) A Participant shall not be entitled to receive any greater payment under
Sections 2.18 and 2.20 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent. A Participant shall not be entitled to the benefits of
Section 2.20 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Section 2.20(e) and (f) as though it were a Lender.

(f) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including, without limitation, any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

(g) The Administrative Agent shall not have any responsibility for ensuring that
an assignee of, or a participant in, a Loan or Revolving Commitment is not a
Disqualified Institution, and shall not have any liability in the event that
Loans or Revolving Commitments, or a participation therein, are transferred to
any Disqualified Institution.

(h) For the avoidance of doubt, the addition of any Person to the Disqualified
Institution List shall solely apply prospectively and shall have no effect with
respect to any assignment or participation that occurs or any Loans, Commitments
or Revolving Credit Exposure acquired by such Person, in each case prior to the
date such Person is added to the Disqualified Institution List.

Section 10.5. Governing Law; Jurisdiction; Consent to Service of Process.

(a) This Agreement and the other Loan Documents and any claim, controversy,
dispute or cause of action (whether in contract or tort or otherwise) based
upon, arising out of or relating to this Agreement or any other Loan Document
(except, as to any other Loan Document, as expressly set forth therein) and the
transactions contemplated hereby and thereby shall be construed in accordance
with and be governed by the law of the State of New York.

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

 

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(c) The Borrower irrevocably and unconditionally waives any objection which it
may now or hereafter have to the laying of venue of any such suit, action or
proceeding described in subsection (b) of this Section and brought in any court
referred to in subsection (b) of this Section. Each of the parties hereto
irrevocably waives, to the fullest extent permitted by applicable law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

(d) Each party to this Agreement irrevocably consents to the service of process
in the manner provided for notices in Section 10.1. Nothing in this Agreement or
in any other Loan Document will affect the right of any party hereto to serve
process in any other manner permitted by law.

Section 10.6. WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 10.7. Right of Set-off. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
each Lender and each Issuing Bank shall have the right, at any time or from time
to time upon the occurrence and during the continuance of an Event of Default,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, to set off and apply
against all deposits (general or special, time or demand, provisional or final)
of the Borrower at any time held or other obligations at any time owing by such
Lender and such Issuing Bank to or for the credit or the account of the Borrower
against any and all Obligations held by such Lender or such Issuing Bank, as the
case may be, irrespective of whether such Lender or such Issuing Bank shall have
made demand hereunder and although such Obligations may be unmatured. Each
Lender and each Issuing Bank agrees promptly to notify the Administrative Agent
and the Borrower after any such set-off and any application made by such Lender
or such Issuing Bank, as the case may be; provided that the failure to give such
notice shall not affect the validity of such set-off and application. Each
Lender and each Issuing Bank agrees to apply all amounts collected from any such
set-off to the Obligations before applying such amounts to any other
Indebtedness or other obligations owed by the Borrower and any of its
Subsidiaries to such Lender or such Issuing Bank.

Section 10.8. Counterparts; Integration. This Agreement may be executed by one
or more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. This Agreement, the Fee Letter, the other Loan
Documents, and any separate letter agreements relating to any fees payable to
the Administrative Agent and its Affiliates constitute the entire agreement
among the parties hereto and thereto and their affiliates regarding the subject
matters hereof and thereof and supersede all prior agreements and
understandings, oral or written, regarding such subject matters. Delivery of an
executed counterpart to this Agreement or any other Loan Document by facsimile
transmission or by electronic mail in pdf format shall be as effective as
delivery of a manually executed counterpart hereof.

 

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Section 10.9. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates, reports, notices
or other instruments delivered in connection with or pursuant to this Agreement
shall be considered to have been relied upon by the other parties hereto and
shall survive the execution and delivery of this Agreement and the other Loan
Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent, any Issuing Bank or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.18, 2.19, 2.20, and 10.3 and Article IX shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.

Section 10.10. Severability. Any provision of this Agreement or any other Loan
Document held to be illegal, invalid or unenforceable in any jurisdiction,
shall, as to such jurisdiction, be ineffective to the extent of such illegality,
invalidity or unenforceability without affecting the legality, validity or
enforceability of the remaining provisions hereof or thereof; and the
illegality, invalidity or unenforceability of a particular provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

Section 10.11. Confidentiality. Each of the Administrative Agent, the Issuing
Banks and the Lenders agrees to maintain the confidentiality of any information
relating to the Borrower or any of its Subsidiaries or any of their respective
businesses, to the extent designated in writing as confidential and provided to
it by the Borrower or any of its Subsidiaries, other than any such information
that is available to the Administrative Agent, any Issuing Bank or any Lender on
a non-confidential basis prior to disclosure by the Borrower or any of its
Subsidiaries, except that such information may be disclosed (i) to any Related
Party of the Administrative Agent, any such Issuing Bank or any such Lender
including, without limitation, accountants, legal counsel and other advisors who
need to know such information in connection with the Related Transactions and
are informed of the confidential nature of such information, (ii) pursuant to
the order of any court or administrative agency or in any pending legal or
administrative proceeding, or otherwise as required by applicable law or
regulation or compulsory legal process (in which case such disclosing party
agrees to inform the Borrower reasonably promptly thereof prior to such
disclosure to the extent not prohibited by law, rule or regulation), (iii) to
the extent requested by any regulatory agency or authority purporting to have
jurisdiction over such disclosing party or its Affiliates (including any
self-regulatory authority such as the National Association of Insurance
Commissioners) (in which case such disclosing party agrees to inform the
Borrower reasonably promptly thereof prior to such disclosure to the extent not
prohibited by law, rule or regulation), (iv) to the extent that such information
becomes publicly available other than as a result of a breach of this Section,
or which becomes available to the Administrative Agent, any Issuing Bank, any
Lender or any Related Party of any of the foregoing on a non-confidential basis
from a source other than the Borrower or any of its Subsidiaries that is not, to
such disclosing party’s knowledge, subject to confidentiality obligations to the
Borrower and its Subsidiaries, (v) in connection with the exercise of any remedy
hereunder or under any other Loan Documents or any suit, action or proceeding
relating to this Agreement or any other Loan Documents or the enforcement of
rights hereunder or thereunder, (vi) subject to execution by such Person of an
agreement containing provisions substantially the same as those of this Section
(or language substantially similar to this paragraph, including provisions
customary in the syndicated loan market), to (A) any

 

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assignee of or Participant in, or any prospective assignee of or Participant in,
any of such disclosing party’s rights or obligations under this Agreement, or
(B) any direct or indirect actual or prospective contractual counterparty (and
its Related Parties) to any swap, derivative or similar product that is to be
secured by the Collateral, (vii) to the CUSIP Service Bureau or any similar
organization, (viii) for purposes of establishing a “due diligence” defense,
(ix) to the extent that such information is independently developed by such
disclosing party (other than with confidential information provided to such
disclosing party by the Borrower and its Subsidiaries), (x) to industry trade
organizations, general information with respect to this Agreement that is
customary for inclusion in league table measurements or (xi) with the consent of
the Borrower. Any Person required to maintain the confidentiality of any
information as provided for in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such information as such Person would
accord its own confidential information. In the event of any conflict between
the terms of this Section and those of any other Contractual Obligation entered
into with any Loan Party (whether or not a Loan Document), the terms of this
Section shall govern.

Section 10.12. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which may be treated as interest on such
Loan under applicable law (collectively, the “Charges”), shall exceed the
maximum lawful rate of interest (the “Maximum Rate”) which may be contracted
for, charged, taken, received or reserved by a Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Rate to the date of
repayment (to the extent permitted by applicable law), shall have been received
by such Lender.

Section 10.13. Waiver of Effect of Corporate Seal. The Borrower represents and
warrants that neither it nor any other Loan Party is required to affix its
corporate seal to this Agreement or any other Loan Document pursuant to any
Requirement of Law, agrees that this Agreement is delivered by the Borrower
under seal and waives any shortening of the statute of limitations that may
result from not affixing the corporate seal to this Agreement or such other Loan
Documents.

Section 10.14. Patriot Act. The Administrative Agent and each Lender hereby
notifies the Loan Parties that, pursuant to the requirements of the Patriot Act,
it is required to obtain, verify and record information that identifies each
Loan Party, which information includes the name and address of such Loan Party
and other information that will allow such Lender or the Administrative Agent,
as applicable, to identify such Loan Party in accordance with the Patriot Act.
The Borrower will, and will cause its Subsidiaries to, provide documentary and
other evidence of the identity of the Loan Parties as may be requested by the
Lenders or the Administrative Agent at any time to enable the Lenders or the
Administrative Agent to verify the identity of the Loan Parties or to comply
with any applicable law or regulation, including, without limitation,
Section 326 of the Patriot Act at 31 U.S.C. Section 5318.

Section 10.15. No Advisory or Fiduciary Responsibility. In connection with all
aspects of each transaction contemplated hereby (including in connection with
any amendment, waiver or other modification hereof or of any other Loan
Document), the Borrower and each other Loan Party acknowledges and agrees and
acknowledges its Affiliates’ understanding that (i) (A) the services regarding
this Agreement provided by the Administrative Agent and/or the Lenders are
arm’s-length commercial transactions between the Borrower, each other Loan Party
and their respective Affiliates, on the one hand, and the Administrative Agent
and the Lenders, on the other hand, (B) each of the Borrower

 

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and the other Loan Parties have consulted their own legal, accounting,
regulatory and tax advisors to the extent they have deemed appropriate, and
(C) the Borrower and each other Loan Party is capable of evaluating and
understanding, and understands and accepts, the terms, risks and conditions of
the transactions contemplated hereby and by the other Loan Documents;
(ii) (A) each of the Administrative Agent and the Lenders is and has been acting
solely as a principal and, except as expressly agreed in writing by the relevant
parties, has not been, is not, and will not be acting as an advisor, agent or
fiduciary for the Borrower, any other Loan Party or any of their respective
Affiliates, or any other Person, and (B) neither the Administrative Agent nor
any Lender has any obligation to the Borrower, any other Loan Party or any of
their Affiliates with respect to the credit facilities contemplated hereby
except those obligations expressly set forth herein and in the other Loan
Documents; and (iii) the Administrative Agent, the Lenders and their respective
Affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the Borrower, the other Loan Parties and
their respective Affiliates, and each of the Administrative Agent and the
Lenders has no obligation to disclose any of such interests to the Borrower, any
other Loan Party or any of their respective Affiliates. To the fullest extent
permitted by law, each of the Borrower and the other Loan Parties hereby waives
and releases any claims that it may have against the Administrative Agent or any
Lender with respect to any breach or alleged breach of agency or fiduciary duty
in connection with any aspect of any transaction contemplated hereby.

Section 10.16. Location of Closing. Each Lender and each Issuing Bank
acknowledges and agrees that it has delivered, with the intent to be bound, its
executed counterparts of this Agreement to the Administrative Agent, c/o
Latham & Watkins LLP, 885 3rd Ave, New York, NY 10022. The Borrower acknowledges
and agrees that it has delivered, with the intent to be bound, its executed
counterparts of this Agreement and each other Loan Document, together with all
other documents, instruments, opinions, certificates and other items required
under Section 3.1, to the Administrative Agent, c/o Latham & Watkins LLP, 885
3rd Ave, New York, NY 10022. All parties agree that the closing of the
transactions contemplated by this Agreement has occurred in New York.

Section 10.17. Releases of Collateral. The Administrative Agent agrees with the
Borrower that the Administrative Agent shall:

(a) release any Lien on any property granted to or held by the Administrative
Agent under any Loan Document (i) upon Payment in Full of all Obligations,
(ii) when such property is sold as part of or in connection with any sale
permitted hereunder or under any other Loan Document, (iii) if such release is
approved, authorized or ratified in writing in accordance with Section 10.2 or
(iv) when such property is subject to Liens permitted under Section 7.2(d)
(solely to the extent required by the holder of such Lien), (e), (f), and, to
the extent relating to extensions, renewals or replacements of such Liens,
Section 7.2(h);

(b) release any Lien on any Mortgaged Properties upon the occurrence of the
Mortgage Release Event;

(c) release any Loan Party from its obligations under the applicable Collateral
Documents (i) if such Person ceases to be a Subsidiary as a result of a
transaction permitted hereunder, (ii) if such Subsidiary becomes an Immaterial
Subsidiary in accordance with the requirements set forth in Section 5.17 or
(iii) if such Subsidiary becomes an Excluded Subsidiary in accordance with the
requirements set forth in Section 5.18;

(d) release any Lien on any Capital Stock of any Subsidiary that (i) ceases to
be a Subsidiary as a result of any transaction permitted hereunder or (ii) is an
Excluded Subsidiary; and

 

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(e) subordinate the Liens and security interests of the Administrative Agent on
any Collateral (other than Capital Stock and accounts receivable) to the extent
contemplated by, and in accordance with the requirements of (including, without
limitation, that any intercreditor agreement entered into in connection
therewith be reasonably satisfactory to the Administrative Agent),
Section 7.2(i);

in each case, upon delivery by the Borrower of a certificate of a Responsible
Officer to the Administrative Agent requesting and certifying as to the grounds
for such release or subordination pursuant to this Section 10.17, as applicable,

In each case as specified in this Section 10.17, the Administrative Agent is
authorized by the Secured Parties and the Borrower and shall, at the Borrower’s
expense, execute and deliver to the applicable Loan Party such documents as such
Loan Party may reasonably request to evidence the release of such item of
Collateral from the Liens granted under the applicable Collateral Documents, or
release such Loan Party from its obligations under the applicable Collateral
Documents, in each case in accordance with the terms of the Loan Documents and
this Section.

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

 

THE ENSIGN GROUP, INC. By:   /s/ Christopher R. Christensen Name:   Christopher
R. Christensen Title:   President and Chief Executive Officer

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SUNTRUST BANK

as the Administrative Agent, as an Issuing Bank, as the Swingline Lender and as
a Lender

By:   /s/ David M. Felty Name:   David M. Felty Title:   Director

 

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CALIFORNIA BANK & TRUST

as a Lender

By:   /s/ Brian Knapp Name:   Brian Knapp Title:   Vice President

 

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COMPASS BANK

as a Lender

By:   /s/ James Ligman Name:   James Ligman Title:   Senior Vice President

 

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FIFTH THIRD BANK, an Ohio Banking Corporation

as a Lender

By:   /s/ Thomas Avery Name:   Thomas Avery Title:   Relationship Manager

 

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FIRST BANK

as a Lender

By:   /s/ Richard A. Sutton Name:   Richard A. Sutton Title:   Senior Vice
President

 

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REGIONS BANK

as a Lender

By:   /s/ Jessica A. Smith Name:   Jessica A. Smith Title:   Vice President

 

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WELLS FARGO BANK, NATIONAL ASSOCIATION

as a Lender

By:   /s/ Tim Bernier Name:   Tim Bernier Title:   Duly Authorized Signatory

 

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SCHEDULE I

Commitment Amounts

 

Lender

   Revolving
Commitment Amount  

SunTrust Bank

   $ 30,000,000.00   

Wells Fargo Bank, National Association

   $ 30,000,000.00   

Compass Bank

   $ 22,500,000.00   

Fifth Third Bank

   $ 22,500,000.00   

California Bank & Trust

   $ 20,000,000.00   

Regions Bank

   $ 15,000,000.00   

First Bank

   $ 10,000,000.00      

 

 

 

Total:

   $ 150,000,000.00      

 

 

 

 

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SCHEDULE 1.1

Subsidiary Agreements

 

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SCHEDULE 4.11

Real Estate

 

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SCHEDULE 4.14

Subsidiaries

 

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SCHEDULE 4.19

Healthcare Matters

 

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SCHEDULE 5.16

Post-Closing Matters

 

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SCHEDULE 7.1

Existing Indebtedness

 

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SCHEDULE 7.2

Existing Liens

 

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SCHEDULE 7.4

Existing Investments

 

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SCHEDULE 7.8

Existing Leases with Restrictive Agreements